EXHIBIT 10.113
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PARTICIPATION AGREEMENT
Dated as of November 13, 1998
among
SMART & FINAL INC.,
as the Construction Agent and as the Lessee,
THE VARIOUS PARTIES HERETO FROM TIME TO TIME,
as the Guarantors,
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not individually, except as expressly stated herein,
but solely as the Owner Trustee under the S&F Trust 1998-1,
THE VARIOUS BANKS AND OTHER LENDING INSTITUTIONS WHICH ARE PARTIES HERETO FROM
TIME TO TIME, as the Holders,
THE VARIOUS BANKS AND OTHER LENDING INSTITUTIONS WHICH ARE PARTIES HERETO FROM
TIME TO TIME, as the Lenders,
and
CREDIT LYONNAIS LOS ANGELES BRANCH,
as the Administrative Agent for the Lenders
and respecting the Security Documents,
as the Administrative Agent for the Lenders and the Holders,
to the extent of their interests,
Co-Lead Arrangers:
CREDIT LYONNAIS LOS ANGELES BRANCH
NATIONSBANC ▇▇▇▇▇▇▇▇▇▇ SECURITIES LLC
Syndication Agent:
NATIONSBANC ▇▇▇▇▇▇▇▇▇▇ SECURITIES LLC
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TABLE OF CONTENTS
Page
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SECTION 1. THE LOANS................................................................................... 1
SECTION 2. HOLDER ADVANCES............................................................................. 2
SECTION 3. SUMMARY OF TRANSACTIONS..................................................................... 2
3.1. Operative Agreements........................................................................ 2
3.2. Property Purchase........................................................................... 2
3.3. Construction of Improvements; Commencement of Basic Rent.................................... 3
3.4. Ratable Interests of the Holders and the Lenders............................................ 3
SECTION 4. THE CLOSINGS................................................................................ 3
4.1. Initial Closing Date........................................................................ 3
4.2. Initial Closing Date; Property Closing Dates; Acquisition Advances; Construction Advances... 3
SECTION 5. FUNDING OF ADVANCES; CONDITIONS PRECEDENT; REPORTING REQUIREMENTS ON COMPLETION DATE;
THE LESSEE'S DELIVERY OF NOTICES; RESTRICTIONS ON LIENS.................................... 4
5.1. General..................................................................................... 4
5.2. Procedures for Funding...................................................................... 4
5.3. Conditions Precedent for the Lessor, the Agent, the Lenders and the Holders Relating to
the Initial Closing Date and the Advance of Funds for the Acquisition of a Property........ 6
5.4. Conditions Precedent for the Lessor, the Agent, the Lenders and the Holders Relating to
the Advance of Funds after the Acquisition Advance......................................... 12
5.5. Additional Reporting and Delivery Requirements on Completion Date and on Construction
Period Termination Date.................................................................... 13
5.6. The Construction Agent Delivery of Construction Budget Modifications........................ 14
5.7. Restrictions on Liens....................................................................... 14
5.8. Joinder Agreement Requirements.............................................................. 14
5.9. Payments.................................................................................... 15
5.10. Ratable Interests held by Holders, Lenders and Lenders pursuant to the Lessee Credit
Agreement.................................................................................. 15
5.11. Application and Allocation of Proceeds of the Sale or Other Disposition of the Properties
After an Event of Default.................................................................. 16
SECTION 6. REPRESENTATIONS AND WARRANTIES.............................................................. 16
6.1. Representations and Warranties of the Borrower.............................................. 16
6.2. Representations and Warranties of the Credit Parties........................................ 19
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SECTION 6B. GUARANTY.................................................................................... 24
6B.1. Guaranty of Payment and Performance......................................................... 24
6B.2. Obligations Unconditional................................................................... 24
6B.3. Modifications............................................................................... 25
6B.4. Waiver of Rights............................................................................ 26
6B.5. Reinstatement............................................................................... 26
6B.6. Remedies.................................................................................... 26
6B.7. Limitation of Guaranty...................................................................... 27
6B.9. Release of Guarantors....................................................................... 27
SECTION 7. PAYMENT OF CERTAIN EXPENSES................................................................. 28
7.1. Transaction Expenses........................................................................ 28
7.2. Brokers' Fees............................................................................... 29
7.3. Certain Fees and Expenses................................................................... 29
7.4. Unused Fee.................................................................................. 30
7.5. Other Fees.................................................................................. 30
SECTION 8. OTHER COVENANTS AND AGREEMENTS.............................................................. 30
8.1. Cooperation with the Construction Agent or the Lessee....................................... 30
8.2. Covenants of the Owner Trustee and the Holders.............................................. 30
8.3. Credit Party Covenants, Consent and Acknowledgment.......................................... 32
8.4. Sharing of Certain Payments................................................................. 36
8.5. Grant of Easements, etc..................................................................... 37
8.6. Appointment by the Agent, the Lenders, the Holders and the Owner Trustee.................... 37
8.7. Collection and Allocation of Payments and Other Amounts..................................... 38
8.8. Release of Properties, etc.................................................................. 41
SECTION 9. CREDIT AGREEMENT AND TRUST AGREEMENT........................................................ 42
9.1. The Construction Agent's and the Lessee's Credit Agreement Rights........................... 42
9.2. The Construction Agent's and the Lessee's Trust Agreement Rights............................ 42
SECTION 10. TRANSFER OF INTEREST........................................................................ 43
10.1. Restrictions on Transfer.................................................................... 43
10.2. Effect of Transfer.......................................................................... 45
SECTION 11. INDEMNIFICATION............................................................................. 45
11.1. General Indemnity........................................................................... 45
11.2. General Tax Indemnity....................................................................... 48
11.3. Increased Costs, Illegality, etc............................................................ 52
11.4. Funding/Contribution Indemnity.............................................................. 54
11.5. EXPRESS INDEMNIFICATION FOR ORDINARY NEGLIGENCE, STRICT LIABILITY, ETC...................... 55
11.6. Additional Provisions Regarding Environmental Indemnification............................... 56
11.7. Additional Provisions Regarding Indemnification............................................. 56
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11.8. Indemnifications Provided by the Owner Trustee in Favor of the Other Indemnified Persons.... 56
SECTION 12. MISCELLANEOUS............................................................................... 57
12.1. Survival of Agreements...................................................................... 57
12.2. Notices..................................................................................... 57
12.3. Counterparts................................................................................ 59
12.4. Terminations, Amendments, Waivers, Etc.; Unanimous Vote Matters............................. 59
12.5. Headings, etc............................................................................... 61
12.6. Parties in Interest......................................................................... 61
12.7. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL; VENUE...................... 61
12.9. Liability Limited........................................................................... 62
12.10. Rights of the Credit Parties................................................................ 64
12.11. Further Assurances.......................................................................... 64
12.12. Calculations under Operative Agreements..................................................... 64
12.13. Confidentiality............................................................................. 64
12.14. Financial Reporting/Tax Characterization.................................................... 65
12.15. Set-off..................................................................................... 65
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EXHIBITS
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A - Form of Requisition - Sections 4.2, 5.2, 5.3 and 5.4
B - Form of Outside Counsel Opinion for the Lessee - Section 5.3(j)
C - Form of Officer's Certificate - Section 5.3(x)
D - Form of Secretary's Certificate - Section 5.3(y)
E - Form of Officer's Certificate - Section 5.3(aa)
F - Form of Secretary's Certificate - Section 5.3(bb)
G - Form of Outside Counsel Opinion for the Owner Trustee - Section 5.3(cc)
H - Form of Outside Counsel Opinion for the Lessee - Section 5.3(dd)
I - Form of Officer's Certificate - Section 5.5
J - Form of Joinder Agreement - Section 5.8(a)
K - Description of Material Litigation - Section 6.2(d)
L - State of Incorporation/Formation and Principal Place of Business of Each
Guarantor - Section 6.2(i)
M - Form of Officer's Compliance Certificate - Section 8.3(l)
Appendix A - Rules of Usage and Definitions
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PARTICIPATION AGREEMENT
THIS PARTICIPATION AGREEMENT dated as of November 13, 1998 (as amended,
modified, extended, supplemented, restated and/or replaced from time to time,
this "Agreement") is by and among SMART & FINAL INC., a Delaware corporation
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(the "Lessee" or the "Construction Agent"); the various parties hereto from time
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to time as guarantors (subject to the definition of Guarantors in Appendix A
hereto, individually, a "Guarantor" and collectively, the "Guarantors"); FIRST
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SECURITY BANK, NATIONAL ASSOCIATION, a national banking association, not
individually (in its individual capacity, the "Trust Company"), except as
expressly stated herein, but solely as the Owner Trustee under the S&F Trust
1998-1 (the "Owner Trustee", the "Borrower" or the "Lessor"); the various banks
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and other lending institutions which are parties hereto from time to time as
holders of certificates issued with respect to the S&F Trust 1998-1 (subject to
the definition of Holders in Appendix A hereto, individually, a "Holder" and
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collectively, the "Holders"); the various banks and other lending institutions
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which are parties hereto from time to time as lenders (subject to the definition
of Lenders in Appendix A hereto, individually, a "Lender" and collectively, the
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"Lenders"); Credit Lyonnais Los Angeles Branch, as co-lead arranger and as the
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administrative agent for the Lenders and respecting the Security Documents, as
the administrative agent for the Lenders and the Holders, to the extent of their
interests (in such capacity, the "Agent"), and NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities
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LLC, as co-lead arranger and as syndication agent. Capitalized terms used but
not otherwise defined in this Agreement shall have the meanings set forth in
Appendix A hereto.
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In consideration of the mutual agreements herein contained and other good
and valuable consideration, the receipt of which is hereby acknowledged, the
parties hereto hereby agree as follows:
SECTION 1. THE LOANS.
Subject to the terms and conditions of this Agreement and the other
Operative Agreements and in reliance on the representations and warranties of
each of the parties hereto contained herein or made pursuant hereto, the Lenders
have agreed to make Loans to the Lessor from time to time in an aggregate
principal amount of up to the aggregate amount of the Commitments of the Lenders
in order for the Lessor to acquire the Properties and certain Improvements, to
develop and construct certain Improvements in accordance with the Agency
Agreement and the terms and provisions hereof and for the other purposes
described herein, and in consideration of the receipt of proceeds of the Loans,
the Lessor will issue the Notes. The Loans shall be made and the Notes shall be
issued pursuant to the Credit Agreement. Pursuant to Section 5 of this Agreement
and Section 2 of the Credit Agreement, the Loans will be made to the Lessor from
time to time at the request of the Construction Agent to acquire the Properties
and the Equipment, in consideration for the Construction Agent agreeing for the
benefit of the Lessor, pursuant to the Agency Agreement, to construct certain
Improvements and to cause the Lessee to lease the Properties, each in accordance
with the Agency Agreement and the other Operative Agreements. The Loans and the
obligations of the Lessor under the Credit Agreement shall be secured by the
Collateral.
SECTION 2. HOLDER ADVANCES.
Subject to the terms and conditions of this Agreement and the other
Operative Agreements and in reliance on the representations and warranties of
each of the parties hereto contained herein or made pursuant hereto, on each
date Advances are requested to be made in accordance with Section 5 hereof, each
Holder shall make a Holder Advance on a pro rata basis to the Lessor with
respect to the S&F Trust 1998-1 based on its Holder Commitment in an amount in
immediately available funds such that the aggregate of all Holder Advances on
such date shall be four percent (4%) of the amount of the Requested Funds on
such date; provided, that no Holder shall be obligated for any Holder Advance in
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excess of its pro rata share of the Available Holder Commitment. The aggregate
amount of Holder Advances shall be up to the aggregate amount of the Holder
Commitments. No prepayment or any other payment with respect to any Advance
shall be permitted such that the Holder Advance with respect to such Advance is
less than four percent (4%) of the outstanding amount of such Advance, except in
connection with termination or expiration of the Term or in connection with the
exercise of remedies relating to the occurrence of a Lease Event of Default. The
representations, warranties, covenants and agreements of the Holders herein and
in the other Operative Agreements are several, and not joint or joint and
several.
SECTION 3. SUMMARY OF TRANSACTIONS.
3.1. OPERATIVE AGREEMENTS.
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On the date hereof, each of the respective parties hereto and thereto shall
execute and deliver this Agreement, the Lease, each applicable Ground Lease, the
Agency Agreement, the Credit Agreement, the Notes, the Trust Agreement, the
Certificates, the Security Agreement, each applicable Mortgage Instrument and
such other documents, instruments, certificates and opinions of counsel as
agreed to by the parties hereto.
3.2. PROPERTY PURCHASE.
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On each Property Closing Date and subject to the terms and conditions of
this Agreement (a) the Holders will each make a Holder Advance in accordance
with Sections 2 and 5 of this Agreement and the terms and provisions of the
Trust Agreement; (b) the Lenders will each make Loans in accordance with
Sections 1 and 5 of this Agreement and the terms and provisions of the Credit
Agreement; (c) the Lessor will purchase and acquire good and marketable title
to, or ground lease pursuant to a Ground Lease, the applicable Property, each to
be within an Approved State, identified by the Construction Agent, in each case
pursuant to a Deed, Ground Lease or ▇▇▇▇ of Sale, as the case may be, and grant
the Agent a lien on such Property by execution of the required Security
Documents; (d) the Agent, the Lessee and the Lessor shall execute and deliver a
Lease Supplement relating to such Property; and (e) the Term shall commence with
respect to such Property.
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3.3. CONSTRUCTION OF IMPROVEMENTS; COMMENCEMENT OF BASIC RENT.
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Construction Advances will be made with respect to particular Improvements
to be constructed and with respect to ongoing Work regarding the Equipment and
construction of particular Improvements, in each case, pursuant to the terms and
conditions of this Agreement and the Agency Agreement. The Construction Agent
will act as a construction agent on behalf of the Lessor respecting the Work
regarding the Equipment, the construction of such Improvements and the
expenditures of the Construction Advances related to the foregoing. The
Construction Agent shall promptly notify the Lessor upon Completion of the
Improvements and the Lessee shall commence to pay Basic Rent as of the Rent
Commencement Date.
3.4. RATABLE INTERESTS OF THE HOLDERS AND THE LENDERS.
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Each Holder and Lender agrees at all times (a) to hold the same ratable
portion of the aggregate Lender Commitment for Tranche A Loans, the aggregate
Lender Commitment for Tranche B Loans, the aggregate Holder Commitment and the
Lessee Credit Agreement Commitment Amount, provided that, solely with respect to
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(i) any Lender or Holder that shall, as of the Initial Closing Date, hold its
Lender Commitment for Tranche A Loans and Tranche B Loans, its Holder Commitment
and/or its percentage share of the Lessee Credit Agreement Commitment Amount
other than in the same ratable portion and (ii) any successor or assign of a
Lender or Holder described in clause (i), such Lender or Holder agrees to hold
the same ratable portion of the aggregate Lender Commitment for Tranche A Loans
and the aggregate Lender Commitment for Tranche B Loans and to maintain a
5.0:3.0 ratio between the dollar amount of its percentage share of the Lessee
Credit Agreement Commitment Amount and the dollar amount of the aggregate of its
Lender Commitment for Tranche A Loans, its Lender Commitment for Tranche B Loans
and its Holder Commitment, and (b) to make advances consistent with such
committed amounts referenced in Section 3.4(a) in accordance with the
requirements of the Operative Agreements and the Lessee Credit Agreement,
respectively.
SECTION 4. THE CLOSINGS.
4.1. INITIAL CLOSING DATE.
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All documents and instruments required to be delivered on the Initial
Closing Date shall be delivered at the offices of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, Los Angeles,
California or at such other location as may be determined by the Lessor, the
Agent and the Lessee.
4.2. INITIAL CLOSING DATE; PROPERTY CLOSING DATES; ACQUISITION ADVANCES;
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CONSTRUCTION ADVANCES.
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The Construction Agent shall deliver to the Agent a requisition (a
"Requisition"), in the form attached hereto as Exhibit A or in such other form
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as is satisfactory to the Agent, in its reasonable discretion, in connection
with (a) the Transaction Expenses and other fees, expenses
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and disbursements payable, pursuant to Section 7.1, by the Lessor, (b) each
Acquisition Advance pursuant to Section 5.3, and (c) each Construction Advance
pursuant to Section 5.4.
SECTION 5. FUNDING OF ADVANCES; CONDITIONS PRECEDENT;
REPORTING REQUIREMENTS ON COMPLETION DATE;
THE LESSEE'S DELIVERY OF NOTICES; RESTRICTIONS ON LIENS.
5.1. GENERAL.
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(a) To the extent funds have been advanced to the Lessor as Loans by
the Lenders and to the Lessor as Holder Advances by the Holders, the Lessor
will use such funds from time to time in accordance with the terms and
conditions of this Agreement and the other Operative Agreements (i) at the
direction of the Construction Agent to acquire the Properties in accordance
with the terms of this Agreement, the Agency Agreement and the other
Operative Agreements, (ii) to make Advances to the Construction Agent to
permit the acquisition, testing, engineering, installation, development,
construction, modification, design, and renovation, as applicable, of the
Properties (or components thereof) in accordance with the terms of the
Agency Agreement and the other Operative Agreements, and (iii) to pay
Transaction Expenses, fees, expenses and other disbursements payable by the
Lessor under Sections 7.1(a) and 7.1(b).
(b) In lieu of the payment of interest on the Loans and Holder Yield
on the Holder Advances on any Scheduled Interest Payment Date with respect
to any Property during the period prior to the Rent Commencement Date with
respect to such Property, (i) each Lender's Loan shall automatically be
increased by the amount of interest accrued and unpaid on such Loan for
such period (except to the extent that at any time such increase would
cause such Lender's Loan to exceed such Lender's Available Commitment, in
which case the Lessee shall pay such excess amount to such Lender in
immediately available funds on the date such Lender's Available Commitment
was exceeded), and (ii) each Holder's Holder Advance shall automatically be
increased by the amount of Holder Yield accrued and unpaid on such Holder
Advance for such period (except to the extent that at any time such
increase would cause the Holder Advance of such Holder to exceed such
Holder's Available Holder Commitment, in which case the Lessee shall pay
such excess amount to such Holder in immediately available funds on the
date the Available Holder Commitment of such Holder was exceeded). Such
increases in a Lender's Loan and a Holder's Holder Advance shall occur
without any disbursement of funds by any Person.
5.2. PROCEDURES FOR FUNDING.
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(a) The Construction Agent shall designate the date for Advances
hereunder in accordance with the terms and provisions hereof which date
shall not be earlier than three (3) Business Days following the
Construction Agent's delivery to Agent of a Requisition with respect to any
such Advance; provided, however, it is understood and
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agreed that no more than one (1) Advance (excluding any continuation of any
Loan or Holder Advance) may be requested during any calendar month. On the
first (1st) Business Day of each calendar month, as needed, the
Construction Agent shall deliver to the Agent, (A) with respect to the date
that the first Advance is requested hereunder and each subsequent
Acquisition Advance, a Requisition as described in Section 4.2 hereof
(including without limitation a legal description of the Land, if any, a
schedule of the Improvements, if any, and a schedule of the Equipment, if
any, acquired or to be acquired on such date, and a schedule of the Work,
if any, to be performed, each of the foregoing in a form reasonably
acceptable to the Agent) and (B) with respect to each Construction Advance,
a Requisition identifying (among other things) the Property to which such
Construction Advance relates.
(b) Each Requisition shall: (i) be irrevocable, (ii) request funds in
an amount that is not in excess of the total aggregate of the Available
Commitments plus the Available Holder Commitments at such time, and (iii)
request that the Holders make Holder Advances and that the Lenders make
Loans to the Lessor for the payment of Transaction Expenses, Property
Acquisition Costs (in the case of an Acquisition Advance) or other Property
Costs (in the case of a Construction Advance) that have previously been
incurred or are to be incurred on the date of such Advance to the extent
such were not subject to a prior Requisition, in each case as specified in
the Requisition.
(c) Subject to the satisfaction of the conditions precedent set forth
in Sections 5.3 or 5.4, as applicable, on each Property Closing Date or the
date on which the Construction Advance is to be made, as applicable, (i)
the Lenders shall make Loans based on their respective Lender Commitments
to the Lessor in an aggregate amount equal to ninety-six percent (96%) of
the Requested Funds specified in any Requisition plus any additional amount
of Transaction Expenses as referenced in Sections 7.1(a) and 7.1(b) and any
additional amount respecting any indemnity payment as referenced in Section
11.8, unless any such funding of Transaction Expenses or any indemnity
payment is declined in writing by each Lender and each Holder (such
decision to be in the sole discretion of each Lender and each Holder)
ratably between the Tranche A Lenders and the Tranche B Lenders with the
Tranche A Lenders funding eighty-six percent (86%) of the Requested Funds
and the Tranche B Lenders funding ten percent (10%) of the Requested
Funds), up to an aggregate principal amount equal to the aggregate of the
Available Commitments; (ii) the Holders shall make Holder Advances based on
their respective Holder Commitments in an aggregate amount equal to four
percent (4%) of the balance of the Requested Funds specified in such
Requisition plus any additional amount of Transaction Expenses as
referenced in Sections 7.1(a) and 7.1(b) and any additional amount
respecting any indemnity payment as referenced in Section 11.8, unless any
such funding of Transaction Expenses or any indemnity payment is declined
in writing by each Lender and each Holder (such decision to be in the sole
discretion of each Lender and each Holder), up to the aggregate advanced
amount equal to the aggregate of the Available Holder Commitments; and
(iii) the total amount of such Loans and Holder Advances made on such date
shall (x) be used by the Lessor to pay Property Costs including Transaction
Expenses within three (3) Business Days of the receipt by the
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Lessor of such Advance or (y) be advanced by the Lessor on the date of such
Advance to the Construction Agent or the Lessee to pay Property Costs, as
applicable. Notwithstanding that the Operative Agreements state that
Advances shall be directed to the Lessor, each Advance shall in fact be
directed to the Construction Agent (for the benefit of the Lessor) and
applied by the Construction Agent (for the benefit of the Lessor) pursuant
to the requirements imposed on the Lessor under the Operative Agreements.
(d) With respect to an Advance obtained by the Lessor to pay for
Property Costs and/or Transaction Expenses or other costs payable under
Section 7.1 hereof and not expended by the Lessor for such purpose on the
date of such Advance, such amounts shall be held by the Lessor (or the
Agent on behalf of the Lessor) until the applicable closing date or, if
such closing date does not occur within three (3) Business Days of the date
of the Lessor's receipt of such Advance, shall be applied regarding the
applicable Advance to repay the Lenders and the Holders and, subject to the
terms hereof, and of the Credit Agreement and the Trust Agreement, shall
remain available for future Advances. Any such amounts held by the Lessor
(or the Agent on behalf of the Lessor) shall be subject to the lien of the
Security Agreement.
(e) All Operative Agreements which are to be delivered to the Lessor,
the Agent, the Lenders or the Holders shall be delivered to the Agent, on
behalf of the Lessor, the Agent, the Lenders or the Holders, and such items
(except for Notes, Certificates, Bills of Sale, the Ground Leases and
chattel paper originals, with respect to which in each case there shall be
only one original) shall be delivered with originals sufficient for the
Lessor, the Agent, each Lender and each Holder. All other items which are
to be delivered to the Lessor, the Agent, the Lenders or the Holders shall
be delivered to the Agent, on behalf of the Lessor, the Agent, the Lenders
or the Holders, and such other items shall be held by the Agent. To the
extent any such other items are requested in writing from time to time by
the Lessor, any Lender or any Holder, the Agent shall provide a copy of
such item to the party requesting it.
(f) Notwithstanding the completion or any closing under this
Agreement pursuant to Sections 5.3 or 5.4, each condition precedent in
connection with any such closing may be subsequently enforced by the Agent
(unless such has been expressly waived in writing by the Agent).
5.3. CONDITIONS PRECEDENT FOR THE LESSOR, THE AGENT, THE LENDERS AND THE
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HOLDERS RELATING TO THE INITIAL CLOSING DATE AND THE ADVANCE OF FUNDS
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FOR THE ACQUISITION OF A PROPERTY.
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The obligations (i) on the Initial Closing Date of the Lessor, the Agent,
the Lenders and the Holders to enter into the transactions contemplated by this
Agreement, including without limitation the obligation to execute and deliver
the applicable Operative Agreements to which each is a party on the Initial
Closing Date, (ii) on the Initial Closing Date of the Holders to make Holder
Advances, and of the Lenders to make Loans in order to pay Transaction Expenses,
fees,
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expenses and other disbursements payable by the Lessor under Section 7.1(a) of
this Agreement and (iii) on a Property Closing Date for the purpose of providing
funds to the Lessor necessary to pay the Transaction Expenses, fees, expenses
and other disbursements payable by the Lessor under Section 7.1(b) of this
Agreement and to acquire or ground lease a Property (an "Acquisition Advance"),
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in each case (with regard to the foregoing Sections 5.3(i), (ii) and (iii)) are
subject to the satisfaction or waiver of the following conditions precedent on
or prior to the Initial Closing Date or the applicable Property Closing Date, as
the case may be (to the extent such conditions precedent require the delivery of
any agreement, certificate, instrument, memorandum, legal or other opinion,
appraisal, commitment, title insurance commitment, lien report or any other
document of any kind or type, such shall be in form and substance satisfactory
to the Agent, in its reasonable discretion; notwithstanding the foregoing, the
obligations of each party shall not be subject to any conditions contained in
this Section 5.3 which are required to be performed by such party):
(a) the correctness of the representations and warranties of the
parties to this Agreement contained herein, in each of the other Operative
Agreements and each certificate delivered pursuant to any Operative
Agreement (including without limitation the Incorporated Representations
and Warranties) on each such date;
(b) the performance by the parties to this Agreement of their
respective agreements contained herein and in the other Operative
Agreements to be performed by them on or prior to each such date;
(c) the Agent shall have received a fully executed counterpart copy
of the Requisition, appropriately completed;
(d) title to each such Property shall conform to the representations
and warranties set forth in Section 6.2(l) hereof;
(e) the Construction Agent shall have delivered to the Agent a good
standing certificate for the Construction Agent in the state where each
such Property is located, the Deed with respect to the Land and existing
Improvements (if any), a copy of the Ground Lease (if any), and a copy of
the ▇▇▇▇ of Sale with respect to the Equipment (if any), respecting such of
the foregoing as are being acquired or ground leased on each such date with
the proceeds of the Loans and Holder Advances or which have been previously
acquired or ground leased with the proceeds of the Loans and Holder
Advances and such Land, existing Improvements (if any) and Equipment (if
any) shall be located in an Approved State;
(f) there shall not have occurred and be continuing any Default or
Event of Default under any of the Operative Agreements and no Default or
Event of Default under any of the Operative Agreements will have occurred
after giving effect to the Advance requested by each such Requisition;
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(g) the Construction Agent shall have delivered to the Agent title
insurance commitments to issue policies respecting each such Property, with
such endorsements as the Agent deems necessary, in favor of the Lessor and
the Agent from a title insurance company acceptable to the Agent, but only
with such title exceptions thereto as are acceptable to the Agent;
(h) the Construction Agent shall have delivered to the Agent an
environmental site assessment respecting each such Property prepared by an
independent recognized professional acceptable to the Agent and evidencing
no pre-existing environmental condition with respect to which there is more
than a remote risk of loss;
(i) the Construction Agent shall have delivered to the Agent a survey
(with a flood hazard certification) respecting each such Property prepared
by (i) an independent recognized professional acceptable to the Agent and
(ii) in a manner and including such information as is required by the
Agent;
(j) unless such an opinion has previously been delivered with respect
to a particular state, the Construction Agent shall have caused to be
delivered to the Agent a legal opinion in the form attached hereto as
Exhibit B or in such other form as is acceptable to the Agent with respect
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to local law real property issues respecting the state in which each such
Property is located addressed to the Lessor, the Agent, the Lenders and the
Holders, from counsel located in the state where each such Property is
located, prepared by counsel acceptable to the Agent and a separate flood
hazard certificate respecting each such Property prepared by an independent
recognized professional acceptable to the Agent;
(k) the Agent shall be satisfied that the acquisition, ground leasing
and/or holding of each such Property and the execution of the Mortgage
Instrument and the other Security Documents will not materially and
adversely affect the rights of the Lessor, the Agent, the Holders or the
Lenders under or with respect to the Operative Agreements;
(l) the Construction Agent shall have delivered to the Agent invoices
for, or other reasonably satisfactory evidence of, the various Transaction
Expenses and other fees, expenses and disbursements referenced in Sections
7.1(a) or 7.1(b) of this Agreement, as appropriate;
(m) the Construction Agent shall have caused to be delivered to the
Agent a Mortgage Instrument (in such form as is acceptable to the Agent,
with revisions as necessary to conform to applicable state law), Lessor
Financing Statements and Lender Financing Statements respecting each such
Property, all fully executed and in recordable form;
(n) the Lessee shall have delivered to the Agent with respect to each
such Property a Lease Supplement and a memorandum (or short form lease)
regarding the Lease and such Lease Supplement (such memorandum or short
form lease to be in the
8
form attached to the Lease as Exhibit B or in such other form as is
---------
acceptable to the Agent, with modifications as necessary to conform to
applicable state law, and in form suitable for recording); and if any such
Property is subject to a Ground Lease, the Construction Agent shall have
caused a lease memorandum (or short form lease) to be delivered to the
Agent for such Ground Lease and, if requested by the Agent, a landlord
waiver and a mortgagee waiver (in each case, in such form as is acceptable
to the Agent);
(o) with respect to each Acquisition Advance, the sum of the
Available Commitment plus the Available Holder Commitment (after deducting
the Unfunded Amount, if any, and after giving effect to the Acquisition
Advance) will be sufficient to pay all amounts payable therefrom;
(p) the Construction Agent shall have delivered to the Agent a
preliminary Construction Budget for each such Property, if applicable;
(q) the Construction Agent shall have provided evidence to the Agent
of insurance with respect to each such Property as provided in the Lease;
(r) the Construction Agent shall have caused an Appraisal regarding
each such Property to be provided to the Agent from an appraiser selected
by the Agent, which Appraisal must show each such Property to have a value
equal to or greater than ninety and 90/100 percent (90.90%) of its Property
Cost or its Budgeted Total Property Cost, as applicable; in other words,
the Property Cost for each such Property shall not exceed 110% of its value
as shown on the related Appraisal;
(s) the Construction Agent shall cause (i) Uniform Commercial Code
lien searches, tax lien searches and judgment lien searches regarding the
Lessee to be conducted (and copies thereof to be delivered to the Agent) in
such jurisdictions as determined by the Agent by a nationally recognized
search company acceptable to the Agent and (ii) the liens referenced in
such lien searches which are objectionable to the Agent to be either
removed or otherwise handled in a manner satisfactory to the Agent;
(t) all taxes, fees and other charges in connection with the
execution, delivery, recording, filing and registration of the Operative
Agreements and/or documents related thereto shall have been paid or
provisions for such payment shall have been made to the satisfaction of the
Agent;
(u) in the opinion of the Agent and its counsel, the transactions
contemplated by the Operative Agreements do not and will not subject the
Lessor, the Lenders, the Agent or the Holders to any adverse regulatory
prohibitions, constraints, penalties or fines;
(v) each of the Operative Agreements to be entered into on such date
shall have been duly authorized, executed and delivered by the parties
thereto, and shall be in
9
full force and effect, and the Agent shall have received a fully executed
copy of each of the Operative Agreements;
(w) since the date of the most recent audited financial statements
(as delivered pursuant to the requirements of the Lessee Credit Agreement)
of the Lessee, there shall not have occurred any event, condition or state
of facts which shall have or could reasonably be expected to have a
Material Adverse Effect, other than as specifically contemplated by the
Operative Agreements ;
(x) as of the Initial Closing Date only, the Agent shall have
received an Officer's Certificate, dated as of the Initial Closing Date, of
the Lessee in the form attached hereto as Exhibit C or in such other form
---------
as is acceptable to the Agent stating that (i) each and every
representation and warranty of each Credit Party contained in the Operative
Agreements to which it is a party is true and correct on and as of the
Initial Closing Date; (ii) no Default or Event of Default has occurred and
is continuing under any Operative Agreement; (iii) each Operative Agreement
to which any Credit Party is a party is in full force and effect with
respect to it; and (iv) each Credit Party has duly performed and complied
with all covenants, agreements and conditions contained herein or in any
Operative Agreement required to be performed or complied with by it on or
prior to the Initial Closing Date;
(y) as of the Initial Closing Date only, the Agent shall have
received (i) a certificate of the Secretary or an Assistant Secretary of
each Credit Party, dated as of the Initial Closing Date, in the form
attached hereto as Exhibit D or in such other form as is acceptable to the
---------
Agent attaching and certifying as to (1) the resolutions of the Board of
Directors of such Credit Party duly authorizing the execution, delivery and
performance by such Credit Party of each of the Operative Agreements to
which it is or will be a party, (2) the articles of incorporation of such
Credit Party certified as of a recent date by the Secretary of State of its
state of incorporation and its by-laws and (3) the incumbency and signature
of persons authorized to execute and deliver on behalf of such Credit Party
the Operative Agreements to which it is or will be a party and (ii) a good
standing certificate (or local equivalent) from the respective states where
such Credit Party is incorporated and where the principal place of business
of such Credit Party is located as to its good standing in each such state.
To the extent any Credit Party is a partnership, a limited liability
company or is otherwise organized, such Person shall deliver to the Agent
(in form and substance satisfactory to the Agent) as of the Initial Closing
Date (A) a certificate regarding such Person and any corporate general
partners covering the matters described in Exhibit D and (B) a good
---------
standing certificate, a certificate of limited partnership or a local
equivalent of either of the foregoing, as applicable;
(z) as of the Initial Closing Date only, there shall not have
occurred any material adverse change in the consolidated assets,
liabilities, operations, business or condition (financial or otherwise) of
the Credit Parties (on a consolidated basis) from that set forth in the
most recent audited consolidated financial statements of the Credit Parties
which have been provided to the Agent;
10
(aa) as of the Initial Closing Date only, the Agent shall have
received an Officer's Certificate of the Lessor dated as of the Initial
Closing Date in the form attached hereto as Exhibit E or in such other form
---------
as is acceptable to the Agent, stating that (i) each and every
representation and warranty of the Lessor contained in the Operative
Agreements to which it is a party is true and correct on and as of the
Initial Closing Date, (ii) each Operative Agreement to which the Lessor is
a party is in full force and effect with respect to it and (iii) the Lessor
has duly performed and complied with all covenants, agreements and
conditions contained herein or in any Operative Agreement required to be
performed or complied with by it on or prior to the Initial Closing Date;
(bb) as of the Initial Closing Date only, the Agent shall have
received (i) a certificate of the Secretary, an Assistant Secretary, Trust
Officer or Vice President of the Trust Company in the form attached hereto
as Exhibit F or in such other form as is acceptable to the Agent, attaching
---------
and certifying as to (A) the signing resolutions duly authorizing the
execution, delivery and performance by the Lessor of each of the Operative
Agreements to which it is or will be a party, (B) its articles of
association or other equivalent charter documents and its by-laws, as the
case may be, certified as of a recent date by an appropriate officer of the
Trust Company and (C) the incumbency and signature of persons authorized to
execute and deliver on its behalf the Operative Agreements to which it is a
party and (ii) a good standing certificate from the Office of the
Comptroller of the Currency;
(cc) as of the Initial Closing Date only, counsel for the Lessor
acceptable to the Agent shall have issued to the Lessee, the Holders, the
Lenders and the Agent its opinion in the form attached hereto as Exhibit G
---------
or in such other form as is reasonably acceptable to the Agent;
(dd) as of the Initial Closing Date only, the Construction Agent shall
have caused to be delivered to the Agent a legal opinion in the form
attached hereto as Exhibit H or in such other form as is acceptable to the
---------
Agent, addressed to the Lessor, the Agent, the Lenders and the Holders,
from counsel acceptable to the Agent;
(ee) as of the Initial Closing Date only, the Construction Agent shall
cause (i) tax lien searches and judgment lien searches regarding each
Credit Party to be conducted (and copies thereof to be delivered to the
Agent) in such jurisdictions as determined by the Agent by a nationally
recognized search company acceptable to the Agent and (ii) the liens
referenced in such lien searches which are objectionable to the Agent to be
either removed or otherwise handled in a manner satisfactory to the Agent;
and
(ff) counsel (acceptable to the Agent) for the ground lessor of each
such Property subject to a Ground Lease shall have issued to the Lessor,
the Agent, the Lenders and the Holders, its opinion.
11
5.4. CONDITIONS PRECEDENT FOR THE LESSOR, THE AGENT, THE LENDERS AND THE
-------------------------------------------------------------------
HOLDERS RELATING TO THE ADVANCE OF FUNDS AFTER THE ACQUISITION
--------------------------------------------------------------
ADVANCE.
-------
The obligations of the Holders to make Holder Advances, and the Lenders to
make Loans in connection with all requests for Advances subsequent to the
acquisition of a Property (and to pay the Transaction Expenses, fees, expenses
and other disbursements payable by the Lessor under Section 7.1 of this
Agreement in connection therewith) are subject to the satisfaction or waiver of
the following conditions precedent (to the extent such conditions precedent
require the delivery of any agreement, certificate, instrument, memorandum,
legal or other opinion, appraisal, commitment, title insurance commitment, lien
report or any other document of any kind or type, such shall be in form and
substance satisfactory to the Agent, in its reasonable discretion.
Notwithstanding the foregoing, the obligations of each party shall not be
subject to any conditions contained in this Section 5.4 which are required to be
performed by such party):
(a) the correctness on such date of the representations and
warranties of the parties to this Agreement contained herein, in each of
the other Operative Agreements and in each certificate delivered pursuant
to any Operative Agreement (including without limitation the Incorporated
Representations and Warranties);
(b) the performance by the parties to this Agreement of their
respective agreements contained herein and in the other Operative
Agreements to be performed by them on or prior to each such date;
(c) the Agent shall have received a fully executed counterpart of the
Requisition, appropriately completed;
(d) based upon the applicable Construction Budget which shall satisfy
the requirements of this Agreement, the Available Commitments and the
Available Holder Commitment (after deducting the Unfunded Amount) will be
sufficient to complete the Improvements;
(e) there shall not have occurred and be continuing any Default or
Event of Default under any of the Operative Agreements and no Default or
Event of Default under any of the Operative Agreements will have occurred
after giving effect to the Construction Advance requested by the applicable
Requisition;
(f) the title insurance policy delivered in connection with the
requirements of Section 5.3(g) shall provide for (or shall be endorsed to
provide for) insurance in an amount at least equal to the maximum total
Property Cost indicated by the Construction Budget referred to in
subparagraph (d) above and there shall be no title change or exception
objectionable to the Agent;
(g) the Construction Agent shall have delivered to the Agent copies
of the Plans and Specifications for the applicable Improvements;
12
(h) the Construction Agent shall have delivered to the Agent invoices
for, or other reasonably satisfactory evidence of, any Transaction Expenses
and other fees, expenses and disbursements referenced in Section 7.1(b)
that are to be paid with the Advance;
(i) the Construction Agent shall have delivered, or caused to be
delivered to the Agent, invoices, Bills of Sale or other documents
acceptable to the Agent, in each case with regard to any Equipment or other
components of such Property then being acquired with the proceeds of the
Loans and Holder Advances and naming the Lessor as purchaser and
transferee;
(j) all taxes, fees and other charges in connection with the
execution, delivery, recording, filing and registration of the Operative
Agreements shall have been paid or provisions for such payment shall have
been made to the satisfaction of the Agent;
(k) since the date of the most recent audited Financial Statements
(as such term is defined in the Lessee Credit Agreement) of the Lessee,
there shall not have occurred any event, condition or state of facts which
shall have or could reasonably be expected to have a Material Adverse
Effect, other than as specifically contemplated by the Operative
Agreements; and
(l) in the opinion of the Agent and its counsel, the transactions
contemplated by the Operative Agreements do not and will not subject the
Lessor, the Lenders, the Agent or the Holders to any adverse regulatory
prohibitions, constraints, penalties or fines.
5.5. ADDITIONAL REPORTING AND DELIVERY REQUIREMENTS ON COMPLETION DATE AND
---------------------------------------------------------------------
ON CONSTRUCTION PERIOD TERMINATION DATE.
---------------------------------------
On or prior to the Completion Date for each Property, the Construction
Agent shall deliver to the Agent an Officer's Certificate in the form attached
hereto as Exhibit I or in such other form as is acceptable to the Agent
---------
specifying (a) the address for such Property; (b) the Completion Date for such
Property; (c) the aggregate Property Cost for such Property; (d) detailed,
itemized documentation supporting the asserted Property Cost figures; and (e)
that all representations and warranties of the Construction Agent and Lessee in
each of the Operative Agreements and each certificate delivered pursuant thereto
(including without limitation the Incorporated Representations and Warranties)
are true and correct as of the Completion Date. The Agent shall have the right
to contest the information contained in such Officer's Certificate. Furthermore,
on or prior to the Completion Date for each Property, the Construction Agent
shall deliver or cause to be delivered to the Agent (unless previously delivered
to the Agent) originals of the following, each of which shall be in form and
substance acceptable to the Agent, in its reasonable discretion: (w) a title
insurance endorsement regarding the title insurance policy delivered in
connection with the requirements of Section 5.3(g), but only to the extent such
endorsement is necessary to provide for insurance in an amount at least equal to
the maximum total Property Cost and, if endorsed, the endorsement shall not
include a title change or exception
13
objectionable to the Agent; (x) an as-built survey for such Property; (y)
insurance certificates respecting such Property as required hereunder and under
the Lease Agreement; and (z) if requested by the Agent, amendments to the Lessor
Financing Statements executed by the appropriate parties.
5.6. THE CONSTRUCTION AGENT DELIVERY OF CONSTRUCTION BUDGET MODIFICATIONS.
--------------------------------------------------------------------
The Construction Agent covenants and agrees to deliver to the Agent each
month notification of any modification to any Construction Budget regarding any
Property if such modification increases the cost to construct such Property;
provided no Construction Budget may be increased unless (a) the title insurance
--------
policies referenced in Section 5.3(g) are also modified or endorsed, if
necessary, to provide for insurance in an amount that satisfies the requirements
of Section 5.4(f) of this Agreement and (b) after giving effect to any such
amendment, the Construction Budget remains in compliance with the requirements
of Section 5.4(d) of this Agreement.
5.7. RESTRICTIONS ON LIENS.
---------------------
On each Property Closing Date, the Construction Agent shall cause each
Property acquired by the Lessor on such date to be free and clear of all Liens
except those referenced in Sections 6.2(r)(i) and 6.2(r)(ii). On each date a
Property is either sold to a third party in accordance with the terms of the
Operative Agreements or, pursuant to Section 22.1(a) of the Lease Agreement,
retained by the Lessor, the Lessee shall cause such Property to be free and
clear of all Liens (other than Lessor Liens and such other Liens that are
expressly set forth as title exceptions on the title commitment issued under
Section 5.3(g) with respect to such Property, to the extent such title
commitment has been approved by the Agent).
5.8. JOINDER AGREEMENT REQUIREMENTS.
------------------------------
Each Domestic Subsidiary formed or acquired subsequent to the Initial
Closing Date shall become a Guarantor and shall satisfy the following conditions
within thirty (30) days after the formation or acquisition of such Domestic
Subsidiary:
(a) such Domestic Subsidiary shall execute and deliver to the Agent a
Joinder Agreement in the form attached hereto as Exhibit J;
---------
(b) such Domestic Subsidiary shall have delivered to the Agent (x) an
Officer's Certificate of such Domestic Subsidiary in the form attached
hereto as Exhibit C, (y) a certificate of the Secretary or an Assistant
---------
Secretary of such Domestic Subsidiary in the form attached hereto as
Exhibit D and (z) good standing certificates (or local equivalent) from the
---------
respective states where such Domestic Subsidiary is incorporated or
organized and where the principal place of business of such Domestic
Subsidiary is located as to its good standing in each such state;
14
(c) such Domestic Subsidiary shall have delivered to the Agent an
opinion of counsel (acceptable to the Agent) in the form attached hereto as
Exhibit H; and
---------
(d) the Agent shall have received such other documents, certificates
and information as the Agent shall have reasonably requested.
5.9. PAYMENTS.
--------
All payments of principal, interest, Holder Advances, Holder Yield and
other amounts to be made by the Construction Agent or the Lessee under this
Agreement or any other Operative Agreement (excluding Excepted Payments which
shall be paid directly to the party to whom such payments are owed) shall be
made to the Agent at the office designated by the Agent from time to time in
Dollars and in immediately available funds, without setoff, deduction, or
counterclaim. Subject to the definition of "Interest Period" in Appendix A
----------
attached hereto, whenever any payment under this Agreement or any other
Operative Agreement shall be stated to be due on a day that is not a Business
Day, such payment may be made on the next succeeding Business Day, and such
extension of time in such case shall be included in the computation of interest,
Holder Yield and fees payable pursuant to the Operative Agreements, as
applicable and as the case may be.
5.10. RATABLE INTERESTS HELD BY HOLDERS, LENDERS AND LENDERS PURSUANT TO
------------------------------------------------------------------
THE LESSEE CREDIT AGREEMENT.
---------------------------
Each Holder and Lender agrees at all times that it shall hold the same
ratable percentage interest in outstanding Tranche A Loans (if any), Tranche A
Commitments, outstanding Tranche B Loans (if any), Tranche B Commitments,
outstanding Holder Advances (if any), Holder Commitments, outstanding loans
pursuant to the Lessee Credit Agreement (if any) and loan commitments pursuant
to the Lessee Credit Agreement, provided that, solely with respect to (i) any
--------
Holder or Lender that shall, as of the Initial Closing Date, hold its interest
in outstanding Tranche A Loans (if any), Tranche A Commitments, outstanding
Tranche B Loans (if any), Tranche B Commitments, outstanding Holder Advances (if
any), Holder Commitments, outstanding loans pursuant to the Lessee Credit
Agreement (if any) and loan commitments pursuant to the Lessee Credit Agreement
other than in the same ratable portion and (ii) any successor or assign of a
Holder or Lender described in clause (i), such Holder or Lender agrees to hold
the same ratable percentage interest in outstanding Tranche A Loans (if any),
Tranche A Commitments, outstanding Tranche B Loans (if any), and Tranche B
Commitments, and to maintain a 5.0:3.0 ratio (a) between the dollar amount of
its percentage interest in the outstanding loans pursuant to the Lessee Credit
Agreement (if any) and the dollar amount of the aggregate of its percentage
interest in outstanding Tranche A Loans (if any), outstanding Tranche B Loans
(if any) and outstanding Holder Advances (if any) and (b) between the dollar
amount of its loan commitments pursuant to the Lessee Credit Agreement and the
dollar amount of the aggregate of its Lender Commitment for Tranche A Loans, its
Lender Commitment for Tranche B Loans and its Holder Commitment.
15
5.11. APPLICATION AND ALLOCATION OF PROCEEDS OF THE SALE OR OTHER
-----------------------------------------------------------
DISPOSITION OF THE PROPERTIES AFTER AN EVENT OF DEFAULT.
-------------------------------------------------------
Subject to Section 8.7(c), an amount equal to any payment identified as
proceeds of the sale or other disposition (or lease upon the exercise of
remedies) of the Properties or any portion thereof, whether pursuant to the
exercise of remedies under the Security Documents, the Lease or otherwise,
(whether such payment relates to a period before or after the Construction
Period Termination Date) shall be applied and allocated by the Agent first,
ratably to the payment of the principal and interest of the Tranche B Loans then
outstanding, second, ratably to the payment to the Holders of the outstanding
principal balance of all Holder Advances plus all outstanding Holder Yield with
respect to such outstanding Holder Advances, third, ratably to the payment of
the principal and interest of the Tranche A Loans then outstanding and to the
payment of the principal and interest of the loans under the Lessee Credit
Agreement then outstanding, fourth, to any and all other amounts owing under the
Operative Agreements to the Lenders under the Tranche B Loans, fifth, to any and
all other amounts owing under the Operative Agreements to the Holders, sixth,
ratably to any and all other amounts owing under the Operative Agreements to the
Lenders under the Tranche A Loans, and seventh, to the extent moneys remain
after application and allocation pursuant to clauses first through sixth above,
to the Owner Trustee for application and allocation to any and all other amounts
owing to the Holders or the Owner Trustee and as the Holders shall determine.
SECTION 6. REPRESENTATIONS AND WARRANTIES.
6.1. REPRESENTATIONS AND WARRANTIES OF THE BORROWER.
----------------------------------------------
Effective as of the Initial Closing Date and the date of each Advance, the
Trust Company in its individual capacity and as the Borrower, as indicated,
represents and warrants to each of the other parties hereto as follows,
provided, that the representations in the following paragraphs (h), (j) and (k)
--------
are made solely in its capacity as the Borrower:
(a) It is a national banking association and is duly organized and
validly existing and in good standing under the laws of the United States
of America and has the power and authority to enter into and perform its
obligations under the Trust Agreement and (assuming due authorization,
execution and delivery of the Trust Agreement by the Holders) has the
corporate and trust power and authority to act as the Owner Trustee and to
enter into and perform the obligations under each of the other Operative
Agreements to which the Trust Company or the Owner Trustee, as the case may
be, is or will be a party and each other agreement, instrument and document
to be executed and delivered by it on or before such Closing Date in
connection with or as contemplated by each such Operative Agreement to
which the Trust Company or the Owner Trustee, as the case may be, is or
will be a party;
(b) The execution, delivery and performance of each Operative
Agreement to which it is or will be a party, either in its individual
capacity or (assuming due
authorization, execution and delivery of the Trust Agreement by the
Holders) as the Owner Trustee, as the case may be, has been duly authorized
by all necessary action on its part and neither the execution and delivery
thereof, nor the consummation of the transactions contemplated thereby, nor
compliance by it with any of the terms and provisions thereof (i) does or
will require any approval or consent of any trustee or holders of any of
its indebtedness or obligations, (ii) does or will contravene any Legal
Requirement relating to its banking or trust powers, (iii) does or will
contravene or result in any breach of or constitute any default under, or
result in the creation of any Lien upon any of its property under, (A) its
charter or by-laws, or (B) any indenture, mortgage, chattel mortgage, deed
of trust, conditional sales contract, bank loan or credit agreement or
other agreement or instrument to which it is a party or by which it or its
properties may be bound or affected, which contravention, breach, default
or Lien under clause (B) would materially and adversely affect its ability,
in its individual capacity or as the Owner Trustee, to perform its
obligations under the Operative Agreements to which it is a party or (iv)
does or will require any Governmental Action by any Governmental Authority
regulating its banking or trust powers;
(c) The Trust Agreement and, assuming the Trust Agreement is the
legal, valid and binding obligation of the Holders, each other Operative
Agreement to which the Trust Company or the Owner Trustee, as the case may
be, is or will be a party have been, or on or before such Closing Date will
be, duly executed and delivered by the Trust Company or the Owner Trustee,
as the case may be, and the Trust Agreement and each such other Operative
Agreement to which the Trust Company or the Owner Trustee, as the case may
be, is a party constitutes, or upon execution and delivery will constitute,
a legal, valid and binding obligation enforceable against the Trust Company
or the Owner Trustee, as the case may be, in accordance with the terms
thereof;
(d) There is no action or proceeding pending or, to its knowledge,
threatened to which it is or will be a party, either in its individual
capacity or as the Owner Trustee, before any Governmental Authority that,
if adversely determined, would materially and adversely affect its ability,
in its individual capacity or as the Owner Trustee, to perform its
obligations under the Operative Agreements to which it is a party or would
question the validity or enforceability of any of the Operative Agreements
to which it is or will become a party;
(e) It, either in its individual capacity or as the Owner Trustee,
has not assigned or transferred any of its right, title or interest in or
under the Lease, the Agency Agreement or its interest in any Property or
any portion thereof, except in accordance with the Operative Agreements;
(f) No Default or Event of Default under the Operative Agreements
attributable to it has occurred and is continuing;
(g) Except as otherwise contemplated in the Operative Agreements, the
proceeds of the Loans and Holder Advances shall not be applied by the Owner
Trustee,
17
either in its individual capacity or as the Owner Trustee, for any purpose
other than the purchase and/or lease of the Properties, the acquisition,
installation and testing of the Equipment, the construction of Improvements
and the payment of Transaction Expenses and the fees, expenses and other
disbursements referenced in Sections 7.1(a) and 7.1(b) of this Agreement,
in each case which accrue prior to the Rent Commencement Date with respect
to a particular Property;
(h) Neither the Owner Trustee nor any Person authorized by the Owner
Trustee to act on its behalf has offered or sold any interest in the Trust
Estate or the Notes, or in any similar security relating to a Property, or
in any security the offering of which for the purposes of the Securities
Act would be deemed to be part of the same offering as the offering of the
aforementioned securities to, or solicited any offer to acquire any of the
same from, any Person other than, in the case of the Notes, the Agent, and
neither the Owner Trustee nor any Person authorized by the Owner Trustee to
act on its behalf will take any action which would subject, as a direct
result of such action alone, the issuance or sale of any interest in the
Trust Estate or the Notes to the provisions of Section 5 of the Securities
Act or require the qualification of any Operative Agreement under the Trust
Indenture Act of 1939, as amended;
(i) The Owner Trustee's principal place of business, chief executive
office and office where the documents, accounts and records relating to the
transactions contemplated by this Agreement and each other Operative
Agreement are kept are located at ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇ ;
(j) The Owner Trustee is not engaged principally in, and does not
have as one of its important activities, the business of extending credit
for the purpose of purchasing or carrying any margin stock (within the
meaning of Regulation U of the Board of Governors of the Federal Reserve
System of the United States), and no part of the proceeds of the Loans or
the Holder Advances will be used by it to purchase or carry any margin
stock or to extend credit to others for the purpose of purchasing or
carrying any such margin stock or for any purpose that violates, or is
inconsistent with, the provisions of Regulations G, T, U, or X of the Board
of Governors of the Federal Reserve System of the United States;
(k) The Owner Trustee is not an "investment company" or a company
controlled by an "investment company" within the meaning of the Investment
Company Act;
(l) Each Property is free and clear of all Lessor Liens attributable
to the Owner Trustee, either in its individual capacity or as the Owner
Trustee; and
(m) The Owner Trustee, in its trust capacity, is not a party to any
documents, instruments or agreements other than the Operative Agreements
executed by the Owner Trustee, in its trust capacity.
18
6.2. REPRESENTATIONS AND WARRANTIES OF THE CREDIT Parties.
----------------------------------------------------
Effective as of the Initial Closing Date, the date of each Advance, the
date each Domestic Subsidiary delivers a Joinder Agreement and the Rent
Commencement Date, each Credit Party represents and warrants to each of the
other parties hereto that:
(a) The Incorporated Representations and Warranties are true and
correct (unless such relate solely to an earlier point in time) and the
Lessee has delivered to the Agent the financial statements and other
reports referred to in Section 5.01(f) of the Lessee Credit Agreement;
(b) The execution and delivery by each Credit Party of this Agreement
and the other applicable Operative Agreements as of such date and the
performance by each Credit Party of its respective obligations under this
Agreement and the other applicable Operative Agreements are within the
corporate, partnership or limited liability company (as the case may be)
powers of each Credit Party, have been duly authorized by all necessary
corporate, partnership or limited liability company (as the case may be)
action on the part of each Credit Party (including without limitation any
necessary shareholder action), have been duly executed and delivered, have
received all necessary governmental approval, and do not and will not (i)
violate any Legal Requirement which is binding on any Credit Party or any
of its Subsidiaries, (ii) contravene or conflict with, or result in a
breach of, any provision of the Articles of Incorporation, By-Laws or other
organizational documents of any Credit Party or any of its Subsidiaries or
of any agreement, indenture, instrument or other document which is binding
on any Credit Party or any of its Subsidiaries or (iii) result in, or
require, the creation or imposition of any Lien (other than pursuant to the
terms of the Operative Agreements) on any asset of any Credit Party or any
of its Subsidiaries;
(c) This Agreement and the other applicable Operative Agreements,
executed prior to and as of such date by any Credit Party, constitute the
legal, valid and binding obligation of such Credit Party, as applicable,
enforceable against such Credit Party, as applicable, in accordance with
their terms. Each Credit Party has executed the various Operative
Agreements required to be executed by such Credit Party as of such date;
(d) There are no material actions, suits or proceedings pending or,
to our knowledge, threatened against any Credit Party in any court or
before any Governmental Authority (nor shall any order, judgment or decree
have been issued or proposed to be issued by any Governmental Authority to
set aside, restrain, enjoin or prevent the full performance of any
Operative Agreement or any transaction contemplated thereby) that (i)
concern any Property or any Credit Party's interest therein, (ii) question
the validity or enforceability of any Operative Agreement to which any
Credit Party is a party or the overall transaction described in the
Operative Agreements to which any Credit Party is a party or (iii) have or
could reasonably be expected to have a Material Adverse Effect; provided,
--------
for purposes of disclosure, the Credit Parties have described the
litigation set forth on Exhibit K;
---------
(e) No Governmental Action by any Governmental Authority or other
authorization, registration, consent, approval, waiver, notice or other
action by, to or of any other Person pursuant to any Legal Requirement,
contract, indenture, instrument or agreement or for any other reason is
required to authorize or is required in connection with (i) the execution,
delivery or performance of any Operative Agreement, (ii) the legality,
validity, binding effect or enforceability of any Operative Agreement,
(iii) the acquisition, ownership, construction, completion, occupancy,
operation, leasing or subleasing of any Property or (iv) any Advance, in
each case, except those which have been obtained and are in full force and
effect;
(f) Upon the execution and delivery of each Lease Supplement to the
Lease, (i) the Lessee will have unconditionally accepted the Property
subject to the Lease Supplement and will have a valid and subsisting
leasehold interest in such Property, subject only to the Permitted Liens,
and (ii) no offset will exist with respect to any Rent or other sums
payable under the Lease;
(g) Except as otherwise contemplated by the Operative Agreements, the
Construction Agent shall not use the proceeds of any Holder Advance or Loan
for any purpose other than the purchase and/or lease of the Properties, the
acquisition, installation and testing of the Equipment, the construction of
Improvements and the payment of Transaction Expenses and the fees, expenses
and other disbursements referenced in Sections 7.1(a) and 7.1(b) of this
Agreement, in each case which accrue prior to the Rent Commencement Date
with respect to a particular Property;
(h) All information heretofore or contemporaneously herewith
furnished by each Credit Party or its Subsidiaries to the Agent, the Owner
Trustee, any Lender or any Holder for purposes of or in connection with
this Agreement and the transactions contemplated hereby is, and all
information hereafter furnished by or on behalf of each Credit Party or its
Subsidiaries to the Agent, the Owner Trustee, any Lender or any Holder
pursuant hereto or in connection herewith will be, true and accurate in
every material respect on the date as of which such information is dated or
certified, and such information, taken as a whole, does not and will not
omit to state any material fact necessary to make such information, taken
as a whole, not misleading;
(i) The principal place of business, chief executive office and
office of the Construction Agent and the Lessee where the documents,
accounts and records relating to the transactions contemplated by this
Agreement and each other Operative Agreement are kept are located at ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and the states of formation and
the chief executive offices of each other Credit Party are located at the
places set forth in Exhibit L;
(j) The representations and warranties of each Credit Party set forth
in any of the Operative Agreements are true and correct in all material
respects on and as of each such date as if made on and as of such date.
Each Credit Party is in all material respects
20
in compliance with its obligations under the Operative Agreements and there
exists no Default or Event of Default under any of the Operative Agreements
which is continuing and which has not been cured within any cure period
expressly granted under the terms of the applicable Operative Agreement or
otherwise waived in accordance with the applicable Operative Agreement. No
Default or Event of Default will occur under any of the Operative
Agreements as a result of, or after giving effect to, the Advance requested
by the Requisition on the date of each Advance;
(k) As of each Property Closing Date, the date of each subsequent
Advance and the Rent Commencement Date only, each Property then being
financed consists of (i) unimproved Land or (ii) Land and existing
Improvements thereon which Improvements are either suitable for occupancy
at the time of acquisition or ground leasing or will be renovated and/or
modified in accordance with the terms of this Agreement. Each Property then
being financed is located at the location set forth on the applicable
Requisition, each of which is in one (1) of the Approved States;
(l) As of each Property Closing Date, the date of each subsequent
Advance and the Rent Commencement Date only, the Lessor has good and
marketable fee simple title to each Property, or, if any Property is the
subject of a Ground Lease, the Lessor will have a valid ground leasehold
interest enforceable against the ground lessor of such Property in
accordance with the terms of such Ground Lease, subject only to (i) such
Liens referenced in Sections 6.2(r)(i) and 6.2(r)(ii) on the applicable
Property Closing Date and (ii) subject to Section 5.7, Permitted Liens
after the applicable Property Closing Date;
(m) As of each Property Closing Date, the date of each subsequent
Advance and the Rent Commencement Date only, no portion of any Property is
located in an area identified as a special flood hazard area by the Federal
Emergency Management Agency or other applicable agency, or if any such
Property is located in an area identified as a special flood hazard area by
the Federal Emergency Management Agency or other applicable agency, then
flood insurance has been obtained for such Property in accordance with
Section 14.2(b) of the Lease and in accordance with the National Flood
Insurance Act of 1968, as amended;
(n) As of each Property Closing Date, the date of each subsequent
Advance and the Rent Commencement Date only, each Property complies with
all Insurance Requirements and all standards of Lessee with respect to
similar properties owned by Lessee;
(o) As of each Property Closing Date, the date of each subsequent
Advance and the Rent Commencement Date only, each Property complies with
all Legal Requirements as of such date (including without limitation all
zoning and land use laws and Environmental Laws), except to the extent that
failure to comply therewith, individually or in the aggregate, shall not
have and could not reasonably be expected to have a Material Adverse
Effect;
21
(p) As of each Property Closing Date, the date of each subsequent
Advance and the Rent Commencement Date only, all utility services and
facilities necessary for the construction and operation of the Improvements
and the installation and operation of the Equipment regarding each Property
(including without limitation gas, electrical, water and sewage services
and facilities) are available at the applicable Land or will be constructed
prior to the Completion Date for such Property;
(q) As of each Property Closing Date, the date of each subsequent
Advance and the Rent Commencement Date only, acquisition, installation and
testing of the Equipment (if any) and construction of the Improvements (if
any) to such date shall have been performed in a good and workmanlike
manner, substantially in accordance with the applicable Plans and
Specifications;
(r) (i) The Security Documents create, as security for the
Obligations (as such term is defined in the Security Agreement), valid
and enforceable security interests in, and Liens on, all of the
Collateral, in favor of the Agent, for the ratable benefit of the
Lenders and the Holders, as their respective interests appear in the
Operative Agreements, and such security interests and Liens are
subject to no other Liens other than Liens that are expressly set
forth as title exceptions on the title commitment issued under Section
5.3(g) with respect to the applicable Property, to the extent such
title commitment has been approved by the Agent. Upon recordation of
the Mortgage Instrument in the real estate recording office in the
applicable Approved State identified by the Construction Agent or the
Lessee, the Lien created by the Mortgage Instrument in the real
property described therein shall be a perfected first priority
mortgage Lien on such real property (or, in the case of a Ground
Lease, the leasehold estate under such Ground Lease) in favor of the
Agent, for the ratable benefit of the Lenders and the Holders, as
their respective interests appear in the Operative Agreements. To the
extent that the security interests in the portion of the Collateral
comprised of personal property can be perfected by filing in the
filing offices in the applicable Approved States or elsewhere
identified by the Construction Agent or the Lessee, upon filing of the
Lender Financing Statements in such filing offices, the security
interests created by the Security Agreement shall be perfected first
priority security interests in such personal property in favor of the
Agent, for the ratable benefit of the Lenders and the Holders, as
their respective interests appear in the Operative Agreements; and
(ii) The Lease Agreement creates, as security for the
obligations of the Lessee under the Lease Agreement, valid and
enforceable security interests in, and Liens on, each Property leased
thereunder, in favor of the Lessor, and such security interests and
Liens are subject to no other Liens other than Liens that are
expressly set forth as title exceptions on the title commitment issued
under Section 5.3(g) with respect to the applicable Property, to the
extent such title commitment has been approved by the Agent. Upon
recordation of the
22
memorandum of the Lease Agreement and the memorandum of a Ground Lease
(or, in either case, a short form lease) in the real estate recording
office in the applicable Approved State identified by the Construction
Agent or the Lessee, the Lien created by the Lease Agreement in the
real property described therein shall be a perfected first priority
mortgage Lien on such real property (or, in the case of a Ground
Lease, the leasehold estate under such Ground Lease) in favor of the
Agent, for the ratable benefit of the Lenders and the Holders, as
their respective interests appear in the Operative Agreements. To the
extent that the security interests in the portion of any Property
comprised of personal property can be perfected by the filing in the
filing offices in the applicable Approved State or elsewhere
identified by the Construction Agent or the Lessee upon filing of the
Lessor Financing Statements in such filing offices, a security
interest created by the Lease Agreement shall be perfected first
priority security interests in such personal property in favor of the
Lessor, which rights pursuant to the Lessor Financing Statements are
assigned to the Agent, for the ratable benefit of the Lenders and the
Holders, as their respective interests appear in the Operative
Agreements;
(s) The Plans and Specifications for each Property will be prepared
prior to the commencement of construction in accordance with all applicable
Legal Requirements (including without limitation all applicable
Environmental Laws and building, planning, zoning and fire codes), except
to the extent the failure to comply therewith, individually or in the
aggregate, shall not have and could not reasonably be expected to have a
Material Adverse Effect. Upon completion of the Improvements for each
Property in accordance with the applicable Plans and Specifications, such
Improvements will be within any building restriction lines and will not
encroach in any manner onto any adjoining land (except as permitted by
express written easements, which have been approved by the Agent);
(t) As of the Rent Commencement Date only, each Property shall be
improved in accordance with the applicable Plans and Specifications in a
good and workmanlike manner and shall be operational;
(u) As of the Initial Closing Date, each Domestic Subsidiary (formed
prior to or on such date) shall have executed this Agreement in its
capacity as a Guarantor;
(v) As of each Property Closing Date only, each Property has been
acquired, or ground leased pursuant to a Ground Lease, at a price that is
not in excess of fair market value or fair market rental value, as the case
may be; and
(w) Each Credit Party has reviewed its operations and those of its
Subsidiaries with a view to assessing whether its businesses, or the
businesses of any of its Subsidiaries, will be vulnerable to a Year 2000
Problem and has a reasonable basis to believe that no Year 2000 Problem
will exist on or after December 31, 1999. Each Credit Party shall take all
actions necessary and commit adequate resources to assure that its
computer-based and
23
other systems (and those of all Subsidiaries) are able to effectively
process data, including dates before, on or after January 1, 2000, without
experiencing any Year 2000 Problem that could cause a Material Adverse
Effect. At the request of Agent, each Credit Party will, at each Credit
Party's own expense, provide Agent with assurances and substantiations
(including, but not limited to, the results of internal or external audit
reports) reasonably acceptable to Agent as to the capability of each Credit
Party and its Subsidiaries to conduct its and their businesses and
operations before, on and after January 1, 2000 without experiencing a Year
2000 Problem.
SECTION 6B. GUARANTY
6B.1. GUARANTY OF PAYMENT AND PERFORMANCE.
-----------------------------------
Subject to Section 6B.7, each Guarantor hereby, jointly and severally,
unconditionally guarantees to each Financing Party the prompt payment and
performance of the Company Obligations in full when due (whether at stated
maturity, as a mandatory prepayment, by acceleration or otherwise) or when such
is otherwise to be performed; provided, notwithstanding the foregoing, the
--------
obligations of the Guarantors under this Section 6B shall not constitute a
direct guaranty of the indebtedness of the Lessor evidenced by the Notes but
rather a guaranty of the Company Obligations arising under the Operative
Agreements. This Section 6B is a guaranty of payment and performance and not of
collection and is a continuing guaranty and shall apply to all Company
Obligations whenever arising. All rights granted to the Financing Parties under
this Section 6B shall be subject to the provisions of Section 8.2(h) and 8.6.
6B.2. OBLIGATIONS UNCONDITIONAL.
-------------------------
Each Guarantor agrees that the obligations of the Guarantors hereunder are
absolute and unconditional, irrespective of the value, genuineness, validity,
regularity or enforceability of any of the Operative Agreements, or any other
agreement or instrument referred to therein, or any substitution, release or
exchange of any other guarantee of or security for any of the Company
Obligations, and, to the fullest extent permitted by applicable law,
irrespective of any other circumstance whatsoever which might otherwise
constitute a legal or equitable discharge or defense of a surety, guarantor or
co-obligor, it being the intent of this Section 6B.2 that the obligations of the
Guarantors hereunder shall be absolute and unconditional under any and all
circumstances. Each Guarantor agrees that this Section 6B may be enforced by
the Financing Parties without the necessity at any time of resorting to or
exhausting any other security or collateral and without the necessity at any
time of having recourse to the Notes, the Certificates or any other of the
Operative Agreements or any collateral, if any, hereafter securing the Company
Obligations or otherwise and each Guarantor hereby waives the right to require
the Financing Parties to proceed against the Construction Agent, the Lessee or
any other Person (including without limitation a co-guarantor) or to require the
Financing Parties to pursue any other remedy or enforce any other right. Each
Guarantor further agrees that it hereby waives any and all right of subrogation,
indemnity, reimbursement or contribution against the Lessee and the Construction
Agent or any other Guarantor of the Company Obligations for amounts paid under
this Section 6B until such time as
24
the Loans, Holder Advances, accrued but unpaid interest, accrued but unpaid
Holder Yield and all other amounts owing under the Operative Agreements have
been paid in full. Without limiting the generality of the waiver provisions of
this Section 6B, each Guarantor hereby waives any rights to require the
Financing Parties to proceed against the Construction Agent, the Lessee or any
co-guarantor or to require Lessor to pursue any other remedy or enforce any
other right. Each Guarantor further agrees that nothing contained herein shall
prevent the Financing Parties from suing on any Operative Agreement or
foreclosing any security interest in or Lien on any collateral, if any, securing
the Company Obligations or from exercising any other rights available to it
under any Operative Agreement, or any other instrument of security, if any, and
the exercise of any of the aforesaid rights and the completion of any
foreclosure proceedings shall not constitute a discharge of any Guarantor's
obligations hereunder; it being the purpose and intent of each Guarantor that
its obligations hereunder shall be absolute, independent and unconditional under
any and all circumstances; provided that any amounts due under this Section 6B
--------
which are paid to or for the benefit of any Financing Party shall reduce the
Company Obligations by a corresponding amount (unless required to be rescinded
at a later date). Neither any Guarantor's obligations under this Section 6B nor
any remedy for the enforcement thereof shall be impaired, modified, changed or
released in any manner whatsoever by an impairment, modification, change,
release or limitation of the liability of the Construction Agent or the Lessee
or by reason of the bankruptcy or insolvency of the Construction Agent or the
Lessee. Each Guarantor waives any and all notice of the creation, renewal,
extension or accrual of any of the Company Obligations and notice of or proof of
reliance by any Financing Party upon this Section 6B or acceptance of this
Section 6B. The Company Obligations shall conclusively be deemed to have been
created, contracted or incurred, or renewed, extended, amended or waived, in
reliance upon this Section 6B. All dealings between the Construction Agent, the
Lessee and any of the Guarantors, on the one hand, and the Financing Parties, on
the other hand, likewise shall be conclusively presumed to have been had or
consummated in reliance upon this Section 6B.
6B.3. MODIFICATIONS.
-------------
Each Guarantor agrees that (a) all or any part of the security now or
hereafter held for the Company Obligations, if any, may be exchanged,
compromised or surrendered from time to time; (b) no Financing Party shall have
any obligation to protect, perfect, secure or insure any such security
interests, liens or encumbrances now or hereafter held, if any, for the Company
Obligations or the properties subject thereto; (c) the time or place of payment
of the Company Obligations may be changed or extended, in whole or in part, to a
time certain or otherwise, and may be renewed or accelerated, in whole or in
part; (d) the Construction Agent, the Lessee and any other party liable for
payment under the Operative Agreements may be granted indulgences generally; (e)
any of the provisions of the Notes, the Certificates or any of the other
Operative Agreements may be modified, amended or waived; (f) any party
(including any co-guarantor) liable for the payment thereof may be granted
indulgences or be released; and (g) any deposit balance for the credit of the
Construction Agent, the Lessee or any other party liable for the payment of the
Company Obligations or liable upon any security therefor may be released, in
whole or in part, at, before or after the stated, extended or accelerated
maturity of the Company Obligations, all without notice to or further assent by
such Guarantor, which shall remain bound thereon, notwithstanding any such
25
exchange, compromise, surrender, extension, renewal, acceleration, modification,
indulgence or release.
6B.4. WAIVER OF RIGHTS.
----------------
Each Guarantor expressly waives to the fullest extent permitted by
applicable law: (a) notice of acceptance of this Section 6B by any Financing
Party and of all extensions of credit or other Advances to the Construction
Agent and the Lessee by the Lenders pursuant to the terms of the Operative
Agreements; (b) presentment and demand for payment or performance of any of the
Company Obligations; (c) protest and notice of dishonor or of default with
respect to the Company Obligations or with respect to any security therefor; (d)
notice of any Financing Party obtaining, amending, substituting for, releasing,
waiving or modifying any security interest, lien or encumbrance, if any,
hereafter securing the Company Obligations, or any Financing Party's
subordinating, compromising, discharging or releasing such security interests,
liens or encumbrances, if any; and (e) all other notices to which such Guarantor
might otherwise be entitled. Without limiting the foregoing, each Guarantor
expressly waives, to the fullest extent permitted by applicable law, any defense
to the enforcement of its obligations hereunder, and any rights and benefits
which might otherwise be available to such Guarantor, under California Civil
Code Sections 2809, 2810, 2819, 2822(a), 2839, 2845, 2848, 2849, 2850, 2899 and
3433. Notwithstanding anything to the contrary herein, (i) each Guarantor's
payments hereunder shall be due five (5) Business Days after written demand by
the Agent for such payment (unless the Company Obligations are automatically
accelerated pursuant to the applicable provisions of the Operative Agreements in
which case the Guarantors' payments shall be automatically due) and (ii) any
modification of the Operative Agreements which has the effect of increasing the
Company Obligations shall not be enforceable against a Guarantor unless such
Guarantor executes the document evidencing such modification or otherwise
reaffirms its guaranty in writing in connection with such modification.
6B.5. REINSTATEMENT.
-------------
The obligations of the Guarantors under this Section 6B shall be
automatically reinstated if and to the extent that for any reason any payment by
or on behalf of any Person in respect of the Company Obligations is rescinded or
must be otherwise restored by any holder of any of the Company Obligations,
whether as a result of any proceedings in bankruptcy or reorganization or
otherwise, and each Guarantor agrees that it will indemnify each Financing Party
on demand for all reasonable costs and expenses (including, without limitation,
reasonable fees of counsel) incurred by any Financing Party in connection with
such rescission or restoration, including without limitation any such costs and
expenses incurred in defending against any claim alleging that such payment
constituted a preference, fraudulent transfer or similar payment under any
bankruptcy, insolvency or similar law.
6B.6. REMEDIES.
--------
The Guarantors agree that, as between the Guarantors, on the one hand, and
each Financing Party, on the other hand, the Company Obligations may be declared
to be forthwith due and
26
payable as provided in the applicable provisions of the Operative Agreements
(and shall be deemed to have become automatically due and payable in the
circumstances provided therein) notwithstanding any stay, injunction or other
prohibition preventing such declaration (or preventing such Company Obligations
from becoming automatically due and payable) as against any other Person and
that, in the event of such declaration (or such Company Obligations being deemed
to have become automatically due and payable), such Company Obligations (whether
or not due and payable by any other Person) shall forthwith become due and
payable by the Guarantors in accordance with the applicable provisions of the
Operative Agreements.
6B.7. LIMITATION OF GUARANTY.
----------------------
Notwithstanding any provision to the contrary contained herein or in any of
the other Operative Agreements, to the extent the obligations of any Guarantor
shall be adjudicated to be invalid or unenforceable for any reason (including
without limitation because of any applicable state or federal law relating to
fraudulent conveyances or transfers) then the obligations of such Guarantor
hereunder shall be limited to the maximum amount that is permissible under
applicable law (whether federal or state and including without limitation the
Bankruptcy Code).
Subject to Section 6B.5, upon the satisfaction of the Company Obligations
in full, regardless of the source of payment, the Guarantors' obligations
hereunder shall be deemed satisfied, discharged and terminated other than
indemnifications set forth herein that expressly survive.
6B.8. PAYMENT OF AMOUNTS TO THE AGENT.
-------------------------------
Each Financing Party hereby instructs each Guarantor, and each Guarantor
hereby acknowledges and agrees, that until such time as the Loans and the Holder
Advances are paid in full and the Liens evidenced by the Security Agreement and
the Mortgage Instruments have been released any and all Rent (excluding Excepted
Payments which shall be payable to each Holder or other Person as appropriate)
and any and all other amounts of any kind or type under any of the Operative
Agreements due and owing or payable to any Person shall instead be paid directly
to the Agent (excluding Excepted Payments which shall be payable to each Holder
or other Person as appropriate) or as the Agent may direct from time to time for
allocation and distribution in accordance with the procedures set forth in
Section 8.7 hereof.
6B.9. RELEASE OF GUARANTORS.
---------------------
Each Financing Party hereby agrees that (a) the Agent shall be permitted to
release any Guarantor from its guaranty obligations under this Section 6B
without the consent of any other Financing Party if the release is granted in
connection with a disposition by the applicable Credit Party of all the shares
of stock or partnership or other equity interest in such Guarantor and such
disposition is permitted pursuant to the applicable provisions of the Operative
Agreements and the Lessee Credit Agreement and (b) the Agent shall be permitted
to release any Guarantor from its guaranty obligations under this Section 6B.9
without the consent of any other Financing Party if the release is requested by
Lessee in connection with a dissolution of the Guarantor, subject to Lessee
27
providing to the Agent written representations to the effect that such Guarantor
has no business operations and no assets.
SECTION 7. PAYMENT OF CERTAIN EXPENSES.
7.1. TRANSACTION EXPENSES.
--------------------
(a) The Lessor agrees on the Initial Closing Date, to pay, or cause
to be paid, all Transaction Expenses arising from the Initial Closing Date,
including without limitation all reasonable fees, expenses and
disbursements of the various legal counsels for the Lessor and the Agent in
connection with the transactions contemplated by the Operative Agreements
and incurred in connection with such Initial Closing Date, the initial fees
and expenses of the Owner Trustee due and payable on such Initial Closing
Date, all fees, taxes and expenses for the recording, registration and
filing of documents and all other reasonable fees, expenses and
disbursements incurred in connection with such Initial Closing Date;
provided, however, the Lessor shall pay such amounts described in this
-------- -------
Section 7.1(a) only if funds are made available by the Lenders and the
Holders in an amount sufficient to allow such payment and without regard to
whether such amounts are referenced in any Requisition. On the Initial
Closing Date after delivery and receipt of the Requisition referenced in
Section 4.2(a) hereof and satisfaction of the other conditions precedent
for such date, the Holders shall make Holder Advances and the Lenders shall
make Loans to the Lessor to pay for the Transaction Expenses, fees,
expenses and other disbursements referenced in this Section 7.1(a).
(b) Assuming no Default or Event of Default shall have occurred and
be continuing and only for the period prior to the Rent Commencement Date,
the Lessor agrees on each Property Closing Date, on the date of any
Construction Advance and on the Completion Date to pay, or cause to be
paid, all Transaction Expenses including without limitation all reasonable
fees, expenses and disbursements of the various legal counsels for the
Lessor and the Agent in connection with the transactions contemplated by
the Operative Agreements and billed in connection with such Advance or such
Completion Date, all amounts described in Section 7.1(a) of this Agreement
which have not been previously paid, the annual fees and reasonable out-of-
pocket expenses of the Owner Trustee, all fees, expenses and disbursements
incurred with respect to the various items referenced in Sections 5.3, 5.4
and/or 5.5 (including without limitation any premiums for title insurance
policies and charges for any updates to such policies) and all other
reasonable fees, expenses and disbursements in connection with such Advance
or such Completion Date including without limitation all expenses relating
to and all fees, taxes and expenses for the recording, registration and
filing of documents and during the Commitment Period, all fees, expenses
and costs referenced in Sections 7.3(a), 7.3(b), 7.3(d) and 7.4; provided,
--------
however, the Lessor shall pay such amounts described in this Section 7.1(b)
-------
only if funds are made available by the Lenders and the Holders in an
amount sufficient to allow such payment and without regard to whether such
amounts are referenced in any Requisition. On each Property Closing Date,
on the date of any
28
Construction Advance or any Completion Date, after delivery of the
applicable Requisition and satisfaction of the other conditions precedent
for such date, the Holders shall make a Holder Advance and the Lenders
shall make Loans to the Lessor to pay for the Transaction Expenses, fees,
expenses and other disbursements referenced in this Section 7.1(b).
(c) All fees payable pursuant to the Operative Agreements shall be
calculated on the basis of a year of three hundred sixty (360) days for the
actual days elapsed.
7.2. BROKERS' FEES.
-------------
Excluding broker's fees payable to any broker engaged by any Financing
Party with respect to the Initial Closing Date (but without limiting the
obligations of the Lessee pursuant to Section 7.5 hereof or with respect to any
time period after the Initial Closing Date), the Lessee agrees to pay or cause
to be paid any and all brokers' fees, if any, including without limitation any
interest and penalties thereon, which are payable in connection with the
transactions contemplated by this Agreement and the other Operative Agreements.
7.3. CERTAIN FEES AND EXPENSES.
-------------------------
During the Commitment Period, the Lessor agrees to pay or to cause to be
paid (a) the initial and annual Owner Trustee's fee and all reasonable expenses
of the Owner Trustee and any co-trustees (including without limitation
reasonable counsel fees and expenses) or any successor owner trustee and/or co-
trustee, for acting as the owner trustee under the Trust Agreement; (b) all
reasonable costs and expenses incurred by the Credit Parties, the Agent, the
Lenders, the Holders or the Lessor in entering into any Lease Supplement and any
future amendments, modifications, supplements, restatements and/or replacements
with respect to any of the Operative Agreements, whether or not such Lease
Supplement, amendments, modifications, supplements, restatements and/or
replacements are ultimately entered into, or giving or withholding of waivers of
consents hereto or thereto, which have been requested by any Credit Party, the
Agent, the Lenders, the Holders or the Lessor; (c) all reasonable costs and
expenses incurred by the Credit Parties, the Agent, the Lenders, the Holders or
the Lessor in connection with any exercise of remedies under any Operative
Agreement or any purchase of any Property by the Construction Agent, the Lessee
or any third party; and (d) all reasonable costs and expenses incurred by the
Credit Parties, the Agent, the Lenders, the Holders or the Lessor in connection
with any transfer or conveyance of any Property, whether or not such transfer or
conveyance is ultimately accomplished; provided, however, the Lessor shall pay
-------- -------
such amounts described in this Section 7.3 only if (i) with respect to the fees
and expenses described in clauses (a) and (b) above, such amounts are properly
described in a Requisition delivered on or before the date such fees and
expenses are due, and (ii) funds are made available by the Lenders and the
Holders in connection with such Requisition, or otherwise (with respect to the
expenses described in clauses (c) and (d) above) in an amount sufficient to
allow such payment; provided, further, the Lessee agrees to timely pay all
-------- -------
amounts referred to in this Section 7.3 to the extent not paid by the Lessor.
29
7.4. UNUSED FEE.
----------
During the Commitment Period, the Lessor agrees to pay or to cause to
be paid to the Agent for the account of (a) the Lenders, respectively, an unused
fee (the "Lender Unused Fee") equal to the product of the average daily
-----------------
Available Commitment of each Lender during the Commitment Period multiplied by
the Applicable Percentage and (b) the Holders, respectively, an unused fee (the
"Holder Unused Fee") equal to the product of the average daily Available Holder
------------------
Commitment of each Holder during the Commitment Period multiplied by the
Applicable Percentage; provided, however, the Lessor shall pay such amounts
-------- -------
described in this Section 7.4 only if (i) such amounts are properly described in
a Requisition delivered on or before the Unused Fee Payment Date and (ii) funds
are made available by the Lenders and the Holders in connection with such
Requisition in an amount sufficient to allow such payment; provided, further,
-------- -------
the Lessee agrees to timely pay all amounts referred to in this Section 7.4 to
the extent not paid by the Lessor. Such Unused Fees shall be payable quarterly
in arrears on each Unused Fee Payment Date. If all or a portion of any such
Unused Fee shall not be paid when due, such overdue amount shall bear interest,
payable by the Lessee on demand, at a rate per annum equal to the ABR (or in the
case of Holder Yield, the ABR plus the Applicable Percentage for Eurodollar
Holder Advances) plus two percent (2%) from the date of such non-payment until
such amount is paid in full (as well as before judgment).
7.5. OTHER FEES.
----------
Other fees shall be payable in accordance with the terms and provisions of
that certain letter agreement dated September 18, 1998 among Credit Lyonnais Los
Angeles Branch, NationsBank, N.A., NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities LLC, and
Smart & Final Inc.
SECTION 8. OTHER COVENANTS AND AGREEMENTS.
8.1. COOPERATION WITH THE CONSTRUCTION AGENT OR THE LESSEE.
-----------------------------------------------------
The Holders, the Lenders, the Lessor (at the direction of the Majority
Secured Parties) and the Agent shall, at the expense of and to the extent
reasonably requested by the Construction Agent or the Lessee (but without
assuming additional liabilities on account thereof and only to the extent such
is acceptable to the Holders, the Lenders, the Lessor (at the direction of the
Majority Secured Parties) and the Agent in their reasonable discretion),
cooperate with the Construction Agent or the Lessee in connection with the
Construction Agent or the Lessee satisfying its covenant obligations contained
in the Operative Agreements including without limitation at any time and from
time to time, promptly and duly executing and delivering any and all such
further instruments, documents and financing statements (and continuation
statements related thereto).
8.2. COVENANTS OF THE OWNER TRUSTEE AND THE HOLDERS.
----------------------------------------------
Each of the Owner Trustee and the Holders hereby agrees that so long as
this Agreement is in effect:
30
(a) Neither the Owner Trustee (in its trust capacity or in its
individual capacity) nor any Holder will create or permit to exist at any
time, and each of them will, at its own cost and expense, promptly take
such action as may be necessary duly to discharge, or to cause to be
discharged, all Lessor Liens on the Properties attributable to it;
provided, however, that the Owner Trustee and the Holders shall not be
-------- -------
required to so discharge any such Lessor Lien while the same is being
contested in good faith by appropriate proceedings diligently prosecuted so
long as such proceedings shall not materially and adversely affect the
rights of the Lessee under the Lease and the other Operative Agreements or
involve any material danger of impairment of the Liens of the Security
Documents or of the sale, forfeiture or loss of, and shall not interfere
with the use or disposition of, any Property or title thereto or any
interest therein or the payment of Rent;
(b) Without prejudice to any right under the Trust Agreement of the
Owner Trustee to resign (subject to the requirement set forth in the Trust
Agreement that such resignation shall not be effective until a successor
shall have agreed to accept such appointment), or the Holders' rights under
the Trust Agreement to remove the institution acting as the Owner Trustee
(after consent to such removal by the Agent as provided in the Trust
Agreement), each of the Owner Trustee and the Holders hereby agrees with
the Lessee and the Agent (i) not to terminate or revoke the trust created
by the Trust Agreement except as permitted by Article VIII of the Trust
Agreement, (ii) not to amend, supplement, terminate or revoke or otherwise
modify any provision of the Trust Agreement in such a manner as to
adversely affect the rights of any such party without the prior written
consent of such party and (iii) to comply with all of the terms of the
Trust Agreement, the nonperformance of which would adversely affect such
party;
(c) The Owner Trustee or any successor may resign or be removed by
the Holders as the Owner Trustee, a successor Owner Trustee may be
appointed and a corporation may become the Owner Trustee under the Trust
Agreement, only in accordance with the provisions of Article IX of the
Trust Agreement and, with respect to such appointment, with the consent of
the Lessee (so long as there shall be no Lease Event of Default that shall
have occurred and be continuing), which consent shall not be unreasonably
withheld or delayed;
(d) The Owner Trustee, in its capacity as the Owner Trustee under the
Trust Agreement, and not in its individual capacity, shall not contract
for, create, incur or assume any Indebtedness, or enter into any business
or other activity or enter into any contracts or agreements, other than
pursuant to or under the Operative Agreements;
(e) The Holders will not instruct the Owner Trustee to take any
action in violation of the terms of any Operative Agreement;
(f) Neither any Holder nor the Owner Trustee shall (i) commence any
case, proceeding or other action with respect to the Owner Trustee under
any existing or future
31
law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization, arrangement, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts,
or (ii) seek appointment of a receiver, trustee, custodian or other similar
official with respect to the Owner Trustee or for all or any substantial
benefit of the creditors of the Owner Trustee; and neither any Holder nor
the Owner Trustee shall take any action in furtherance of, or indicating
its consent to, approval of, or acquiescence in, any of the acts set forth
in this paragraph;
(g) The Owner Trustee shall give prompt notice to the Lessee, the
Holders and the Agent if the Owner Trustee's principal place of business or
chief executive office, or the office where the records concerning the
accounts or contract rights relating to any Property are kept, shall cease
to be located at ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, or if it
shall change its name; and
(h) The Owner Trustee shall take or refrain from taking such actions
and grant or refrain from granting such approvals with respect to the
Operative Agreements and/or relating to any Property in each case as
directed in writing by the Agent (until such time as the Loans are paid in
full, and then by the Majority Holders) or, in connection with Sections 8.5
and 9.2 hereof, the Lessee; provided, however, that notwithstanding the
-------- -------
foregoing provisions of this subparagraph (h) the Owner Trustee, the Agent,
the Lenders and the Holders each acknowledge, covenant and agree that
neither the Owner Trustee nor the Agent shall act or refrain from acting,
regarding each Unanimous Vote Matter, until such party has received the
approval of each Lender and each Holder affected by such matter.
8.3. CREDIT PARTY COVENANTS, CONSENT AND ACKNOWLEDGMENT.
--------------------------------------------------
(a) Each Credit Party acknowledges and agrees that the Owner Trustee,
pursuant to the terms and conditions of the Security Agreement and the
Mortgage Instruments, shall create Liens respecting the various personal
property, fixtures and real property described therein in favor of the
Agent. Each Credit Party hereby irrevocably consents to the creation,
perfection and maintenance of such Liens. Each Credit Party shall, to the
extent reasonably requested by any of the other parties hereto, cooperate
with the other parties in connection with their covenants herein or in the
other Operative Agreements and shall from time to time duly execute and
deliver any and all such future instruments, documents and financing
statements (and continuation statements related thereto) as any other party
hereto may reasonably request.
(b) The Lessor hereby instructs each Credit Party, and each Credit
Party hereby acknowledges and agrees, that until such time as the Loans and
the Holder Advances are paid in full and the Liens evidenced by the
Security Agreement and the Mortgage Instruments have been released (i) any
and all Rent (excluding Excepted Payments which shall be payable to each
Holder or other Person as appropriate) and any and all other amounts of any
kind or type under any of the Operative Agreements due and owing or payable
to any Person shall instead be paid directly to the Agent (excluding
32
Excepted Payments which shall be payable to each Holder or other Person as
appropriate) or as the Agent may direct from time to time for allocation
and distribution in accordance with the procedures set forth in Section 8.7
hereof, (ii) all rights of the Lessor under the Lease shall be exercised by
the Agent and (iii) each Credit Party shall cause all notices,
certificates, financial statements, communications and other information
which are delivered, or are required to be delivered, to the Lessor, to
also to be delivered at the same time to the Agent.
(c) No Credit Party shall consent to or permit any amendment,
supplement or other modification of the terms or provisions of any
Operative Agreement except in accordance with Section 12.4 of this
Agreement.
(d) Each Credit Party hereby covenants and agrees that, except for
amounts payable as Basic Rent, any and all payment obligations owing from
time to time under the Operative Agreements by any Person to the Agent, any
Lender, any Holder or any other Person shall (without further action) be
deemed to be Supplemental Rent obligations payable by the Lessee and
guaranteed by the other Credit Parties. Without limitation, such
obligations of the Credit Parties shall include without limitation
arrangement fees, administrative fees, unused fees, breakage costs,
indemnities, trustee fees and transaction expenses incurred by the parties
hereto in connection with the transactions contemplated by the Operative
Agreements.
(e) The Lessee hereby covenants and agrees to cause an Appraisal or
reappraisal (in form and substance satisfactory to the Agent and from an
appraiser selected by the Agent) to be issued respecting any Property as
requested by the Agent from time to time (i) at each and every time as such
shall be required to satisfy any regulatory requirements imposed on the
Agent, the Lessor, the Trust Company, any Lender and/or any Holder and (ii)
after the occurrence of an Event of Default.
(f) The Lessee hereby covenants and agrees that, except for amounts
payable as Basic Rent, any and all payment obligations owing from time to
time under the Operative Agreements by any Person to the Agent, any Lender,
any Holder or any other Person shall (without further action) be deemed to
be Supplemental Rent obligations payable by the Lessee. Without limitation,
such obligations of the Lessee shall include the Supplement Rent
obligations pursuant to Section 3.3 of the Lease, arrangement fees,
administrative fees, participation fees, commitment fees, unused fees,
prepayment penalties, breakage costs, indemnities, trustee fees and
transaction expenses incurred by the parties hereto in connection with the
transactions contemplated by the Operative Agreements.
(g) At any time the Lessor or the Agent is entitled under the
Operative Agreements to possession of a Property or any component thereof,
each of the Construction Agent and the Lessee hereby covenants and agrees,
at its own cost and expense, to assemble and make the same available to the
Agent (on behalf of the Lessor).
33
(h) The Lessee hereby covenants and agrees that, respecting each
Property, Non-Integral Equipment financed under the Operative Agreements
may constitute up to, but shall not exceed, ten percent (10%) of the
aggregate Advances extended at or prior to such time with respect to such
Property.
(i) The Lessee hereby covenants and agrees that as of Completion (i)
the Property Cost for each individual parcel of the Property shall be no
less than $1,000,000 and (ii) each parcel of the Property shall be a
Permitted Facility.
(j) The Lessee hereby covenants and agrees that it shall give prompt
notice to the Agent if the Lessee's principal place of business or chief
executive office, or the office where the records concerning the accounts
or contract rights relating to any Property are kept, shall cease to be
located at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or if it shall
change its name.
(k) Unless the Agent otherwise agrees in writing, the Lessee hereby
covenants and agrees that the aggregate Property Cost of Non-Integral
Equipment purchased for any reason by the Lessee prior to the Expiration
Date shall not exceed ten percent (10%) of the aggregate Property Cost for
all Properties funded during the Commitment Period.
(l) Until all the obligations of the Credit Parties under the
Operative Agreements have been finally and indefeasibly paid and satisfied
in full, the Commitments and the Holder Commitments terminated and the Term
has expired or been earlier terminated, then unless consent has been
obtained from the Majority Secured Parties, the Lessee will furnish or
cause to be furnished to each Holder, each Lender and the Agent at their
respective addresses set forth or referenced in Section 12.2 of this
Agreement, or such other office as may be designated by any such Holder,
Lender or the Agent from time to time: (i) not later than forty-five (45)
days after the end of each fiscal quarter, a certificate duly signed by the
chief executive officer, chief operating officer, chief financial officer,
treasurer or controller of Lessee setting forth the Adjusted Leverage Ratio
for the period of four (4) consecutive fiscal quarters ending with such
quarter-end and setting forth the computations employed in calculating the
ratio (the "Margin Certificate") and (ii) at each time financial statements
------------------
are delivered or to be delivered pursuant to Section 28.1 of the Lease, a
compliance certificate duly executed by the president, treasurer, chief
financial offer or controller of Lessee substantially in the form of
Exhibit M ATTACHED HERETO (THE "OFFICER'S COMPLIANCE CERTIFICATE").
--------- --------------------------------
(m) The Lessee hereby covenants and agrees that the rights of the
Lessee under this Agreement and the Lease shall not impair or in any way
diminish the obligations of the Construction Agent and/or the rights of the
Lessor under the Agency Agreement.
(n) Each Credit Party hereby covenants and agrees to cause each
Domestic Subsidiary formed or acquired after the Initial Closing Date to
execute a Joinder Agreement and to observe the terms of Sections 5.8(a)-(d)
of this Agreement, all within thirty (30) days of the formation or
acquisition of such Domestic Subsidiary.
34
(o) Each Credit Party shall promptly notify the Agent, or cause the
Agent to be promptly notified, upon such Credit Party gaining knowledge of
the occurrence of any Default or Event of Default which is continuing at
such time. In any event, such notice shall be provided to the Agent within
ten (10) days of when such Credit Party gains such knowledge.
(p) Until all of the obligations under the Operative Agreements have
been finally and indefeasibly paid and satisfied in full and the
Commitments and the Holder Commitments terminated unless consent has been
obtained from the Majority Secured Parties, each Credit Party will:
(i) except as permitted by the express provisions of the Lessee
Credit Agreement, preserve and maintain its separate legal existence
and all rights, franchises, licenses and privileges necessary to the
conduct of its business, and qualify and remain qualified as a foreign
corporation (or partnership, limited liability company or other such
similar entity, as the case may be) and authorized to do business in
each jurisdiction in which the failure to do so qualify would have a
Material Adverse Effect;
(ii) pay and perform all obligations of the Credit Parties under
the Operative Agreements and pay and perform (A) all taxes,
assessments and other governmental charges that may be levied or
assessed upon it or any of its property, and (B) all other
indebtedness, obligations and liabilities in accordance with customary
trade practices, which if not paid would have a Material Adverse
Effect; provided that any Credit Party may contest any item described
--------
in this Section 8.3(p)(ii) in good faith so long as adequate reserves
are maintained with respect thereto in accordance with GAAP;
(iii) to the extent failure to do so would have a Material
Adverse Effect, observe and remain in compliance with all applicable
Laws and maintain in full force and effect all Governmental Actions,
in each case applicable to the conduct of its business; keep in full
force and effect all licenses, certifications or accreditations
necessary for any Facility to carry on its business; and not permit
the termination of any insurance reimbursement program available to
any Facility; and
(iv) provided that the Agent, the Lenders and the Holders use
reasonable efforts to minimize disruption to the business of the
Credit Parties permit representatives of the Agent or any Lender or
Holder, from time to time, to visit and inspect its properties;
inspect, audit and make extracts from its books, records and files,
including without limitation management letters prepared by
independent accountants; and discuss with its principal officers, and
its independent accountants, its business, assets, liabilities,
financial condition, results of operations and business prospects.
35
(q) Lessee shall take all action reasonably necessary to assure that
Lessee's computer based systems are able to operate and effectively process
data including dates on and after january 1, 2000. At the request of the
Agent, Lessee shall provide Agent assurance acceptable to Agent of Lessee's
Year 2000 compatibility. In addition, each credit party will promptly
notify the Agent in the event sucH Credit Party discovers or determines
that any computer application (including those of any supplier, vendor or
customer of such Credit Party or any Subsidiary of such Credit Party) that
is material to such Credit Party's or any of its Subsidiaries' business and
operations will not be Year 2000 Compliant, except to the extent that such
failure shall not have and could not reasonably be expected to have a
Material Adverse Effect.
(r) Promptly after obtaining any required architectural approvals by
any business park or any other applicable entity with oversight
responsibility for the applicable Improvements, the Construction Agent
shall deliver to the Agent copies of the same.
(S) Lessee shall perform any and all obligations of Lessor under, and
cause Lessor to otherwise remain in full compliance with, the terms and
provisions of each Ground Lease, if any.
(t) On or before November 18, 1998, Lessee shall deliver to the
Lessor, the Agent and each other Financing party a report (the
"Environmental Compliance Report"), in form and substance satisfactory to
-------------------------------
the Lessor and the Agent, that confirms that the recommendations for
additional investigation and remedial work contained in the ▇▇▇▇▇
Environmental Report have been satisfied in accordance with applicable
Environmental Laws and to the satisfaction of the Lessor and the Agent. If
Lessee shall fail to so deliver such Environmental Compliance Report, the
Lessor, the Agent or any other Financing Party may obtain such
Environmental Compliance Report and Lessee shall pay all costs and expenses
thereof.
(t) On or before November 18, 1998, the Lessee shall complete the
demolition and removal of all buildings, structures, fixtures and other
improvements that were located on or part of the Commerce Property as oF
May 20, 1998, which demolition and removal shall be completed in compliance
with all applicable laws and to the satisfaction of the Lessor and the
Agent. The Lessee shall provide written notice to the Lessor and the Agent
when such demolition and removal has been completed.
8.4. SHARING OF CERTAIN PAYMENTS.
---------------------------
Except for Excepted Payments, the parties hereto acknowledge and agree that
all payments due and owing by any Credit Party to the Lessor under the Lease or
any of the other Operative Agreements shall be made by such Credit Party
directly to the Agent as more particularly provided in Section 8.3 hereof. The
Lessor, the Holders, the Agent, the Lenders and the Credit Parties acknowledge
the terms of Section 8.7 of this Agreement regarding the
36
allocation of payments and other amounts made or received from time to time
under the Operative Agreements and agree, that all such payments and amounts are
to be allocated as provided in Section 8.7 of this Agreement.
8.5. GRANT OF EASEMENTS, ETC.
------------------------
The Agent, the Lenders and the Holders hereby agree that, so long as no
Event of Default shall have occurred and be continuing, the Owner Trustee shall,
from time to time at the request of the Lessee (and with the prior consent of
the Agent), in connection with the transactions contemplated by the Agency
Agreement, the Lease or the other Operative Agreements, (i) grant easements and
other rights in the nature of easements with respect to any Property; (ii)
release existing easements or other rights in the nature of easements which are
for the benefit of any Property; (iii) execute and deliver to any Person any
instrument appropriate to confirm or effect such grants or releases; and (iv)
execute and deliver to any Person such other documents or materials in
connection with the acquisition, development, construction, testing or operation
of any Property, including without limitation reciprocal easement agreements,
construction contracts, operating agreements, development agreements, plats,
replats or subdivision documents; provided, that each of the agreements referred
--------
to in this Section 8.5 shall be of the type normally executed by the Lessee in
the ordinary course of the Lessee's business and shall be on commercially
reasonable terms so as not to diminish the value of any Property in any material
respect.
8.6. APPOINTMENT BY THE AGENT, THE LENDERS, THE HOLDERS AND THE OWNER
----------------------------------------------------------------
TRUSTEE.
-------
The Holders hereby appoint the Agent to act as collateral agent for the
Holders in connection with the Lien granted by the Security Documents to secure
the Holder Amount and all other amounts due and owing to the Holders. The
Lenders and the Holders acknowledge and agree and direct that the rights and
remedies of the beneficiaries of the Lien of the Security Documents shall be
exercised by the Agent on behalf of the Lenders and the Holders as directed from
time to time by the Majority Secured Parties or, pursuant to Sections 8.2(h) and
12.4, all of the Lenders and the Holders, as the case may be; provided, in all
--------
cases, the Agent shall allocate payments and other amounts received in
accordance with Section 8.7. The Agent is further appointed to provide notices
under the Operative Agreements on behalf of the Owner Trustee (as determined by
the Agent, in its reasonable discretion), to receive notices under the Operative
Agreements on behalf of the Owner Trustee and (subject to Sections 8.5 and 9.2)
to take such other action under the Operative Agreements on behalf of the Owner
Trustee as the Agent shall determine in its reasonable discretion from time to
time. The Agent hereby accepts such appointments. For purposes hereof, the
provisions of Section 7 of the Credit Agreement, together with such other terms
and provisions of the Credit Agreement and the other Operative Agreements as
required for the full interpretation and operation of Section 7 of the Credit
Agreement are hereby incorporated by reference as if restated herein for the
mutual benefit of the Agent and each Holder as if each Holder were a Lender
thereunder. Outstanding Holder Advances and outstanding Loans shall each be
taken into account for purposes of determining Majority Secured Parties.
Further, the Agent shall be entitled to take such action on behalf of the Owner
Trustee as is delegated to the Agent under any Operative Agreement (whether
express or
37
implied) as may be reasonably incidental thereto. The parties hereto hereby
agree to the provisions contained in this Section 8.6. Any appointment of a
successor agent under Section 7.9 of the Credit Agreement shall also be
effective as an appointment of a successor agent for purposes of this Section
8.6.
8.7. COLLECTION AND ALLOCATION OF PAYMENTS AND OTHER AMOUNTS.
-------------------------------------------------------
(a) Each Credit Party has agreed pursuant to Sections 5.8 and 5.9 and
otherwise in accordance with the terms of this Agreement to pay to (i) the
Agent any and all Rent (excluding Excepted Payments) and any and all other
amounts of any kind or type under any of the Operative Agreements due and
owing or payable to any Person and (ii) each Person as appropriate the
Excepted Payments. Promptly after receipt, the Agent shall apply and
allocate, in accordance with the terms of this Section 8.7, such amounts
received from any Credit Party and all other payments, receipts and other
consideration of any kind whatsoever received by the Agent pursuant to the
Security Agreement or otherwise received by the Agent, the Holders or any
of the Lenders in connection with the Collateral, the Security Documents or
any of the other Operative Agreements. Ratable distributions among the
Lenders and the Holders pursuant to this Section 8.7 shall be made based on
(in the case of the Lenders) the ratio of the outstanding Loans to the
aggregate Property Cost and (in the case of the Holders) the ratio of the
outstanding Holder Advances to the aggregate Property Cost. Ratable
distributions among the Tranche A Lenders pursuant to this Section 8.7
shall be made based on the ratio of the individual Tranche A Lender's
Commitment for Tranche A Loans to the aggregate of all the Tranche A
Lenders' Commitments for Tranche A Loans. Ratable distributions among the
Tranche B Lenders pursuant to this Section 8.7 shall be made based on the
ratio of the individual Tranche B Lender's Commitment for Tranche B Loans
to the aggregate of all the Tranche B Lenders' Commitments for Tranche B
Loans. Ratable distributions among the Lenders (in situations where the
Tranche A Lenders are not differentiated from the Tranche B Lenders) shall
be made based on the ratio of the individual Lender's Commitment to the
aggregate of all the Lenders' Commitments. Ratable distributions among the
Holders pursuant to this Section 8.7 shall be based on the ratio of the
individual Holder's Holder Commitment to the aggregate of all the Holders'
Holder Commitments.
(b) Payments and other amounts received by the Agent from time to
time in accordance with the terms of subparagraph (a) shall be applied and
allocated as follows:
(i) Any such payment or amount identified as or deemed to be
Basic Rent shall be applied and allocated by the Agent first, ratably
-----
to the Lenders and the Holders for application and allocation to the
payment of interest on the Loans and thereafter the principal of the
Loans which is due and payable on such date and to the payment of
accrued Holder Yield with respect to the Holder Advances and
thereafter the portion of the Holder Advances which is due on such
date; and second, if no Default or Event of Default is in effect, any
------
excess shall be paid to such Person or Persons as the Lessee may
designate; provided, that if a Default or
--------
38
Event of Default is in effect, such excess (if any) shall instead be
held by the Agent until the earlier of (I) the first date thereafter
on which no Default or Event of Default shall be in effect (in which
case such payments or returns shall then be made to such other Person
or Persons as the Lessee may designate) and (II) the Maturity Date or
the Expiration Date, as the case may be (or, if earlier, the date of
any Acceleration), in which case such amounts shall be applied and
allocated in the manner contemplated by Section 8.7(b)(iv); and
(ii) If on any date the Agent or the Lessor shall receive any
amount in respect of (A) any Casualty or Condemnation pursuant to
Sections 15.1(a) or 15.1(g) of the Lease (excluding any payments in
respect thereof which are payable to the Lessee in accordance with the
Lease), or (B) the Termination Value in connection with the delivery
of a Termination Notice pursuant to Article XVI of the Lease, or (C)
the Termination Value in connection with the exercise of the Purchase
Option under Section 20.1 of the Lease or the exercise of the option
of the Lessor to transfer the Properties to the Lessee pursuant to
Section 20.3 of the Lease, or (D) any payment required to be made or
elected to be made by the Construction Agent to the Lessor pursuant to
the terms of the Agency Agreement, then in each case, the Lessor shall
be required to pay such amount received (1) if no Acceleration has
occurred, to prepay the principal balance of the Loans and the Holder
Advances, on a pro rata basis, a portion of such amount to be
distributed to the Lenders and the Holders or (2) if an Acceleration
has occurred, to apply and allocate the proceeds respecting Sections
8.7(b)(ii)(A) through 8.7(b)(ii)(D) in accordance with Section
8.7(b)(iii) hereof.
(iii) Subject to Section 8.7(c), an amount equal to any payment
identified as proceeds of the sale or other disposition (or lease upon
the exercise of remedies) of the Properties or any portion thereof,
whether pursuant to Article XXII of the Lease or the exercise of
remedies under the Security Documents or otherwise, the execution of
remedies set forth in the Lease and any payment in respect of excess
wear and tear pursuant to Section 22.3 of the Lease (whether such
payment relates to a period before or after the Construction Period
Termination Date) shall be applied and allocated by the Agent first,
-----
ratably to the payment of the principal and interest of the Tranche B
Loans then outstanding, second, ratably to the payment to the Holders
------
of the outstanding principal balance of all Holder Advances plus all
outstanding Holder Yield with respect to such outstanding Holder
Advances, third, to the extent such amount exceeds the maximum amount
-----
to be returned pursuant to the foregoing provisions of this paragraph
(iii), ratably to the payment of the principal and interest of the
Tranche A Loans then outstanding, fourth, to any and all other amounts
------
owing under the Operative Agreements to the Lenders under the Tranche
B Loans, fifth, to any and all other amounts owing under the Operative
-----
Agreements to the Holders, sixth, to any and all other amounts owing
-----
under the Operative Agreements to the Lenders under the Tranche A
Loans, and seventh, to the extent moneys remain after application and
-------
allocation pursuant to clauses first through sixth above, to the
----- -----
39
Owner Trustee for application and allocation to any and all other
amounts owing to the Holders or the Owner Trustee and as the Holders
shall determine; provided, where no Event of Default shall exist and
--------
be continuing and a prepayment is made for any reason with respect to
less than the full amount of the outstanding principal amount of the
Loans and the outstanding Holder Advances, the proceeds shall be
applied and allocated ratably to the Lenders and to the Holders.
(iv) Subject to Section 8.7(c), an amount equal to (A) any such
payment identified as a payment pursuant to Section 22.1(b) of the
Lease (or otherwise) of the Maximum Residual Guarantee Amount (and any
such lesser amount as may be required by Section 22.1(b) of the Lease)
in respect of the Properties, (B) any other amount payable upon any
exercise of remedies after the occurrence of an Event of Default not
covered by Sections 8.7(b)(i) or 8.7(b)(iii) above (including without
limitation any amount received in connection with an Acceleration
which does not represent proceeds from the sale or liquidation of the
Properties), and (C) any other amount payable by any Guarantor
pursuant to Section 6B shall be applied and allocated by the Agent
first, ratably, to the payment of the principal and interest
-----
balance of Tranche A Loans then outstanding, second, ratably to the
------
payment of the principal and interest balance of the Tranche B Loans
then outstanding, third, ratably to the payment of the principal
-----
balance of all Holder Advances plus all outstanding Holder Yield with
respect to such outstanding Holder Advances, fourth, to the payment of
------
any other amounts owing to the Lenders hereunder or under any of the
other Operative Agreement, and fifth, to the extent moneys remain
-----
after application and allocation pursuant to clauses first through
-------------
fourth above, to the Owner Trustee for application and allocation to
------
Holder Advances and Holder Yield and any other amounts owing to the
Holders or the Owner Trustee as the Holders shall determine.
(v) An amount equal to any such payment identified as
Supplemental Rent shall be applied and allocated by the Agent to the
payment of any amounts then owing to the Agent, the Lenders, the
Holders and the other parties to the Operative Agreements (or any of
them) (other than any such amounts payable pursuant to the preceding
provisions of this Section 8.7(b)) as shall be determined by the Agent
in its reasonable discretion; provided, however, that Supplemental
-------- -------
Rent received upon the exercise of remedies after the occurrence and
continuance of an Event of Default in lieu of or in substitution of
the Maximum Residual Guarantee Amount or as a partial payment thereon
shall be applied and allocated as set forth in Section 8.7(b)(iv).
(vi) The Agent in its reasonable judgment shall identify the
nature of each payment or amount received by the Agent and apply and
allocate each such amount in the manner specified above.
40
(c) Upon the termination of the Commitments and the payment in full
of the Loans and all other amounts owing by the Owner Trustee hereunder or
under any Credit Document and the payment in full of all amounts owing to
the Holders and the Owner Trustee under the Trust Agreement, any moneys
remaining with the Agent shall be returned to the Owner Trustee or such
other Person or Persons as the Holders may designate for application and
allocation to any and all other amounts owing to the Holders or the Owner
Trustee and as the Holders shall determine. In the event of an Acceleration
it is agreed that, prior to the application and allocation of amounts
received by the Agent in the order described in Section 8.7(b) above, any
such amounts shall first be applied and allocated to the payment of (i) any
and all sums advanced by the Agent in order to preserve the Collateral or
to preserve its Lien thereon; (ii) the expenses of retaking, holding,
preparing for sale or lease, selling or otherwise disposing or realizing on
the Collateral, or of any exercise by the Agent of its rights under the
Security Documents, together with reasonable attorneys' fees and expenses
and court costs; and (iii) any and all other amounts reasonably owed to the
Agent under or in connection with the transactions contemplated by the
Operative Agreements (including without limitation any accrued and unpaid
administration fees).
(d) Subject to Section 8.7(c), an amount equal to any payment
identified as proceeds of the sale or other disposition of the Properties
or any part thereof (whether pursuant to the exercise of remedies under the
Security Documents, the Lease or otherwise) shall be applied and allocated
by the Agent in accordance with Section 5.11.
(e) Notwithstanding anything to the contrary in any of the Operative
Agreements, to the extent that any procceds derived from any of the
Properties (whether by sale, in the form of an award in condemnation or
taking, in the form of insurance proceeds after a casualty, or otherwise)
and held by Agent are payable, pursuant to the terms of the Operative
Agreements, to the Lessee (other than in reimbursement for restoration or
replacement work performed by the Lessee after a condemnation, taking or
casualty), Lessee hereby directs that Agent handle such proceeds in
accordance with Section 6(d) of the LCA Security Agreement.
8.8. RELEASE OF PROPERTIES, ETC.
---------------------------
If the Lessee shall at any time purchase any Property pursuant to the
Lease, or the Construction Agent shall purchase any Property pursuant to the
Agency Agreement, or if any Property shall be sold in accordance with Article
XXII of the Lease, then, upon satisfaction by the Owner Trustee of its
obligation to prepay the Loans, and Holder Advances in respect of such property
and all other amounts owing to the Lenders and the Holders under the Operative
Agreements, the Agent is hereby authorized and directed to release such Property
from the Liens created by the Security Documents to the extent of
41
its interest therein. In addition, upon the termination of the Commitments and
the Holder Commitments and the payment in full of the Loans, the Holder Advances
and all other amounts owing by the Owner Trustee and the Lessee hereunder or
under any other Operative Agreement the Agent is hereby authorized and directed
to release all of the Properties from the Liens created by the Security
Documents to the extent of its interest therein. Upon request of the Owner
Trustee following any such release, the Agent shall, at the sole cost and
expense of the Lessee, execute and deliver to the Owner Trustee and the Lessee
such documents as the Owner Trustee or the Lessee shall reasonably request to
evidence such release.
SECTION 9. CREDIT AGREEMENT AND TRUST AGREEMENT.
9.1. THE CONSTRUCTION AGENT'S AND THE LESSEE'S CREDIT AGREEMENT RIGHTS.
-----------------------------------------------------------------
Notwithstanding anything to the contrary contained in the Credit Agreement,
the Agent, the Lenders, the Holders, the Construction Agent, the Credit Parties
and the Owner Trustee hereby agree that, prior to the occurrence and
continuation of any Default or Event of Default, the Construction Agent or the
Lessee, as the case may be, shall have the following rights:
(a) the right to designate an account to which amounts funded under
the Operative Agreements shall be credited pursuant to Section 2.3(a) of
the Credit Agreement;
(b) the right to terminate or reduce the Commitments pursuant to
Section 2.5(a) of the Credit Agreement;
(c) the right to exercise the conversion and continuation options
pursuant to Section 2.7 of the Credit Agreement;
(d) the right to receive any notice and any certificate, in each case
issued pursuant to Section 2.11(a) of the Credit Agreement;
(e) the right to replace any Lender pursuant to Section 2.11(b) of
the Credit Agreement;
(f) the right to approve any successor agent pursuant to Section 7.9
of the Credit Agreement; and
(g) the right to consent to any assignment by a Lender to which the
Lessor has the right to consent pursuant to Section 9.8 of the Credit
Agreement.
9.2. THE CONSTRUCTION AGENT'S AND THE LESSEE'S TRUST AGREEMENT RIGHTS.
----------------------------------------------------------------
Notwithstanding anything to the contrary contained in the Trust Agreement,
the Credit Parties, the Owner Trustee and the Holders hereby agree that, prior
to the occurrence and continuation of any Default or Event of Default, the
Construction Agent or the Lessee, as the case may be, shall have the following
rights:
(a) the right to exercise the conversion and continuation options
pursuant to Section 3.8 of the Trust Agreement;
42
(b) the right to receive any notice and any certificate, in each
case issued pursuant to Section 3.9(a) of the Trust Agreement;
(c) the right to replace any Holder pursuant to Section 3.9(b) of the
Trust Agreement; and
(d) the right to exercise the removal options contained in Section
3.9 of the Trust Agreement; provided, however, that no removal of the Owner
-------- -------
Trustee and appointment of a successor Owner Trustee pursuant to Section
9.1 of the Trust Agreement shall be made without the prior written consent
(not to be unreasonably withheld or delayed) of the Lessee.
SECTION 10. TRANSFER OF INTEREST.
10.1. RESTRICTIONS ON TRANSFER.
------------------------
(a) Each Lender may participate, assign or transfer all or a
portion of its interest hereunder and under the other Operative Agreements
in accordance with Sections 9.7 and 9.8 of the Credit Agreement; provided,
--------
each participant, assignee or transferee must obtain either:
(i) the same ratable interest in Tranche A Commitments,
outstanding Tranche A Loans (if any), Tranche B Commitments, outstanding
Tranche B Loans (if any), Holder Commitments, outstanding Holder Advances
(if any) and loan commitments with regard and outstanding loans (if any)
under and pursuant to the Lessee Credit Agreement, or
(ii) only if such participant, assignee or transferee shall
obtain its interest from a Lender that itself does not hold the same
ratable interest in the Tranche A Commitments, outstanding Tranche A Loans
(if any), Tranche B Commitments, outstanding Tranche B Loans (if any),
Holder Commitments, outstanding Holder Advances (if any) and loan
commitments with regard and outstanding loans (if any) under and pursuant
to the Lessee Credit Agreement, the same ratable interest in Tranche A
Commitments, outstanding Tranche A Loans (if any), Tranche B Commitments
and oustsatnding Tranche B Loans (if any), and such an interest in the in
Tranche A Commitments, outstanding Tranche A Loans (if any), Tranche B
Commitments, outstanding Tranche B Loans (if any), Holder Commitments,
outstanding Holder Advances (if any) and loan commitments and outstanding
loans (if any) under and pursuant to the Lessee Credit Agreement that there
exists a 5.0:3.0 ratio (A) between the dollar amount of its interest in the
loans commitments with regard to the Lessee Credit Agreement and the dollar
amount of the aggregate of its interest in the Tranche A Commitments, the
Tranche B Commitments and the Holder Commitments and (B) between the dollar
amount of its interest in the outstanding loans under and pursuant to the
Lessee Credit Agreement (if any) and the aggregate dollar amount of its
interest in the
43
outstanding Tranche A Loans(if any), the outstanding Tranche B Loans (if
any) and the outstanding Holder Advances (if any).
(b) The Holders may, directly or indirectly, assign, convey or
otherwise transfer any of their right, title or interest in or to the Trust
Estate or the Trust Agreement with the prior written consent of the Agent
and the Lessee (which consent shall not be unreasonably withheld or
delayed) and in accordance with the terms of Section 11.8(b) of the Trust
Agreement; provided, each assignee, recipient of a conveyance or transferee
must obtain either:
(i) the same ratable interest in and to the Tranche A Commitments,
outstanding Tranche A Loans (if any), Tranche B Commitments, outstanding
Tranche B Loans (if any), Holder Commitments, outstanding Holder Advances
(if any) and loan commitments with regard and outstanding loans (if any)
under and pursuant to the Lessee Credit Agreement, or
(ii) only if such assignee, recipient of a conveyance or transferee
shall obtain its interest from a Holder that itself does not hold the same
ratable interest in the Tranche A Commitments, outstanding Tranche A Loans
(if any), Tranche B Commitments, outstanding Tranche B Loans (if any),
Holder Commitments, outstanding Holder Advances (if any) and loan
commitments with regard and outstanding loans (if any) under and pursuant
to the Lessee Credit Agreement, the same ratable interest in Tranche A
Commitments, outstanding Tranche A Loans (if any), Tranche B Commitments
and oustsatnding Tranche B Loans (if any) and such an interest in the in
Tranche A Commitments, outstanding Tranche A Loans (if any), Tranche B
Commitments, outstanding Tranche B Loans (if any), Holder Commitments,
outstanding Holder Advances (if any) and loan commitments and outstanding
loans (if any) under and pursuant to the Lessee Credit Agreement that there
exists a 5.0:3.0 ratio (A) between the dollar amount of its interest in the
loans commitments with regard to the Lessee Credit Agreement and the dollar
amount of the aggregate of its interest in the Tranche A Commitments, the
Tranche B Commitments and the Holder Commitments and (B) between the dollar
amount of its interest in the outstanding loans under and pursuant to the
Lessee Credit Agreement (if any) and the aggregate dollar amount of its
interest in the outstanding Tranche A Loans(if any), the outstanding
Tranche B Loans (if any) and the outstanding Holder Advances (if any).
(c) The Owner Trustee may, subject to the rights of the Lessee under
the Lease and the other Operative Agreements and to the Lien of the
applicable Security Documents but only with the prior written consent of
the Agent (which consent may be withheld by the Agent in its sole
discretion) and (provided, no Default or Event of Default has occurred and
--------
is continuing) with the consent of the Lessee, directly or indirectly,
assign, convey, appoint an agent with respect to enforcement of, or
otherwise transfer any of its right, title or interest in or to any
Property, the Lease, the Trust Agreement and the other Operative Agreements
(including without limitation any right to indemnification thereunder), or
any other document relating to a Property or any interest
44
in a Property as provided in the Trust Agreement and the Lease. The
provisions of the immediately preceding sentence shall not apply to the
obligations of the Owner Trustee to transfer Property to the Lessee or a
third party purchaser pursuant to Article XXII of the Lease upon payment
for such Property in accordance with the terms and conditions of the Lease.
(d) No Credit Party may assign any of the Operative Agreements or any
of their respective rights or obligations thereunder or with respect to any
Property in whole or in part to any Person without the prior written
consent of the Agent, the Lenders, the Holders and the Lessor.
(e) Any participation, assignment or transfer effected in breach of
this Section 10.1 shall be void.
10.2. EFFECT OF TRANSFER.
------------------
From and after any transfer effected in accordance with this Section 10,
the transferor shall be released, to the extent of such transfer, from its
liability hereunder and under the other documents to which it is a party in
respect of obligations to be performed on or after the date of such transfer;
provided, however, that any transferor shall remain liable hereunder and under
-------- -------
such other documents to the extent that the transferee shall not have assumed
the obligations of the transferor thereunder. Upon any transfer by the Owner
Trustee, a Holder or a Lender as above provided, any such transferee shall
assume the obligations of the Owner Trustee, the Holder or the Lender, as the
case may be, and shall be deemed an "Owner Trustee", "Holder", or "Lender", as
the case may be, for all purposes of such documents and each reference herein to
the transferor shall thereafter be deemed a reference to such transferee for all
purposes, except as provided in the preceding sentence. Notwithstanding any
transfer of all or a portion of the transferor's interest as provided in this
Section 10, the transferor shall be entitled to all benefits accrued and all
rights vested prior to such transfer including without limitation rights to
indemnification under any such document.
SECTION 11. INDEMNIFICATION.
11.1. GENERAL INDEMNITY.
-----------------
Subject to and limited by in all respects the provisions of Sections 11.6
through 11.8 and whether or not any of the transactions contemplated hereby
shall be consummated, the Indemnity Provider hereby assumes liability for and
agrees to defend, indemnify and hold harmless each Indemnified Person on an
After Tax Basis from and against any Claims, which may be imposed on, incurred
by or asserted against an Indemnified Person by any third party, including
without limitation Claims arising from the negligence of an Indemnified Person
(but not to the extent such Claims arise from the gross negligence or willful
misconduct of such Indemnified Person itself, as determined by a court of
competent jurisdiction, as opposed to gross negligence or willful misconduct
imputed to such Indemnified Person) in any way relating to or arising or alleged
to arise out of the execution, delivery, performance or enforcement of this
Agreement,
45
the Lease or any other Operative Agreement or on or with respect to any Property
or any component thereof, including without limitation Claims in any way
relating to or arising or alleged to arise out of (a) the financing,
refinancing, purchase, acceptance, rejection, ownership, design, construction,
refurbishment, development, delivery, acceptance, nondelivery, leasing,
subleasing, possession, use, occupancy, operation, maintenance repair,
modification, transportation, condition, sale, return, repossession (whether by
summary proceedings or otherwise), or any other disposition of any Property or
any part thereof, including without limitation the acquisition, holding or
disposition of any interest in the Property, lease or agreement comprising a
portion of any thereof; (b) any latent or other defects in any Property or any
portion thereof whether or not discoverable by an Indemnified Person or the
Indemnity Provider; (c) a violation of Environmental Laws, Environmental Claims
or other loss of or damage to any property or the environment relating to the
Property, the Lease, the Agency Agreement or the Indemnity Provider; (d) the
Operative Agreements, or any transaction contemplated thereby; (e) any breach by
the Indemnity Provider of any of its representations or warranties under the
Operative Agreements to which the Indemnity Provider is a party or failure by
the Indemnity Provider to perform or observe any covenant or agreement to be
performed by it under any of the Operative Agreements; (f) the transactions
contemplated hereby or by any other Operative Agreement, in respect of the
application of Parts 4 and 5 of Subtitle B of Title I of ERISA; (g) personal
injury, death or property damage, including without limitation Claims based on
strict or absolute liability in tort; and (h) any fees, expenses and/or other
assessments by any business park or any other applicable entity with oversight
responsibility for the applicable Property.
If a written Claim is made against any Indemnified Person or if any
proceeding shall be commenced against such Indemnified Person (including without
limitation a written notice of such proceeding), for any Claim, such Indemnified
Person shall promptly notify the Indemnity Provider in writing and shall not
take action with respect to such Claim without the consent of the Indemnity
Provider for thirty (30) days after the receipt of such notice by the Indemnity
Provider; provided, however, that in the case of any such Claim, if action shall
-------- -------
be required by law or regulation to be taken prior to the end of such period of
thirty (30) days, such Indemnified Person shall endeavor to, in such notice to
the Indemnity Provider, inform the Indemnity Provider of such shorter period,
and no action shall be taken with respect to such Claim without the consent of
the Indemnity Provider before seven (7) days before the end of such shorter
period; provided, further, that the failure of such Indemnified Person to give
-------- -------
the notices referred to in this sentence shall not diminish the Indemnity
Provider's obligation hereunder except to the extent such failure precludes in
all respects the Indemnity Provider from contesting such Claim.
If, within thirty (30) days of receipt of such notice from the Indemnified
Person (or such shorter period as the Indemnified Person has notified the
Indemnity Provider is required by law or regulation for the Indemnified Person
to respond to such Claim), the Indemnity Provider shall request in writing that
such Indemnified Person respond to such Claim, the Indemnified Person shall, at
the expense of the Indemnity Provider, in good faith conduct and control such
action (including without limitation by pursuit of appeals) (provided, however,
-------- --------
that (A) if such Claim, in the Indemnity Provider's reasonable discretion, can
be pursued by the Indemnity Provider on behalf of or in the name of such
Indemnified Person, the Indemnified Person, at the Indemnity
46
Provider's request, shall allow the Indemnity Provider to conduct and control
the response to such Claim and (B) in the case of any Claim (and notwithstanding
the provisions of the foregoing subsection (A)), the Indemnified Person may
request the Indemnity Provider to conduct and control the response to such Claim
(with counsel to be selected by the Indemnity Provider and consented to by such
Indemnified Person, such consent not to be unreasonably withheld; provided,
however, that any Indemnified Person may retain separate counsel at the expense
of the Indemnity Provider in the event of a conflict of interest between such
Indemnified Person and the Indemnity Provider)) by, in the sole discretion of
the Person conducting and controlling the response to such Claim (1) resisting
payment thereof, (2) not paying the same except under protest, if protest is
necessary and proper, (3) if the payment be made, using reasonable efforts to
obtain a refund thereof in appropriate administrative and judicial proceedings,
or (4) taking such other action as is reasonably requested by the Indemnity
Provider from time to time.
The party controlling the response to any Claim shall consult in good faith
with the non-controlling party and shall keep the non-controlling party
reasonably informed as to the conduct of the response to such Claim; provided,
--------
that all decisions ultimately shall be made in the discretion of the controlling
party. The parties agree that an Indemnified Person may at any time decline to
take further action with respect to the response to such Claim and may settle
such Claim if such Indemnified Person shall waive its rights to any indemnity
from the Indemnity Provider that otherwise would be payable in respect of such
Claim (and any future Claim, the pursuit of which is precluded by reason of such
resolution of such Claim) and shall pay to the Indemnity Provider any amount
previously paid or advanced by the Indemnity Provider pursuant to this Section
11.1 by way of indemnification or advance for the payment of an amount regarding
such Claim.
Notwithstanding the foregoing provisions of this Section 11.1, an
Indemnified Person shall not be required to take any action and the Indemnity
Provider shall not be permitted to respond to any Claim in its own name or that
of the Indemnified Person unless (A) the Indemnity Provider shall have agreed to
pay and shall pay to such Indemnified Person on demand and on an After Tax Basis
all reasonable costs, losses and expenses that such Indemnified Person actually
incurs in connection with such Claim, including without limitation all
reasonable legal, accounting and investigatory fees and disbursements and, if
the Indemnified Person has informed the Indemnity Provider that it intends to
contest such Claim (whether or not the control of the contest is then assumed by
the Indemnity Provider), the Indemnity Provider shall have agreed that the Claim
is an indemnifiable Claim hereunder; (B) in the case of a Claim that must be
pursued in the name of an Indemnified Person (or an Affiliate thereof), the
amount of the potential indemnity (taking into account all similar or logically
related Claims that have been or could be raised for which the Indemnity
Provider may be liable to pay an indemnity under this Section 11.1) exceeds
$25,000 (or such lesser amount as may be subsequently agreed between the
Indemnity Provider and the Indemnified Person); (C) the Indemnified Person shall
have reasonably determined that the action to be taken will not result in any
material danger of sale, forfeiture or loss of the Property, or any part thereof
or interest therein, will not interfere with the payment of Rent, and will not
result in risk of criminal liability; (D) if such Claim shall involve the
payment of any amount prior to the resolution of such Claim, the Indemnity
Provider shall
47
provide to the Indemnified Person an interest-free advance in an amount equal to
the amount that the Indemnified Person is required to pay (with no additional
net after-tax cost to such Indemnified Person) prior to the date such payment is
due; (E) in the case of a Claim that must be pursued in the name of an
Indemnified Person (or an Affiliate thereof), the Indemnity Provider shall have
provided to such Indemnified Person an opinion of independent counsel selected
by the Indemnity Provider and reasonably satisfactory to the Indemnified Person
stating that a reasonable basis exists to contest such Claim (or, in the case of
an appeal of an adverse determination, an opinion of such counsel to the effect
that the position asserted in such appeal will more likely than not prevail);
and (F) no Event of Default shall have occurred and be continuing. In no event
shall an Indemnified Person be required to appeal an adverse judicial
determination to the United States Supreme Court. In addition, an Indemnified
Person shall not be required to contest any Claim in its name (or that of an
Affiliate) if the subject matter thereof shall be of a continuing nature and
shall have previously been decided adversely by a court of competent
jurisdiction pursuant to the contest provisions of this Section 11.1, unless
there shall have been a change in law (or interpretation thereof) and the
Indemnified Person shall have received, at the Indemnity Provider's expense, an
opinion of independent counsel selected by the Indemnity Provider and reasonably
acceptable to the Indemnified Person stating that as a result of such change in
law (or interpretation thereof), it is more likely than not that the Indemnified
Person will prevail in such contest. In no event shall the Indemnity Provider be
permitted to adjust or settle any Claim without the consent of the Indemnified
Person to the extent any such adjustment or settlement involves, or is
reasonably likely to involve, any performance by or adverse admission by or with
respect to the Indemnified Person.
11.2. GENERAL TAX INDEMNITY.
---------------------
(a) Subject to and limited by in all respects the provisions of
Sections 11.6 through 11.8, the Indemnity Provider shall pay and assume
liability for, and does hereby agree to indemnify, protect and defend each
Property and all Indemnified Persons, and hold them harmless against, all
Impositions on an After Tax Basis, and all payments pursuant to the
Operative Agreements shall be made free and clear of and without deduction
for any and all present and future Impositions.
(b) Notwithstanding anything to the contrary in Section 11.2(a)
hereof, the following shall be excluded from the indemnity required by
Section 11.2(a) (collectively, the "Excluded Taxes"):
---------------
(i) Taxes (other than Taxes that are, or are in the nature of,
sales, use, rental, value added, transfer or property taxes) that are
imposed on a Indemnified Person (other than the Lessor, the Owner
Trustee and the Trust) by the Uni ▇▇▇ States federal government that
are based on or measured by the net income (including without
limitation taxes based on capital gains and minimum taxes) of such
Person; provided, that this clause (i) shall not be interpreted to
prevent a payment from being made on an After Tax Basis if such
payment is otherwise required to be so made;
48
(ii) Taxes (other than Taxes that are, or are in the nature of,
sales, use, rental, value added, transfer or property taxes) that are
imposed on any Indemnified Person (other than the Lessor, the Owner
Trustee and the Trust) by any state or local jurisdiction or taxing
authority within any state or local jurisdiction and that are based
upon or measured by the net income (including without limitation taxes
based on capital gains and minimum taxes) of such Person; provided
that such Taxes shall not be excluded under this subparagraph (ii) to
the extent such Taxes would have been imposed had the location,
possession or use of any Property in, the location or the operation of
the Lessee in, or the Lessee's making payments under the Operative
Agreements from, the jurisdiction imposing such Taxes been the sole
connection between such Indemnified Person and the jurisdiction
imposing such Taxes; provided further, that this clause (ii) shall not
be interpreted to prevent a tpayment from being made on an After Tax
Basis if such payment is otherwise required to be so made;
(iii) any Tax to the extent it relates to any act, event or
omission that occurs after the termination of the Lease and redelivery
or sale of the Property in accordance with the terms of the Lease (but
not any Tax that relates to such termination, redelivery or sale
and/or to any period prior to such termination, redelivery or sale);
and
(iv) any Taxes which are imposed on an Indemnified Person as a
result of the gross negligence or willful misconduct of such
Indemnified Person itself, as determined by a court of competent
jurisdiction (as opposed to gross negligence or willful misconduct
imputed to such Indemnified Person), but not Taxes imposed as a result
of ordinary negligence of such Indemnified Person.
(c) (i) Subject to the terms of Section 11.2(f), the Indemnity
Provider shall pay or cause to be paid all Impositions directly to the
taxing authorities where feasible and otherwise to the Indemnified
Person, as appropriate, and the Indemnity Provider shall at its own
expense, upon such Indemnified Person's reasonable request, furnish to
such Indemnified Person copies of official receipts or other
satisfactory proof evidencing such payment;
(ii) In the case of Impositions for which no contest is
conducted pursuant to Section 11.2(f) and which the Indemnity Provider
pays directly to the taxing authorities, the Indemnity Provider shall
pay such Impositions prior to the latest time permitted by the
relevant taxing authority for timely payment. In the case of
Impositions for which the Indemnity Provider reimburses an Indemnified
Person, the Indemnity Provider shall do so within thirty (30) days
after receipt by the Indemnity Provider of demand by such Indemnified
Person describing in reasonable detail the nature of the Imposition
and the basis for the demand (including without limitation the
computation of the amount payable), accompanied by receipts or other
reasonable evidence of such demand. In the case of Impositions for
which a contest is conducted pursuant to Section 11.2(f),
49
the Indemnity Provider shall pay such Impositions or reimburse such
Indemnified Person for such Impositions, to the extent not previously
paid or reimbursed pursuant to subsection (a), prior to the latest
time permitted by the relevant taxing authority for timely payment
after conclusion of all contests under Section 11.2(f); and
(iii) At the Indemnity Provider's request, the amount of any
indemnification payment by the Indemnity Provider pursuant to
subsection (a) shall be verified and certified by an independent
public accounting firm mutually acceptable to the Indemnity Provider
and the Indemnified Person. The fees and expenses of such independent
public accounting firm shall be paid by the Indemnity Provider unless
such verification shall result in an adjustment in the Indemnity
Provider's favor of fifteen percent (15%) or more of the payment as
computed by the Indemnified Person, in which case such fee shall be
paid by the Indemnified Person.
(d) The Indemnity Provider shall be responsible for preparing and
filing any real and personal property or ad valorem tax returns in respect
of each Property and any other tax returns required for the Owner Trustee
respecting the transactions described in the Operative Agreements. In case
any other report or tax return shall be required to be made with respect to
any obligations of the Indemnity Provider under or arising out of
subsection (a) and of which the Indemnity Provider has knowledge or should
have knowledge, the Indemnity Provider, at its sole cost and expense, shall
notify the relevant Indemnified Person of such requirement and (except if
such Indemnified Person notifies the Indemnity Provider that such
Indemnified Person intends to prepare and file such report or return) (A)
to the extent required or permitted by and consistent with Legal
Requirements, make and file in the Indemnity Provider's name such return,
statement or report; and (B) in the case of any other such return,
statement or report required to be made in the name of such Indemnified
Person, advise such Indemnified Person of such fact and prepare such
return, statement or report for filing by such Indemnified Person or, where
such return, statement or report shall be required to reflect items in
addition to any obligations of the Indemnity Provider under or arising out
of subsection (a), provide such Indemnified Person at the Indemnity
Provider's expense with information sufficient to permit such return,
statement or report to be properly made with respect to any obligations of
the Indemnity Provider under or arising out of subsection (a). Such
Indemnified Person shall, upon the Indemnity Provider's request and at the
Indemnity Provider's expense, provide any data maintained by such
Indemnified Person (and not otherwise available to or within the control of
the Indemnity Provider) with respect to each Property which the Indemnity
Provider may reasonably require to prepare any required tax returns or
reports.
(e) As between the Indemnity Provider on one hand, and each Financing
Party on the other hand, the Indemnity Provider shall be responsible for,
and the Indemnity Provider shall indemnify and hold harmless each Financing
Party (without duplication of any indemnification required by subsection
(a)) on an After Tax Basis against, any
50
obligation for United States or foreign withholding taxes or similar levies,
imposts, charges, fees, deductions or withholdings (collectively,
"Withholdings") imposed in respect of the interest payable on the Notes, Holder
------------
Yield payable on the Certificates or with respect to any other payments under
the Operative Agreements (all such payments being referred to herein as "Exempt
------
Payments" to be made without deduction, withholding or set off) (and, if any
--------
Financing Party receives a demand for such payment from any taxing authority or
a Withholding is otherwise required with respect to any Exempt Payment, the
Indemnity Provider shall discharge such demand on behalf of such Financing
Party); provided, however, that the obligation of the Indemnity Provider under
-------- -------
this Section 11.2(e) shall not apply to:
(i) Withholdings on any Exempt Payment to any Financing Party
which is a non-U.S. Person unless such Financing Party is, on the date
hereof (or on the date it becomes a Financing Party hereunder) and on
the date of any change in the principal place of business or the
lending office of such Financing Party, entitled to submit a Form 1001
(relating to such Financing Party and entitling it to a complete
exemption from Withholding on such Exempt Payment) or Form 4224 or is
otherwise subject to exemption from Withholding with respect to such
Exempt Payment (except where the failure of the exemption results from
a change in the principal place of business of the Lessee; provided if
a failure of exemption for any Financing Party results from a change
in the principal place of business or lending office of any other
Financing Party, then such other Financing Party shall be liable for
any Withholding or indemnity with respect thereto), or
(ii) Any U.S. Taxes imposed solely by reason of the failure by a
non-U.S. Person to comply with applicable certification, information,
documentation or other reporting requirements concerning the
nationality, residence, identity or connections with the United States
of America of such non-U.S. Person if such compliance is required by
statute or regulation of the United States of America as a
precondition to relief or exemption from such U.S. Taxes.
For the purposes of this Section 11.2(e), (A) "U.S. Person" shall mean a
-----------
citizen, national or resident of the United States of America, a corporation,
partnership or other entity created or organized in or under any laws of the
United States of America or any State thereof, or any estate that is subject to
Federal income taxation regardless of the source of its income or a trust if a
court in the United States is able to exercise primary supervision over its
administration and one or more United States fiduciaries have the authority to
control all substantial decisions of the trust; (B) "U.S. Taxes" shall mean any
----------
present or future tax, assessment or other charge or levy imposed by or on
behalf of the United States of America or any taxing authority thereof or
therein; (C) "Form 1001" shall mean Form 1001 (Ownership, Exemption, or Reduced
---------
Rate Certificate) of the Department of the Treasury of the United States of
America; and (D) "Form 4224" shall mean Form 4224(R) (Exemption from Withholding
---------
of Tax on Income Effectively Connected with the Conduct of a Trade or Business
in the United States) of the Department of Treasury of the United States of
America (or in relation to either such Form such successor and related
51
forms as may from time to time be adopted by the relevant taxing
authorities of the United States of America to document a claim to which
such Form relates). Each of the Forms referred to in the foregoing clauses
(C) and (D) shall include such successor and related forms as may from time
to time be adopted by the relevant taxing authorities of the United States
of America to document a claim to which such Form relates.
If a Financing Party or an Affiliate with whom such Financing Party
files a consolidated tax return (or equivalent) subsequently receives the
benefit in any country of a tax credit or an allowance resulting from U.S.
Taxes with respect to which it has received a payment of an additional
amount under this Section 11.2(e), such Financing Party will pay to the
Indemnity Provider such part of that benefit as in the opinion of such
Financing Party will leave it (after such payment) in a position no more
and no less favorable than it would have been in if no additional payment
had been required to be paid, provided always that (i) such Financing Party
--------
will be the sole judge of the amount of any such benefit and of the date on
which it is received, (ii) such Financing Party will have the absolute
discretion as to the order and manner in which it employs or claims tax
credits and allowances available to it, and (iii) such Financing Party will
not be obliged to disclose to the Indemnity Provider or any other Person
any information regarding its tax affairs or tax computations.
Each non-U.S. Person that shall become a Financing Party after the
date hereof shall, upon the effectiveness of the related transfer or
otherwise upon becoming a Financing Party hereunder, be required to provide
all of the forms and statements referenced above or other evidences of
exemption from Withholdings to which such Person shall be legally entitled.
(f) If a written Claim is made against any Indemnified Person or if
any proceeding shall be commenced against such Indemnified Person
(including without limitation a written notice of such proceeding), for any
Impositions, the provisions in Section 11.1 relating to notification and
rights to contest shall apply; provided, however, that the Indemnity
-------- -------
Provider shall have the right to conduct and control such contest only if
such contest involves a Tax other than a Tax on net income of the
Indemnified Person and can be pursued independently from and without
prejudice to any other proceeding involving a Tax liability of such
Indemnified Person.
11.3. INCREASED COSTS, ILLEGALITY, ETC.
---------------------------------
(a) If, due to either (i) the introduction of or any change in or in
the interpretation of any law or regulation or (ii) the compliance with any
guideline or request hereafter adopted, promulgated or made by any central
bank or other governmental authority (whether or not having the force of
law), there shall be any increase in the cost to any Financing Party of
agreeing to make or making, funding or maintaining Advances, then the
Lessee shall from time to time, upon demand by such Financing Party (with a
copy of such demand to the Agent but subject to the terms of Section 2.11
of the Credit Agreement and 3.9 of the Trust Agreement, as the case may
be), pay to the Agent for the
52
account of such Financing Party additional amounts sufficient to compensate
such Financing Party for such increased cost. A certificate as to the
amount of such increased cost, submitted to the Lessee and the Agent by
such Financing Party, shall be conclusive and binding for all purposes,
absent manifest error.
(b) If any Financing Party determines that compliance with any law or
regulation or any guideline or request from any central bank or other
governmental authority (whether or not having the force of law, but in each
case promulgated or made after the date hereof) affects or would affect the
amount of capital required or expected to be maintained by such Financing
Party or any corporation controlling such Financing Party and that the
amount of such capital is increased by or based upon the existence of such
Financing Party's commitment to make Advances and other commitments of this
type or upon the Advances, then, upon demand by such Financing Party (with
a copy of such demand to the Agent but subject to the terms of Section 2.11
of the Credit Agreement and 3.9 of the Trust Agreement), the Lessee shall
pay to the Agent for the account of such Financing Party, from time to time
as specified by such Financing Party, additional amounts sufficient to
compensate such Financing Party or such corporation in the light of such
circumstances, to the extent that such Financing Party reasonably
determines such increase in capital to be allocable to the existence of
such Financing Party's commitment to make such Advances. A certificate as
to such amounts submitted to the Lessee and the Agent by such Financing
Party shall be conclusive and binding for all purposes, absent manifest
error.
(c) Without limiting the effect of the foregoing, the Lessee shall
pay to each Financing Party on the last day of the Interest Period therefor
so long as such Financing Party is maintaining reserves against
"Eurocurrency liabilities" under Regulation D an additional amount
(determined by such Financing Party and notified to the Lessee through the
Agent) equal to the product of the following for each Eurodollar Loan or
Eurodollar Holder Advance, as the case may be, for each day during such
Interest Period:
(i) the principal amount of such Eurodollar Loan or Eurodollar
Holder Advance, as the case may be, outstanding on such day; and
(ii) the remainder of (x) a fraction the numerator of which is
the rate (expressed as a decimal) at which interest accrues on such
Eurodollar Loan or Eurodollar Holder Advance, as the case may be, for
such Interest Period as provided in the Credit Agreement or the Trust
Agreement, as the case may be (less the Applicable Percentage), and
the denominator of which is one (1) minus the effective rate
-----
(expressed as a decimal) at which such reserve requirements are
imposed on such Financing Party on such day minus (y) such numerator;
and
(iii) 1/360.
(d) Without affecting its rights under Sections 11.3(a), 11.3(b) or
11.3(c) or any other provision of any Operative Agreement, each Financing
Party agrees that if there
53
is any increase in any cost to or reduction in any amount receivable by
such Financing Party with respect to which the Lessee would be obligated to
compensate such Financing Party pursuant to Sections 11.3(a) or 11.3(b),
such Financing Party shall use reasonable efforts to select an alternative
office for Advances which would not result in any such increase in any cost
to or reduction in any amount receivable by such Financing Party; provided,
--------
however, that no Financing Party shall be obligated to select an
-------
alternative office for Advances if such Financing Party determines that (i)
as a result of such selection such Financing Party would be in violation of
any applicable law, regulation, treaty, or guideline, or would incur
additional costs or expenses or (ii) such selection would be inadvisable
for regulatory reasons or materially inconsistent with the interests of
such Financing Party.
(e) With reference to the obligations of the Lessee set forth in
Sections 11.3(a) through 11.3(d), the Lessee shall not have any obligation
to pay to any Financing Party amounts owing under such Sections for any
period which is more than one (1) year prior to the date upon which the
request for payment therefor is delivered to the Lessee.
(f) Notwithstanding any other provision of this Agreement, if any
Financing Party shall notify the Agent that the introduction of or any
change in or in the interpretation of any law or regulation makes it
unlawful, or any central bank or other governmental authority asserts that
it is unlawful, for any Financing Party to perform its obligations
hereunder to make or maintain Eurodollar Loans or Eurodollar Holder
Advances, as the case may be, then (i) each Eurodollar Loan or Eurodollar
Holder Advance, as the case may be, will automatically, at the earlier of
the end of the Interest Period for such Eurodollar Loan or Eurodollar
Holder Advance, as the case may be, or the date required by law, convert
into an ABR Loan or an ABR Holder Advance, as the case may be, and (ii) the
obligation of the Financing Parties to make, convert or continue Eurodollar
Loans or Eurodollar Holder Advances, as the case may be, shall be suspended
until the Agent shall notify the Lessee that such Financing Party has
determined that the circumstances causing such suspension no longer exist.
11.4. FUNDING/CONTRIBUTION INDEMNITY.
------------------------------
Subject to the provisions of Section 2.11(a) of the Credit Agreement and
3.9(a) of the Trust Agreement, as the case may be, the Lessee agrees to
indemnify each Financing Party and to hold each Financing Party harmless from
any loss or reasonable expense which such Financing Party may sustain or incur
as a consequence of (a) any default in connection with the drawing of funds for
any Advance, (b) any default in making any prepayment after a notice thereof has
been given in accordance with the provisions of the Operative Agreements or (c)
the making of a voluntary or involuntary payment of Eurodollar Loans or
Eurodollar Holder Advances, as the case may be, on a day which is not the last
day of an Interest Period with respect thereto. Such indemnification shall be
in an amount equal to the excess, if any, of (x) the amount of interest or
Holder Yield, as the case may be, which would have accrued on the amount so
paid, or not so borrowed, accepted, converted or continued for the period from
the date of such payment or of such failure to borrow, accept, convert or
continue to the last day of such Interest Period (or, in
54
the case of a failure to borrow, accept, convert or continue, the Interest
Period that would have commenced on the date of such failure) in each case at
the applicable Eurodollar Rate plus the Applicable Percentage for such Loan or
Holder Advance, as the case may be, for such Interest Period over (y) the amount
of interest (as determined by such Financing Party in its reasonable discretion)
which would have accrued to such Financing Party on such amount by (i) (in the
case of the Lenders) reemploying such funds in loans of the same type and amount
during the period from the date of payment or failure to borrow to the last day
of the then applicable Interest Period (or, in the case of a failure to borrow,
the Interest Period that would have commenced on the date of such failure) and
(ii) (in the case of the Holders) placing such amount on deposit for a
comparable period with leading banks in the relevant interest rate market. This
covenant shall survive the termination of the Operative Agreements and the
payment of all other amounts payable hereunder.
11.5. EXPRESS INDEMNIFICATION FOR ORDINARY NEGLIGENCE, STRICT LIABILITY,
------------------------------------------------------------------
ETC.
---
SUBJECT TO AND LIMITED BY IN ALL RESPECTS THE PROVISIONS OF SECTION 11.6
THROUGH 11.8 AND WITHOUT LIMITING THE GENERALITY OF THE INDEMNIFICATION
PROVISIONS OF ANY AND ALL OF THE OPERATIVE AGREEMENTS, EACH PERSON PROVIDING
INDEMNIFICATION OF ANOTHER PERSON UNDER ANY OPERATIVE AGREEMENT HEREBY FURTHER
EXPRESSLY RELEASES EACH BENEFICIARY OF ANY SUCH INDEMNIFICATION FROM ALL CLAIMS
FOR LOSS OR DAMAGE, DESCRIBED IN ANY OPERATIVE AGREEMENT, CAUSED BY ANY ACT OR
OMISSION ON THE PART OF ANY SUCH BENEFICIARY ATTRIBUTABLE TO THE ORDINARY
NEGLIGENCE (WHETHER SOLE OR CONTRIBUTORY) OR STRICT LIABILITY OF ANY SUCH
BENEFICIARY, AND INDEMNIFIES, EXONERATES AND HOLDS EACH SUCH BENEFICIARY FREE
AND HARMLESS FROM AND AGAINST ANY AND ALL ACTIONS, CAUSES OF ACTION, SUITS,
CLAIMS, LOSSES, COSTS, LIABILITIES, DAMAGES AND EXPENSES (INCLUDING WITHOUT
LIMITATION ATTORNEY'S FEES AND EXPENSES), DESCRIBED ABOVE, INCURRED BY ANY SUCH
BENEFICIARY (IRRESPECTIVE OF WHETHER ANY SUCH BENEFICIARY IS A PARTY TO THE
ACTION FOR WHICH INDEMNIFICATION UNDER THIS AGREEMENT OR ANY OTHER OPERATIVE
AGREEMENT IS SOUGHT) ATTRIBUTABLE TO THE ORDINARY NEGLIGENCE (WHETHER SOLE OR
CONTRIBUTORY) OR STRICT LIABILITY OF ANY SUCH BENEFICIARY.
55
11.6. Additional Provisions Regarding Environmental Indemnification.
-------------------------------------------------------------
Each and every Indemnified Person shall at all times have the rights and
benefits, and the Indemnity Provider shall have the obligations, in each case
provided pursuant to the Operative Agreements with respect to environmental
matters, violations of any Environmental Law, any Environmental Claim, or other
loss of or damage to any Property or the environment relating to any Property,
the Lease, the Agency Agreement or the Indemnity Provider (including without
limitation the rights and benefits provided pursuant to Section 11.1(c).
11.7. ADDITIONAL PROVISIONS REGARDING INDEMNIFICATION.
-----------------------------------------------
Notwithstanding the provisions of Sections 11.1, 11.2 and 11.5 (other than
with respect to matters concerning environmental indemnification referenced in
Section 11.6), (a) the Owner Trustee and each Holder shall be the only
beneficiary of the provisions set forth in Sections 11.1, 11.2 and 11.5 (again,
subject to the immediately preceding parenthetical phrase) with respect to each
Property during the Construction Period for such Property and (b) such limited
rights of indemnification referenced in Section 11.7(a) (to the extent relating
to third-party claims) shall be limited to third-party claims caused by or
resulting from the Indemnity Provider's acts or omissions and/or all other
Persons acting by, through or under the Indemnity Provider. After the
Construction Period for a Property, each Indemnified Person shall be a
beneficiary of the provisions set forth in Sections 11.1, 11.2 and 11.5.
11.8. INDEMNIFICATIONS PROVIDED BY THE OWNER TRUSTEE IN FAVOR OF THE OTHER
--------------------------------------------------------------------
INDEMNIFIED PERSONS.
-------------------
To the extent the Indemnity Provider is not obligated to indemnify each
Indemnified Person with respect to the various matters described in this Section
11.8, the Owner Trustee shall provide such indemnities (but only to the extent
amounts sufficient to pay such indemnity are funded by the Lenders and the
Holders) in favor of each Indemnified Person in accordance with this Section
11.8 and shall pay all such amounts owed with respect to this Section 11.8 with
amounts advanced by the Lenders and the Holders (a) to the extent, but only to
the extent, amounts are available therefor with respect to the Available
Commitments and the Available Holder Commitments and (b) unless each Lender and
each Holder has declined in writing to fund such amount. Notwithstanding any
other provision in any other Operative Agreement to the contrary, all amounts so
advanced shall be deemed added (ratably, based on the ratio of the Property Cost
for each Property individually to the Aggregate Property Cost of all Properties
at such time) to the Property Cost of all Properties then subject to the terms
of the Operative Agreements.
Whether or not any of the transactions contemplated hereby shall be
consummated, the Owner Trustee hereby assumes liability for and agrees to
defend, indemnify and hold harmless each Indemnified Person on an After Tax
Basis from and against any Claims, which may be imposed on, incurred by or
asserted against an Indemnified Person by any third party, including without
limitation Claims arising from the negligence of an Indemnified Person (but not
to the extent such Claims arise from the gross negligence or willful misconduct
of such Indemnified
56
Person itself, as determined by a court of competent jurisdiction, as opposed to
gross negligence or willful misconduct imputed to such Indemnified Person or
breach of such Indemnified Person's obligations under this Agreement, the Lease
or any other Operative Agreement) in any way relating to or arising or alleged
to arise out of the execution, delivery, performance or enforcement of this
Agreement, the Lease or any other Operative Agreement or on or with respect to
any Property or any component thereof, including without limitation Claims in
any way relating to or arising or alleged to arise out of the matters set forth
in Sections 11.1(a) through 11.1(h).
The Owner Trustee shall pay and assume liability for, and does hereby agree
to indemnify, protect and defend each Property and all Indemnified Persons, and
hold them harmless against, all Impositions on an After Tax Basis, and all
payments pursuant to the Operative Agreements shall be made free and clear of
and without deduction for any and all present and future Impositions.
Notwithstanding anything to the contrary in this paragraph, the Excluded Taxes
shall be excluded from the indemnity provisions afforded by this paragraph.
THE INDEMNITY OBLIGATIONS UNDERTAKEN BY THE OWNER TRUSTEE PURSUANT TO THIS
SECTION 11.8 ARE IN ALL RESPECTS SUBJECT TO THE LIMITATIONS ON LIABILITY
REFERENCED IN SECTION 12.9.
SECTION 12. MISCELLANEOUS.
12.1. SURVIVAL OF AGREEMENTS.
----------------------
The representations, warranties, covenants, indemnities and agreements of
the parties provided for in the Operative Agreements, and the parties'
obligations under any and all thereof, shall survive the execution and delivery
of this Agreement, the transfer of any Property to the Owner Trustee, the
acquisition of any Property (or any of its components), the construction of any
Improvements, the Completion of any Property, any disposition of any interest of
the Owner Trustee in any Property or any interest of the Holders in the Trust
Estate, the payment of the Notes and any disposition thereof and shall be and
continue in effect notwithstanding any investigation made by any party and the
fact that any party may waive compliance with any of the other terms, provisions
or conditions of any of the Operative Agreements. Except as otherwise expressly
set forth herein or in other Operative Agreements, the indemnities of the
parties provided for in the Operative Agreements shall survive the expiration or
termination of any thereof.
12.2. NOTICES.
-------
All notices required or permitted to be given under any Operative Agreement
shall be in writing. Notices may be served by certified or registered mail,
postage paid with return receipt requested; by private courier, prepaid; by
telex, facsimile, or other telecommunication device capable of transmitting or
creating a written record; or personally. Mailed notices shall be deemed
delivered five (5) days after mailing, properly addressed. Couriered notices
shall be deemed delivered when delivered as addressed, or if the addressee
refuses delivery, when
57
presented for delivery notwithstanding such refusal. Telex or telecommunicated
notices shall be deemed delivered when receipt is either confirmed by confirming
transmission equipment or acknowledged by the addressee or its office. Personal
delivery shall be effective when accomplished. Unless a party changes its
address by giving notice to the other party as provided herein, notices shall be
delivered to the parties at the following addresses:
If to the Construction Agent or the Lessee, to such entity at the
following address:
Smart & Final Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
If to any Guarantor, to such entity in care of Smart & Final Inc. at
the following address:
Smart & Final Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
If to the Owner Trustee, to it at the following address:
First Security Bank, National Association
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇,
Vice President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Holders, to each such Holder at the address set forth for
such Holder on Schedule I of the Trust Agreement.
----------
If to the Agent, to it at the following address:
58
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
If to any Lender, to it at the address set forth for such Lender in
Schedule 2.1 of the Credit Agreement.
------------
From time to time any party may designate additional parties and/or
another address for notice purposes by notice to each of the other parties
hereto. Each notice hereunder shall be effective upon receipt or refusal
thereof.
12.3. COUNTERPARTS.
------------
This Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute but one (1) and the same
instrument.
12.4. TERMINATIONS, AMENDMENTS, WAIVERS, ETC.; UNANIMOUS VOTE MATTERS.
---------------------------------------------------------------
Each Basic Document may be terminated, amended, supplemented, waived or
modified only by an instrument in writing signed by, subject to Article VIII of
the Trust Agreement regarding termination of the Trust Agreement, the Majority
Secured Parties and each Credit Party (to the extent such Credit Party is a
party to such Basic Document); provided, to the extent no Default or Event of
--------
Default shall have occurred and be continuing, the Majority Secured Parties
shall not amend, supplement, waive or modify any provision of any Basic Document
in such a manner as to adversely affect the rights of any Credit Party without
the prior written consent (not to be unreasonably withheld or delayed) of such
Credit Party. Each Operative Agreement which is not a Basic Document may be
terminated, amended, supplemented, waived or modified only by an instrument in
writing signed by the parties thereto and (without the consent of any other
Financing Party) the Agent. In addition, the Unanimous Vote Matters shall
require the consent of each Lender and each Holder affected by such matter.
Each Operative Agreement which is not a Basic Document may be terminated,
amended, supplemented, waived or modified only by an instrument in writing
signed by the parties thereto and (without the consent of any other Financing
Party) the Agent.
Notwithstanding the foregoing, no such termination, amendment, supplement,
waiver or modification shall, without the consent of the Agent and, to the
extent affected thereby, each Lender and each Holder (collectively, the
"Unanimous Vote Matters") (i) reduce the amount of any Note or any Certificate,
-----------------------
extend the scheduled date of maturity of any Note, extend the scheduled
Expiration Date, extend any payment date of any Note or Certificate, reduce the
stated rate of interest payable on any Note, reduce the stated Holder Yield
payable on any Certificate (other than as a result of waiving the applicability
of any post-default increase in interest rates or Holder Yields), modify the
priority of any Lien in favor of the Agent under any Security
59
Document, subordinate any obligation owed to any Lender or Holder, reduce any
Lender Unused Fees or any Holder Unused Fees payable under this Participation
Agreement, extend the scheduled date of payment of any Lender Unused Fees or any
Holder Unused Fees, fund any Advance referenced in Section 2.1 of the Agency
Agreement in excess of the then current aggregate sum of the Available
Commitments and the Available Holder Commitments, elect to decline the funding
of any Transaction Expense with respect to Sections 7.1(a) or 7.1(b), elect to
decline the funding of any indemnity payment by the Owner Trustee with respect
to Section 12.9 or increase the amount or extend the expiration date of any
Lender's Commitment or the Holder Commitment of any Holder; or (ii) terminate,
amend, supplement, waive or modify any provision of this Section 12.4 or reduce
the percentages specified in the definitions of Majority Lenders, Majority
Holders or Majority Secured Parties, or consent to the assignment or transfer by
the Owner Trustee of any of its rights and obligations under any Credit Document
or release a material portion of the Collateral (except in accordance with
Section 8.8) or release any Credit Party from its obligations under any
Operative Agreement or otherwise alter any payment obligations of any Credit
Party to the Lessor or any Financing Party under the Operative Agreements; or
(iii) terminate, amend, supplement, waive or modify any provision of Section 7
of the Credit Agreement (which shall also require the consent of the Agent); or
(iv) eliminate the automatic option under Section 5.3(b) of the Agency Agreement
requiring that the Construction Agent pay certain liquidated damages in exchange
for the conveyance of a Property to the Construction Agent; or (v) permit the
extension of the Construction Period beyond the date that is two (2) years from
the Initial Closing Date. Any such termination, amendment, supplement, waiver or
modification shall apply equally to each of the Lenders and the Holders and
shall be binding upon all the parties to this Agreement. In the case of any
waiver, each party to this Agreement shall be restored to its former position
and rights under the Operative Agreements, and any Default or Event of Default
waived shall be deemed to be cured and not continuing; but no such waiver shall
extend to any subsequent or other Default or Event of Default, or impair any
right consequent thereon.
If at a time when the conditions precedent set forth in the Operative
Agreements to any Loan are, in the opinion of the Majority Lenders, satisfied,
any Lender shall fail to fulfill its obligations to make such Loan (any such
Lender, a "Defaulting Lender") then, for so long as such failure shall continue,
-----------------
the Defaulting Lender shall (unless the Lessee and the Majority Lenders,
determined as if the Defaulting Lender were not a "Lender", shall otherwise
consent in writing) be deemed for all purposes relating to terminations,
amendments, supplements, waivers or modifications under the Operative Agreements
to have no Loans, shall not be treated as a "Lender" when performing the
computation of Majority Lenders or Majority Secured Parties, and shall have no
rights under this Section 12.4; provided that any action taken pursuant to the
--------
second paragraph of this Section 12.4 shall not be effective as against the
Defaulting Lender.
If at a time when the conditions precedent set forth in the Operative
Agreements to any Holder Advance are, in the opinion of the Majority Holders,
satisfied, any Holder shall fail to fulfill its obligations to make such Holder
Advance (any such Holder, a "Defaulting Holder") then, for so long as such
-----------------
failure shall continue, the Defaulting Holder shall (unless the Lessee and the
Majority Holders, determined as if the Defaulting Holder were not a "Holder",
shall otherwise consent in writing) be deemed for all purposes relating to
terminations, amendments,
60
supplements, waivers or modifications under the Operative Agreements to have no
Holder Advances, shall not be treated as a "Holder" when performing the
computation of Majority Holders or Majority Secured Parties, and shall have no
rights under this Section 12.4; provided that any action taken pursuant to the
--------
second paragraph of this Section 12.4 shall not be effective as against the
Defaulting Holder.
12.5. HEADINGS, ETC.
--------------
The Table of Contents and headings of the various Articles and Sections of
this Agreement are for convenience of reference only and shall not modify,
define, expand or limit any of the terms or provisions hereof.
12.6. PARTIES IN INTEREST.
-------------------
Except as expressly provided herein, none of the provisions of this
Agreement are intended for the benefit of any Person except the parties hereto.
12.7. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL;
----------------------------------------------------------------
VENUE.
-----
(a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED, INTERPRETED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA. Any legal action or
proceeding with respect to this Agreement or any other Operative Agreement
may be brought in the courts of the State of California in Los Angeles
County or of the United States for the Southern District of California,
and, by execution and delivery of this Agreement, each of the parties to
this Agreement hereby irrevocably accepts for itself and in respect of its
property, generally and unconditionally, the nonexclusive jurisdiction of
such courts. Each of the parties to this Agreement further irrevocably
consents to the service of process out of any of the aforementioned courts
in any such action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to it at the address set out
for notices pursuant to Section 12.2, such service to become effective
three (3) days after such mailing. Nothing herein shall affect the right of
any party to serve process in any other manner permitted by Law or to
commence legal proceedings or to otherwise proceed against any party in any
other jurisdiction.
(b) EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY, TO
THE FULLEST EXTENT ALLOWED BY APPLICABLE LAW, WAIVES TRIAL BY JURY IN ANY
LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, ANY OTHER OPERATIVE
AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.
(c) Each of the parties to this Agreement hereby irrevocably waives
any objection which it may now or hereafter have to the laying of venue of
any of the
61
aforesaid actions or proceedings arising out of or in connection with this
Agreement or any other Operative Agreement brought in the courts referred
to in subsection (a) above and hereby further irrevocably waives and agrees
not to plead or claim in any such court that any such action or proceeding
brought in any such court has been brought in an inconvenient forum.
(d) The Agent on behalf of the Lenders and the Holders shall have
the right to proceed in any court of proper jurisdiction or by self-help to
exercise or prosecute the following remedies, as applicable (i) all rights
to foreclose against any real or personal property or other security by
exercising a power of sale granted under any Operative Agreement or under
applicable Law or by judicial foreclosure and sale, including without
limitation a proceeding to confirm the sale; (ii) all rights of self-help
including without limitation peaceful occupation of real property and
collection of rents, set-off and peaceful possession of personal property;
(iii) obtaining provisional or ancillary remedies including without
limitation injunctive relief, sequestration, garnishment, attachment,
appointment of receiver and filing an involuntary bankruptcy proceeding;
and (iv) when applicable, a judgment by confession of judgment.
Preservation of these remedies does not limit the power of an arbitrator to
grant similar remedies that may be requested by a party in a Dispute.
The parties to this Agreement and/or any other Operative Agreement agree
that they shall not have a remedy of special, punitive or exemplary damages
against any other party in any Dispute and hereby waive any right or claim to
special, punitive or exemplary damages they have now or which may arise in the
future in connection with any Dispute.
12.8. SEVERABILITY.
------------
Any provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
12.9. LIABILITY LIMITED.
-----------------
(a) The Lenders, the Agent, the Credit Parties, the Owner Trustee
and the Holders each acknowledge and agree that the Owner Trustee is
(except as otherwise expressly provided herein or therein) entering into
this Agreement and the other Operative Agreements to which it is a party
(other than the Trust Agreement and to the extent otherwise provided in
Section 6.1 of this Agreement), solely in its capacity as trustee under the
Trust Agreement and not in its individual capacity and that the Trust
Company shall not be liable or accountable under any circumstances
whatsoever in its individual capacity for or on account of any statements,
representations, warranties, covenants or obligations stated to be those of
the Owner Trustee, except for its own gross
62
negligence or willful misconduct and as otherwise expressly provided herein
or in the other Operative Agreements.
(b) Anything to the contrary contained in this Agreement, the
Credit Agreement, the Notes or in any other Operative Agreement
notwithstanding, no Exculpated Person shall be personally liable in any
respect for any liability or obligation arising hereunder or in any other
Operative Agreement including without limitation the payment of the
principal of, or interest on, the Notes, or for monetary damages for the
breach of performance of any of the covenants contained in the Credit
Agreement, the Notes, this Agreement, the Security Agreement or any of the
other Operative Agreements. The Lenders, the Holders and the Agent agree
that, in the event any remedies under any Operative Agreement are pursued,
neither the Lenders, the Holders nor the Agent shall have any recourse
against any Exculpated Person, for any deficiency, loss or Claim for
monetary damages or otherwise resulting therefrom and recourse shall be had
solely and exclusively against the Trust Estate (excluding Excepted
Payments) and the Credit Parties (with respect to the Credit Parties'
obligations under the Operative Agreements); but nothing contained herein
shall be taken to prevent recourse against or the enforcement of remedies
against the Trust Estate (excluding Excepted Payments) in respect of any
and all liabilities, obligations and undertakings contained herein and/or
in any other Operative Agreement. Notwithstanding the provisions of this
Section, nothing in any Operative Agreement shall: (i) constitute a waiver,
release or discharge of any indebtedness or obligation evidenced by the
Notes and/or the Certificates arising under any Operative Agreement or
secured by any Operative Agreement, but the same shall continue until paid
or discharged; (ii) relieve any Exculpated Person from liability and
responsibility for (but only to the extent of the damages arising by reason
of): active waste knowingly committed by any Exculpated Person with respect
to any Property, any fraud, gross negligence or willful misconduct on the
part of any Exculpated Person; (iii) relieve any Exculpated Person from
liability and responsibility for (but only to the extent of the moneys
misappropriated, misapplied or not turned over) (A) except for Excepted
Payments, misappropriation or misapplication by the Lessor (i.e.,
application in a manner contrary to any of the Operative Agreements) of any
insurance proceeds or condemnation award paid or delivered to the Lessor by
any Person other than the Agent, (B) except for Excepted Payments, any
deposits or any escrows or amounts owed by the Construction Agent under the
Agency Agreement held by the Lessor or (C) except for Excepted Payments,
any rent or other income received by the Lessor from any Credit Party that
is not turned over to the Agent; or (iv) affect or in any way limit the
Agent's rights and remedies under any Operative Agreement with respect to
the Rents and rights and powers of the Agent under the Operative Agreements
or to obtain a judgment against the Lessee's interest in the Properties or
the Agent's rights and powers to obtain a judgment against the Lessor or
any Credit Party (provided, that no deficiency judgment or other money
--------
judgment shall be enforced against any Exculpated Person except to the
extent of the Lessor's interest in the Trust Estate (excluding Excepted
Payments) or to the extent the Lessor may be liable as otherwise
contemplated in clauses (ii) and (iii) of this Section 12.9(b)).
63
12.10. RIGHTS OF THE CREDIT PARTIES.
----------------------------
If at any time all obligations (i) of the Owner Trustee under the Credit
Agreement, the Security Documents and the other Operative Agreements and (ii) of
the Credit Parties under the Operative Agreements have in each case been
satisfied or discharged in full, then the Credit Parties shall be entitled to
(a) terminate the Lease and guaranty obligations under Section 6B and (b)
receive all amounts then held under the Operative Agreements and all proceeds
with respect to any of the Properties. Upon the termination of the Lease and
Section 6B pursuant to the foregoing clause (a), the Lessor shall transfer to
the Lessee all of its right, title and interest free and clear of the Lien of
the Lease, the Lien of the Security Documents and all Lessor Liens in and to any
Properties then subject to the Lease and any amounts or proceeds referred to in
the foregoing clause (b) shall be paid over to the Lessee.
12.11. FURTHER ASSURANCES.
------------------
The parties hereto shall promptly cause to be taken, executed, acknowledged
or delivered, at the sole expense of the Lessee, all such further acts,
conveyances, documents and assurances as the other parties may from time to time
reasonably request in order to carry out and effectuate the intent and purposes
of this Participation Agreement, the other Operative Agreements and the
transactions contemplated hereby and thereby (including without limitation the
preparation, execution and filing of any and all Uniform Commercial Code
financing statements, filings of Mortgage Instruments and other filings or
registrations which the parties hereto may from time to time request to be filed
or effected). The Lessee, at its own expense and without need of any prior
request from any other party, shall take such action as may be necessary
(including without limitation any action specified in the preceding sentence),
or (if the Owner Trustee shall so request) as so requested, in order to maintain
and protect all security interests provided for hereunder or under any other
Operative Agreement. In addition, in connection with the sale or other
disposition of any Property or any portion thereof, the Lessee agrees to execute
such instruments of conveyance as may be reasonably required in connection
therewith.
12.12. CALCULATIONS UNDER OPERATIVE AGREEMENTS.
---------------------------------------
The parties hereto agree that all calculations and numerical determinations
to be made under the Operative Agreements by the Owner Trustee shall be made by
the Agent and that such calculations and determinations shall be conclusive and
binding on the parties hereto in the absence of manifest error.
12.13. CONFIDENTIALITY.
---------------
Each Financing Party agrees to keep confidential any information furnished
or made available to it by any Credit Party or any of its Subsidiaries pursuant
to this Agreement that is marked confidential; provided that nothing herein
--------
shall prevent any Financing Party from disclosing such information (a) to any
other Financing Party or any Affiliate of any Financing Party, or any officer,
director, employee, agent, or advisor of any Financing Party or Affiliate of any
Financing Party; (b) to any other Person if reasonably incidental to the
administration of the
64
credit facility provided herein; (c) as required by any law, rule, or
regulation; (d) upon the order of any court or administrative agency; (e) upon
the request or demand of any regulatory agency or authority; (f) that is or
becomes available to the public or that is or becomes available to any Financing
Party other than as a result of a disclosure by any Financing Party prohibited
by this Agreement; (g) in connection with any litigation to which such Financing
Party or any of its Affiliates may be a party; (h) to the extent necessary in
connection with the exercise of any remedy under this Agreement or any other
Operative Agreement; and (i) subject to provisions substantially similar to
those contained in this Section, to any actual or proposed participant or
assignee.
12.14. FINANCIAL REPORTING/TAX CHARACTERIZATION.
----------------------------------------
Lessee agrees to obtain advice from its own accountants and tax counsel
regarding the financial reporting treatment and the tax characterization of the
transactions described in the Operative Agreements. Lessee further agrees that
Lessee shall not rely upon any statement of any Financing Party or any of their
respective Affiliates and/or Subsidiaries regarding any such financial reporting
treatment and/or tax characterization.
12.15. SET-OFF.
-------
In addition to any rights now or hereafter granted under applicable Law and
not by way of limitation of any such rights, upon and after the occurrence of
any Event of Default and during the continuance thereof, the Lenders, the
Holders, their respective Affiliates and any assignee or participant of a Lender
or a Holder in accordance with the applicable provisions of the Operative
Agreements are hereby authorized by the Credit Parties at any time or from time
to time, without notice to the Credit Parties or to any other Person, any such
notice being hereby expressly waived, to set-off and to appropriate and to apply
any and all deposits (general or special, time or demand, including without
limitation indebtedness evidenced by certificates of deposit, whether matured or
unmatured) and any other indebtedness at any time held or owing by the Lenders,
the Holders, their respective Affiliates or any assignee or participant of a
Lender or a Holder in accordance with the applicable provisions of the Operative
Agreements to or for the credit or the account of any Credit Party against and
on account of the obligations of any Credit Party under the Operative Agreements
irrespective of whether or not (a) the Lenders or the Holders shall have made
any demand under any Operative Agreement or (b) the Agent shall have declared
any or all of the obligations of any Credit Party under the Operative Agreements
to be due and payable and although such obligations shall be contingent or
unmatured. Notwithstanding the foregoing, neither the Agent nor any other
Financing Party shall exercise, or attempt to exercise, any right of setoff,
banker's lien, or the like, against any deposit account or property of any
Credit Party held by the Agent or any other Financing Party, without the prior
written consent of the Majority Secured Parties, and any Financing Party
violating this provision shall indemnify the Agent and the other Financing
Parties from any and all costs, expenses, liabilities and damages resulting
therefrom. The contractual restriction on the exercise of setoff rights
provided in the foregoing sentence is solely for the benefit of the Agent and
the Financing Parties and may not be enforced by any Credit Party.
65
[signature pages follow]
66
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized as of the
day and year first above written.
CONSTRUCTION AGENT
------------------
AND LESSEE:
-----------
SMART & FINAL INC., as the Construction Agent
and as the Lessee
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Secretary
GUARANTORS:
----------
AMERICAN FOODSERVICE DISTRIBUTORS, a
California corporation, as a Guarantor
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------
Title: Secretary
-----------------------
SMART & FINAL STORES CORPORATION, a
California corporation, as a Guarantor
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------
Title: Secretary
-----------------------
SMART & FINAL OREGON, INC., a Oregon
corporation, as a Guarantor
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------
Title: Secretary
-----------------------
[signature pages continued]
PORT STOCKTON FOOD DISTRIBUTORS,
INC., a California corporation, as a Guarantor
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------
Title: Secretary
---------------------------------
▇▇▇▇▇ ▇▇▇ COMPANY, a Florida corporation,
as a Guarantor
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------
Title: Secretary
---------------------------------
AMERIFOODS TRADING COMPANY, a Florida
corporation, as a Guarantor
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------
Title: Secretary
---------------------------------
OWNER TRUSTEE AND
-----------------
LESSOR:
------
FIRST SECURITY BANK, NATIONAL ASSOCIATION, not
individually, except as expressly stated herein,
but solely as the Owner Trustee under the S&F
1998-1
By: /s/ C. ▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
Name: C. ▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------
Title: Vice President
---------------------------------
[signature pages continued]
THE AGENT AND THE
-----------------
LENDERS AND HOLDERS:
-------------------
--, as a Lender, as co- lead arranger and as the
Agent
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
Title: First Vice President and Manager
--------------------------------
NATIONSBANC ▇▇▇▇▇▇▇▇▇▇ SECURITIES, LLC, as co-lead
arranger and as the syndication agent
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------
Title: Vice President
--------------------------------
COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK
B.A. "RABOBANK NEDERLAND", NEW YORK BRANCH, as a
Holder and as a Lender
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------
Title: Vice President Chief
-----------------------------------------
Corporate Banking Officer
-------------------------
UNION BANK OF CALIFORNIA, N.A., AS A HOLDER AND AS
A LENDER
BY: /s/ ▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------
NAME: ▇▇▇▇▇ ▇▇▇▇▇
---------------------------------
TITLE: Vice President
--------------------------------
▇▇▇▇▇ FARGO BANK, N.A., as a Lender
BY: /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
NAME: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
TITLE: Vice President
--------------------------------
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Senior Vice President
CREDIT LYONNAIS LEASING CORP., as a Holder
BY: /S/ ▇.▇. ▇▇▇▇▇▇▇▇
-----------------------------------
NAME: ▇.▇. ▇▇▇▇▇▇▇▇
---------------------------------
TITLE: Vice President / Secretary
--------------------------------
NATIONSBANK, N.A. as a Holder and as a Lender
BY: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------------
NAME: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------------------------
TITLE: Vice President
-----------------------------------
EXHIBIT A
---------
Appendix A
Rules of Usage and Definitions
I. Rules of Usage
The following rules of usage shall apply to this Appendix A and the Operative
Agreements (and each appendix, schedule, exhibit and annex to the foregoing)
unless otherwise required by the context or unless otherwise defined therein:
(a) Except as otherwise expressly provided, any definitions set forth
herein or in any other document shall be equally applicable to the singular and
plural forms of the terms defined.
(b) Except as otherwise expressly provided, references in any document to
articles, sections, paragraphs, clauses, annexes, appendices, schedules or
exhibits are references to articles, sections, paragraphs, clauses, annexes,
appendices, schedules or exhibits in or to such document.
(c) The headings, subheadings and table of contents used in any document
are solely for convenience of reference and shall not constitute a part of any
such document nor shall they affect the meaning, construction or effect of any
provision thereof.
(d) References to any Person shall include such Person, its successors,
permitted assigns and permitted transferees.
(e) Except as otherwise expressly provided, reference to any agreement
means such agreement as amended, modified, extended, supplemented, restated
and/or replaced from time to time in accordance with the applicable provisions
thereof.
(f) Except as otherwise expressly provided, references to any law includes
any amendment or modification to such law and any rules or regulations issued
thereunder or any law enacted in substitution or replacement therefor.
(g) When used in any document, words such as "hereunder", "hereto",
"hereof" and "herein" and other words of like import shall, unless the context
clearly indicates to the contrary, refer to the whole of the applicable document
and not to any particular article, section, subsection, paragraph or clause
thereof.
(h) References to "including" means including without limiting the
generality of any description preceding such term and for purposes hereof the
rule of ejusdem generis shall not be
applicable to limit a general statement, followed by or referable to an
enumeration of specific matters, to matters similar to those specifically
mentioned.
(i) References herein to "attorney's fees", "legal fees", "costs of
counsel" or other such references shall be deemed to include the allocated cost
of in-house counsel.
(j) Each of the parties to the Operative Agreements and their counsel have
reviewed and revised, or requested revisions to, the Operative Agreements, and
the usual rule of construction that any ambiguities are to be resolved against
the drafting party shall be inapplicable in the construction and interpretation
of the Operative Agreements and any amendments or exhibits thereto.
(k) Capitalized terms used in any Operative Agreements which are not
defined in this Appendix A but are defined in another Operative Agreement shall
----------
have the meaning so ascribed to such term in the applicable Operative Agreement.
II. Definitions
"ABR" shall mean, for any day, a rate per annum equal to the greater of (a)
the Prime Lending Rate in effect on such day, and (b) the Federal Funds
Effective Rate in effect on such day plus one-half of one percent (0.5%). For
purposes hereof: "Prime Lending Rate" shall mean the rate which Credit Lyonnais
------------------
New York Branch ("CLNY") announces from time to time as its prime lending rate
as in effect from time to time. The Prime Lending Rate is a reference rate and
does not necessarily represent the lowest or best rate actually charged to any
customer. Any Lender may make commercial loans or other loans at rates of
interest at, above or below the Prime Lending Rate. The Prime Lending Rate
shall change automatically and without notice from time to time as and when the
prime lending rate of CLNY changes. "Federal Funds Effective Rate" shall mean,
----------------------------
for any period, a fluctuating interest rate per annum equal for each day during
such period to the weighted average of the rates on overnight Federal funds
transactions with members or the Federal Reserve System arranged by Federal
funds brokers, as published for such day (or, if such day is not a Business Day,
for the next preceding Business Day) by the Federal Reserve Bank of New York,
or, if such rate is not so published for any day which is a Business Day, the
average of the quotations for such day on such transactions received by CLNY
from three (3) Federal funds brokers of recognized standing selected by it. Any
change in the ABR due to a change in the Prime Lending Rate or the Federal Funds
Effective Rate shall be effective as of the opening of business on the effective
day of such change in the Prime Lending Rate or the Federal Funds Effective
Rate, respectively.
"ABR Holder Advance" shall mean a Holder Advance bearing a Holder Yield
based on the ABR.
"ABR Loans" shall mean Loans the rate of interest applicable to which is
based upon the ABR.
Appedix A-2
"Acceleration" shall have the meaning given to such term in Section 6 of
the Credit Agreement.
"Accounts" shall have the meaning given to such term in Section 1 of the
Security Agreement.
"Acquisition Advance" shall have the meaning given to such term in Section
5.3 of the Participation Agreement.
"Acquisition Loan" shall mean any Loan made in connection with an
Acquisition Advance.
"Additional Incorporated Terms" shall have the meaning given to such term
in Section 28.1 of the Lease.
"Adjusted Leverage Ratio" shall have the meaning given to such term in the
Lessee Credit Agreement.
"Advance" shall mean a Construction Advance or an Acquisition Advance.
"Affiliate" shall mean, as to any Person, any other Person that, directly
or indirectly, controls, is controlled by or is under common control with such
Person or is a director or officer of such Person. For purposes of this
definition, the term "control" (including the terms "controlling," "controlled
by" and "under common control with") of a Person means to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of Voting Stock, by contract or otherwise.
"After Tax Basis" shall mean, with respect to any payment to be received,
the amount of such payment increased so that, after deduction of the amount of
all taxes required to be paid by the recipient calculated at the then maximum
marginal rates generally applicable to Persons of the same type as the
recipients with respect to the receipt by the recipient of such amounts (less
any tax savings realized as a result of the payment of the indemnified amount),
such increased payment (as so reduced) is equal to the payment otherwise
required to be made.
"Agency Agreement" shall mean the Agency Agreement, dated on or about the
Initial Closing Date between the Construction Agent and the Lessor.
"Agency Agreement Event of Default" shall mean an "Event of Default" as
defined in Section 5.1 of the Agency Agreement.
"Agent" shall mean Credit Lyonnais Los Angeles Branch, as agent for the
Lenders pursuant to the Credit Agreement, or any successor agent appointed in
accordance with the terms of the Credit Agreement and respecting the Security
Documents, for the Lenders and the Holders, to the extent of their interests.
Appendix A-3
"Applicable Percentage" shall mean for Eurodollar Loans, the Lender Unused
Fee, Eurodollar Holder Advances and the Holder Unused Fee, the margin (expressed
as a percentage) to be used in determining the Eurodollar Rate and/or the
applicable Unused Fee, as the case may be, and shall, from the Initial Closing
Date until the receipt of the initial Margin Certificate, be (a) 2.50%, for the
Applicable Percentage for Eurodollar Loans, (b) 1.50%, for the ABR Loans, (c)
0.50%, for the Lender Unused Fee, (d) 3.25%, for the Eurodollar Holder Advances,
(e) 2.25%, for the ABR Holder Advances and (f) 0.50%, for the Holder Unused Fee,
and for each fiscal quarter ending after the Initial Closing Date shall be
determined, subject to the final paragraph of this definition, by reference to
the Adjusted Leverage Ratio set forth in the most recently delivered Margin
Certificate as follows:
====================================================================================================================
Applicable
Applicable Applicable Percentage Applicable Applicable Applicable
Adjusted Percentage Percentage for Percentage Percentage Percentage
Leverage for for ABR Eurodollar for ABR for the for the
Ratio Eurodollar Loans Holder Holder Holder Lender
Loans Advances Advances Unused Fee Unused Fee
--------------------------------------------------------------------------------------------------------------------
Less than 3.25 1.50% 0.00% 2.25% 0.75% 0.30% 0.30%
--------------------------------------------------------------------------------------------------------------------
Equal to or
greater than 3.25 1.75% 0.50% 2.50% 1.25% 0.35% 0.35%
but less than 3.75
--------------------------------------------------------------------------------------------------------------------
Equal to or
greater than 3.75 2.00% 1.00% 2.75% 1.75% 0.40% 0.40%
but less than 4.25
--------------------------------------------------------------------------------------------------------------------
Equal to or
greater than 4.25 2.25% 1.25% 3.00% 2.00% 0.50% 0.50%
but less than 4.75
--------------------------------------------------------------------------------------------------------------------
Equal to or
greater than 4.75 2.50% 1.50% 3.25% 2.25% 0.50% 0.50%
====================================================================================================================
Adjustments, if any, in the Applicable Percentage shall be made by the
Agent on the fifth (5th) Business Day after receipt by the Agent of quarterly
financial statements for Smart & Final Inc. and its Subsidiaries and the
accompanying Officer's Compliance Certificate setting forth the income and cash
flows of Smart & Final Inc. and its Consolidated Subsidiaries as of the most
recent fiscal quarter end. Subject to Section 2.8(b) of the Credit Agreement and
Section 3.2(b) of the Trust Agreement, in the event the Lessee fails to deliver,
or to cause the delivery of, such financial statements and certificate within
forty-five (45) days after the end of each fiscal quarter of Smart & Final Inc.,
the Applicable Percentage shall be the highest Applicable Percentage until five
(5) Business Days after receipt by the Agent of such financial statements and
certificates.
"Appraisal" shall mean, with respect to any Property, an appraisal to be
delivered in connection with the Participation Agreement or in accordance with
the terms of the Lease, in each case prepared by a reputable appraiser
reasonably acceptable to the Agent, which in the judgment of counsel to the
Agent, complies with all of the provisions of the Financial Institutions Reform,
Recovery and Enforcement Act of 1989, as amended, the rules and regulations
adopted pursuant thereto, and all other applicable Legal Requirements.
Appendix A-4
"Appraisal Procedure" shall have the meaning given such term in Section
22.4 of the Lease.
"Approved State" shall mean each state within the continental United
States.
"Appurtenant Rights" shall mean (a) all agreements, easements, rights of
way or use, rights of ingress or egress, privileges, appurtenances, tenements,
hereditaments and other rights and benefits at any time belonging or pertaining
to the Land underlying the Improvements or the Improvements, including without
limitation the use of any streets, ways, alleys, vaults or strips of land
adjoining, abutting, adjacent or contiguous to the Land and (b) all permits,
licenses and rights, whether or not of record, appurtenant to such Land or the
Improvements.
"Assignment and Acceptance" shall mean the Assignment and Acceptance in the
form attached to the Credit Agreement as Exhibit B.
---------
"Available Commitment" shall mean, as to any Lender at any time, an amount
equal to the excess, if any, of (a) the amount of such Lender's Commitment over
(b) the aggregate principal amount of all Loans made by such Lender as of such
date after giving effect to Section 5.2(d) of the Participation Agreement (but
without giving effect to any other repayments or prepayments of any Loans
hereunder).
"Available Holder Commitments" shall mean an amount equal to the excess, if
any, of (a) the aggregate amount of the Holder Commitments over (b) the
aggregate amount of the Holder Advances made since the Initial Closing Date
after giving effect to Section 5.2(d) of the Participation Agreement (but
without giving effect to any other repayments or prepayments of any Holder
Advances).
"Bankruptcy Code" shall mean Title 11 of the U. S. Code entitled
"Bankruptcy," as now or hereafter in effect or any successor thereto.
"Basic Documents" shall mean the following: the Participation Agreement,
the Agency Agreement, the Trust Agreement, the Certificates, the Credit
Agreement, the Notes, the Lease and the Security Agreement.
"Basic Rent" shall mean, the sum of (a) the Loan Basic Rent and (b) the
Lessor Basic Rent, calculated as of the applicable date on which Basic Rent is
due.
"Benefitted Lender" shall have the meaning specified in Section 9.10(a) of
the Credit Agreement.
"▇▇▇▇ of Sale" shall mean a ▇▇▇▇ of Sale regarding Equipment in form and
substance satisfactory to the Agent.
Appendix A-5
"Board" shall mean the Board of Governors of the Federal Reserve System of
the United States (or any successor).
"Borrower" shall mean the Owner Trustee, not in its individual capacity but
as Borrower under the Credit Agreement.
"Borrowing Date" shall mean any Business Day specified in a notice
delivered pursuant to Section 2.3 of the Credit Agreement as a date on which the
Lessor requests the Lenders to make Loans hereunder.
"Budgeted Total Property Cost" shall mean, at any date of determination
with respect to any Construction Period Property, an amount equal to the
aggregate amount which the Construction Agent in good faith expects to be
expended in order to achieve Completion with respect to such Property.
"Business Day" shall mean a day of the year on which banks are not required
or authorized by law to close in Los Angeles, California or New York, New York
and, if the applicable Business Day relates to any Eurodollar Rate Advances, on
which dealings are carried on in the London interbank market.
"Capital Lease" shall mean, as applied to any Person, any lease of any
property (whether real, personal, tangible, intangible or mixed of such Person)
by such Person as the lessee which would be capitalized on a balance sheet of
such Person prepared in accordance with GAAP.
"Capital Stock" shall mean any nonredeemable capital stock of any Credit
Party or any of its Subsidiaries, whether common or preferred.
"Casino" shall mean Casino USA, Inc. and its Affiliates.
"Casualty" shall mean any damage or destruction of all or any portion of
the Property as a result of a fire or other casualty.
"CERCLA" shall means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended or supplemented from time to time, and the
regulations promulgated pursuant thereto.
"Certificate" shall mean a Certificate in favor of each Holder regarding
the Holder Commitment of such Holder issued pursuant to the terms and conditions
of the Trust Agreement in favor of each Holder.
"Chattel Paper" shall have the meaning given to such term in Section 1 of
the Security Agreement.
Appendix A-6
"Claims" shall mean any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, claims, demands, disbursements and
expenses (including without limitation reasonable attorney's fees and expenses)
of any nature whatsoever.
"Closing Date" shall mean the Initial Closing Date and each Property
Closing Date.
"Code" shall mean the Internal Revenue Code of 1986 together with rules and
regulations promulgated thereunder, as amended from time to time, or any
successor statute thereto.
"Collateral" shall mean all assets of the Lessor, the Construction Agent
and the Lessee, now owned or hereafter acquired, upon which a Lien is purported
to be created by one or more of the Security Documents.
"Commencement Date" shall have the meaning specified in Section 2.2 of the
Lease.
"Commerce Distribution Center" shall mean the Property commonly known as
the "Commerce Distribution Center", located at SWC Eastern Avenue and ▇▇▇▇▇▇
Street, Commerce, California.
"Commitment" shall mean, as to any Lender, the obligation of such Lender to
make the portion of the Loans to the Lessor in an aggregate principal amount at
any time outstanding not to exceed the amount set forth opposite such Lender's
name on Schedule 2.1 of the Credit Agreement, as such amount may be increased or
------------
reduced from time to time in accordance with the provisions of the Operative
Agreements.
"Commitment Percentage" shall mean, as to any Lender at any time, the
percentage which such Lender's Commitment then constitutes of the aggregate
Commitments (or, at any time after the Commitments shall have expired or
terminated, the percentage which the aggregate principal amount of such Lender's
Loans then outstanding constitutes of the aggregate principal amount of all of
the Loans then outstanding), and such Commitment Percentage shall take into
account both the Lender's Tranche A Commitment and the Lender's Tranche B
Commitment.
"Commitment Period" shall mean the period from and including the Initial
Closing Date to and including the Construction Period Termination Date, or such
earlier date as the Commitments shall terminate as provided in the Credit
Agreement or the Holder Commitment shall terminate as provided in the Trust
Agreement.
"Company Obligations" shall mean the obligations of Smart & Final Inc., in
any and all capacities under and with respect to the Operative Agreements and
each Property.
"Completion" shall mean, with respect to a Property, such time as the
acquisition, installation, testing and final completion of the Improvements on
such Property has been achieved in accordance with the Plans and Specifications,
the Agency Agreement and/or the Lease, and in compliance with all Legal
Requirements and Insurance Requirements and a certificate of occupancy has been
issued with respect to such Property by the appropriate governmental entity
(except if non-compliance, individually or in the aggregate, shall not have
Appendix A-7
and could not reasonably be expected to have a Material Adverse Effect). If the
Lessor purchases a Property that includes existing Improvements that are to be
immediately occupied by the Lessee without any improvements financed pursuant to
the Operative Agreements, the date of Completion for such Property shall be the
Property Closing Date.
"Completion Date" shall mean, with respect to a Property, the earlier of
(a) the date on which Completion for such Property has occurred or (b) the
Construction Period Termination Date.
"Condemnation" shall mean any taking or sale of the use, access, occupancy,
easement rights or title to any Property or any part thereof, wholly or
partially (temporarily or permanently), by or on account of any actual or
threatened eminent domain proceeding or other taking of action by any Person
having the power of eminent domain, including without limitation an action by a
Governmental Authority to change the grade of, or widen the streets adjacent to,
any Property or alter the pedestrian or vehicular traffic flow to any Property
so as to result in a change in access to such Property, or by or on account of
an eviction by paramount title or any transfer made in lieu of any such
proceeding or action.
"Consolidated Subsidiary" shall mean, as to any Person, any Subsidiary of
such Person which under the rules of GAAP consistently applied should have its
financial results consolidated with those of such Person for purposes of
financial accounting statements.
"Consolidated Total Capital" shall mean, at any time, the sum of
Stockholders' Equity and Funded Indebtedness.
"Construction Advance" shall mean an advance of funds to pay Property Costs
pursuant to Section 5.4 of the Participation Agreement.
"Construction Agent" shall mean Smart & Final Inc., a Delaware corporation,
as the construction agent under the Agency Agreement.
"Construction Agent Options" shall have the meaning given to such term in
Section 2.1 of the Agency Agreement.
"Construction Budget" shall mean the cost of acquisition, installation,
testing, constructing and developing any Property as determined by the
Construction Agent in its reasonable, good faith judgment.
"Construction Commencement Date" shall mean, with respect to Improvements,
the date on which construction of such Improvements commences pursuant to the
Agency Agreement.
"Construction Contract" shall mean any contract entered into between the
Construction Agent or the Lessee with a Contractor for the construction of
Improvements or any portion thereof on the Property.
Appendix A-8
"Construction Loan" shall mean any Loan made in connection with a
Construction Advance.
"Construction Loan Property Cost" shall mean with respect to each
Construction Period Property at the date of determination, an amount equal to
(a) the aggregate principal amount of Construction Loans made on or prior to
such date with respect to the Property minus (b) the aggregate principal amount
-----
of prepayments or repayments of the Loans allocated to reduce the Construction
Loan Property Cost of such Property pursuant to Section 2.6(c) of the Credit
Agreement.
"Construction Period" shall mean, with respect to a Property, the period
commencing on the Construction Commencement Date for such Property and ending on
the Completion Date for such Property.
"Construction Period Property" means, at any date of determination, any
Property as to which the Rent Commencement Date has not occurred on or prior to
such date.
"Construction Period Termination Date" shall mean (a) the earlier of (i)
the date that the Commitments have been terminated in their entirety in
accordance with the terms of Section 2.5(a) of the Credit Agreement, or (ii) the
second anniversary of the Initial Closing Date or (b) such later date as may be
agreed to by the Majority Secured Parties.
"Contractor" shall mean each entity with whom the Construction Agent or the
Lessee contracts to construct any Improvements or any portion thereof on the
Property.
"Controlled Group" shall mean all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with any Credit Party, are treated as a single
employer under Section 414 of the Code.
"Co-Owner Trustee" shall have the meaning specified in Section 9.2 of the
Trust Agreement.
"Credit Agreement" shall mean the Credit Agreement, dated on or about the
Initial Closing Date, among the Lessor, the Agent and the Lenders, as specified
therein.
"Credit Agreement Default" shall mean any event or condition which, with
the lapse of time or the giving of notice, or both, would constitute a Credit
Agreement Event of Default.
"Credit Agreement Event of Default" shall mean any event or condition
defined as an "Event of Default" in Section 6 of the Credit Agreement.
"Credit Documents" shall mean the Participation Agreement, the Agency
Agreement, the Credit Agreement, the Notes and the Security Documents.
"Credit Parties" shall mean the Construction Agent, the Lessee and each
Guarantor.
Appendix A-9
"Deed" shall mean a warranty deed regarding the Land and/or Improvements in
form and substance satisfactory to the Agent.
"Default" shall mean any Event of Default or any event that would
constitute an Event of Default but for the requirement that notice be given or
time elapse or both.
"Defaulting Holder" shall have the meaning given to such term in Section
12.4 of the Participation Agreement.
"Defaulting Lender" shall have the meaning given to such term in Section
12.4 of the Participation Agreement.
"Deficiency Balance" shall have the meaning given in Section 22.1(b) of the
Lease Agreement.
"Dispute" shall mean any judicial proceeding, dispute, claim or controversy
arising out of, connected with or related to any Operative Agreement between or
among parties to any Operative Agreement.
"Documents" shall have the meaning given to such term in Section 1 of the
Security Agreement.
"Dollars" and "$" shall mean dollars in lawful currency of the United
States of America.
"Domestic Subsidiary" shall mean, with respect to any Person, any
Subsidiary of such Person which is incorporated or organized under the laws of
any State of the United States or the District of Columbia.
"Election Notice" shall have the meaning given to such term in Section 20.1
of the Lease.
"Eligible Assignee" shall mean (i) a Lender or a Holder, as the case may
be; (ii) an Affiliate of a Lender or a Holder, as the case may be; and (iii) any
other Person approved by the Agent and, unless an Event of Default has occurred
and is continuing at the time any assignment is effected in accordance with the
Operative Agreements, the Lessee or the Construction Agent, such approval not to
be unreasonably withheld or delayed by the Lessee or the Construction Agent and
such approval to be deemed given by the Lessee or the Construction Agent if no
objection is received by the assigning Lender or Holder and the Agent from the
Lessee or the Construction Agent within two Business Days after notice of such
proposed assignment has been provided by the assigning Lender or Holder to the
Lessee or the Construction Agent; provided, however, that neither the Lessee or
-------- -------
the Construction Agent nor an Affiliate of the Lessee or the Construction Agent
shall qualify as an Eligible Assignee.
"Employee Benefit Plan" or "Plan" shall mean an employee benefit plan
(within the meaning of Section 3(3) of ERISA, including without limitation any
Multiemployer Plan), or any
Appendix A-10
"plan" as defined in Section 4975(e)(1) of the Code and as interpreted by the
Internal Revenue Service and the Department of Labor in rules, regulations,
releases or bulletins in effect on any Closing Date.
"Environmental Claims" shall mean any federal, state or local law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award
and any and all common law requirements, rules and bases of liability relating
to the environment, health, safety or Hazardous Materials, including, without
limitation, CERCLA, the Resource Conservation and Recovery Act, the Hazardous
Materials Transportation Act, the Clean Water Act, the Toxic Substances Control
Act, the Clean Air Act, the Safe Drinking Water Act, the Atomic Energy Act, the
Federal Insecticide, Fungicide and Rodenticide Act and the Occupational Safety
and Health Act.
"Environmental Laws" shall mean any Law, permit, consent, approval,
license, award, or other authorization or requirement of any Tribunal relating
to emissions, discharges, releases, threatened releases of any Hazardous
Substance into ambient air, surface water, ground water, publicly owned
treatment works, septic system, or land, or otherwise relating to the handling,
storage, treatment, generation, use, or disposal of Hazardous Substances,
pollution or to the protection of health or the environment, including without
limitation CERCLA, the Resource Conservation and Recovery Act, 42 U.S.C. (S)
6901, et seq., and state statutes analogous thereto.
"Environmental Violation" shall mean any activity, occurrence or condition
that violates or threatens (if the threat requires remediation under any
Environmental Law and is not remediated during any grace period allowed under
such Environmental Law) to violate or results in or threatens (if the threat
requires remediation under any Environmental Law and is not remediated during
any grace period allowed under such Environmental Law) to result in
noncompliance with any Environmental Law.
"Equipment" shall mean equipment, apparatus, furnishings, fittings and
personal property of every kind and nature whatsoever purchased, leased or
otherwise acquired using the proceeds of the Loans or the Holder Advances by the
Construction Agent, the Lessee or the Lessor and all improvements and
modifications thereto and replacements thereof, whether or not now owned or
hereafter acquired or now or subsequently attached to, contained in or used or
usable in any way in connection with any operation of any Improvements,
including but without limiting the generality of the foregoing, all equipment
described in the Appraisal including without limitation all heating, electrical,
and mechanical equipment, lighting, switchboards, plumbing, ventilation, air
conditioning and air-cooling apparatus, refrigerating, and incinerating
equipment, escalators, elevators, loading and unloading equipment and systems,
cleaning systems (including without limitation window cleaning apparatus),
telephones, communication systems (including without limitation satellite dishes
and antennae), televisions, computers, sprinkler systems and other fire
prevention and extinguishing apparatus and materials, security systems, motors,
engines, machinery, pipes, pumps, tanks, conduits, appliances, fittings and
fixtures of every kind and description.
Appendix A-11
"Equipment Schedule" shall mean (a) each Equipment Schedule attached to the
applicable Requisition and (b) each Equipment Schedule attached to the
applicable Lease Supplement.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"ERISA Affiliate" shall mean each entity required to be aggregated with any
Credit Party pursuant to the requirements of Section 414(b) or (c) of the Code.
"Eurocurrency Reserve Requirements" shall mean for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the maximum rates
(expressed as a decimal) of reserve requirements in effect on such day
(including without limitation basic, supplemental, marginal and emergency
reserves under any regulations of the Board or other Governmental Authority
having jurisdiction with respect thereto) dealing with reserve requirements
prescribed on eurocurrency funding (currently referred to as "Eurocurrency
liabilities" in Regulation D) maintained by a member bank of the Federal Reserve
System.
"Eurodollar Holder Advance" shall mean a Holder Advance bearing a Holder
Yield based on the Eurodollar Rate.
"Eurodollar Loans" shall mean Loans the rate of interest applicable to
which is based upon the Eurodollar Rate.
"Eurodollar Rate" means, for any Eurodollar Loan or Eurodollar Holder
Advance comprising part of the same borrowing or advance (including without
limitation conversions, extensions and renewals), for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) appearing on Telerate Page 3750 (or any successor page) as the
London interbank offered rate for deposits in Dollars at approximately 11:00
a.m. (London time) two Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period. If for any reason such
rate is not available, the term "Eurodollar Rate" shall mean, for any Eurodollar
Loan or Eurodollar Holder Advance for any Interest Period therefor, the rate per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on
Reuters Screen LIBO Page as the London interbank offered rate for deposits in
Dollars at approximately 11:00 a.m. (London time) two Business Days prior to the
first day of such Interest Period for a term comparable to such Interest Period;
provided, however, if more than one rate is specified on Reuters Screen LIBO
-------- -------
Page, the applicable rate shall be the arithmetic mean of all such rates
(rounded upwards, if necessary, to the nearest 1/100 of 1%). As used herein,
"Reuters Screen LIBO Page" means the display designated as page "LIBO" on the
Reuters Monitor Money Rates Service (or such other page as may replace the LIBO
page on that service for the purpose of displaying London interbank offered
rates of major banks) ("RMMRS"). In the event the RMMRS is not then quoting such
offered rates, "Eurodollar Rate" shall mean for the Interest Period for each
Eurodollar Loan or Eurodollar Holder Advance comprising part of the same
borrowing or advance (including without limitation conversions, extensions and
renewals), the average (rounded upward to the nearest one sixteenth (1/16) of
one percent (1%)) per annum rate of interest determined by the office of the
Appendix A-12
Agent (each such determination to be conclusive and binding) as of two (2)
Business Days prior to the first day of such Interest Period, as the effective
rate at which deposits in immediately available funds in U.S. dollars are being,
have been, or would be offered or quoted by the Agent to major banks in the
applicable interbank market for Eurodollar deposits at any time during the
Business Day which is the second Business Day immediately preceding the first
day of such Interest Period, for a term comparable to such Interest Period and
in the amount of the requested Eurodollar Loan and/or Eurodollar Holder Advance.
If no such offers or quotes are generally available for such amount, then the
Agent shall be entitled to determine the Eurodollar Rate by estimating in its
reasonable judgment the per annum rate (as described above) that would be
applicable if such quote or offers were generally available.
"Event of Default" shall mean a Lease Event of Default, an Agency Agreement
Event of Default or a Credit Agreement Event of Default.
"Excepted Payments" shall mean:
(a) all indemnity payments (including without limitation indemnity
payments made pursuant to Section 11 of the Participation Agreement),
whether made by adjustment to Basic Rent or otherwise, to which the Owner
Trustee, any Holder or any of their respective Affiliates, agents,
officers, directors or employees is entitled;
(b) any amounts (other than Basic Rent or Termination Value) payable
under any Operative Agreement to reimburse the Owner Trustee, any Holder or
any of their respective Affiliates (including without limitation the
reasonable expenses of the Owner Trustee, the Trust Company and the Holders
incurred in connection with any such payment) for performing or complying
with any of the obligations of any Credit Party under and as permitted by
any Operative Agreement;
(c) any amount payable to a Holder by any transferee of such interest
of a Holder as the purchase price of such Holder's interest in the Trust
Estate (or a portion thereof);
(d) any insurance proceeds (or payments with respect to risks self-
insured or policy deductibles) under liability policies other than such
proceeds or payments payable to the Agent or any Lender;
(e) any insurance proceeds under policies maintained by the Owner
Trustee or any Holder;
(f) Transaction Expenses or other amounts, fees, disbursements or
expenses paid or payable to or for the benefit of the Owner Trustee or any
Holder;
(g) all right, title and interest of any Holder or the Owner Trustee
to any Property or any portion thereof or any other property to the extent
any of the foregoing has been released from the Liens of the Security
Documents and the Lease pursuant to the terms thereof;
Appendix A-13
has been released from the Liens of the Security Documents and the Lease
pursuant to the terms thereof;
(h) upon termination of the Credit Agreement pursuant to the terms
thereof, all remaining property covered by the Lease or Security Documents;
(i) all payments in respect of the Holder Yield;
(j) any payments in respect of interest to the extent attributable to
payments referred to in clauses (a) through (i) above; and
(k) any rights of either the Owner Trustee or the Trust Company to
demand, collect, ▇▇▇ for or otherwise receive and enforce payment of any of
the foregoing amounts, provided that such rights shall not include the
--------
right to terminate the Lease.
"Excess Proceeds" shall mean the excess, if any, of the aggregate of all
awards, compensation or insurance proceeds payable in connection with a Casualty
or Condemnation over the Termination Value paid by the Lessee pursuant to the
Lease with respect to such Casualty or Condemnation.
"Excluded Taxes" shall have the meaning given to such term in Section
11.2(b) of the Participation Agreement.
"Exculpated Persons" shall mean the Trust Company (except with respect to
the representations and warranties and the other obligations of the Trust
Company pursuant to the Operative Agreements expressly undertaken in its
individual capacity, including without limitation the representations and
warranties of the Trust Company pursuant to Section 6.1 of the Participation
Agreement, the obligations of the Trust Company pursuant to Section 8.2 of the
Participation Agreement and the obligations of the Trust Company pursuant to the
Trust Agreement), the Holders (except with respect to the obligations of the
Holders pursuant to the Participation Agreement and the Trust Agreement
expressly undertaken in their respective individual capacities), their officers,
directors, shareholders and partners.
"Exempt Payments" shall have the meaning specified in Section 11.2(e) of
the Participation Agreement.
"Expiration Date" shall have the meaning specified in Section 2.2 of the
Lease.
"Fair Market Sales Value" shall mean, with respect to any Property, the
amount, which in any event, shall not be less than zero (0), that would be paid
in cash in an arms-length transaction between an informed and willing purchaser
and an informed and willing seller, neither of whom is under any compulsion to
purchase or sell, respectively, such Property. Fair Market Sales Value of any
Property shall be determined based on the assumption that, except for purposes
of Section 17 of the Lease, such Property is in the condition and state of
repair required under
Appendix A-14
Section 10.1 of the Lease and each Credit Party is in compliance with the other
requirements of the Operative Agreements.
"Federal Funds Effective Rate" shall have the meaning given to such term in
the definition of ABR.
"Financing Parties" shall mean the Lessor, the Owner Trustee, in its trust
capacity, the Agent, the Holders and the Lenders.
"Fixtures" shall mean all fixtures relating to the Improvements, including
without limitation all components thereof, located in or on the Improvements,
together with all replacements, modifications, alterations and additions
thereto.
"Force Majeure Event" shall mean any event beyond the control of the
Construction Agent, other than a Casualty or Condemnation, including without
limitation strikes or lockouts (but only when the Construction Agent is legally
prevented from securing replacement labor or materials as a result thereof),
adverse soil conditions, acts of God, adverse weather conditions, inability to
obtain labor or materials after all possible efforts have been expended by the
Construction Agent, governmental activities, civil commotion and enemy action;
but excluding any event, cause or condition that results from the Construction
Agent's financial condition.
"Form 1001" shall have the meaning specified in Section 11.2(e) of the
Participation Agreement.
"Form 4224" shall have the meaning specified in Section 11.2(e) of the
Participation Agreement.
"Funded Indebtedness" shall mean at any date all indebtedness of the Lessee
and its Consolidated Subsidiaries determined in accordance with GAAP on a
consolidated basis which by its terms (i) matures more than one year after the
date of its inception, including without limitation any payments required to be
made on such indebtedness within one year, and (ii) any such indebtedness
maturing within one year from such date which is renewable or extendible at the
option of any obligor to a date more than one year from such date.
"GAAP" shall mean generally accepted accounting principles set forth in the
opinions and pronouncements of the accounting principles board of the American
Institute of Certified Public Accountants, and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession, that are applicable to the circumstances as of the date of
determination.
"▇▇▇▇▇ Environmental Report" means the environmental audit prepared for the
Commerce Distribution Center by ▇▇▇▇▇ Engineering Associates, Inc., as
supplemented by a letter dated as of May 18, 1998.
Appendix A-15
"Governmental Action" shall mean all permits, authorizations,
registrations, consents, approvals, waivers, exceptions, variances, orders,
judgments, written interpretations, decrees, licenses, exemptions, publications,
filings, notices to and declarations of or with, or required by, any
Governmental Authority, or required by any Legal Requirement, and shall include,
without limitation, all environmental and operating permits and licenses that
are required for the full use, occupancy, zoning and operating of the Property.
"Governmental Authority" shall mean any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Ground Lease" shall mean a ground lease (in form and substance
satisfactory to the Agent) respecting any Property (a) owned by any Credit Party
(or a parent corporation or any Subsidiary of any Credit Party) and leased to
the Lessor where such lease has at least a ninety-nine (99) year term and
payments set at no more than $1.00 per year, or (b) where such lease is subject
to such other terms and conditions as are satisfactory to the Agent.
"Guarantors" shall mean the various parties to the Participation Agreement
from time to time, as guarantors of the Construction Agent and the Lessee with
respect to the Operative Agreements and the Properties.
"Guaranty Agreement" shall mean the Guaranty Agreement (Tranche A
Obligations) dated as of November 13, 1998, made by Smart & Final Inc. and the
guarantors to the Agent for the ratable benefit of the Tranche A Lenders.
"Hard Costs" shall mean all costs and expenses payable for supplies,
materials, labor and profit with respect to the Improvements under any
Construction Contract.
"Hazardous Substance" shall mean (a) petroleum or petroleum products,
natural or synthetic gas, asbestos in any form that is or could become friable,
urea formaldehyde foam insulation and radon gas, (b) any substances defined as
or included in the definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," "extremely hazardous wastes," "restricted hazardous
wastes," "toxic substances," "toxic pollutants," "contaminants" or "pollutants,"
or words of similar import, under any Environmental Law and (c) any other
substance exposure to which is regulated under any Environmental Law.
"Holder Advance" shall mean any advance made by any Holder to the Owner
Trustee pursuant to the terms of the Trust Agreement or the Participation
Agreement.
"Holder Amount" shall mean as of any date, the aggregate amount of Holder
Advances made by each Holder to the Trust Estate pursuant to Section 2 of the
Participation Agreement and Section 3.1 of the Trust Agreement less any payments
of any Holder Advances received by the Holders pursuant to Section 3.4 of the
Trust Agreement.
Appendix A-16
"Holder Commitments" shall mean $3,600,000, as such amount may be increased
or reduced from time to time in accordance with the provisions of the Operative
Agreements; provided, if there shall be more than one (1) Holder, the Holder
--------
Commitment of each Holder shall be as set forth in Schedule I to the Trust
----------
Agreement as such Schedule I may be amended and replaced from time to time.
----------
"Holder Construction Property Cost" shall mean, with respect to each
Construction Period Property, at any date of determination, an amount equal to
the outstanding Holder Advances made with respect thereto under the Trust
Agreement.
"Holder Overdue Rate" shall mean the lesser of (a) the then current rate of
Holder Yield respecting the particular amount in question plus two percent (2%)
and (b) the highest rate permitted by applicable law.
"Holder Property Cost" shall mean with respect to a Property an amount
equal to the outstanding Holder Advances with respect thereto.
"Holder Unused Fee" shall have the meaning given to such term in Section
7.4 of the Participation Agreement.
"Holder Yield" shall mean with respect to Holder Advances from time to time
either the Eurodollar Rate plus the Applicable Percentage or the ABR as elected
by the Owner Trustee from time to time with respect to such Holder Advances in
accordance with the terms of the Trust Agreement; provided, however, (a) upon
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delivery of the notice described in Section 3.7(c) of the Trust Agreement, the
outstanding Holder Advances of each Holder shall bear a yield at the ABR
applicable from time to time from and after the dates and during the periods
specified in Section 3.7(c) of the Trust Agreement, and (b) upon the delivery by
a Holder of the notice described in Section 11.3(f) of the Participation
Agreement, the Holder Advances of such Holder shall bear a yield at the ABR
applicable from time to time after the dates and during the periods specified in
Section 11.3(f) of the Participation Agreement.
"Holders" shall mean Credit Lyonnais Los Angeles Branch and shall include
the other banks and financial institutions which may be from time to time
holders of Certificates in connection with the S&F Trust 1998-1.
"Impositions" shall mean any and all liabilities, losses, expenses, costs,
charges and Liens of any kind whatsoever for fees, taxes, levies, imposts,
duties, charges, assessments or withholdings ("Taxes") including but not limited
-----
to (i) real and personal property taxes, including without limitation personal
property taxes on any property covered by the Lease that is classified by
Governmental Authorities as personal property, and real estate or ad valorem
taxes in the nature of property taxes; (ii) sales taxes, use taxes and other
similar taxes (including rent taxes and intangibles taxes); (iii) excise taxes;
(iv) real estate transfer taxes, conveyance taxes, stamp taxes and documentary
recording taxes and fees; (v) taxes that are or are in the nature of franchise,
income, value added, privilege and doing business taxes, license and
registration fees; (vi) assessments on any Property, including without
limitation all assessments for public Improvements or benefits, whether or not
such improvements are commenced or completed
Appendix A-17
within the Term; and (vii) taxes, Liens, assessments or charges asserted,
imposed or assessed by the PBGC or any governmental authority succeeding to or
performing functions similar to, the PBGC; and in each case all interest,
additions to tax and penalties thereon, which at any time prior to, during or
with respect to the Term or in respect of any period for which the Lessee shall
be obligated to pay Supplemental Rent, may be levied, assessed or imposed by any
Governmental Authority upon or with respect to (a) any Property or any part
thereof or interest therein; (b) the leasing, financing, refinancing,
demolition, construction, substitution, subleasing, assignment, control,
condition, occupancy, servicing, maintenance, repair, ownership, possession,
activity conducted on, delivery, insuring, use, operation, improvement, sale,
transfer of title, return or other disposition of such Property or any part
thereof or interest therein; (c) the Notes, other indebtedness with respect to
any Property, or the Certificates, or any part thereof or interest therein; (d)
the rentals, receipts or earnings arising from any Property or any part thereof
or interest therein; (e) the Operative Agreements, the performance or
enforcement of performance or the nonperformance thereof, or any payment made or
accrued pursuant thereto; (f) the income or other proceeds received with respect
to any Property or any part thereof or interest therein upon the sale or
disposition thereof; (g) any contract (including the Agency Agreement) relating
to the construction, acquisition or delivery of the Improvements or any part
thereof or interest therein; (h) the issuance of the Notes or the Certificates;
(i) the Owner Trustee, the Trust or the Trust Estate; or (j) otherwise in
connection with the transactions contemplated by the Operative Agreements.
"Improvements" shall mean, with respect to the construction, renovations
and/or Modifications on any Land, all buildings, structures, Fixtures, and other
improvements of every kind existing at any time and from time to time on or
under the Land purchased or otherwise acquired using the proceeds of the Loans
or the Holder Advances or which is subject to a Ground Lease, together with any
and all appurtenances to such buildings, structures or improvements, including
without limitation sidewalks, utility pipes, conduits and lines, parking areas
and roadways, and including without limitation all Modifications and other
additions to or changes in the Improvements at any time, including without
limitation (a) any Improvements existing as of the Property Closing Date as such
Improvements may be referenced on the applicable Requisition and (b) any
Improvements made subsequent to such Property Closing Date.
"Incorporated Covenants" shall have the meaning given to such term in
Section 28.1 of the Lease.
"Incorporated Representations and Warranties" shall have the meaning given
to such term in Section 28.1 of the Lease.
"Indebtedness" of a Person shall mean, without duplication such Person's:
(a) obligations for borrowed money;
(b) obligations representing the deferred purchase price of Property
(whether real, personal, tangible, intangible or mixed) or services (other than
accounts payable arising in the
Appendix A-18
ordinary course of such Person's business payable on terms customary in the
trade);
(c) obligations, whether or not assumed, secured by liens or payable out
of the proceeds or production from property now or hereafter owned or acquired
by such Person;
(d) obligations which are evidenced by notes, acceptances or other
instruments;
(e) Capital Lease obligations;
(f) net liabilities under interest rate swap, exchange or cap agreements;
and
(g) contingent obligations
"Indemnified Person" shall mean the Lessor, the Owner Trustee, in its
individual and its trust capacity, the Trust, the Trust Company, the Agent, the
Holders, the Lenders and their respective successors, assigns, directors,
shareholders, partners, officers, employees, agents and Affiliates.
"Indemnity Provider" shall mean, respecting each Property, the Lessee.
"Initial Closing Date" shall mean November 13, 1998.
"Initial Construction Advance" shall mean any initial Advance to pay for:
(a) Property Costs for construction of any Improvements; and (b) the Property
Costs of restoring or repairing any Property which is required to be restored or
repaired in accordance with Section 15.1(e) of the Lease.
"Instruments" shall have the meaning given to such term in Section 1 of the
Security Agreement.
"Insurance Requirements" shall mean all terms and conditions of any
insurance policy either required by the Lease to be maintained by the Lessee or
required by the Agency Agreement to be maintained by the Construction Agent, and
all requirements of the issuer of any such policy and, regarding self insurance,
any other requirements of the Lessee.
"Interest Period" shall mean (a) during the Commitment Period and
thereafter as to any Eurodollar Loan or Eurodollar Holder Advance (i) with
respect to the initial Interest Period, the period beginning on the date of the
first Eurodollar Loan and Eurodollar Holder Advance and ending one (1) month,
two (2) months, three (3) months or six (6) months thereafter, as selected by
the Lessor (in the case of a Eurodollar Loan) or the Owner Trustee (in the case
of a Eurodollar Holder Advance) in its applicable notice given with respect
thereto and (ii) thereafter, each period commencing on the last day of the next
preceding Interest Period applicable to such Eurodollar Loan or Eurodollar
Holder Advance and ending one (1) month, two (2) months, three (3) months or six
(6) months thereafter, as selected by the Lessor by irrevocable notice to the
Agent (in the case of a Eurodollar Loan) or by the Owner Trustee (in the case of
a Eurodollar
Appendix A-19
Holder Advance) in each case not less than three (3) Business Days prior to the
last day of the then current Interest Period with respect thereto; provided,
--------
however, that all of the foregoing provisions relating to Interest Periods are
-------
subject to the following: (A) if any Interest Period would end on a day which is
not a Business Day, such Interest Period shall be extended to the next
succeeding Business Day (except that where the next succeeding Business Day
falls in the next succeeding calendar month, then on the next preceding Business
Day), (B) no Interest Period shall extend beyond the Maturity Date or the
Expiration Date, as the case may be, (C) where an Interest Period begins on a
day for which there is no numerically corresponding day in the calendar month in
which the Interest Period is to end, such Interest Period shall end on the last
Business Day of such calendar month, (D) there shall not be more than four (4)
Interest Periods outstanding at any one (1) time; provided further, to the
extent payments of interest or Holder Yield, as the case may be, are to be made
at the end of an Interest Period and such Interest Period extends for longer
than three (3) months, then such payments shall also be made on the last
Business Day of the third month during such Interest Period.
"Investment Company Act" shall mean the Investment Company Act of 1940, as
amended, together with the rules and regulations promulgated thereunder.
"Joinder Agreement" shall mean a joinder agreement, in the form of Exhibit
-------
J to the Participation Agreement, executed from time to time between a Domestic
-
Subsidiary of any Credit Party and the Agent.
"Land" shall mean a parcel of real property described on (a) the
Requisition issued by the Construction Agent on the Property Closing Date
relating to such parcel and (b) the schedules to each applicable Lease
Supplement executed and delivered in accordance with the requirements of Section
2.4 of the Lease.
"LCA Security Agreement" shall mean the "Security Agreement" as defined in
the Lessee Credit Agreement.
"Law" shall mean any statute, law, ordinance, regulation, rule, directive,
order, writ, injunction or decree of any Tribunal.
"Lease" or "Lease Agreement" shall mean the Lease Agreement dated on or
about the Initial Closing Date, between the Lessor and the Lessee, together with
any Lease Supplements thereto.
"Lease Default" shall mean any event or condition which, with the lapse of
time or the giving of notice, or both, would constitute a Lease Event of
Default.
"Lease Event of Default" shall have the meaning specified in Section 17.1
of the Lease.
"Lease Supplement" shall mean each Lease Supplement substantially in the
form of Exhibit A to the Lease, together with all attachments and schedules
---------
thereto.
Appendix A-20
"Legal Requirements" shall mean all foreign, federal, state, county,
municipal and other governmental statutes, laws, rules, orders, regulations,
ordinances, judgments, decrees and injunctions affecting the Owner Trustee, any
Holder, the Lessor, any Credit Party, the Agent, any Lender or any Property,
Land, Improvement, Equipment or the taxation, demolition, construction, use or
alteration of such Improvements, whether now or hereafter enacted and in force,
including without limitation any that require repairs, modifications or
alterations in or to any Property or in any way limit the use and enjoyment
thereof (including without limitation all building, zoning and fire codes and
the Americans with Disabilities Act of 1990, 42 U.S.C. (S) 12101 et. seq., and
any other similar federal, state or local laws or ordinances and the regulations
promulgated thereunder) and any that may relate to environmental requirements
(including without limitation all Environmental Laws), and all permits,
certificates of occupancy, licenses, authorizations and regulations relating
thereto, and all covenants, agreements, restrictions and encumbrances contained
in any instruments which are either of record or known to any Credit Party
affecting any Property or the Appurtenant Rights.
"Lender Commitments" shall mean $86,400,000, as such amount may be
increased or reduced from time to time in accordance with the provisions of the
Operative Agreements; provided, if there shall be more than one (1) Lender, the
--------
Lender Commitment of each Lender shall be as set forth in Schedule 2.1 to the
------------
Credit Agreement as such Schedule 2.1 may be amended and replaced from time to
------------
time.
"Lender Financing Statements" shall mean UCC financing statements and
fixture filings appropriately completed and executed for filing in the
applicable jurisdiction in order to procure a security interest in favor of the
Agent in the Collateral subject to the Security Documents.
"Lender Unused Fee" shall have the meaning given to such term in Section
7.4 of the Participation Agreement.
"Lenders" shall mean Credit Lyonnais Los Angeles Branch and shall include
the other banks and financial institutions which may be from time to time party
to the Participation Agreement and the Credit Agreement.
"Lessee" shall have the meaning set forth in the Lease.
"Lessee Credit Agreement" shall mean that certain Credit Agreement dated as
of November 13, 1998 among the Lessee, as Borrower, the financial institutions
and other entities listed on the signature page thereof as lenders, Credit
Lyonnais Los Angeles Bank, as Co-Lead Arranger and as Administrative Agent,
NationsBank ▇▇▇▇▇▇▇▇▇▇ Securities LLC, as Co-Lead Arranger and as Syndication
Agent, and Credit Lyonnais New York Branch, as L/C Bank, as such may hereafter
be amended, modified, supplemented, restated and/or replaced from time to time.
"Lessee Credit Agreement Commitment Amount" shall mean the aggregate
Revolving Commitments (as such term is defined in the Lessee Credit Agreement).
Appendix A-21
"Lessee Credit Agreement Event of Default" shall mean any of the Events of
Default as defined in Section 7.01 of the Lessee Credit Agreement.
"Lessor" shall mean the Owner Trustee, not in its individual capacity, but
as the Lessor under the Lease.
"Lessor Basic Rent" shall mean the scheduled Holder Yield due on the Holder
Advances on any Scheduled Interest Payment Date pursuant to the Trust Agreement
(but not including interest on (a) any such scheduled Holder Yield due on the
Holder Advances prior to the Rent Commencement Date with respect to the Property
to which such Holder Advances relate or (b) overdue amounts under the Trust
Agreement or otherwise).
"Lessor Financing Statements" shall mean UCC financing statements and
fixture filings appropriately completed and executed for filing in the
applicable jurisdictions in order to protect the Lessor's interest under the
Lease to the extent the Lease is a security agreement or a mortgage.
"Lessor Lien" shall mean any Lien, true lease or sublease or disposition of
title arising as a result of (a) any claim against the Lessor or the Trust
Company, in its individual capacity, not resulting from the transactions
contemplated by the Operative Agreements, (b) any act or omission of the Lessor
or the Trust Company, in its individual capacity, which is not required by the
Operative Agreements or is in violation of any of the terms of the Operative
Agreements, (c) any claim against the Lessor or the Trust Company, in its
individual capacity, with respect to Taxes or Transaction Expenses against which
the Lessee is not required to indemnify the Lessor or the Trust Company, in its
individual capacity, pursuant to Section 11 of the Participation Agreement or
(d) any claim against the Lessor arising out of any transfer by the Lessor of
all or any portion of the interest of the Lessor in the Properties, the Trust
Estate or the Operative Agreements other than the transfer of title to or
possession of any Properties by the Lessor pursuant to and in accordance with
the Lease, the Credit Agreement, the Security Agreement or the Participation
Agreement or pursuant to the exercise of the remedies set forth in Article XVII
of the Lease.
"Lien" shall mean any lien, security interest or other charge or
encumbrance of any kind, or any other type of preferential arrangement,
including, without limitation, the lien or retained security title of a
conditional vendor and any easement, right of way or other encumbrance on title
to real property.
"Limited Recourse Amount" shall mean with respect to all the Properties on
an aggregate basis, an amount equal to the sum of the Termination Values with
respect to all the Properties on an aggregate basis on each Payment Date, less
the Maximum Residual Guarantee Amount as of such date with respect to all the
Properties on an aggregate basis.
"Loan Basic Rent" shall mean the scheduled interest due on the Loans on any
Scheduled Interest Payment Date pursuant to the Credit Agreement (but not
including interest on (a) any such Loan due prior to the Rent Commencement Date
with respect to the Property to which such
Appendix A-22
Loan relates or (b) any overdue amounts under Section 2.8(c) of the Credit
Agreement or otherwise).
"Loan Property Cost" shall mean, with respect to each Property at any date
of determination, an amount equal to (a) the aggregate principal amount all
Loans (including without limitation all Acquisition Loans and Construction
Loans) made on or prior to such date with respect to such Property minus (b) the
-----
aggregate amount of prepayments or repayments as the case may be of the Loans
allocated to reduce the Loan Property Cost of such Property pursuant to Section
2.6(c) of the Credit Agreement.
"Loans" shall mean the loans extended pursuant to the Credit Agreement and
shall include both the Tranche A Loans and the Tranche B Loans.
"Majority Holders" shall mean at any time, Holders whose Holder Advances
outstanding represent at least sixty-six and 2/3 percent (66-2/3%) of (a) the
aggregate Holder Advances outstanding or (b) to the extent there are no Holder
Advances outstanding, the aggregate Holder Commitments.
"Majority Lenders" shall mean at any time, Lenders whose Loans outstanding
represent at least sixty-six and 2/3 percent (66-2/3%) of (a) the aggregate
Loans outstanding or (b) to the extent there are no Loans outstanding, the
aggregate of the Lender Commitments.
"Majority Secured Parties" shall mean at any time, Lenders and Holders
whose Loans and Holder Advances outstanding represent at least sixty-six and 2/3
percent (66-2/3%) of (a) the aggregate Advances outstanding or (b) to the extent
there are no Advances outstanding, the sum of the aggregate Holder Commitments
plus the aggregate Lender Commitments.
"Marketing Period" shall mean, if the Lessee has given a Sale Notice in
accordance with Section 20.1 of the Lease, the period commencing on the date
such Sale Notice is given and ending on the Expiration Date.
"Margin Certificate" shall have the meaning given to such term in Section
8.3(l) of the Participation Agreement.
"Material Adverse Effect" shall, mean a material adverse effect on (a) the
business, condition (financial or otherwise), assets, liabilities or operations
of the Credit Parties (on a consolidated basis), (b) the ability of any Credit
Party to perform its respective obligations under any Operative Agreement to
which it is a party, (c) the validity or enforceability of any Operative
Agreement or the rights and remedies of the Agent, the Lenders, the Holders, or
the Lessor thereunder, (d) the validity, priority or enforceability of any Lien
on any Property created by any of the Operative Agreements, or (e) the value,
utility or useful life of any Property or the use, or ability of the Lessee to
use, any Property for the purpose for which it was intended.
"Maturity Date" shall mean the Expiration Date.
Appendix A-23
"Maximum Amount" shall mean (a) one hundred percent (100%) of the cost of
the Land or the Ground Lease (as the case may be) for all, but not less than
all, the Properties (collectively, the "Land Cost"), plus (b) the product of
--------- ----
eighty-nine and nine tenths percent (89.9%) multiplied by the following: (the
aggregate Termination Value for all, but not less than all, the Properties,
minus the Land Cost, minus accrued, unpaid Holder Yield respecting any and all
----- -----
Construction Period Properties) minus (c) the accreted value (calculated at a
-----
rate of seven and 81/100 percent (7.81%) per annum) of any payments previously
made by the Construction Agent or the Lessee regarding any and all Construction
Period Properties and not reimbursed.
"Maximum Residual Guarantee Amount" shall mean an amount equal to the
product of the aggregate Property Cost for all of the Properties times eighty-
six percent (86%), provided that, (a) the portion of the Maximum Residual
--------
Guarantee Amount allocated to the Land shall be in an amount not less than
eighty-eight percent (88%) of the amount of the aggregate Property Cost
attributable to the Land, and (b) the portion of the Maximum Residual Guarantee
Amount allocated to Improvements and Equipment shall be in an amount equal to
the Maximum Residual Guarantee Amount less the amount described in clause (a)
above.
"Modifications" shall have the meaning specified in Section 11.1(a) of the
Lease.
"Mortgage Instrument" shall mean any mortgage, deed of trust or any other
instrument executed by the Owner Trustee in favor of the Agent (for the benefit
of the Lenders and the Holders) and evidencing a Lien on the Property, in form
and substance reasonably acceptable to the Agent.
"Multiemployer Plan" shall mean any plan described in Section 4001(a)(3) of
ERISA to which contributions are or have been made or required by any Credit
Party or any of its Subsidiaries or ERISA Affiliates.
"Multiple Employer Plan" shall mean a plan to which any Credit Party or any
ERISA Affiliate and at least one (1) other employer other than an ERISA
Affiliate is making or accruing an obligation to make, or has made or accrued an
obligation to make, contributions.
"New Facility" shall have the meaning given to such term in Section 28.1 of
the Lease.
"Non-Integral Equipment" shall mean Equipment which (a) is personal
property that is readily removable without causing material damage to the
applicable Property and (b) is not integral or necessary, respecting the
applicable Property, for compliance with Section 8.3 of the Lease or otherwise
to the structure thereof, the mechanical operation thereof, the electrical
systems thereof or otherwise with respect to any aspect of the physical plant
thereof.
"Notes" shall mean those notes issued to the Lenders pursuant to the Credit
Agreement and shall include both the Tranche A Notes and the Tranche B Notes.
"Obligations" shall have the meaning given to such term in Section 1 of the
Security Agreement.
Appendix A-24
"Officer's Certificate" with respect to any person shall mean a certificate
executed on behalf of such person by a Responsible Officer who has made or
caused to be made such examination or investigation as is necessary to enable
such Responsible Officer to express an informed opinion with respect to the
subject matter of such Officer's Certificate.
"Officer's Compliance Certificate" shall have the meaning given to such
term in Section 8.3(l) of the Participation Agreement.
"Operative Agreements" shall mean the following: the Participation
Agreement, the Agency Agreement, the Trust Agreement, the Certificates, the
Credit Agreement, the Notes, the Lease, the Lease Supplements (and memoranda of
the Lease and each Lease Supplement in a form reasonably acceptable to the
Agent), the Joinder Agreements, the Security Agreement, the Mortgage
Instruments, the Guaranty Agreement, the other Security Documents, the Ground
Leases, the Deeds and the Bills of Sale and any and all other agreements,
documents and instruments executed in connection with any of the foregoing.
"Original Executed Counterpart" shall have the meaning given to such term
in Section 5 of Exhibit A to the Lease.
---------
"Overdue Interest" shall mean any interest payable pursuant to Section
2.8(b) of the Credit Agreement.
"Overdue Rate" shall mean (a) with respect to the Loan Basic Rent, and any
other amount owed under or with respect to the Credit Agreement or the Security
Documents, the rate specified in Section 2.8(b) of the Credit Agreement, (b)
with respect to the Lessor Basic Rent, the Holder Yield and any other amount
owed under or with respect to the Trust Agreement, the Holder Overdue Rate, and
(c) with respect to any other amount, the amount referred to in clause (y) of
Section 2.8(b) of the Credit Agreement.
"Owner Trustee," "Borrower" or "Lessor" shall mean First Security Bank,
National Association, not individually, except as expressly stated in the
various Operative Agreements, but solely as the Owner Trustee under the S&F
Trust 1998-1 and any successor, replacement and/or additional Owner Trustee
expressly permitted under the Operative Agreements.
"Participant" shall have the meaning given to such term in Section 9.7 of
the Credit Agreement.
"Participation Agreement" shall mean that certain Participation Agreement
dated as of November 13, 1998 among Smart & Final Inc., as the Construction
Agent and as the Lessee, the various parties hereto from time to time, as the
Guarantors, First Security Bank, National Association, not individually, except
as expressly stated herein, but solely as the Owner Trustee under the S&F Trust
1998-1, the various banks and other lending institutions which are parties
hereto from time to time, as the Holders, the various banks and other lending
institutions which are parties hereto from time to time, as the Lenders and
Credit Lyonnais Los Angeles Branch, as
Appendix A-25
the Administrative Agent for the Lenders and respecting the Security Documents,
as the Administrative Agent for the Lenders and the Holders, to the extent of
their interests, Co-Lead Arrangers: Credit Lyonnais Los Angeles Branch,
NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities LLC, Syndication Agent: NationsBanc ▇▇▇▇▇▇▇▇▇▇
Securities LLC.
"Payment Date" shall mean any Scheduled Interest Payment Date and any date
on which interest or Holder Yield in connection with a prepayment of principal
on the Loans or of the Holder Advances is due under the Credit Agreement or the
Trust Agreement.
"PBGC" shall mean the Pension Benefit Guaranty Corporation created by
Section 4002(a) of ERISA or any successor thereto.
"Pension Plan" shall mean a "pension plan", as such term is defined in
section 3(2) of ERISA, which is subject to title IV of ERISA (other than a
Multiemployer Plan), and to which any Credit Party or any ERISA Affiliate may
have any liability, including without limitation any liability by reason of
having been a substantial employer within the meaning of section 4063 of ERISA
at any time during the preceding five (5) years, or by reason of being deemed to
be a contributing sponsor under section 4069 of ERISA.
"Permitted Facility" shall mean a retail grocery and restaurant supply
store or a food and restaurant supply distribution facility, in each case of the
type and size customarily used and operated by the Lessee or any of its
Subsidiaries in its ordinary course of business as of the Initial Closing Date.
"Permitted Liens" shall mean:
(a) the respective rights and interests of the parties to the
Operative Agreements as provided in the Operative Agreements;
(b) the rights of any sublessee or assignee under a sublease or an
assignment expressly permitted by the terms of the Lease for no longer than
the duration of the Lease;
(c) Liens for Taxes that either are not yet due or are being
contested in accordance with the provisions of Section 13.1 of the Lease;
(d) Liens arising by operation of law, materialmen's, mechanics',
workmen's, repairmen's, employees', carriers', warehousemen's and other
like Liens relating to the construction of the Improvements or in
connection with any Modifications or arising in the ordinary course of
business for amounts that either are not more than thirty (30) days past
due or are being diligently contested in good faith by appropriate
proceedings, so long as such proceedings satisfy the conditions for the
continuation of proceedings to contest Taxes set forth in Section 13.1 of
the Lease;
Appendix A-26
(e) Liens of any of the types referred to in clause (d) above that
have been bonded for not less than the full amount in dispute (or as to
which other security arrangements satisfactory to the Lessor and the Agent
have been made), which bonding (or arrangements) shall comply with
applicable Legal Requirements, and shall have effectively stayed any
execution or enforcement of such Liens;
(f) Liens arising out of judgments or awards with respect to which
appeals or other proceedings for review are being prosecuted in good faith
and for the payment of which adequate reserves have been provided as
required by GAAP or other appropriate provisions have been made, so long as
such proceedings have the effect of staying the execution of such judgments
or awards and satisfy the conditions for the continuation of proceedings to
contest Taxes set forth in Section 13.1 of the Lease; and
(g) Liens in favor of municipalities to the extent agreed to by the
Lessor.
"Person" shall mean an individual, partnership, limited liability company,
corporation (including a business trust), joint stock company, trust,
unincorporated association, joint venture or other entity, or a government or
any political subdivision or agency thereof.
"Plans and Specifications" shall mean, with respect to Improvements, the
plans and specifications for such Improvements to be constructed or already
existing, as such Plans and Specifications may be amended, modified or
supplemented from time to time in accordance with the terms of the Operative
Agreements.
"Prime Lending Rate" shall have the meaning given to such term in the
definition of ABR.
"Property" shall mean, with respect to each Permitted Facility that is (or
is to be) acquired, constructed and/or renovated pursuant to the terms of the
Operative Agreements, the Land and each item of Equipment and the various
Improvements, in each case located on such Land, including without limitation
each Construction Period Property, each Property subject to a Ground Lease and
each Property for which the Term has commenced.
"Property Acquisition Cost" shall mean the cost to the Lessor to purchase a
Property on a Property Closing Date.
"Property Closing Date" shall mean the date on which the Lessor purchases a
Property or, with respect to the first Advance, the date on which the Lessor
seeks reimbursement for Property previously purchased by the Lessor.
"Property Cost" shall mean with respect to a Property the aggregate amount
(and/or the various items and occurrences giving rise to such amounts) of the
Loan Property Cost plus the Holder Property Cost for such Property (as such
amounts shall be increased equally among all Properties respecting the Holder
Advances and the Loans extended from time to time to pay for the Transaction
Expenses, fees, expenses and other disbursements referenced in Sections 7.1(a)
Appendix A-27
and 7.1(b) and indemnity payments pursuant to Section 11.8, in each case of the
Participation Agreement).
"Purchase Option" shall have the meaning given to such term in Section 20.1
of the Lease.
"Purchasing Lender" shall have the meaning given to such term in Section
9.8(a) of the Credit Agreement.
"Register" shall have the meaning given to such term in Section 9.9(a) of
the Credit Agreement.
"Regulation D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System (or any successor), as the same may be modified and
supplemented and in effect from time to time.
"Release" shall mean any release, pumping, pouring, emptying, injecting,
escaping, leaching, dumping, seepage, spill, leak, flow, discharge, disposal or
emission of a Hazardous Substance.
"Rent" shall mean, collectively, the Basic Rent and the Supplemental Rent,
in each case payable under the Lease.
"Rent Commencement Date" shall mean, regarding each Property, the
Completion Date.
"Reportable Event" shall have the meaning specified in ERISA.
"Requested Funds" shall mean any funds requested by the Lessee or the
Construction Agent, as applicable, in accordance with Section 5 of the
Participation Agreement.
"Requisition" shall have the meaning specified in Section 4.2 of the
Participation Agreement.
"Responsible Officer" shall mean the Chairman or Vice Chairman of the Board
of Directors, the Chairman or Vice Chairman of the Executive Committee of the
Board of Directors, the President, any Senior Vice President or Executive Vice
President, any Vice President, the Secretary, any Assistant Secretary, the
Treasurer, or any Assistant Treasurer, except that when used with respect to the
Trust Company or the Owner Trustee, "Responsible Officer" shall also include the
Cashier, any Assistant Cashier, any Trust Officer or Assistant Trust Officer,
the Controller and any Assistant Controller or any other officer of the Trust
Company or the Owner Trustee customarily performing functions similar to those
performed by any of the above designated officers and also means, with respect
to a particular corporate trust matter, any other officer to whom such matter is
referred because of his knowledge of and familiarity with the particular
subject.
Appendix A-28
"S&F Trust 1998-1" shall mean the grantor trust created pursuant to the
terms and conditions of the Trust Agreement.
"Sale Date" shall have the meaning given to such term in Section 22.1(a) of
the Lease.
"Sale Notice" shall mean a notice given to the Lessor in connection with
the election by the Lessee of its Sale Option.
"Sale Option" shall have the meaning given to such term in Section 20.1 of
the Lease.
"Sale Proceeds Shortfall" shall mean the amount by which the proceeds of a
sale described in Section 22.1 of the Lease are less than the Limited Recourse
Amount with respect to the Properties if it has been determined that the Fair
Market Sales Value of the Properties at the expiration of the term of the Lease
has been impaired by greater than ordinary wear and tear during the Term of the
Lease.
"Scheduled Interest Payment Date" shall mean (a) as to any Eurodollar Loan
or Eurodollar Holder Advance, the last day of the Interest Period applicable to
such Eurodollar Loan or Eurodollar Holder Advance, (b) as to any ABR Loan or any
ABR Holder Advance, the fifteenth day of each month, unless such day is not a
Business Day and in such case on the next occurring Business Day and (c) as to
all Loans and Holder Advances, the date of any voluntary or involuntary payment,
prepayment, return or redemption, and the Maturity Date or the Expiration Date,
as the case may be.
"Secured Parties" shall have the meaning given to such term in the Security
Agreement.
"Securities Act" shall mean the Securities Act of 1933, as amended,
together with the rules and regulations promulgated thereunder.
"Security Agreement" shall mean the Security Agreement dated on or about
the Initial Closing Date between the Lessor and the Agent, for the benefit of
the Secured Parties, and accepted and agreed to by the Lessee.
"Security Documents" shall mean the collective reference to the Security
Agreement, the Mortgage Instruments, (to the extent the Lease is construed as a
security instrument) the Lease, the UCC Financing Statements, the Guaranty
Agreement and all other security documents hereafter delivered to the Agent
granting a lien on any asset or assets of any Person to secure the obligations
and liabilities of the Lessor under the Credit Agreement and/or under any of the
other Credit Documents or to secure any guarantee of any such obligations and
liabilities.
"Smart & Final Inc." shall mean Smart & Final Inc., a Delaware corporation,
and its successors and permitted assigns.
"Soft Costs" shall mean all costs which are ordinarily and reasonably
incurred in relation to the acquisition, development, installation,
construction, improvement and testing of the
Appendix A-29
Properties other than Hard Costs, including without limitation structuring fees,
administrative fees, legal fees, upfront fees, fees and expenses related to
appraisals, title examinations, title insurance, document recordation, surveys,
environmental site assessments, geotechnical soil investigations and similar
costs and professional fees customarily associated with a real estate closing,
the Lender Unused Fee, the Holder Unused Fee, fees and expenses of the Owner
Trustee payable or reimbursable under the Operative Agreements and costs and
expenses incurred pursuant to Sections 7.3(a) and 7.3(b) of the Participation
Agreement.
"Stockholders' Equity" shall mean, at any time, the shareholders' equity of
the Lessee and its Consolidated Subsidiaries, as set forth or reflected on the
most recent consolidated balance sheet of the Lessee and its Consolidated
Subsidiaries prepared in accordance with GAAP. Stockholders' Equity includes
without limitation (i) the par or stated value of all outstanding Capital Stock,
(ii) capital surplus, (iii) retained earnings and (iv) various deductions such
as (A) purchases of treasury stock, (B) valuation allowances, (C) receivables
due from an employee stock ownership plan, (D) employee stock ownership plan
debt guarantees (to the extent not duplicative of (C)) and (E) translation
adjustments for foreign currency transactions.
"Subsidiary" shall mean, as to any Person, any corporation partnership,
limited liability company, joint venture, trust or estate of which (or in which)
more than 50% of (a) the issued and outstanding capital stock having ordinary
voting power to elect a majority of the Board of Directors of such corporation
(irrespective of whether at the time capital stock of any other class or classes
of such corporation shall or might have voting power upon the occurrence of any
contingency) (b) the interest in the capital or profits of such partnership,
limited liability company or joint venture or (c) the beneficial interest in
such trust or estate is at the time directly or indirectly owned or controlled
by such Person, by such Person and one or more of its other Subsidiaries or by
one or more of such Person's other Subsidiaries.
"Supplemental Amounts" shall have the meaning given to such term in Section
9.18 of the Credit Agreement.
"Supplemental Rent" shall mean all amounts, liabilities and obligations
(other than Basic Rent) which the Lessee assumes or agrees to pay to the Lessor,
the Trust Company, the Holders, the Agent, the Lenders or any other Person under
the Lease or under any of the other Operative Agreements including without
limitation payments of the Termination Value and the Maximum Residual Guarantee
Amount and all indemnification amounts, liabilities and obligations.
"Taxes" shall have the meaning specified in the definition of
"Impositions".
"Term" shall have the meaning specified in Section 2.2 of the Lease.
"Termination Date" shall have the meaning specified in Section 16.2(a) of
the Lease.
"Termination Event" shall mean (a) with respect to any Pension Plan, the
occurrence of a Reportable Event or an event described in Section 4062(e) of
ERISA, (b) the withdrawal of any Credit Party or any ERISA Affiliate from a
Multiple Employer Plan during a plan year in which
Appendix A-30
it was a substantial employer (as such term is defined in Section 4001(a)(2) of
ERISA), or the termination of a Multiple Employer Plan, (c) the distribution of
a notice of intent to terminate a Plan or Multiemployer Plan pursuant to Section
4041(a)(2) or 4041A of ERISA, (d) the institution of proceedings to terminate a
Plan or Multiemployer Plan by the PBGC under Section 4042 of ERISA, (e) any
other event or condition which might constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
Plan or Multiemployer Plan, or (f) the complete or partial withdrawal of any
Credit Party or any ERISA Affiliate from a Multiemployer Plan.
"Termination Notice" shall have the meaning specified in Section 16.1 of
the Lease.
"Termination Value" shall mean the sum of (a) either (i) with respect to
all Properties, an amount equal to the aggregate outstanding Property Cost for
all the Properties, in each case as of the last occurring Payment Date, or (ii)
with respect to a particular Property, an amount equal to the Property Cost
allocable to such Property, plus (b) respecting the amounts described in each of
the foregoing subclause (i) or (ii), as applicable, any and all accrued but
unpaid interest on the Loans and any and all Holder Yield on the Holder Advances
related to the applicable Property Cost, plus (c) to the extent the same is not
duplicative of the amounts payable under clause (b) above, all other Rent and
other amounts then due and payable or accrued under the Agency Agreement, Lease
and/or under any other Operative Agreement (including without limitation amounts
under Sections 11.1 and 11.2 of the Participation Agreement and all costs and
expenses referred to in clause FIRST of Section 22.2 of the Lease).
-----
"Tranche A Commitments" shall mean the obligation of the Tranche A Lenders
to make the Tranche A Loans to the Lessor in an aggregate principal amount at
any one (1) time outstanding not to exceed the aggregate of the amounts set
forth opposite each Tranche A Lender's name on Schedule 2.1 to the Credit
------------
Agreement, as such amount may be reduced from time to time in accordance with
the provisions of the Operative Agreements; provided, no Tranche A Lender shall
--------
be obligated to make Tranche A Loans in excess of such Tranche A Lender's share
of the Tranche A Commitments as set forth adjacent to such Tranche A Lender's
name on Schedule 2.1 to Credit Agreement.
------------
"Tranche A Lenders" shall mean Credit Lyonnais Los Angeles Branch and shall
include the several banks and other financial institutions from time to time
party to the Credit Agreement that commit to make the Tranche A Loans.
"Tranche A Loans" shall mean the Loans made pursuant to the Tranche A
Commitment.
"Tranche A Note" shall have the meaning given to it in Section 2.2 of the
Credit Agreement.
"Tranche B Commitments" shall mean the obligation of the Tranche B Lenders
to make the Tranche B Loans to the Lessor in an aggregate principal amount at
any one (1) time outstanding not to exceed the aggregate of the amounts set
forth opposite each Tranche B Lender's name on Schedule 2.1 to the Credit
------------
Agreement, as such amount may be reduced from
Appendix A-31
time to time in accordance with the provisions of the Operative Agreements;
provided, no Tranche B Lender shall be obligated to make Tranche B Loans in
--------
excess of such Tranche B Lender's share of the Tranche B Commitments as set
forth adjacent to such Tranche B Lender's name on Schedule 2.1 to Credit
------------
Agreement.
"Tranche B Lenders" shall mean Credit Lyonnais Los Angeles Branch and shall
include the several banks and other financial institutions from time to time
party to the Credit Agreement that commit to make the Tranche B Loans.
"Tranche B Loan" shall mean the Loans made pursuant to the Tranche B
Commitment.
"Tranche B Note" shall have the meaning given to it in Section 2.2 of the
Credit Agreement.
"Transaction Expenses" shall mean all Soft Costs and all other costs and
expenses incurred in connection with the preparation, execution and delivery of
the Operative Agreements and the transactions contemplated by the Operative
Agreements including without limitation all costs and expenses described in
Section 7.1 of the Participation Agreement and the following:
(a) the reasonable fees, out-of-pocket expenses and disbursements of
counsel in negotiating the terms of the Operative Agreements and the other
transaction documents, preparing for the closings under, and rendering
opinions in connection with, such transactions and in rendering other
services customary for counsel representing parties to transactions of the
types involved in the transactions contemplated by the Operative
Agreements;
(b) the reasonable fees, out-of-pocket expenses and disbursements of
accountants for any Credit Party in connection with the transaction
contemplated by the Operative Agreements;
(c) any and all other reasonable fees, charges or other amounts
payable to the Lenders, the Agent, the Holders, the Owner Trustee or any
broker which arises under any of the Operative Agreements;
(d) any other reasonable fee, out-of-pocket expenses, disbursement or
cost of any party to the Operative Agreements or any of the other
transaction documents; and
(e) any and all Taxes and fees incurred in recording or filing any
Operative Agreement or any other transaction document, any deed,
declaration, mortgage, security agreement, notice or financing statement
with any public office, registry or governmental agency in connection with
the transactions contemplated by the Operative Agreement.
"Tribunal" shall mean any state, commonwealth, federal, foreign,
territorial, or other court or government body, subdivision agency, department,
commission, board, bureau or instrumentality of a governmental body.
Appendix A-32
"Trust" shall mean the S&F Trust 1998-1.
"Trust Agreement" shall mean the Trust Agreement dated on or about the
Initial Closing Date between the Holders and the Owner Trustee.
"Trust Company" shall mean First Security Bank, National Association, in
its individual capacity, and any successor owner trustee under the Trust
Agreement in its individual capacity.
"Trust Estate" shall have the meaning specified in Section 2.2 of the Trust
Agreement.
"Type" shall mean, as to any Loan, whether it is an ABR Loan or a
Eurodollar Loan.
"UCC Financing Statements" shall mean collectively the Lender Financing
Statements and the Lessor Financing Statements.
"Unanimous Vote Matters" shall have the meaning given it in Section 12.4 of
the Participation Agreement.
"Unfunded Amount" shall have the meaning specified in Section 3.2 of the
Agency Agreement.
"Unfunded Liability" shall mean, with respect to any Plan, at any time, the
amount (if any) by which (a) the present value of all benefits under such Plan
exceeds (b) the fair market value of all Plan assets allocable to such benefits,
all determined as of the then most recent valuation date for such Plan, but only
to the extent that such excess represents a potential liability of the Company
or any member of the Controlled Group to the PBGC or such Plan under Title IV of
ERISA.
"Uniform Commercial Code" and "UCC" shall mean the Uniform Commercial Code
as in effect in any applicable jurisdiction.
"United States Bankruptcy Code" shall mean Title 11 of the United States
Code.
"Unused Fee" shall mean, collectively, the Holder Unused Fee and the Lender
Unused Fee.
"Unused Fee Payment Date" shall mean the last Business Day of each February,
May, August and November and the last Business Day of the Commitment Period, or
such earlier date as the Commitments shall terminate as provided in the Credit
Agreement or the Holder Commitment shall terminate as provided in the Trust
Agreement.
"U.S. Person" shall have the meaning specified in Section 11.2(e) of the
Participation Agreement.
Appendix A-33
"U.S. Taxes" shall have the meaning specified in Section 11.2(e) of the
Participation Agreement.
"Voting Stock" shall mean capital stock issued by a corporation, or
equivalent interests in any other Person, the holders of which are ordinarily,
in the absence of contingencies, entitled to vote for the election of directors
(or persons performing similar functions) of such Person, even though the right
so to vote has been suspended by the happening of such a contingency.
"Wholly-Owned Entity" shall mean a Person all of the shares of capital
stock or other ownership interest of which are owned by Smart & Final Inc.
and/or one of its wholly-owned Subsidiaries or other wholly-owned entities.
"Withdrawal Liability" shall have the meaning specified in Part I of
Subtitle E of Title IV of ERISA.
"Withholdings" shall have the meaning specified in Section 11.2(e) of the
Participation Agreement.
"Work" shall mean the furnishing of labor, materials, components,
furniture, furnishings, fixtures, appliances, machinery, equipment, tools,
power, water, fuel, lubricants, supplies, goods and/or services with respect to
any Property.
"Year 2000 Compliant" shall have the meaning specified in Section 6.2(w) of
the Participation Agreement.
"Year 2000 Problem" shall mean any significant risk that computer hardware,
software or equipment containing embedded microchips essential to the business
or operations of any Credit Party or any Subsidiary of any Credit Party will
not, in the case of dates or time periods occurring after December 31, 1999,
function at least as effectively and reliably as in the case of times or time
periods occurring before January 1, 2000, including the making of accurate leap
year calculations. No Credit Party has knowledge of the existence of a Year
2000 Problem with respect to any of its vendors or suppliers that could have a
Material Adverse Effect.
Appendix A-34