PARTICIPATION AGREEMENT
between
ACE HARDWARE CORPORATION
and
PNC COMMERCIAL CORP
Dated as of December 17, 1997
TABLE OF CONTENTS
Page
ARTICLE I 1
SECTION 1.01. Definitions and Rules of Usage 1
SECTION 1.02. Documentary Conventions 1
ARTICLE II 1
SECTION 2.01. Operative Agreements 1
SECTION 2.02. Contributions; Commitment 1
SECTION 2.03. Use of Proceeds of Contributions 1
SECTION 2.04. Records 2
ARTICLE III 2
SECTION 3.01. Conditions Precedent to Participation 2
SECTION 3.02. Conditions to the Lessor's Obligations 4
SECTION 3.03. Conditions Precedent to the Lessor's
Obligation To Acquire Property 5
SECTION 3.04. Conditions Precedent to the Lessor's
Obligation To Fund Construction on
Any Property 9
SECTION 3.05. Conditions Precedent to the
Commencement of the Basic Term for
any Property 10
ARTICLE IV 11
SECTION 4.01. General Representations and
Warranties of Ace 11
SECTION 4.02. Ace Funding Date Representations
and Warranties 15
SECTION 4.03. Ace Property Closing Date
Representations and Warranties 16
SECTION 4.04. Ace Construction Funding Date
Representations and Warranties 16
SECTION 4.05. Ace Commencement of Basic Term
Representations and Warranties 17
SECTION 4.06. General Representations and
Warranties of Lessor 17
ARTICLE V 18
SECTION 5.01. No Lessor Liens 18
SECTION 5.02. Further Assurances; Etc 19
SECTION 5.03. Payment of Certain Expenses 19
SECTION 5.04. Taxes 20
SECTION 5.05. Tax and Accounting Treatment 20
ARTICLE VI 20
SECTION 6.01. Incorporation of Covenants From Ace
Credit Agreement 20
ARTICLE VII 21
SECTION 7.01. Ace 21
SECTION 7.02. Lessor 21
ARTICLE VIII 22
SECTION 8.01. General Indemnity 22
EXHIBITS, ANNEXES AND SCHEDULES
Annex A Rules of Usage, Definitions and Documentary Conventions
Exhibit A Lease
Exhibit B Opinion of Counsel for Ace
Exhibit C-1 Non-Disturbance and Attornment Agreement (Lender)
Exhibit C-2 Non-Disturbance and Attornment Agreement (Sublessee)
Exhibit C-3 Non-Disturbance and Attornment Agreement (Assignee)
Exhibit D Agency Agreement
Exhibit E Environmental Indemnity Agreement
Schedule 4.01(h) Ace's Subsidiaries
PARTICIPATION AGREEMENT
THIS PARTICIPATION AGREEMENT, dated as of December 17, 1997 is
entered into by and between ACE HARDWARE CORPORATION, a Delaware
corporation, and PNC COMMERCIAL CORP, a Florida corporation.
The parties hereby agree as follows:
ARTICLE I
Definitions, Rules of Usage and Documentary Conventions
SECTION 1.01. Definitions and Rules of Usage. Capitalized terms used
herein have the meanings assigned to them in Annex A hereto. The rules of
usage contained in Annex A hereto are applicable hereto.
SECTION 1.02. Documentary Conventions. The documentary conventions
set forth in Annex A hereto shall apply to this Agreement.
ARTICLE II
Summary of Transactions
SECTION 2.01. Operative Agreements. On the Closing Date, each party
shall execute and deliver each of the Operative Agreements.
SECTION 2.02. Contributions; Commitment. (a) On the terms and
subject to the conditions set forth in this Agreement, the Lessor shall make
Contributions to Ace from time to time, as specified in the applicable
Requisition; provided, however, that the aggregate amount of Contributions
made hereunder shall not exceed $10,000,000; and provided, further, that the
aggregate amount of the Unrecovered Contributions with respect to any
Property at any time shall not exceed the Commitment with respect to such
Property at such time.
(b) At the request of Ace, from time to time, at its sole
discretion, the Lessor may issue a written commitment (each a "Commitment")
to provide Contributions for the Acquisition of, and/or payment of Property
Costs of any Improvements on, any Property; provided, however that the
portion of the Property Costs consisting of "soft costs" for any one
Property shall not exceed ten percent (10%) of the total Property Costs for
such Property.
SECTION 2.03. Use of Proceeds of Contributions. All amounts paid
by the Lessor to Ace as Contributions shall be used by Ace solely to pay
costs and expenses that constitute Property Costs by (i) paying costs and
expenses incurred in connection with the Acquisition of any Property or
(ii) paying invoices therefor that are due and payable and issued to the
Construction Agent.
SECTION 2.04. Records. Ace shall keep accurate records of all
Property Costs, including copies of all relevant invoices and evidence of
payment thereof, with sufficient detail to show each Property to which the
Property Costs have been allocated. Ace shall permit representatives of
the Lessor to have access to such records at all reasonable times and to
make such copies of such records as such representatives deem necessary.
ARTICLE III
Conditions Precedent
SECTION 3.01. Conditions Precedent to Participation. The
obligations of Ace and the Lessor to participate in the transactions
contemplated hereby to occur on the Closing Date shall be subject to the
fulfillment, on or prior to the Closing Date, of the following conditions
precedent as applicable to each such Person (each document, agreement,
instrument or writing referred to below to be satisfactory in form and
substance to each such Person in its reasonable discretion):
(a) Litigation. No Litigation shall have been instituted,
nor shall any written order, judgment or decree have been issued or, to the
best of Ace's knowledge, proposed to be issued by any Governmental Authority,
to set aside, restrain, enjoin or prevent the execution and delivery of this
Agreement or the other Operative Agreements or the consummation of the
transactions contemplated hereby or thereby or that would adversely affect
the ability of any party to any of the Operative Agreements to perform its
obligations under each Operative Agreement to which it is a party.
(b) Consents and Approvals. All Governmental Actions and all
consents, waivers and actions by or from any trustee or holder of any Debt
or obligations of Ace or from any other Person that are necessary in
connection with the execution and delivery of this Agreement and the other
Operative Agreements or the consummation of the transactions contemplated
hereby and thereby shall have been duly taken, given or obtained, shall be
in full force and effect on the Closing Date, shall not be subject to any
pending Litigation and either the time within which any appeal therefrom may
be taken or review thereof may be obtained shall have expired or no review
thereof may be obtained or appeal therefrom taken and shall be adequate to
authorize the consummation of the transactions contemplated by this Agreement
and the other Operative Agreements and the performance by each party of its
obligations hereunder and thereunder.
(c) Governmental Action. No Governmental Action shall be
required for the participation by Ace or the Lessor in the transactions
contemplated by the Operative Agreements.
(d) Authorization, Execution and Delivery of Documents. Each
Operative Agreement shall have been duly authorized, executed and delivered
by the respective parties thereto and shall be in full force and effect.
An executed counterpart of each such Operative Agreement shall have been
delivered to each party thereto and, if not a party thereto, to Ace and the
Lessor or their respective counsel.
(e) Officers' Certificate. The Lessor shall have received an
Officer's Certificate of Ace stating that (i) the representations and
warranties of Ace contained herein and in the other Operative Agreements are
true and correct on and as of the Closing Date as though made on and as of
such date, (ii) no event or condition exists, or would result from the
consummation of any transaction contemplated by the Operative Agreements,
which constitutes a Default or an Event of Default under any Operative
Agreement and (iii) each Operative Agreement to which Ace is a party is in
full force and effect with respect to it.
(f) Corporate Documents of Ace. The Lessor shall have received
the following, all to be satisfactory to the Lessor:
(i) a copy of Ace's articles and/or certificate of
incorporation, together with all amendments, certified by the Secretary of
State of the State of Delaware as of a date which is not more than twenty
(20) days prior to the Closing Date;
(ii) a certificate of good standing as to Ace issued by
the Secretary of State of the State of Delaware dated as of a date which is
not more than twenty (20) days prior to the Closing Date; and
(iii) a certificate of the Secretary or an Assistant
Secretary of Ace dated the Closing Date and certifying (A) that attached
thereto is a true and complete copy of the by-laws of Ace as in effect on the
date of such certification, (B) that attached thereto is a true, correct and
complete copy of resolutions adopted by the Board of Directors of Ace
authorizing the execution, delivery and performance of this Agreement and the
other Operative Agreements to which Ace is a party and that such resolutions
have not been amended or revoked and are in full force and effect on the date
of such certificate, (C) that the articles and/or certificate of
incorporation of Ace have not been amended since the date of the last
amendment thereto indicated on the certificate furnished pursuant to clause
(A) above and (D) as to the incumbency and specimen signature of each officer
of Ace executing this Agreement and the other Operative Agreements to which
Ace is a party or any other document delivered in connection herewith or
therewith and a certification by another officer of Ace as to the incumbency
and signature of the officer signing the certificate referred to in this
clause (iii).
(g) Representations and Performance. All representations and
warranties of each party hereto contained herein and in the other Operative
Agreements shall be true and correct as of the Closing Date and each party
shall have performed and complied with all agreements and conditions
contained herein and in the other Operative Agreements required to be
performed or complied with by it on or prior to the Closing Date; and no
Default or Event of Default shall have occurred and be continuing, or would
result from the consummation of any of the transactions contemplated to
occur on the Closing Date.
(h) Opinion of Counsel. The Lessor shall have received an
opinion of the general counsel for Ace substantially in the form of Exhibit
B hereto.
(i) Transaction Expenses. All Transaction Expenses then due
and payable (including without limitation the reasonable fees, not to exceed
$20,000, and out-of-pocket costs of Lessor's legal counsel) shall have been
paid in full.
SECTION 3.02. Conditions to the Lessor's Obligations. The
obligation of the Lessor to make any Contribution on any Funding Date shall
be subject to the fulfillment, or waiver by the Lessor, on or prior to such
Funding Date, of the following conditions precedent (in addition to the
conditions set forth in Sections 3.03 or 3.04, as applicable):
(a) Commitment. The Lessor shall have issued a Commitment to
make such contribution.
(b) Requisition. Ace shall have delivered to the Lessor
(which it may do only once in each calendar month with respect to any
Property) not less than five (5) Business Days prior to such Funding Date, a
Requisition in a form satisfactory to the Lessor, referring to this Agreement
and specifying:
(i) the amount of the Contribution being requested,
(ii) the applicable Funding Date (which shall be a
Business Day),
(iii) the Property or prospective Property to which such
Requisition relates (a Requisition may only relate to one Property or
prospective Property, although Ace may issue more than one Requisition with
respect to any one Funding Date) and
(iv) whether the Contribution being requested is to be
used to Acquire Property or for the costs and expenses of a Development
Project (each Requisition may only relate to one use of proceeds).
Each Requisition shall be deemed to be a certification by Ace to the Lessor
that (i) all of the representations and warranties set forth in Section 4.01
are true and complete as of the date of the Requisition and the date of the
Contribution made thereunder and (ii) no Event of Default exists or will
result from such Contribution. In addition, each Requisition shall be deemed
to be a representation and warranty by Ace to the Lessor that:
(A) the costs and expenses to be paid out of the
proceeds of the Contributions to be made on the applicable Funding Date, as
specified in such Requisition, (1) constitute or will constitute Property
Costs and (2) represent (a) amounts payable in connection with the
Acquisition by the Lessor of a Property on such Funding Date or within
ten (10) Business Days thereafter, (b) amounts due and payable under invoices
issued to the Construction Agent for services or materials already supplied
or (c) reimbursement of amounts paid by the Construction Agent out of its own
funds in payment of invoices issued to the Construction Agent; and
(B) all the conditions to the obligations of the
Lessor to make such Contributions on such Funding Date (including those
specified in Sections 3.03 or 3.04, as applicable) have been, or on the
applicable Funding Date will have been, fulfilled by Ace or waived by the
Lessor.
(c) Representations and Warranties. Each representation and
warranty of Ace set forth in this Agreement and the other Operative
Agreements shall be true and correct on and as of such Funding Date with the
same effect as though such representation and warranty had been made on and
as of such date, except to the extent that such representation and warranty
expressly relates only to an earlier date.
(d) Compliance with Operative Agreements. Each Operative
Agreement shall be in full force and effect. Ace shall be in compliance with
each term and provision set forth in this Agreement and the other Operative
Agreements on its part to be observed or performed, and immediately before
and immediately after giving effect to the funding of the Contribution to be
made on such Funding Date, no Default or Event of Default shall have occurred
and be continuing.
(e) Payment of Transaction Expenses. All Transaction Expenses
which are due and payable on or prior to such Funding Date shall have been
paid in full.
SECTION 3.03.Conditions Precedent to the Lessor's Obligation To
Acquire Property.
(a) Conditions Precedent to the Lessor's Obligation to Acquire
Land. The obligation of the Lessor to issue a Commitment with respect to any
Land and to make any Contribution on any Funding Date to fund the Acquisition
of any Land by the Lessor on such Funding Date shall be subject to the
fulfillment, on or prior to such Funding Date and in a manner and in form and
substance satisfactory to the Lessor, of the following conditions precedent
(in addition to the conditions set forth in Section 3.02):
(i) Available Commitment. The Lessor shall have issued a
Commitment to finance such Land in accordance with Section 2.02(b).
(ii)Appraisal. The Lessor shall have received a preliminary
appraisal of the Land showing an appraised value that is acceptable to the
Lessor. Ace shall pay the costs of the preliminary appraisal and the report
required under Section 3.05(e) not to exceed $5,000 in the aggregate, and the
Lessor shall pay any excess amount. Upon the request by the Lessee, the
Lessor shall deliver to the Lessee a copy of the preliminary appraisal.
(iii) Deed. The Lessor shall have received a deed
(a "Deed"), in form and substance appropriate for recording with all
applicable Governmental Authorities, with respect to such Land (including
all Improvements located thereon, if any), conveying fee simple title to such
Land and/or Improvements to the Lessor, subject only to Permitted Encumbrances.
(iv)Development Project Notice. Ace shall have delivered to the
Lessor a notice in writing (a "Development Project Notice") stating (i) that
the Lessor is not Acquiring any Improvements on such Funding Date or (ii)
whether, with respect to each parcel of Land being Acquired by the Lessor on
such Funding Date on which Improvements are located, Ace intends (A) to
demolish substantially all such Improvements, (B) to undertake a Development
Project or (C) neither of the above (in which case such notice shall also
describe Ace's intentions with respect to such Improvements).
(v) Land Lease Supplement; Memorandum of Lease; Improvements
Lease Supplement. Ace shall have executed and delivered to the Lessor a Land
Lease Supplement (and, if required by the succeeding sentence, an Improvements
Lease Supplement), and a Memorandum of Lease with respect to such Property.
If any Land to be Acquired by the Lessor on such Funding Date carries any
Improvements (other than Improvements intended to be demolished by Ace, as set
forth in the applicable Development Project Notice delivered pursuant to
Section 3.03(a)(iv)), separate Lease Supplements and Memoranda of Lease shall
have been executed and delivered with respect to such Land and such
Improvements. If any Land to be Acquired by the Lessor on such Funding Date
carries Improvements that Ace intends to demolish (as set forth in the
applicable Development Project Notice delivered pursuant to Section
3.03(a)(iv)), a single Land Lease Supplement and Memorandum of Lease shall
have been executed and delivered with respect to such Land and such
Improvements.
(vi) Environmental Audit. The Lessor shall have received an
Environmental Audit of such Land and shall not have objected to such
Acquisition by reason of the results of such Environmental Audit.
(vii) Financing Statements. Ace shall have executed and
delivered to the Lessor all appropriate Financing Statements.
(viii) Agreement of Sale. The Lessor shall have received a
copy of the final agreement of sale (and shall, if practicable, deliver to
the Lessor copies of preliminary drafts of the agreement of sale as they
become available), bills of sale, if applicable, and other documentation, for
the Acquisition of the Land and any Improvements thereon.
(ix)Site Plan. The Lessor shall have received a copy of a site
plan for such Land.
(x) Zoning. The Lessor shall have received evidence that the
Land has been zoned for its intended use.
(xi)Permits and Approvals. The Lessor shall have received
copies of all Governmental Actions required in connection with the purchase
of the Land, if any.
(xii) Construction Budget. The Lessor shall have received
a copy of a preliminary Construction Budget for the Improvements proposed
for such Property.
(xiii) Title Commitment. The Lessor shall have received a
preliminary title commitment for an owner's policy of title insurance on such
Land from a title insurance company satisfactory to the Lessor, containing
only such Encumbrances and exceptions as are acceptable to the Lessor,
containing such endorsements as are reasonably required by the Lessor, which
shall include but not be limited to the 100/300 series of endorsements and
affirmative coverage for mechanics' liens, if available, and in an amount not
less than the total amount of Contributions to be made by the Lessor for
Property Costs relating to such Property.
(xiv) Local Counsel Advice. The Lessor shall have received
an opinion of counsel in the jurisdiction where the Land is located as to the
mortgage, usury and other relevant local law treatment of the Lease and as to
such other matters as the Lessor may reasonably request. Ace shall pay an
amount not to exceed $5,000 for each local counsel opinion delivered
hereunder; provided that Ace shall pay an amount not to exceed $2,500 for
subsequent local counsel opinions delivered by the same law firm for Land in
the same jurisdiction. The Lessor shall pay any excess amounts for local
counsel opinions.
(xv)Qualification to do Business. If required to do so under
applicable law, the Lessor shall have qualified to do business as a foreign
corporation in the state where the Land is located; provided, however, that
the Lessor's failure to satisfy this condition shall not prevent the Lessor
from issuing a Commitment to fund the Acquisition of any Property.
(xvi) Survey. The Lessor shall have received a recent
survey (which may be a preliminary survey) of the Land, containing such
information and a certificate of the surveyor as are satisfactory to the
Lessor.
(xvii) Soil Report. The Lessor shall have received a copy of
a soil report obtained by Ace with respect to such Property.
(xviii) Insurance. The Lessor shall have received evidence
that the liability insurance requirements contained in Article VIII of the
Lease have been complied with.
(xix) Origination Fee. Ace shall have paid to the Lessor
an origination fee for each parcel of Land in the amount of $5,000.
(xx)Transaction Expenses. All Transaction Expenses which are
due and payable on or prior to such Funding Date shall have been paid in full.
The Lessor shall use its best efforts to either approve or provide
the Lessee with written objections to any report, certificate or other
document or item provided to it under this Section 3.03(a) within thirty (30)
days of its receipt thereof.
(b) Conditions Precedent to the Lessor's Obligation to Make
Contribution for Improvements. The obligation of the Lessor to issue a
Commitment with respect to any Improvements and to make any Contribution on
any Funding Date to fund the Acquisition of any Improvements by the Lessor on
such Funding Date shall be subject to the fulfillment, on or prior to such
Funding Date and in a manner and in form and substance satisfactory to the
Lessor, of the following conditions precedent (in addition to the conditions
set forth in Sections 3.02 and 3.03(a)):
(i) Plans and Specifications. The Lessor shall have received a copy
of the Plans and Specifications for the Improvements proposed for such Property.
(ii)Utilities. The Lessor shall have received evidence that the
utilities required for the intended use of such Property are available.
(iii) Permits and Approvals. The Lessor shall have received
copies of all Governmental Actions required in connection with the
construction and development of such Improvements.
(iv)Construction Budget. The Lessor shall have received a copy of
the final Construction Budget for the Improvements proposed for such Property.
(v) Construction Contract and Architect's Agreement. The Lessor shall
have received fully-executed copies of the construction contract and the
architect's agreement, if any, for the construction of such Improvements.
(vi)Survey. The Lessor shall have received a recent survey of the
Property, showing the location of the Improvements upon the Land and
containing such other information and a certificate of the surveyor as are
satisfactory to the Lessor.
(vii) Report of Inspecting Architect or Engineer. The Lessor
shall have received a report, reasonably satisfactory to it, of an inspecting
architect or engineer selected by the Lessor based on his review of the Plans
and Specifications for the Improvements; provided that the Lessee shall not be
responsible to pay more than $5,000 for such report.
(viii) Insurance. The Lessor shall have received evidence that the
insurance requirements contained in Article VIII of the Lease have been
complied with.
(ix)Transaction Expenses. All Transaction Expenses which are due and
payable on or prior to such Funding Date shall have been paid in full.
The Lessor shall use its best efforts to either approve or provide
the Lessee with written objections to any report, certificate or other
document or item provided to it under this Section 3.04(b) within thirty (30)
days of its receipt thereof.
SECTION 3.04 Conditions Precedent to the Lessor's Obligation To
Fund Construction on Any Property. The obligation of the Lessor to make any
Contribution to finance any Property Costs (other than to Acquire Property)
relating to any Property shall be subject to the fulfillment, on or prior to
the applicable Funding Date and in a manner and in form and substance
satisfactory to the Lessor, of the following conditions precedent (in
addition to the conditions set forth in Section 3.02):
(a) Property Acquisition. Such Property (or the Land underlying
such Property) shall have been Acquired in compliance with Section 3.03 and
all conditions precedent set forth in Section 3.03 shall have been satisfied
in a manner satisfactory to the Lessor.
(b) Agency Agreement Supplement. The Construction Agent shall
have executed and delivered to the Lessor an Agency Agreement Supplement with
respect to such Property.
(c) Cost Overruns. In the case of Property Costs allocable to
Improvements comprising a portion of a Development Project, after taking into
account the Contributions to be made on such Funding Date to finance such
Property Costs, the aggregate Property Costs incurred in connection with such
Development Project shall not exceed 110% of the Projected Completion Cost
with respect to such Development Project.
(d) Transaction Expenses. All TransactionExpenses then due and
payable shall have been paid in full.
The Lessor shall use its best efforts to either approve or provide
the Lessee with written objections to any report, certificate or other
document or item provided to it under this Section 3.04 within thirty (30)
days of its receipt thereof.
SECTION 3.05. Conditions Precedent to the Commencement of the Basic
Term for any Property. The obligation of the Lessor to lease any Property to
Ace for the Basic Term of the Lease with respect thereto on any Lease
Commencement Date, and the commencement of such Basic Term, shall be subject
to the fulfillment of the following conditions precedent in a manner and in
form and substance satisfactory to the Lessor (in addition to the conditions
set forth in Sections 3.02(b) and (c) with respect to such Property):
(a) Improvements Lease Supplement. Ace shall have executed and
delivered to the Lessor an Improvements Lease Supplement (and, if necessary,
a Memorandum of Lease) with respect to such Property.
(b) Financing Statements. Ace shall have executed and delivered
all appropriate Financing Statements.
(c) Completion. The Completion Date for such Property shall
have occurred on or prior to the applicable Outside Completion Date for such
Property.
(d) Certificate of Occupancy. Ace shall have obtained any
Governmental Actions necessary for the use and occupancy of such Property.
(e) Inspecting Architect or Engineer. The Lessor shall have
received an approving report of an inspecting architect or engineer
reasonably acceptable to the Lessor; provided, however, that Ace shall not be
responsible to pay more than $5,000 in the aggregate for such report and the
preliminary appraisal required by Section 3.03(ii).
(f) Design Architect Certificate. The Lessor shall have
received a certificate of substantial completion from the design architect for
the Development Project on such Property.
(g) Title Bring-Down. The Lessor shall have received a
bring-down of the owner's title insurance policy by the title company
confirming that such Property is free and clear of liens and encumbrances
other than Permitted Encumbrances, satisfactory to the Lessor
(h) No Defaults. No Default or Event of Default shall have
occurred or be continuing.
(i) Certificate Regarding Representations and Warranties. Ace
shall have delivered to the Lessor a certificate as to the accuracy of the
representations and warranties made by Ace pursuant to Section 4.05.
The Lessor shall use its best efforts to either approve or provide
the Lessee with written objections to any report, certificate or other
document or item provided to it under this Section 3.05 within thirty (30)
days of its receipt thereof. The Basic Term of such Lease shall commence on
the date on which the conditions in this Section 3.05 have been met, or, if
such date is not the first day of a calendar month, on the first day of the
calendar month next following such date.
ARTICLE IV
Representations and Warranties
SECTION 4.01. General Representations and Warranties of Ace.
Ace represents and warrants to the Lessor, as of the Closing Date, as of each
Funding Date and on each Lease Commencement Date, that:
(a) Corporate Existence. (i) Ace is duly organized, validly
existing and in good standing under the laws of the State of Delaware; and
(ii) Ace has the requisite power and authority to own its properties and
assets and to carry on its business as now conducted and is qualified to do
business in every jurisdiction where such qualification is required. Ace
has all requisite corporate power to execute and deliver and to perform its
obligations under the Operative Agreements.
(b) Authorization; Non-Contravention. The execution, delivery,
and performance by Ace of the Operative Agreements have been duly authorized
by all necessary corporate action and do not and will not (i) require any
consent or approval of the shareholders of Ace, (ii) violate any provision
of any law, rule, regulation, order, writ, judgment, injunction, decree,
determination, or award presently in effect having applicability to Ace or
any Subsidiary or its or their properties, or of the charter or bylaws of Ace,
(iii) result in a breach of or constitute a default under any material
indenture or loan or credit agreement or any other agreement, lease, or
instrument to which Ace or any Subsidiary is a party or by which it or its
properties may be bound or affected (including without limitation the Ace
Credit Agreement), or (iv) result in the creation of an Encumbrance of any
nature upon or with respect to any of the properties now owned or hereafter
acquired by Ace or any Subsidiary, and Ace and its Subsidiaries are not in
default under any such order, writ, judgment, injunction, decree,
determination, or award or any such indenture, agreement, lease, or
instrument or in default under any such law, rule, or regulation, which
default would have a material adverse effect on the consolidated assets,
properties, or financial condition of Ace and its Subsidiaries.
(c) Governmental Approvals. Ace has received all Governmental
Actions from all Governmental Authorities required in connection with the
ownership, construction, operation and maintenance by it of its properties
and the conduct of its present and proposed business, and all such
Governmental Actions have been validly issued and are in full force and
effect. No authorization, consent, approval, license, exemption of, or
filing or registration with, or any other action in respect of any
Governmental Authority, is or will be necessary for the valid execution,
delivery or performance by Ace of the Operative Agreements.
(d) Compliance with Laws. Ace and its properties, business
operations and leaseholds are in compliance with all Governmental Rules
applicable thereto.
(e) Binding Obligations. The Operative Agreements constitute
legal, valid, and binding obligations of Ace enforceable against Ace in
accordance with their respective terms.
(f) Title to Properties. Ace has good and marketable title to
all of the material assets and properties purported to be owned by it, free
and clear of all Encumbrances except such as are permitted by Section 7.05 of
the Lease and except for covenants, restrictions, rights, easements and minor
irregularities in title which do not interfere with the occupation, use and
enjoyment by Ace of such properties and assets in the normal course of
business as presently conducted or materially impair the value thereof for
such business.
(g) Intellectual Property. Ace owns or licenses all of the
material patents, patent applications, trademarks, trademark applications,
permits, service marks, trade names, copyrights, copyright applications,
licenses, franchises, authorizations and other intellectual property rights
that are necessary for the operations, use and occupancy of the Properties,
without infringement upon or conflict with the rights of any other Person
with respect thereto. No slogan or other advertising device, product,
process, method, substance, part or component or other material now employed,
or now contemplated to be employed, by Ace in connection with the Properties
infringes upon or conflicts with any rights owned by any other Person, and
no claim or litigation regarding any of the foregoing is pending or threatened.
(h) Subsidiaries. Ace has no Subsidiaries other than those
listed on Schedule 4.01(h) hereto. All the outstanding shares of Ace's
Subsidiaries shown on Schedule 4.01(h) hereto as being owned by Ace or any of
its Subsidiaries have been duly authorized and validly issued, are fully paid
and nonassessable and are free and clear of any Encumbrances. No Subsidiary
other than A.H.C. Store Development Corp. owns any shares of Ace. Each of the
Subsidiaries of Ace is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization; and each of the
Subsidiaries of Ace (i) has the requisite power and authority to own its
property and assets and to carry on its business as now conducted and (ii) is
qualified to do business in every jurisdiction where such qualification is
required, except where the failure so to qualify would not have a material
adverse effect on the condition, financial or otherwise, of Ace or any of
its Subsidiaries taken as a whole.
(i) Financial Statements. The consolidated balance sheet of
Ace and its Subsidiaries as at December 31, 1996 and the related consolidated
statements of operations, shareholders, equity and cash flow of Ace and its
Subsidiaries for the fiscal year then ended, certified by KPMG Peat Marwick,
LLP, independent public accountants, copies of which have been delivered to
the Lessor, fairly present the consolidated financial condition of Ace and
its Subsidiaries as at such date and the consolidated results of the
operations of Ace and its Subsidiaries for the period ended on such date, all
prepared in accordance with GAAP applied on a consistent basis, and there has
been no material adverse change in such condition or operations since
December 31, 1996.
(j) Litigation. Except as otherwise disclosed in writing to the
Lessor, there is no material litigation threatened against or affecting Ace or
any of its Subsidiaries or the properties of Ace or any Subsidiaries before
any Governmental Authority or arbitrator or mediator, and neither Ace nor any
of its Subsidiaries is in default (in any respect which might have a material
adverse effect on the ability of Ace to perform its obligations hereunder)
with respect to any law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award presently in effect and applicable to Ace or
any of its Subsidiaries.
(k) Taxes and Tax Returns. United States federal income tax
returns of Ace and the Subsidiaries have been examined and closed through the
fiscal year of Ace ended December 31, 19____. Ace and its Subsidiaries have
filed all United States federal income tax returns and all other material tax
returns which are required to be filed by them and have paid all material
taxes due pursuant to such returns or pursuant to any assessment received by
Ace or any of its Subsidiaries. The charges, accruals and reserves on the
books of Ace and its Subsidiaries in respect of taxes and other governmental
charges are, in the opinion of Ace, adequate in all material respects.
(l) ERISA. (i) Subject to Section 4.01(l)(iii) hereof, Ace
and the ERISA Affiliates and the plan administrator of each Plan have
fulfilled in all material respects their respective obligations under ERISA
and the Code with respect to each Plan and each Plan is currently in material
compliance with the applicable provisions of ERISA and the Code.
(ii) Subject to Section 4.01(l)(iii) hereof, with respect
to each Plan, there has been no material (A) "reportable event" within the
meaning of Section 4043 of ERISA and the regulations thereunder which is not
subject to the provision for waiver of the 30-day notice requirement to the
PBGC; (B) failure to make or properly accrue any contribution which is due to
any Plan; (C) action under Section 4041 of ERISA to terminate any Pension
Plan; (D) withdrawal from any Pension Plan with two or more contributing
sponsors or the termination of any such Pension Plan resulting in liability
pursuant to Section 4063 or 4064 of ERISA; (E) institution by the PBGC of
proceedings to terminate any Pension Plan, or the occurrence of any event or
condition which might constitute grounds under ERISA for the termination of,
or the appointment of a trustee to administer, any Pension Plan; (F) the
imposition of liability pursuant to Section 4062(e), 4069 or 4212 of ERISA;
(G) complete or partial withdrawal (within the meaning of Sections 4203 and
4205 of ERISA) from any Pension Plan which is a Multiemployer Plan that it is
in reorganization or insolvency pursuant to Sections 4241 or 4245 of ERISA,
or that it intends to terminate or has terminated under Sections 4041A or
4042 of ERISA; (H) prohibited transaction described in Section 406 of ERISA
or 4975 of the Code which could give rise to the imposition of any material
fines, penalties, taxes or related charges; (I) assertion of a material
claim (other than routine claims for benefits) against any Plan (other than a
Multiemployer Plan) which could reasonably be expected to be successful; (J)
receipt from the Internal Revenue Service of notice of the failure of any
Plan to qualify under Section 401(a) of the Code, or the failure of any trust
forming part of any Plan to qualify for exemption from taxation under
Section 501(a) of the Code, if applicable; or (K) imposition of a lien
pursuant to Section 401(a)(29) of the Code or 412(n) of ERISA.
(iii) The representations and warranties set forth in
Sections 4.01l(i) and (ii) shall not be deemed to be breached as a result of
any event, occurrence or condition affecting or relating to a Multiemployer
Plan of which Ace does not have knowledge.
(m) No Default. No Default and no Event of Default has
occurred and is continuing.
(n) Investment Company Act. Ace is not an "investment company"
as defined in, or subject to regulation under, the Investment Company Act of
1940.
(o) Chief Executive Office. The principal place of business and
chief executive office (as used in Article 9 of the Uniform Commercial Code as
in effect in the state of Illinois and each state in which Property is
located) of Ace and the office where its records are maintained concerning the
transactions contemplated by the Operative Agreements is that address provided
in the applicable Lease Supplement.
(p) Full Disclosure. No Operative Document or other document,
certificate or statement furnished to the Lessor by or on behalf of Ace
pursuant to the Operative Documents contain any untrue statement of a material
fact.
(q) Use of Property for Lawful Purposes. Each Property is
owned, operated and occupied by Ace in accordance with all applicable
Governmental Rules.
SECTION 4.02. Ace Funding Date Representations and Warranties. Ace
represents and warrants to the Lessor, as of each Funding Date (in addition
to the representations and warranties set forth in Section 4.01), that:
(a) Compliance with Operative Agreements. The Construction
Agent is in compliance in all material respects with its obligations under
the Operative Agreements. Each Operative Agreement is in full force and
effect. No Default or Event of Default shall occur as a result of, or after
giving effect to, the transactions to be consummated on such Funding Date.
(b) Title to Property. The Lessor has good and marketable title
to each Property in fee simple, subject only to Permitted Encumbrances.
(c) Use of Proceeds. The costs and expenses to be paid or
reimbursed out of the proceeds of the Contributions to be made on such
Funding Date, as specified in the applicable Requisition, (i) constitute or
will constitute Property Costs and (ii) represent (A) amounts due in
connection with the Acquisition by the Lessor of a Property on such Funding
Date, or (B) amounts due and payable under invoices issued to the Construction
Agent.
(d) Unrecovered Contributions. The amount of the Contribution
made on such Funding Date with respect to each Property will be added to the
amount of the Unrecovered Contributions allocable to such Property.
SECTION 4.03. Ace Property Closing Date Representations and
Warranties. Ace represents and warrants to the Lessor, as of each Property
Closing Date (in addition to the representations and warranties set forth in
Sections 4.01 and 4.02), that:
(a) Nature of Property. Each Property to be Acquired on such
Property Closing Date is located in the continental United States and consists
of (i) Land on which a Development Project is to be performed pursuant to the
Agency Agreement or (ii) a Facility on such Land.
(b) Title. Upon the Acquisition by the Lessor of each Property
to be Acquired on such Property Closing Date that consists of Land, the Lessor
shall have good and marketable title to such Property in fee simple, subject
only to Permitted Encumbrances. Upon the Acquisition by the Lessor of each
Property to be Acquired on such Property Closing Date that consists of
Improvements, the Lessor shall have good and marketable title to such
Property, subject only to Permitted Encumbrances.
(c) Insurance. Ace has obtained insurance coverage for each
Property being Acquired by the Lessor on such Property Closing Date which
meets the requirements of Article VIII of the Lease, and has delivered to the
Lessor such evidence of such insurance coverage as requested by the Lessor.
All such coverage is in full force and effect.
(d) Compliance with Governmental Rules. Each Property being
Acquired by the Lessor on such Property Closing Date complies in all material
respects with all applicable Governmental Rules (including all Environmental
Laws).
(e) Approvals for Operation. If any Property consisting of
Improvements is intended to be occupied and operated by Ace in its then
current condition and configuration, all material Governmental Actions
required for the occupancy and operation of such Improvements have been taken
or obtained and are in full force and effect.
(f) Construction. If any Property to be Acquired by the Lessor
on such Property Closing Date consists of Land on which Ace intends to
undertake a Development Project, (i) the Construction Commencement Date with
respect to such Property shall be not later than the date provided in the
applicable Lease Supplement and (ii) the Completion Date with respect to such
Property shall occur on or prior to the Outside Completion Date with respect
to such Property.
SECTION 4.04. Ace Construction Funding Date Representations and
Warranties. Ace represents and warrants to the Lessor, as of each Funding
Date with respect to which any applicable Requisition specifies that the
requested Contribution is to be used to finance the costs and expenses of a
Development Project (in addition to the representations and warranties set
forth in Sections 4.01, 4.02 and 4.03), that:
(a) Compliance. The applicable Facility, as constructed in
accordance with the applicable Plans and Specifications, shall comply in all
material respects with all applicable Governmental Rules (including all
Environmental Laws).
(b) State of Property. There is no Litigation pending or, to
the best of Ace's knowledge, threatened, which materially adversely affects
the title to, or the use, operation or value of, the applicable Facility or
the related Land. No fire or other casualty with respect to such Facility or
the related Land has occurred. All Governmental Actions required for (i) the
construction of such Facility in accordance with the Agency Agreement and (ii)
the use and operation of such Facility following construction for its intended
purposes have either been obtained from the appropriate Governmental
Authorities having jurisdiction or from private parties, as the case may be.
(c) Completion of Construction. Unless Ace has exercised its
right to purchase under Section 4.03 of the Lease (i) the Completion Date with
respect to the applicable Property shall be no later than the applicable
Outside Completion Date and (ii) based upon the Construction Budget for such
Development Project, the Available Commitment for such Development Project
shall be sufficient to complete such Development Project.
SECTION 4.05. Ace Commencement of Basic Term
Representations and Warranties. As of each date on which a Basic Term
commences with respect to any Property, Ace shall be deemed to certify to the
Lessor that the representations and warranties in Sections 4.01, 4.02, 4.03
and 4.04 are true and correct on such date as to such Property.
SECTION 4.06. General Representations and Warranties of Lessor.
Lessor hereby represents and warrants, as of the Closing Date, that:
(a) Organization; Corporate Powers. It (i) is duly organized,
validly existing and in good standing under the laws of the State of Florida,
(ii) has the corporate power and authority to own its properties and to carry
on its business as now conducted, (iii) is qualified to do business in every
jurisdiction where such qualification is necessary and (iv) has the corporate
power to execute and deliver this Agreement and each other Operative
Agreement to which it is a party and perform its obligations hereunder and
thereunder.
(b) Authorization and Enforceability. The execution and delivery
of this Agreement and each other Operative Agreement to which it is a party and
the performance of its obligations hereunder and thereunder (i) have been duly
authorized by all requisite corporate action and (ii) will not (A) violate (I)
any provision of its articles of incorporation or by-laws, (II) any applicable
Governmental Rule or (III) any material contract, agreement or other
instrument to which it is a party or by which it or its property is bound, (B)
be in conflict with, result in a breach of or constitute a default under any
such material contract, agreement or other instrument or (C) result in the
creation or imposition of any Encumbrance upon any of its properties or
assets. This Agreement and each other Operative Agreement to which it is a
party have been duly executed and delivered by it and constitute its legal,
valid and binding obligations, enforceable against it in accordance with its
terms (except as enforcement may be affected by bankruptcy laws or other laws
for the relief of debtors and except as certain remedies may be affected by
the equitable powers of a court of competent jurisdiction).
(c) Governmental Actions. No Governmental Action is required in
connection with the execution and delivery by it of this Agreement or any
other Operative Agreement to which it is a party or the performance by it of
its obligations hereunder and thereunder.
(d) Litigation. There is no material Litigation pending or, to
its knowledge, threatened against or affecting it which individually or in the
aggregate, is likely to materially impair its ability to perform its
obligations under this Agreement and the other Operative Agreements to which
it is a party.
(e) Compliance with Governmental Rules. It is not in violation
of or in default with respect to any Governmental Rule where such violation or
default is likely to materially impair its ability to perform its obligations
under this Agreement and the other Operative Agreements to which it is a party.
ARTICLE V
Covenants
SECTION 5.01. No Lessor Liens. The Lessor agrees that it shall not
directly or indirectly create, incur or suffer to exist (and will, at its own
cost and expense, promptly take such action as may be necessary to discharge)
any Encumbrance with respect to any Property (i) in favor of any taxing
authority by reason of the nonpayment by it of any Tax (other than Taxes for
which it is indemnified under the Lease) imposed on it or (ii) resulting from
or related to any act of or claim against it not related to or connected with
any transaction contemplated hereby or by any of the other Operative
Agreements. The foregoing shall not apply to an Encumbrance granted by the
Lessor to a Lender in accordance with Section 7.02(b) hereof, except that the
Lessor will, at its own cost and expense, take such action as may be necessary
to discharge any such Encumbrance prior to the time it is required to convey any
Property to Ace.
SECTION 5.02. Further Assurances; Etc.
(a) Ace's Agreement Regarding Further Assurances. Ace shall
cause to be promptly and duly taken, executed, acknowledged and delivered all
such further acts, conveyances, documents and assurances as the Lessor may
from time to time reasonably request in order to carry out the intent and
purposes of any of the Operative Agreements or to more fully vest in the
Lessor the interests in any Property contemplated hereunder to be transferred
to and held by the Lessor. Without limiting the generality of this Section
5.02(a), on any Property Closing Date (i) Ace shall provide all documents
requested by the Lessor necessary to record, or file or deliver to any title
insurance company issuing title insurance with respect to the applicable
Property for recording, each Deed, Memorandum of Lease and Lease Supplement
(if applicable) executed or delivered on or in connection with such Property
Closing Date and (ii) Ace shall provide all documents requested by the Lessor
so that the Lessor can file the Financing Statements executed or delivered on
or in connection with such Property Closing Date. Ace shall direct that
copies of the filed Financing Statements be sent to the Lessor or its counsel
and that any such title company provide the Lessor or its counsel with
evidence of all such filings.
(b) Lender Non-Disturbance Agreements. Upon the request of the
Lessor, Ace will (and will cause any assignee or sublessee to) promptly
execute and deliver to any Lender designated by the Lessor a Non-Disturbance
and Attornment Agreement substantially in the form of Exhibit C-1, with such
changes thereto consistent with the Operative Agreements as shall be
reasonably necessary to conform to the circumstances of the applicable loan
transaction.
SECTION 5.03. Payment of Certain Expenses.
(a) Closing Date Expenses. Ace shall pay on the Closing Date
all Transaction Expenses then due in connection with the Closing Date,
including all such expenses relating to all Taxes for the recording,
registration and filing of documents executed on the Closing Date.
(b) Funding Date Expenses. Ace shall pay, or cause to be paid
when due or upon demand by the Lessor, whichever is earlier, all Transaction
Expenses in connection with each request for Contributions and each Funding
Date, including all such expenses relating to each Environmental Audit, each
Appraisal and all Taxes for the recording, registration and filing of
documents.
(c) Brokers' Fees and Stamp Taxes. Ace shall pay or cause to be
paid any brokers' fees and any and all stamp, transfer, recording and other
similar fees and Taxes, if any, that are payable in connection with the
transactions contemplated by this Agreement and the other Operative
Agreements; provided, however, that such fees and Taxes shall not include any
brokerage fees or Taxes relating to any transfer by the Lessor of its interest
in any Property or any Operative Agreement unless an Event of Default has
occurred and is continuing or the transfer is to Ace or a Subsidiary of Ace.
(d) Lessor to Provide Invoices. The Lessor shall deliver to Ace
copies of invoices for expenses which Ace is required to pay for pursuant to
the Operative Documents and for matters commissioned or arranged by the Lessor.
SECTION 5.04. Taxes. Any and all payments by Ace under any Operative
Agreement shall be made free and clear of and without deduction for any and
all current or future Taxes other than Excluded Taxes. If Ace shall be
required to deduct any Taxes other than Excluded Taxes from or in respect of
any sum payable under any Operative Agreement, (i) the sum payable shall be
increased by the amount (an "Additional Amount") necessary so that after
making all required deductions (including deductions applicable to additional
amounts payable under this Section) the payee shall receive an amount equal to
the sum it would have received had no such deductions been made, (ii) the
payor shall make such deductions and (iii) the payor shall pay the full amount
deducted to the relevant Governmental Authority in accordance with applicable
Governmental Rules.
SECTION 5.05. Tax and Accounting Treatment. It is expressly
understood and agreed to by Ace that the Lessor is not making any
representation as to the tax or accounting treatment to be given to Ace with
respect to the Lease. The Lessor shall take no position which is
inconsistent with the tax or accounting treatment which is desired by Ace
with respect to the Lease.
ARTICLE VI
Additional Covenants of Ace
SECTION 6.01. Incorporation of Covenants From Ace Credit Agreement.
Ace covenants and agrees with the Lessor that Ace shall comply with the
covenants set forth in Section 8 of the Ace Credit Agreement for the benefit
of the Lessor. All of such covenants are incorporated into this Agreement by
reference as though set forth herein, and all amendments, deletions and
additions to or of such covenants shall automatically be deemed to be
incorporated herein by reference as though set forth herein. All references
to the "Banks" or the "Agent" set forth in Section 8 of the Ace Credit
Agreement shall, for purposes of this Section 6.01, be deemed to be references
to the Lessor. If the Ace Credit Agreement ceases to be in effect for any
reason, or if PNC Bank, National Association, ceases to be a "Bank", as
defined in the Ace Credit Agreement, the provisions of Section 8 thereof as in
effect immediately prior thereto shall continue to be incorporated herein by
reference as though set forth herein. Ace shall deliver to the Lessor from
time to time prompt written notice of any amendment, addition or deletion to
Section 8 of the Ace Credit Agreement, along with copies thereof.
ARTICLE VII
Transfers of Interests
SECTION 7.01. Ace. Ace shall not assign, convey or otherwise
transfer all or any part of its rights, title or interest in, to or under any
of the Operative Agreements to, or cause any of its obligations under any of
the Operative Agreements to be assumed by, any Person, other than (a) as
specifically permitted by (i) Section 12.01 of the Lease or (ii) Section 2.05
of the Agency Agreement or (b) in connection with a merger of Ace permitted
pursuant to the covenants incorporated into Section 6.01. Any purported
assignment, conveyance or transfer by Ace (other than as permitted in the
immediately preceding sentence) shall be void and of no effect.
SECTION 7.02. Lessor. (a) The Lessor may from time to time assign,
pledge, mortgage, transfer or otherwise dispose of, in whole or in part (an
"Assignment") any of its rights under the Operative Agreements to any
financial institution which has a minimum capital, surplus and undivided
profits aggregating at least $50,000,000 without the consent of Ace. Any
other assignment by the Lessor shall require the prior written consent of Ace.
(b) In addition to the Lessor's right to make assignments set
forth in Section 7.02 (a), the Lessor may assign its rights in this Agreement
and the other Operative Agreements to, and may grant a mortgage lien upon, any
Property in favor of, a bank or other financial institution extending credit
to the Lessor (hereinafter a "Lender") without the consent of Ace; provided
that (i) Ace and the Lender shall enter into a Nondisturbance and Attornment
Agreement substantially in the form of Exhibit C-1, (ii) Ace, upon the request
of the Lender, shall certify that this Agreement and the other Operative
Agreements are in full force and effect and that no defaults thereunder have
occurred and are continuing and (iii) Ace shall agree for the benefit of the
Lender that any payments of Rent or Supplemental Rent or other amounts due the
Lessor under this Agreement and the other Operative Agreements which have been
assigned to the Lender shall be paid without offset or recoupment in
accordance with the provisions of the Lease.
(c) No Person to which an Assignment permitted by this Section
7.02 is made (an "Assignee") shall be obligated to perform any duty, covenant
or condition required to be performed by the Lessor under the terms of any
Operative Agreement unless such obligations are expressly assumed in writing
and in the absence of such written assumption, the Lessor shall remain
obligated with respect thereto. An Assignee shall have all rights, powers and
remedies given to the Lessor by the Operative Agreements and shall be named as
lender loss payee or co-insured under all policies of insurance maintained
pursuant to the Operative Agreements. If the Lessor assigns this Agreement or
the other Operative Agreements or the monies due or to become due hereunder or
thereunder or any other interest herein or therein, Ace agrees not to assert
against the Assignee any defense, set- off, recoupment, claim or counterclaim
which Ace may have against the Lessor, whether arising under the Operative
Agreements or any other transaction between the Lessor and Ace.
ARTICLE VIII
Indemnification
SECTION 8.01. General Indemnity. (a) Ace, whether or not any of
the transactions contemplated hereby shall be consummated, hereby assumes
liability for and agrees to defend, indemnify and hold harmless each
Indemnified Person from and against any Claims (including Claims by a
purchaser from such Indemnified Person) imposed on, incurred by or asserted
against such Indemnified Person (other than to the extent such Claims arise
from the gross negligence or willful misconduct of such Indemnified Person or
to the extent such Claims arise from the breach by such Indemnified Person of
its obligations under the Operative Agreements) in any way relating to or
arising or alleged to arise out of the execution, delivery, performance or
enforcement of this Agreement or any other Operative Agreement or on or with
respect to any Property or Improvements thereon, including without limitation
Claims in any way relating to or arising or alleged to arise out of:
(i) the purchase, acceptance, rejection, ownership,
design, construction, delivery, acceptance, nondelivery, leasing, subleasing,
possession, use, operation, repair, modification, transportation, condition,
sale, return, repossession (whether by summary proceedings or otherwise), or
any other disposition of any Property or part thereof;
(ii) any latent or other defects in any Property, whether
or not discoverable by an Indemnified Person or Ace and whether arising before
or during the Term of this Lease;
(iii) any loss of or damage to any property or the
environment relating to or arising out of any Property, the performance by Ace
of its obligations under the Lease and the Agency Agreement or any other
action or omission by Ace;
(iv) the Operative Agreements, or any transaction
contemplated thereby;
(v) any breach by Ace of any of its representations or
warranties set forth in the Operative Agreements or any failure by Ace to
perform or observe any covenant or agreement to be performed by it under any
of the Operative Agreements;
(vi) personal injury, death or property damage, including
Claims based on strict liability in tort; and
(vii) the failure of the Lessor to have good and marketable
title to any Property, subject only to Stated Title Exceptions.
(b) The foregoing indemnity shall remain in full force and effect
notwithstanding the termination or expiration of this Agreement or any of the
other Operative Agreements. The Lessor agrees to use reasonable efforts to
cooperate with Ace in connection with Ace's defense of any claims covered by
this indemnification. Unless the Lessor has notified Ace that the Lessor
wishes to control or stay involved in the defense of any such claim, Ace may
control the defense of any such claim.
(c) The Lessor must notify Ace in writing within two years of the
date on which an officer of the Lessor holding the title of Vice President or
higher had actual notice of the existence or occurrence of any event giving
rise to a claim by such Indemnified Person.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have duly executed this Participation Agreement as of the day and year
first written above.
PNC COMMERCIAL CORP
By:____________________________________(SEAL)
Name:
Title:
ACE HARDWARE CORPORATION
By:___________________________________(SEAL)
Name:
Title:
BF 60511.14: 12/11/97: 6805-14359