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<PAGE> 1
PARTICIPATION AGREEMENT
dated as of September 28, 1998
among
PEOPLESOFT, INC.,
as Lessee,
WILMINGTON TRUST COMPANY,
not in its individual capacity,
except as expressly stated herein, but solely as Owner Trustee,
as Lessor,
ABN AMRO LEASING, INC.,
as Certificate Purchaser,
ABN AMRO BANK N.V.,
not in its individual capacity,
except as expressly stated herein, but solely as Indenture Trustee
and
THE FINANCIAL INSTITUTIONS LISTED ON SCHEDULE I,
as Note Purchasers
PeopleSoft Hacienda II Lease Facility
TABLE OF CONTENTS
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Page
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SECTION 1. DEFINITIONS; INTERPRETATION 2
SECTION 2. CLOSING DATE 2
SECTION 3. ACQUISITION OF THE PROPERTY; FUNDING OF ADVANCES 2
SECTION 3.1. Owner Trustee Commitment 2
SECTION 3.2. Certificate Purchasers' Commitments 3
SECTION 3.3. Note Purchasers' Commitments 3
SECTION 3.4. Procedures for Acquisition of the Ground Lease Interest 3
SECTION 3.5. Procedures for Advances 3
SECTION 3.6. Allocation of Commitments 6
SECTION 3.7. Use of Commitments 6
SECTION 3.8. Termination, Reduction or Extension of Participants' Commitments 7
SECTION 3.9. Types of Advances; Interest and Certificate Yield Rates; Procedures 9
SECTION 3.10. Computation of Interest and Certificate Yield 11
SECTION 4. FEES 12
SECTION 4.1. Commitment Fees 12
SECTION 4.2. Underwriting Fee 12
SECTION 4.3. Administrative Fee 12
SECTION 4.4. Overdue Fees 12
SECTION 4.5. Extension Fee 12
SECTION 5. CERTAIN INTENTIONS OF THE PARTIES 12
SECTION 5.1. Nature of Transaction 12
SECTION 5.2. Amounts Due Under Lease 14
SECTION 6. CONDITIONS PRECEDENT TO CLOSING DATE,ACQUISITION OF GROUND LEASE INTEREST AND
ADVANCES 15
SECTION 6.1. Conditions Precedent Documentation 15
(a) Acquisition and Funding Request 15
(b) Closing Date; Operative Documents 15
(c) Environmental Certificate 16
(d) Appraisal 16
(e) Ground Lease 16
(f) Lease Supplement; Equipment Schedule 16
(g) Survey and Title Insurance 16
(h) Evidence of Recording and Filing 17
(i) Evidence of Insurance 17
(j) Evidence of Use of Proceeds 17
(k) Taxes 17
</TABLE>
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<TABLE>
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(l) Opinions of Counsel 17
(m) Approvals 18
(n) Litigation 18
(o) Requirements of Law 18
(p) Responsible Officer's Certificate of the Lessee 18
(q) The Lessee's Resolutions and Incumbency Certificate, etc 18
(r) Responsible Officer's Certificate of the Guarantor 19
(s) The Guarantor's Resolutions and Incumbency Certificate, etc 19
(t) Ground Lease Interest Acquisition Date 19
(u) No Material Adverse Effect 19
(v) Officer's Certificate of the Lessor 19
(w) The Lessor's Resolutions and Incumbency Certificate, etc 19
(x) Construction Budget; Plans and Specifications 20
(y) Sale of All Notes and Certificates 20
(z) Legal Fees and Expenses 20
SECTION 6.2. Further Conditions Precedent 20
(a) Representations and Warranties 20
(b) Performance of Covenants 20
(c) Title 20
(d) No Default 21
SECTION 6.3. Conditions Precedent to Closing Date 21
(a) Operative Documents 21
(b) Representations and Warranties 21
(c) Performance of Covenants 21
(d) No Default 21
SECTION 7. COMPLETION DATE CONDITIONS 21
SECTION 7.1. Conditions 21
(a) Construction Completion 21
(b) Architect's Certificate; DateDown Endorsement 22
(c) Lessee Certification 22
SECTION 8. REPRESENTATIONS 22
SECTION 8.1. Representations of the Bank and the Lessor 22
(a) Due Organization, etc 22
(b) Authorization; No Conflict 23
(c) Enforceability, etc 23
(d) Litigation 23
(e) Assignment 23
(f) Defaults 23
(g) Use of Proceeds 24
(h) Securities Act 24
(i) Chief Place of Business 24
(j) Federal Reserve Regulations 24
(k) Investment Company Act 24
(l) No Plan Assets 24
</TABLE>
<PAGE> 4
<TABLE>
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SECTION 8.2. Representations of the Participants 24
(i) Due Organization, etc 26
(ii) Authorization; No Conflict 26
(iii) Enforceability, etc 26
(iv) Litigation 27
(v) Defaults 27
(vi) Securities Act 27
(vii) Investment Company Act 27
SECTION 8.3. Representations of the Lessee 27
(a) Corporate Status 27
(b) Corporate Power and Authority 27
(c) No Violation 28
(d) Litigation 28
(e) Governmental Approvals 28
(f) Investment Company Act 28
(g) Public Utility Holding Company Act 28
(h) Information 29
(i) Taxes 29
(j) Compliance with ERISA 29
(k) Environmental and Other Regulations 29
(l) Offer of Securities, etc 29
(m) Financial Statements 30
(n) No Material Adverse Change 30
(o) No Defaults 30
(p) Properties; Leases 30
(q) Licenses, Permits, etc 31
(r) Year 2000 31
SECTION 8.4. Representations of the Lessee With Respect to the Property
on the Ground Lease Interest Acquisition Date 31
(a) Representations 31
(b) Property 31
(c) Title 33
(d) Insurance 33
(e) Lease 33
(f) Protection of Interests 33
(g) Flood Hazard Areas 33
(h) Conditions Precedent 33
SECTION 8.5. Representations of the Lessee With Respect to Each
Advance 34
(a) Representations 34
(b) Improvements 34
(c) No Liens 34
(d) Advance 34
(e) Lease 34
(f) Protection of Interests 34
(g) Title Insurance Date Down Endorsement 35
SECTION 8.6. Representations and Warranties of the Indenture Trustee 35
</TABLE>
<PAGE> 5
<TABLE>
<S> <C>
(a) Due Organization 35
(b) Due Authorization; Enforceability 35
(c) No Violation 35
(d) Litigation 36
SECTION 9. PAYMENT OF CERTAIN EXPENSES 36
SECTION 9.1. Transaction Expenses 36
SECTION 9.2. Brokers' Fees and Stamp Taxes 37
SECTION 9.3. Obligations 37
SECTION 10. OTHER COVENANTS AND AGREEMENTS 37
SECTION 10.1. Covenants of the Lessee 37
(a) Information 37
(b) Compliance with Laws 39
(c) Further Assurances 39
(d) Existence; Franchises; Businesses 39
(e) Books and Records 39
(f) Minimum Consolidated Quick Ratio 39
(g) Minimum Consolidated Tangible Net Worth 40
(h) Maximum Consolidated Debt to Consolidated Total Capital Ratio 40
(i) Minimum Consolidated Fixed Charge Ratio 40
(j) Minimum Consolidated Cash Balances 40
(k) Liens 40
(l) Mergers, Acquisitions, Etc 41
(m) Asset Dispositions 41
(n) Transactions with Affiliates 42
(o) Restricted Payments 42
(p) Investments 42
(q) Maintenance and Repair 43
(r) Payment of Taxes 43
(s) Insurance 43
SECTION 10.2. Cooperation with the Lessee 43
SECTION 10.3. Covenants of the Owner Trustee, the Certificate Holders,
and the Bank 43
(a) Discharge of Liens 43
(b) Trust Agreement 43
(c) Successor Owner Trustee 44
(d) Indebtedness; Other Business 44
(e) Instructions 44
(f) Change of Chief Place of Business 44
(g) Performance of Covenants 44
SECTION 11. LESSEE DIRECTIONS 45
SECTION 12. TRANSFERS OF PARTICIPANTS' INTERESTS 45
</TABLE>
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<TABLE>
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SECTION 12.1. Restrictions on and Effect of Transfer by Participants 45
(a) Transfer of Notes 45
(b) Note Transfer Procedures 45
(c) Transfers of Certificates 46
(d) Effect 48
(e) Arranger's Fee 48
SECTION 12.2. Covenants and Agreements of Participants 48
(a) Participations 48
(b) Transferee Indemnities 49
SECTION 12.3. Future Participants 49
SECTION 13. INDEMNIFICATION 49
SECTION 13.1. General Indemnification 49
SECTION 13.2. End of Term Indemnity 51
SECTION 13.3. Environmental Indemnity 52
SECTION 13.4. Proceedings in Respect of Claims 54
SECTION 13.5. General Impositions Indemnity 55
(a) Indemnification 55
(b) Payments 56
(c) Reports and Returns 56
(d) Income Inclusions 57
(e) Withholding Taxes 57
(f) Contests of Impositions 57
(g) Documentation of Withholding Status 59
(h) Limitation on Tax Indemnification 60
SECTION 13.6. Funding Losses 60
SECTION 13.7. Regulation D Compensation 60
SECTION 13.8. Basis for Determining Interest Rate or Certificate Yield Rate
Inadequate or Unfair 61
SECTION 13.9. Illegality 61
SECTION 13.10. Increased Cost and Reduced Return 62
SECTION 13.11. Notice and Mitigation 63
SECTION 13.12. Substitution of Participant 63
SECTION 13.13. Indemnity Payments in Addition to Residual Value Guarantee Amount 64
SECTION 13.14. Limitations on Indemnification 64
SECTION 13.15. Lessor Indemnification 64
(a) Indemnified Losses 64
(c) No Indemnification for Certain Matters. 65
(d) Limitations on Indemnification by Lessor. 65
(d) Repayment to the Lessor. 65
(f) Survival, Reinstatement. 66
(g) Indemnification Procedures 66
SECTION 14. THE INDENTURE TRUSTEE 66
</TABLE>
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<TABLE>
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SECTION 15. MISCELLANEOUS 66
SECTION 15.1. Survival of Agreements 66
SECTION 15.2. No Broker, etc 67
SECTION 15.3. Notices 67
SECTION 15.4. Counterparts 67
SECTION 15.5. Amendments 67
SECTION 15.6. Headings, etc 68
SECTION 15.7. Parties in Interest 68
SECTION 15.8. GOVERNING LAW 69
SECTION 15.9. Severability 69
SECTION 15.10. Liability Limited 69
SECTION 15.11. Further Assurances 69
SECTION 15.12. Submission to Jurisdiction 70
SECTION 15.13. Confidentiality 70
SECTION 15.14. WAIVER OF JURY TRIAL 70
SECTION 15.15. Usury Savings Clause 70
SCHEDULES
SCHEDULE I Participants' Commitments
SCHEDULE II Notice Information and Funding Offices
SCHEDULE III Environmental Matters
SCHEDULE IV Intellectual Property Matters
APPENDICES
APPENDIX 1 Definitions and Interpretation
EXHIBITS
EXHIBIT A Form of Acquisition Request
EXHIBIT B-1 Form of Funding Request
EXHIBIT B-2 Form of Fixed Rate Request
EXHIBIT C Form of Environmental Certificate
EXHIBIT D Opinion of Special Counsel to Lessee
EXHIBIT E Opinion of Special Counsel to Owner Trustee
EXHIBIT F Opinion of Special Counsel to Co-Trustee
EXHIBIT G Ground Lease
EXHIBIT H Form of Architect's Completion Certificate
EXHIBIT I Form of Lessee's Completion Certificate
EXHIBIT J Form of Assignment and Acceptance
EXHIBIT K Form of Participant's Letter
</TABLE>
<PAGE> 8
<TABLE>
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EXHIBIT L Assignment of Lease and Consent to Assignment
EXHIBIT M Construction Agency Agreement
EXHIBIT N Construction Agency Agreement Assignment
EXHIBIT O Guarantee
EXHIBIT P Cash Collateral Agreement
EXHIBIT Q Leasehold Construction Deed of Trust
EXHIBIT R Form of Financial Covenant Compliance Certificate
</TABLE>
PARTICIPATION AGREEMENT
THIS PARTICIPATION AGREEMENT, dated as of September 28, 1998 (this
"Participation Agreement"), is entered into by and among PEOPLESOFT, INC., a
Delaware corporation, as Lessee (together with its permitted successors and
assigns, the "Lessee"); WILMINGTON TRUST COMPANY, a Delaware banking
corporation, not in its individual capacity, except as expressly stated herein,
but solely as Owner Trustee (together with its successors in such capacity, the
"Owner Trustee" or the "Lessor"); ABN AMRO LEASING, INC., as Certificate
Purchaser (the "Certificate Purchaser"); ABN AMRO BANK N.V., not in its
individual capacity except as expressly stated herein, but solely as Indenture
Trustee (together with its successors in such capacity, the "Indenture
Trustee"); and the financial institutions listed on Schedule I, as Note
Purchasers (the "Note Purchasers").
PRELIMINARY STATEMENT
In accordance with the terms of the Trust Agreement, this Participation
Agreement, the Lease, the Indenture and the other Operative Documents,
A. the Trust under the Trust Agreement has been created for
the purpose of providing financing for the construction of two office buildings,
one common building containing a cafeteria and fitness center, a parking
structure and the Data Center, on the real property located in Pleasanton,
California to be owned by the Ground Lessor, leased to the Lessor and subleased
to the Lessee, and the Improvements to be constructed and owned by the Lessor
and leased to the Lessee;
B. the Lessor contemplates acquiring a leasehold interest in
such parcel of land by leasing the Land, as lessee, from the Ground Lessor, as
ground lessor;
C. using Advances from the Lessor, the Lessee contemplates
building, as Construction Agent, certain Improvements on such Land for the
Lessor, acquiring certain items of Equipment, if any, to be used in connection
with such Improvements, and subleasing as Lessee, the Land and leasing the
Improvements and Equipment from the Lessor under the Lease;
D. the Certificate Purchasers are willing to provide a portion
of the funding of the costs of construction of the Property and acquisition of
the Equipment;
<PAGE> 9
E. the Lessor wishes to obtain, and the Note Purchasers are
willing to provide, limited recourse financing of the remaining portion of the
funding of the costs of construction of the Property and acquisition of the
Equipment;
F. concurrently with the execution and delivery of this
Agreement, the Indenture Trustee is entering into the Indenture, pursuant to
which Indenture, among other things, (i) the Owner Trustee creates a security
interest in the Property for the benefit of the Participants, and (ii) provision
is made for the issuance of Notes to the Note Holders as evidence of the
participation of each Note Holder in the Advances for the Property; and
G. concurrently with the execution and delivery of this
Agreement, the Owner Trustee is entering into (i) the Mortgage, pursuant to
which Mortgage the Owner Trustee grants a mortgage on the Property, and (ii) the
other Security Documents, in each case for the benefit of the Participants.
In consideration of the mutual agreements contained in this
Participation Agreement and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1.
DEFINITIONS; INTERPRETATION
Unless the context shall otherwise require, capitalized terms used and
not defined herein shall have the meanings assigned thereto in Appendix 1 hereto
for all purposes hereof; and the rules of interpretation set forth in Appendix 1
hereto shall apply to this Participation Agreement.
SECTION 2.
CLOSING DATE
The closing date (the "Closing Date") shall occur on such date as the
parties may agree, which shall be the earliest date on which all the conditions
precedent thereto set forth in Sections 6.1, 6.2 and 6.3 hereof shall have been
satisfied or waived by the applicable parties as set forth therein.
SECTION 3.
ACQUISITION OF THE PROPERTY; FUNDING OF ADVANCES
<PAGE> 10
SECTION 3.1. Owner Trustee Commitment. Subject to the conditions and
terms hereof, the Owner Trustee shall take the following actions at the written
request of the Lessee from time to time during the Commitment Period:
(a) enter into the Ground Lease and the other Operative Documents to
which it is to be a party;
(b) make Advances (out of funds provided by the Participants) for the
purpose of financing the construction of the Improvements and the acquisition of
the Equipment, if any;
(c) lease the Land pursuant to the Ground Lease; and
(d) sublease the Land and lease the Improvements and Equipment, if any,
as Lessor to the Lessee under the Lease.
SECTION 3.2. Certificate Purchasers' Commitments. Subject to the terms
and conditions hereof, each Certificate Purchaser severally shall make available
to the Lessor at the request of the Lessee from time to time during the
Commitment Period on each Funding Date an amount (each a "Certificate Purchaser
Amount") in immediately available funds equal to such Certificate Purchaser's
Commitment Percentage of the amount of the Advance being funded on such Funding
Date. Notwithstanding any other provision hereof, no Certificate Purchaser shall
be obligated to make available any Certificate Purchaser Amount if, after giving
effect to the proposed Certificate Purchaser Amount, the outstanding aggregate
amount of Certificate Purchaser Amounts of such Certificate Purchaser would
exceed such Certificate Purchaser's Commitment.
SECTION 3.3. Note Purchasers' Commitments. Subject to the terms and
conditions hereof, each Note Purchaser severally shall make Loans to the Lessor
at the request of the Lessee from time to time during the Commitment Period on
each Funding Date in an amount in immediately available funds equal to such Note
Purchaser's Commitment Percentage of the amount of the Advance being funded on
such Funding Date. Notwithstanding any other provision hereof, no Note Purchaser
shall be obligated to make any Loan if, after giving effect to the proposed
Loan, the outstanding aggregate amount of such Note Purchaser's Loans would
exceed such Note Purchaser's Commitment.
SECTION 3.4. Procedures for Acquisition of the Ground Lease Interest.
The Lessee shall give the Owner Trustee and the Indenture Trustee prior written
notice not later than 10:00 a.m., San Francisco time, three Business Days prior
to the proposed Ground Lease Interest Acquisition Date, pursuant to an
Acquisition Request substantially in the form of Exhibit A (an "Acquisition
Request"), specifying with respect to such Ground Lease Interest: (i) the
proposed Ground Lease Interest Acquisition Date, (ii) the Ground Lease Interest
to be acquired and (iii) the Property Improvements Costs to be funded in
connection with the acquisition of the Ground Lease Interest. The Indenture
Trustee shall promptly forward a copy of such Acquisition Request to each
Certificate Purchaser and each Note Purchaser.
<PAGE> 11
SECTION 3.5. Procedures for Advances.
(a) Funding Request. With respect to each funding of an Advance, the
Lessee shall give the Lessor and the Indenture Trustee prior written notice not
later than 11:00 a.m., New York time, four (4) Business Days (in the case of a
Fixed Rate Advance) or three (3) Business Days in the case of a Eurodollar Rate
Advance) prior to the proposed Funding Date, pursuant, in each case, to a
Funding Request substantially in the form of Exhibit B-1 (a "Funding Request"),
specifying (i) the proposed Funding Date, (ii) the amount and purpose of the
Advance requested, (iii) whether such Advance is to be comprised of a Eurodollar
Rate Advance or a Fixed Rate Advance, (iv) the initial Interest Period for any
such Eurodollar Rate Advance, (v) the payee of such Advance and (vi) that the
Advance will be utilized to fund Property Improvements Costs. The Indenture
Trustee shall promptly forward a copy of such Funding Request to each
Participant. The Lessee shall not request more than one Funding Date during any
calendar month. Each Eurodollar Rate Advance (other than an Interest Payment
Advance or an amount to be capitalized pursuant to Section 3.9(f)) shall be in a
minimum amount of $1,000,000 or in amounts of $100,000 in excess thereof.
Subject to the satisfaction or waiver of the conditions precedent to such
Advance set forth in Section 3.5 and Section 6, each Participant shall fund its
pro rata share of such Advance by making available to the Lessor its
proportionate share of such Advance as Loans or Certificate Purchaser Amounts,
as the case may be, in immediately available federal funds by wire transfer to
the Agent for deposit to the Lessee's demand deposit account with the Indenture
Trustee not later than 1:00 p.m. New York time, on the applicable Funding Date.
Upon (i) the Lessee's receipt of the funds provided by the Participants with
respect to an Advance, and (ii) satisfaction or waiver of the conditions
precedent to such Advance set forth in Section 6, the Lessee shall pay or retain
as payment or reimbursement of Property Improvements Costs, in each case from
the funds provided by the Participants for such Advance.
(b) Procedure for Fixed Rate Advances.
(i) When the Lessee wishes to request the Lessor to make, and the
Participants to submit through the Agent an offer to fund, Loans and
Certificate Purchaser Amounts with respect to a Fixed Rate Advance or
convert a Eurodollar Rate Advance to a Fixed Rate Advance or continue a
Fixed Rate Advance as another Fixed Rate Advance, it shall transmit to
the Indenture Trustee by facsimile transmission a request in
substantially the form of Exhibit B-2 (a "Fixed Rate Request") so as to
be received no later than 12:00 noon (New York time) four (4) Business
Days prior to the date of the proposed Fixed Rate Advance, conversion
or continuation specifying:
(1) the proposed date of such Advance, conversion or continuation,
which shall be a Business Day and, (A) if a conversion from a
Eurodollar Rate Advance, shall be the last day of the
applicable Interest Period with respect to the Advance to be
converted or (B)
<PAGE> 12
if a continuation of a Fixed Rate Advance, shall be the last
day of the Fixed Rate Period applicable thereto;
(2) the aggregate amount of such Fixed Rate Advance, conversion or
continuation, which shall be a minimum amount of $5,000,000;
and
(3) the maturity date with respect thereto (the "Fixed Rate
Maturity Date"), which shall be a Business Day not later than
the Maturity Date.
The Lessee shall pay to the Indenture Trustee a fee of $1,000 for each
Fixed Rate Request.
(ii) Upon receipt of a Fixed Rate Request from the Lessee, the
Indenture Trustee will promptly forward such Fixed Rate Request to the
Participants by facsimile transmission.
(iii)(1) Each Participant, upon receipt of a Fixed Rate Request, shall
submit an offer (a "Fixed Rate Offer") to fund its Loans or
Certificate Purchaser Amounts with respect to the applicable
Fixed Rate Advance, convert its Loans or Certificate Purchaser
Amounts with respect to the applicable Eurodollar Rate Advance
to the requested Fixed Rate Advance or continue its Loans or
Certificate Purchaser Amounts with respect to the applicable
Fixed Rate Advance to the requested Fixed Rate Advance in
response to such Fixed Rate Request. Each Fixed Rate Offer
must comply with the requirements of this subsection (iii) and
must be submitted to the Indenture Trustee by facsimile
transmission not later than 11:00 a.m. (New York time) three
(3) Business Days prior to the proposed Funding Date,
conversion date or continuation date.
(2) Each Fixed Rate Offer shall specify:
(A) the proposed date of the Advance, conversion or
continuation;
(B) the principal amount of such Participant's Loans or
Certificate Purchaser Amounts with respect to the
Advance, conversion or continuation for which such
Fixed Rate Offer is being made, which principal
amount must be equal to such Participant's pro rata
share of the aggregate amount requested;
(C) the fixed rate per annum (rounded upward to the
nearest 1/100th of 1%) offered for such Fixed Rate
Advance; and
<PAGE> 13
(D) the Fixed Rate Maturity Date with respect to such
Fixed Rate Advance (which shall be the date requested
by the Lessee) (the period from the date any Fixed
Rate Advance is made to its Fixed Rate Maturity Date
is referred to as a "Fixed Rate Period").
(iv) Promptly on receipt on the third Business Day prior to the
proposed Funding Date or conversion or continuation date, the Indenture
Trustee will notify the Lessee of the terms of all Fixed Rate Offers
submitted by the Participants with respect to the Fixed Rate Request.
The Indenture Trustee's notice to the Lessee shall specify (1) the
aggregate amount for which offers have been received; and (2) the
respective amounts and interest rates, as the case may be, and the
weighted average interest rate so offered. Subject only to the
provisions of Section 6 and to the Lessee's right to reject all Fixed
Rate Offers set forth in Section 3.5(b)(v), any Fixed Rate Offer shall
be irrevocable.
(v) Promptly upon receipt of the Indenture Trustee's notice referred to
in Section 3.5(b)(iv) above, on the third Business Day prior to the
proposed Funding Date or conversion or continuation date, the Lessee
shall notify the Indenture Trustee of its acceptance or non-acceptance
of the Fixed Rate Offers which it has received pursuant to Section
3.5(b)(iv). The Lessee shall be under no obligation to accept any
offer, but if any offer is rejected, all Fixed Rate Offers with respect
to the same Fixed Rate Request must be rejected. If the Lessee accepts
any Fixed Rate Offer, the Lessee must accept all Fixed Rate Offers with
respect to the same Fixed Rate Request only in whole. If the Fixed Rate
Offers are rejected or if no response is received from the Lessee, the
Lessee may elect to have the applicable Advance be a Eurodollar Rate
Advance pursuant to Section 3.5(a) or (c) hereof provided the
conditions thereto are met. Otherwise, the Advance that was the subject
of such Fixed Rate Request shall be a Eurodollar Rate Advance with an
Interest Period of one month commencing on the applicable Funding Date
or proposed conversion date, provided, that no Interest Period shall
commence or terminate on or after the Maturity Date.
(c) Conversion and Continuation Procedures. The Lessee may (i)(A) on
the last day of any Fixed Rate Period, convert all or any part of any Fixed Rate
Advance to a Eurodollar Rate Advance or (B) on the last day of any Interest
Period, continue the applicable Eurodollar Rate Advance as a Eurodollar Rate
Advance for a successive Interest Period, by giving notice to the Indenture
Trustee by 12:00 noon, New York time, on a day which is at least three Business
Days prior to the proposed date of such conversion or continuation or (ii) on
the last day of any Fixed Rate Period, continue all or any part of any Fixed
Rate Advance as another Fixed Rate Advance by giving the notice and following
the procedure set forth in Section 3.5(b). Each such notice with respect to the
conversion into or continuation of a Eurodollar Rate Advance shall be
irrevocable, shall be effective upon receipt by the Indenture Trustee, shall be
in writing (or by telephone to be confirmed in writing by the Lessee on the
Business Day such telephonic notice was given), shall specify the Type, the date
and amount of the conversion or
<PAGE> 14
continuation, the Advances to be converted or continued and the Interest Period
applicable thereto. If the Lessee fails to give appropriate notice pursuant to
this Section 3.5(c) or Section 3.5(b), such Advance shall automatically become a
Eurodollar Rate Advance with an Interest Period of one month at the end of its
then current Fixed Rate Period or Interest Period, provided, that no Interest
Period shall commence or terminate on or after the Maturity Date. Promptly upon
receipt of each notice of conversion or continuation, the Indenture Trustee
shall advise each Participant thereof. No Fixed Rate Advance shall be converted
or continued on any day other than the last day of the Fixed Rate Period
relating to such Advance.
SECTION 3.6. Allocation of Commitments. Schedule I hereto contains an
allocation for each Participant of (i) the amount of its Commitment representing
its Tranche A Loan Commitment ("Tranche A Loan Commitment"), (ii) the amount of
its commitment representing its Tranche B Loan Commitment ("Tranche B Loan
Commitment"), (iii) the amount of its commitment representing its Certificate
Purchaser Commitment ("Certificate Commitment"), (iv) the amount of its
Commitment (and allocation to its Tranche A Loan Commitment and Tranche B Loan
Commitment) allocated to the 364 Day Commitment, and (v) the amount of its
Commitment (and allocation to its Tranche A Loan Commitment, Tranche B Loan
Commitment and Certificate Commitment) allocated to the Eighteen Month
Commitment. The Lessee, the Lessor and the Participants have approved all such
allocations and commitments. Schedule I shall be amended as required to reflect
changes in the allocations set forth thereon due to the addition of additional
Participants pursuant to Section 12.1.
SECTION 3.7. Use of Commitments. (a) All remittances by each
Participant to the Lessor to fund Advances shall be allocated first, to the 364
Day Commitment of such Participant, and second, to the Eighteen Month Commitment
of such Participant. Unless extended as provided in this Section 3.7, the 364
Day Commitment shall terminate on the day which is 364 days after the Closing
Date and the unused portion thereof shall not be available to the Lessor
thereafter. The Lessee shall notify the Lessor, the Indenture Trustee and each
Participant not less than forty-five (45) days prior to the expiration date of
the 364 Day Commitment whether it wishes to extend the availability of the
unused portion of the 364 Day Commitment to the Six Month Extension Termination
Date. The availability of the unused portion of the 364 Day Commitment shall not
be extended unless the Indenture Trustee and each Participant, in its sole
discretion, has notified the Lessor and the Indenture Trustee within fifteen
(15) days prior to such termination date that it will permit the unused portion
of its 364 Day Commitment to be extended to the Six Month Extension Termination
Date commencing on the Extension Date. The Indenture Trustee shall notify the
Lessee whether the Participants have agreed to permit the extension of such
unused portion of the 364 Day Commitment to the Six Month Extension Termination
Date. Any portion that is so extended shall bear Commitment Fees from and after
the Extension Date at a rate applicable to the 364 Day Commitment. The parties
hereto shall amend Schedule I hereto in connection with any such extension.
<PAGE> 15
(b) If the 364 Day Commitment is extended pursuant to Section 3.7(a),
the Lessee shall pay to each Participant its pro rata share of the Extension Fee
on the Extension Date.
SECTION 3.8. Termination, Reduction or Extension of Participants'
Commitments. (a) The Lessor shall have the right, upon not less than five (5)
Business Days' written notice to the Indenture Trustee, to terminate the
Participants' Commitments or, from time to time, to reduce the amount of the
Participants' Commitments, provided that (i) after giving effect to such
reduction, the aggregate outstanding principal amount of the Tranche A Loans
shall not exceed the aggregate Tranche A Loan Commitments, (ii) after giving
effect to such reduction, the aggregate outstanding principal amount of the
Tranche B Loans shall not exceed the aggregate Tranche B Loan Commitments, (iii)
after giving affect to such reduction, the aggregate principal amount of the
Certificates shall not exceed the aggregate Certificate Commitments, and (iv)
any such reduction shall be made pro rata among the Participants' Commitments
within each tranche. At any time other than during the continuance of an Event
of Default the Lessor shall exercise such right only as directed by the Lessee
and after the occurrence and during the continuance of an Event of Default the
Lessor shall exercise such right only as directed by the Required Participants.
(b) The Lessee may, by written request to the Lessor and Indenture
Trustee (which the Indenture Trustee shall promptly forward to each Participant)
given at any time from time to time after six (6) months after the Closing Date,
request (an "Extension Request") that the Maturity Date be extended to the date
that is five (5) years after the date requested by the Lessee (the "Extension
Effective Date"). No later than the date (the "Extension Response Date") which
is (30) days after such request has been delivered to each of the Participants,
each Participant will notify the Lessor in writing (with a copy to the Indenture
Trustee and the Lessee) whether or not it consents to such Extension Request
(which consent may be granted or denied by each Participant in its sole
discretion and may be conditioned on receipt of such financial information or
other documentation as may be specified by such Participant including without
limitation satisfactory appraisals of the Property), provided that any
Participant that fails to so advise the Lessor on or prior to the Extension
Response Date shall be deemed to have denied such Extension Request. The
extension of the Maturity Date contemplated by any Extension Request shall
become effective as of the Extension Effective Date on or after the Extension
Response Date on which all of the Participants (other than non-consenting
Participants (each a "Non-Consenting Participant") which have been replaced by
Replacement Participants in accordance with Section 3.8(c)) shall have consented
to such Extension Request; provided that:
(A) on both the date of the Extension Request and the
Extension Effective Date, (x) each of the
representations and warranties made by the Lessee and
the Lessor in or pursuant to the Operative Documents
shall be true and correct in all material respects as
if made on and as of each such date, except for
representations and warranties made as of a specific
date,
<PAGE> 16
which shall be true and correct in all material
respects as of such date, (y) no Event of Default
shall have occurred and be continuing, and (z) on
each of such dates the Indenture Trustee shall have
received a certificate of the Lessee and the Lessor,
each as to itself, as to the matters set forth in
clause (x) above and from the Lessee as to the
matters set forth in clause (y) above, and
(B) the Indenture Trustee and the Required Participants
shall have received satisfactory evidence that the
Expiration Date shall, after giving effect to any
extension thereof which has become effective on or
prior to such Extension Effective Date, occur on the
Maturity Date as so extended.
(c) The Lessee shall be permitted to replace any Non-Consenting
Participant under this Section 3.8 with a replacement bank or other financial
institution (a "Replacement Participant") at any time on or prior to the date
which is thirty (30) days after the relevant Extension Response Date; provided
that (i) such replacement does not conflict with any Requirement of Law, (ii)
the Replacement Participant shall purchase, at par, all of the Notes and/or
Certificates of such Non-Consenting Participant on or prior to the date of
replacement, (iii) the Lessee shall be liable to such Non-Consenting Participant
under Section 13 of this Agreement if any Advance (or Loan or Certificate
Purchaser Amount with respect thereto) shall be prepaid (or purchased) other
than on the last day of the Interest Period or Interest Periods relating
thereto, (iv) the Replacement Participant, if not already a Participant, shall
be reasonably satisfactory to the Required Participants, (v) such replacement
shall be made in accordance with the provisions of Section 12 of this Agreement
(provided that the Lessee or the relevant Replacement Participant shall be
obligated to pay or cause to be paid the Transaction Expenses arising in
connection therewith), (vi) the Replacement Participant shall have agreed to be
subject to all of the terms and conditions of this Agreement (including the
extension of the Maturity Date contemplated by the relevant Extension Request)
and the other Operative Documents, and (vii) at any time other than during the
continuance of an Event of Default, the Lessee shall have the exclusive right to
designate the Replacement Participant. The Indenture Trustee hereby agrees to
cooperate with the Lessee in the Lessee's efforts to arrange one or more
Replacement Participants as contemplated by this Section 3.8(c).
SECTION 3.9. Types of Advances; Interest and Certificate Yield Rates;
Procedures.
(a) Each Advance shall be comprised of either a Fixed Rate Advance or a
Eurodollar Rate Advance (each being herein called a "Type" of Advance), as the
Lessee shall specify in the related Funding Request or notice of conversion or
continuation pursuant to Section 3.5. Each Fixed Rate Advance (and Loan and
Certificate Purchaser Amount with respect to such Fixed Rate Advance) shall bear
interest or, with respect to a Certificate Purchaser Amount, yield ("Certificate
Yield"), as the case may be, for each
<PAGE> 17
day during the Fixed Rate Period with respect thereto at a rate per annum equal
to the Fixed Rate determined with respect to such Fixed Rate Period plus the
Applicable Margin.
(b) Each Eurodollar Rate Advance (and Loan and Certificate Purchaser
Amount with respect to such Eurodollar Rate Advance) shall bear interest or
Certificate Yield, as the case may be, for each day during each Interest Period
with respect thereto at a rate per annum equal to the Eurodollar Rate determined
for such day plus the Applicable Margin; provided, however, that:
(i) each Advance and related Loan and Certificate Purchaser Amount
outstanding during the period beginning on the Closing Date and ending
on the date three (3) Business Days thereafter shall bear interest or
Certificate Yield during such period at a rate per annum equal to the
Alternate Base Rate plus the Applicable Margin; and
(ii) an Advance and related Loan and Certificate Purchaser Amount shall
bear interest or Certificate Yield, as the case may be, at a rate per
annum equal to the Alternate Base Rate plus the Applicable Margin to
the extent expressly required by the terms hereof.
The Lessee shall give irrevocable written notice to the Indenture Trustee, in
accordance with Section 3.5 and the applicable provisions of the term "Interest
Period" set forth in Appendix 1, of the length of each Interest Period to be
applicable to each Eurodollar Rate Advance.
(c) If all or a portion of (i) the amount of any Loans or Certificate
Purchaser Amounts with respect to any Advance, (ii) any interest or Certificate
Yield payable thereon or (iii) any other amount payable hereunder shall not be
paid when due (whether at the stated maturity, by acceleration or otherwise),
such overdue amount shall bear interest at a rate per annum which is equal to
the Overdue Rate.
(d) Interest and Certificate Yield shall be payable in immediately
available funds (except as provided in paragraph (e) below) in arrears on each
Scheduled Payment Date, provided that (i) interest accruing pursuant to
paragraph (c) of this Section 3.9 shall be payable from time to time on demand
and (ii) each prepayment of Advances shall be accompanied by accrued interest to
the date of such prepayment on the amount of Advances so prepaid plus amounts
payable under Section 13.6 hereof. The Indenture Trustee shall provide the
Lessee with not less than five (5) days' notice of the amount of Basic Rent due
on any Scheduled Payment Date.
(e) On each date which is three (3) Business Days prior to each
Scheduled Payment Date during the Construction Period, unless the Lessee
notifies the Lessor prior to such date that the Lessee desires to pay in cash on
the Scheduled Payment Date the accrued interest and Certificate Yield on Loans
and Certificate Purchaser Amounts, respectively, with respect to Advances
allocated to Property Improvement Costs during the Construction Period and makes
such cash payment on the Scheduled Payment Date,
<PAGE> 18
the Lessee shall be deemed to have requested an Advance comprised of an Interest
Payment Advance pursuant to Section 3.5 and the Lessor shall be deemed to have
requested a funding of Loans and Certificate Purchaser Amounts pursuant to
Sections 3.2 and 3.3 with respect to such Advance in an amount equal to the
aggregate amount of the Basic Rent due and payable on such date with respect to
accrued interest and Certificate Yield on Loans and Certificate Purchaser
Amounts, respectively, with respect to outstanding Advances. Each Interest
Payment Advance shall initially be deemed to be a Eurodollar Rate Advance having
a one month Interest Period. The Funding Date with respect to any such Interest
Payment Advance (and related Loans and Certificate Purchaser Amounts and with
respect thereto) shall be the relevant Scheduled Payment Date (provided that
such Advance and such funding shall be subject to satisfaction of the applicable
conditions precedent set forth in Section 6) and the proceeds of such payment
shall be applied to pay such accrued interest and Certificate Yield. On each
such Funding Date during the Construction Period, the Property Cost and Property
Improvements Cost shall be increased by an amount equal to the Basic Rent paid
on such date with respect to such Property with the proceeds of such payment.
The Indenture Trustee shall provide the Lessee on a monthly basis with a
detailed statement or other form of confirmation showing all deemed Interest
Payment Advances made to the Lessee pursuant to this Section 3.9(e).
(f) Capitalization of Certain Amounts During Construction Period.
(i) On each date during the Construction Period that any amount is
payable by the Lessee under the Operative Documents on account of (A)
Basic Rent (to the extent provided in Section 3.9(e)), (B) fees
pursuant to Section 4 or (c) Supplemental Rent consisting of amounts
payable by the Lessor as rent or otherwise under the Ground Lease, such
amounts shall be capitalized by automatically treating such amount as
an Advance and related Loans and Certificate Purchaser Amounts made on
such date.
(ii) If any Lessor Party shall request the Lessor to capitalize the
amount of (A) any Claims or Taxes pursuant to Section 13.1(z) or
13.5(a), (B) any increased costs or reduced amounts pursuant to clause
(2) of Section 13.10(a) or (C) any loss or liability pursuant to
Section 24.1 of the Lease, any such amount shall be capitalized by
automatically treating such amount as an Advance and related Loans and
Certificate Purchaser Amounts (funded by such Lessor Party); provided,
however, that the Lessee shall have no obligation to pay any such
amounts if the Lessee exercises the Remarketing Option or is otherwise
required to pay the Residual Value Guarantee Amount in accordance with
the Lease and the other Operative Documents, except to the extent such
amounts may be included in the Residual Value Guarantee Amount. If any
such capitalized amounts are included in the Asset Termination Value,
Lease Balance or Participant Balance (the "3.9(f)(ii) portion" of the
Asset Termination Value, Lease Balance or Participant Balance), all the
Lessee payments and other amounts applied to the Asset Termination
Value, Lease Balance or Participant Balance shall be applied as
follows:
<PAGE> 19
(1) If any 3.9(f)(ii) portion is outstanding when a payment is
to be applied to the Asset Termination Value, Lease Balance or
Participant Balance, such payment shall first be applied to
the 3.9(f)(ii) portion of the Asset Termination Value, Lease
Balance or Participant Balance and shall be shared by the
Lessor Parties that funded such 3.9(f)(ii) portion of the
Asset Termination Value, Lease Balance, or Participant Balance
pro rata based on the amounts so funded by and owed to such
Lessor Parties.
(2) If any amount of such payment then remains, such remaining
amount shall be applied to all other amounts included in the
Asset Termination Value, Lease Balance or Participant Balance
(the "project costs portion" of the Asset Termination Value,
Lease Balance or Participant Balance) and shall be shared by
the Participants as provided in Section 6.2 to Section 6.10 of
the Indenture.
The Indenture Trustee shall notify the Lessee, the Lessor and each
Participant of each amount capitalized and treated as an Advance (and related
Loans and Certificate Purchaser Amounts) under this Section 3.9(f)(ii) within
fifteen (15) days after each such Advance.
(iii) Transaction Expenses incurred during the Construction Period
shall be funded as Advances and related Loans and Certificate Purchaser
Amounts and capitalized to the extent set forth in Section 9.1.
SECTION 3.10. Computation of Interest and Certificate Yield. (a) For
purposes of determining the Alternate Base Rate, interest and Certificate Yield
shall be calculated on the basis of a 365- (or 366-, as the case may be) day
year for the actual days elapsed; and for purposes of determining a Eurodollar
Rate or a Fixed Rate, interest and Certificate Yield shall be calculated on the
basis of a 360-day year for the actual days elapsed. The Indenture Trustee shall
as soon as practicable after the commencement of each Interest Period or Fixed
Rate Period notify the Lessor, the Lessee and the Participants of each
determination of a Eurodollar Rate or a Fixed Rate. Any change in the interest
rate on an Advance and related Loans and Certificate Purchaser Amounts resulting
from a change in the Alternate Base Rate, the Eurocurrency Reserve Requirements
or the Applicable Margin shall become effective as of the opening of business on
the day on which such change becomes effective. The Indenture Trustee shall as
soon as practicable notify the Lessor, the Lessee and the Participants of the
effective date and the amount of each such change in interest rate.
(b) Each determination of an interest rate by the Indenture Trustee
pursuant to any provision of this Agreement shall be conclusive and binding on
the Lessor, the Lessee and the Participants in the absence of manifest error.
The Indenture Trustee shall, at the request of such parties, deliver to such
parties a statement showing the quotations used by the Indenture Trustee in
determining any interest rate pursuant to Section 3.9(a).
<PAGE> 20
SECTION 4.
FEES
SECTION 4.1. Commitment Fees. The Lessee shall pay to the Indenture
Trustee for the account of each Participant a commitment fee (the "Commitment
Fees") for the period from and including the Closing Date to the earlier of (i)
the Completion Date or (ii) the Outside Completion Date, computed in the case of
each Participant at a rate per annum equal to the Commitment Fee Rate applicable
to the 364 Day Commitment or the Eighteen Month Commitment, as the case may be,
on the amount of the Available Commitment of such Participant, in each case
during the period for which payment is made, payable on each Commitment Fee
Payment Date. Commitment Fees shall be calculated on the basis of a 365- (or
366-, as the case may be) day year for the actual days elapsed.
SECTION 4.2. Underwriting Fee. The Lessee shall pay to the Arranger the
underwriting fee (the "Underwriting Fee") referred to in, and at such times as
provided in, the Arranger Fee Letter.
SECTION 4.3. Administrative Fee. The Lessee shall pay an administrative
fee (the "Administrative Fee") to the Arranger for its own account as provided
in, and at such times as provided in, the Arranger Fee Letter.
SECTION 4.4. Overdue Fees. If all or a portion of any fee due hereunder
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 Overdue Rate from the
date of such nonpayment until such amount is paid in full (as well after as
before judgment).
SECTION 4.5. Extension Fee. The Lessee shall pay the Extension Fee to
the Indenture Trustee for the account of each Participant agreeing to an
extension of the 364 Day Commitment if any portion of the 364 Day Commitment is
extended pursuant to Section 3.7. The Extension Fee shall be payable on the
Extension Date.
SECTION 5.
CERTAIN INTENTIONS OF THE PARTIES
SECTION 5.1. Nature of Transaction. (a) It is the intent of the parties
hereto that: (i) the Lease constitutes an "operating lease" pursuant to
Statement of Financial Accounting Standards No. 13, as amended, for purposes of
Lessee's financial reporting, and (ii) for purposes of federal, state and local
income or franchise taxes and for any other tax imposed on or measured by
income, the transaction contemplated hereby is a financing arrangement and
preserves ownership in the Property in the Lessee.
<PAGE> 21
Accordingly, and notwithstanding any provision of this Participation Agreement
to the contrary, the parties hereto agree and declare that: (i) the transactions
contemplated by the Lease are intended to have a dual, rather than single, form;
and (ii) all references in this Participation Agreement to the "lease" of the
Property which fail to reference such dual form do so as a matter of convenience
only and do not reflect the intent of parties hereto as to the true form of such
arrangements. Nevertheless, the Lessee acknowledges and agrees that neither the
Indenture Trustee, the Lessor nor any Participant has made any representations
or warranties to the Lessee concerning the tax, accounting or legal
characteristics of the Operative Documents and that the Lessee has obtained and
relied upon such tax, accounting and legal advice concerning the Operative
Documents as it deems appropriate.
(b) Anything to the contrary in the Operative Documents
notwithstanding, the parties hereto intend and agree that with respect to the
nature of the transactions evidenced by the Lease in the context of the exercise
of remedies under the Operative Documents, including, without limitation, in the
case of any proceedings under commercial or real estate law, any insolvency or
receivership proceedings or a petition under the United States bankruptcy laws
or any other applicable insolvency laws or statute of the United States of
America or any State or Commonwealth thereof affecting the Lessee, the Lessor,
or any Participant or any enforcement or collection actions, (i) the
transactions evidenced by the Lease are loans made by the Lessor and the
Participants as unrelated third party lenders to the Lessee secured by the
Property, (ii) the obligations of the Lessee under the Lease to pay Basic Rent
and Supplemental Rent or Asset Termination Value in connection with a purchase
of the Property pursuant to the Lease shall be treated as payments of interest
on and principal of, respectively, loans from the Lessor and the Participants to
the Lessee, and (iii) the Lease grants a security interest and mortgage or deed
of trust or lien, as the case may be, in the Property to the Lessor and the
Participants to secure the Lessee's performance under and payment of all amounts
under the Lease and the other Operative Documents.
(c) Specifically, without limiting the generality of subsection (b) of
this Section 5.1, the parties hereto further intend and agree that, for the
purpose of securing the Lessee's obligations for the repayment of the
above-described loans from the Lessor and the Participants to the Lessee, (i)
the Lease shall also be deemed to be a security agreement and financing
statement within the meaning of Article 9 of the Uniform Commercial Code (and
specifically, a construction mortgage, as said term is defined in Section
9-313(1)(c) of the Uniform Commercial Code) and a real property mortgage or deed
of trust; (ii) the conveyance provided for in Article II of the Lease shall be
deemed to be a grant by the Lessee to the Lessor and the Participants of a
mortgage lien and security interest in all of the Lessee's right, title and
interest in and to the Property and all proceeds of the conversion, voluntary or
involuntary, of the foregoing into cash, investments, securities or other
property, whether in the form of cash, investments, securities or other property
(it being understood that Lessee hereby mortgages and warrants and grants a
security interest in the Property to Lessor and the Participants to secure such
loans); (iii) the possession by the Lessor or any of its agents of notes and
such other items of property as constitute instruments, money, negotiable
documents or
<PAGE> 22
chattel paper shall be deemed to be "possession by the secured party" for
purposes of perfecting the security interest pursuant to Section 9-305 of the
Uniform Commercial Code; and (iv) notifications to Persons holding such
property, and acknowledgments, receipts or confirmations from financial
intermediaries, bankers or agents (as applicable) of the Lessee shall be deemed
to have been given for the purpose of perfecting such security interest under
Applicable Law. The Lessor and the Lessee shall, to the extent consistent with
the Lease, take such actions and execute, deliver, file and record such other
documents, financing statements, mortgages and deeds of trust as may be
reasonably necessary to ensure that, if the Lease were deemed to create a
security interest in the Property in accordance with this Section, such security
interest would be deemed to be a perfected security interest of first priority
under Applicable Law and will be maintained as such throughout the Term.
(d) Specifically, without limiting the generality of subsections (a),
(b) and (c) of this Section 5.1, the parties hereto intend and agree that, for
purposes of filing federal, state and local returns, reports and other
statements relating to income or franchise taxes, or any other taxes imposed
upon or measured by income, (i) the Lessee shall be entitled to take any
deduction, credit, allowance or other reporting position consistent with its
status as owner of the Property; and (ii) neither the Lessor nor any Participant
shall take an initial position on its federal, state and local returns, reports
and other statements relating to income or franchise taxes that is inconsistent
with the Lessee's status as owner of the Property.
(e) If the transaction evidenced by this Agreement and the other
Operative Documents can no longer be treated as an operating lease pursuant to
GAAP for accounting purposes, all provisions in the Operative Documents limiting
the Lessee's obligation to pay the Lease Balance or Asset Termination Value
(including the Remarketing Option) shall no longer apply. If any such change in
accounting treatment shall occur, the Lessee shall enter into such amendments to
the Operative Documents as the Lessor or the Required Participants may
reasonably request to reflect the foregoing.
SECTION 5.2. Amounts Due Under Lease. Anything else herein or elsewhere
to the contrary notwithstanding, it is the intention of the Lessee, the Lessor,
the Participants and the Indenture Trustee that: (i) the amount and timing of
installments of Basic Rent due and payable from time to time from the Lessee
under the Lease shall be equal to the aggregate payments due and payable as
interest and principal on the Notes and Certificate Yield on, and the
Certificate Purchaser Amounts with respect to, the Certificates on each Payment
Date; (ii) if the Lessee elects the Purchase Option or becomes obligated to
purchase the Property under the Lease, the Notes, the Certificate Purchaser
Amounts, all interest and Certificate Yield, thereon and all other obligations
of the Lessee owing to the Certificate Holders, the Owner Trustee, the Note
Holders and the Indenture Trustee shall be paid in full by the Lessee; (iii) if
the Lessee properly elects the Remarketing Option, the Lessee shall only be
required to pay to the Lessor the proceeds of the sale of the Property, the
Residual Value Guarantee Amount and any amounts due pursuant to Section 13 of
this Participation Agreement and Section 22.1 of the Lease; and (iv) upon an
Event of Default resulting in an acceleration of the Lessee's obligation to
purchase the
<PAGE> 23
Property under the Lease, the amounts then due and payable by the Lessee under
the Lease shall include all amounts necessary to pay in full the Asset
Termination Value, plus all other amounts then due from the Lessee to the Note
Holders, the Indenture Trustee, the Certificate Holders and the Owner Trustee
under the Operative Documents.
SECTION 6.
CONDITIONS PRECEDENT TO CLOSING DATE,
ACQUISITION OF GROUND LEASE INTEREST AND ADVANCES
SECTION 6.1. Conditions Precedent -- Documentation. The obligation of
the Lessor to acquire the Ground Lease Interest by ground lease on the Ground
Lease Interest Acquisition Date, the obligation of the Lessor to make an Advance
to finance the acquisition of Equipment or the construction of any Improvements
or the funding of any Interest Payment Advance or other Section 3.9(f)(ii)
portion on any Funding Date, and the obligation of each Participant to purchase
its respective Notes and/or Certificates on the Closing Date and to make
available to the Lessor its related portion of each such Advance on such Funding
Date are subject to satisfaction or waiver of the following conditions precedent
and the conditions precedent set forth in Section 6.2 and Section 6.3 (it being
understood that the Lessor's obligation to acquire such Ground Lease Interest or
to finance such Equipment, if any, or Improvements shall not be subject to the
conditions precedent set forth in this Section 6.1, Section 6.2 or Section 6.3
to the extent such conditions are actions required of the Lessor) on or prior to
the Closing Date, Ground Lease Interest Acquisition Date or such Funding Date,
as the case may be:
(a) Acquisition and Funding Request. Prior to the Ground Lease Interest
Acquisition Date or applicable Funding Date, the Indenture Trustee and the
Lessor shall have received a fully executed counterpart of the Acquisition
Request or Funding Request, as the case may be, appropriately completed by the
Lessee, in accordance with Sections 3.4 and 3.5, respectively; provided, that
this condition shall be deemed to have been satisfied in connection with an
Interest Payment Advance or funding of a Section 3.9(f)(ii) portion pursuant to
Section 3.9 hereof.
(b) Closing Date; Operative Documents. The Closing Date shall have
occurred and each of the Operative Documents to be entered into on the Closing
Date shall have been duly authorized, executed and delivered by the parties
thereto, and shall be in full force and effect, including, without limitation,
(i) this Participation Agreement, (ii) the Lease, (iii) the Indenture, (iv) the
Notes, (v) the Trust Agreement, (vi) the Certificates, (vii) the Guarantee,
(viii) the Cash Collateral Agreement, (ix) the Construction Agency Agreement,
(x) the Construction Agency Agreement Assignment, (xi) the Mortgage, (xii) the
Assignment of Lease, (xiii) the Consent to Assignment, (xv) the Ground Lease and
(xvi) the Appointment of Co-Trustee. No Default or Event of Default shall exist
thereunder (both before and after giving effect to the transactions contemplated
by the Operative Documents), and the Lessor, the Indenture Trustee and each
Participant shall each have received a fully executed copy of each of such
Operative
<PAGE> 24
Documents (other than (A) the Lease and Lease Supplement, of which the Indenture
Trustee shall receive the originals and the Lessor and the Certificate
Purchasers shall receive specimens, (B) the Certificates, of which each
Certificate Purchaser shall receive its original and the Lessee, the Indenture
Trustee and the Note Purchasers shall receive specimens), and (C) the Notes, of
which each Note Purchaser shall receive its original and the other parties shall
receive specimens. On or prior to the Closing Date or the Ground Lease Interest
Acquisition Date, as applicable, the Operative Documents (or memoranda thereof),
any supplements thereto and any financing statements in connection therewith
required under the Uniform Commercial Code shall have been recorded, registered
and filed, if necessary, in such manner as to enable the respective counsel to
render their opinions referred to in clauses (l) below.
(c) Environmental Certificate. The Indenture Trustee, each Participant
and the Lessor shall have received an Environmental Certificate substantially in
the form of Exhibit C (an "Environmental Certificate") with respect to the
Property, provided that such Environmental Certificate shall be delivered not
less than five (5) Business Days prior to the Ground Lease Interest Acquisition
Date and accompanied by the Environmental Audit for the Property, each of which
shall have been approved by the Indenture Trustee, the Required Participants and
the Lessor, it being understood and agreed that the Lessee agrees to provide a
Phase II environmental site assessment with respect to any Recognized
Environmental Conditions (as defined in the certificate) shown on such
certificate or indicated in the Environmental Audit within ninety (90) days
following the Ground Lease Interest Acquisition Date if requested by the
Required Participants, to remedy any such conditions within two hundred seventy
(270) days following the Ground Lease Interest Acquisition Date and to deliver
to the Indenture Trustee, the Lessor and each Participant upon completion of
such remedial action a written statement by the consultant who prepared the
Environmental Audit indicating that all such exceptions have been remedied in
compliance with Applicable Law.
(d) Appraisal. On or prior to the Ground Lease Interest Acquisition
Date, the Indenture Trustee, the Lessor and the Participants shall have received
an Appraisal of the Property, which Appraisal shall (i) show as of the projected
Completion Date the Fair Market Sales Value of the Ground Lease Interest and the
Improvements to be constructed thereon in accordance with the Plans and
Specifications, and (ii) meet the other applicable requirements set forth in the
definition of the term "Appraisal" contained in Appendix 1.
(e) Ground Lease. As of the Ground Lease Interest Acquisition Date, the
conditions to commencement of the lease term under the Ground Lease shall have
been satisfied to satisfaction of, or waived by, the Ground Lessor, the Lessor
and the Participants, the Ground Lease shall have been duly executed and shall
be in full force and effect and the lease term thereunder shall have commenced
as of such date.
(f) Lease Supplement; Equipment Schedule. The Lessee and the Lessor
shall have delivered (i) on or prior to the Ground Lease Interest Acquisition
Date, the original counterpart of the Lease Supplement executed by the Lessee
and the Lessor to the
<PAGE> 25
Indenture Trustee and (ii) on or prior to the applicable Funding Date, a duly
executed Equipment Schedule covering any Equipment, if any, being acquired with
the proceeds of such Advance by the Lessor.
(g) Survey and Title Insurance. On or prior to the Ground Lease
Interest Acquisition Date, the Lessee shall have delivered (i) an ALTA/ACSM
(1992)(Urban) Survey of the Property, including Table A numbers 1, 2, 3, 4, 6,
8, 9, 10 and 11, certified to the Lessor, the Indenture Trustee, the
Participants and the title company and otherwise in form reasonably acceptable
to the Participants, (ii) an ALTA (1992) owners title insurance policy with
extended coverage over the general exceptions, insuring leasehold title in the
Lessor to the Ground Lease and the Ground Lease Interest and fee title in the
Lessor to the Improvements, subject only to the Permitted Exceptions, (iii) an
ALTA (1992) Loan Policy insuring the Indenture Trustee that the Lien of the
Mortgage is a first and primary lien in the Lessor's interest in the Lease, in
the leasehold title to the Ground Lease Interest and in the fee title to the
Improvements, subject only to pending disbursements for construction and the
Permitted Exceptions, and (iv) an ALTA (1992) Loan Policy insuring the Indenture
Trustee that the Lien of the Lease is a first and primary Lien in the Lessee's
interest in the Property; such policies each in an amount not less than the
estimated Property Cost and to be reasonably satisfactory to the Lessor, the
Indenture Trustee and the Participants with extended coverage, access, tax
parcel, survey identicality, variable rate, future advances, usury,
comprehensive, fraudulent conveyances, doing business, mechanics liens and
zoning endorsements and such other endorsements as and to the extent available
in such jurisdiction where the Property is located, if requested by the Required
Participants.
(h) Evidence of Recording and Filing. On or prior to the Ground Lease
Interest Acquisition Date, the Indenture Trustee shall have received evidence
reasonably satisfactory to it that each of the Ground Lease, the Lease
Supplement, the Assignment of Lease and Supplement to Assignment of Lease, the
Consent to Assignment and the Mortgage shall have been or are being recorded
with the appropriate Governmental Authorities in the order in which such
documents are listed in this clause, and the UCC Financing Statements with
respect to the Property being acquired shall have been or are being filed with
the appropriate Governmental Authorities.
(i) Evidence of Insurance. On or prior to the Ground Lease Interest
Acquisition Date, copies of the Lessee's insurance policies with respect to the
Property required to be maintained pursuant to the Lease shall have been
delivered to the insurance consultant of the Lessor and the Participants and
such policies shall be reasonably satisfactory to such insurance consultant, the
Lessor and the Participants.
(j) Evidence of Use of Proceeds. On or prior to the applicable Funding
Date, the Indenture Trustee and each Participant shall have received evidence
reasonably satisfactory to the Indenture Trustee and each Participant as to the
use of the proceeds of the Advance in accordance with the provisions of Section
8.1(g).
<PAGE> 26
(k) Taxes. On or prior to the Ground Lease Interest Acquisition Date,
all taxes, fees and other charges in connection with the execution, delivery,
recording, filing and registration of the Operative Documents shall have been
paid or provisions for such payment shall have been made to the satisfaction of
the Indenture Trustee, each Participant and the Lessor.
(l) Opinions of Counsel. On or prior to the Closing Date, (i) the
Lessee shall have delivered to the Indenture Trustee, each Participant and the
Lessor an opinion of Orrick, Herrington & Sutcliffe LLP, counsel to the Lessee,
as to the matters set forth in Exhibit D (with an appropriate update on the
Ground Lease Interest Acquisition Date (if different than the Closing Date) with
respect to the Property and the Mortgage); (ii) the Owner Trustee shall have
delivered to the Indenture Trustee, the Lessee and each Participant an opinion
of counsel reasonably satisfactory to the Indenture Trustee, each Participant
and the Lessee in the form set forth on Exhibit E; and (iii) Dorsey & Whitney,
counsel to the Co-Trustee, shall have issued to the Lessor, the Indenture
Trustee, the Lessee and the Participants its opinion to the effect and in the
form set forth on Exhibit F.
(m) Approvals. All necessary (or, in the reasonable opinion of the
Lessor, the Participants or the Indenture Trustee or any of their respective
counsel, advisable) Governmental Actions and covenants and approvals of or by
any Governmental Authority or other Person, in each case required by any
Requirement of Law, covenant or restriction affecting the Property or the
transactions contemplated thereby shall have been obtained or made and be in
full force and effect prior to the time required to be in effect.
(n) Litigation. No action or proceeding shall have been instituted, nor
shall any action or proceeding be threatened, before any Governmental Authority,
nor shall any order, judgment or decree have been issued or proposed to be
issued by any Governmental Authority (i) to set aside, restrain, enjoin or
prevent the full performance of this Participation Agreement, the Lease or any
other Operative Document or any transaction contemplated hereby or thereby or
(ii) which is reasonably likely to have a Material Adverse Effect.
(o) Requirements of Law. In the reasonable opinion of the Lessor, the
Participants, the Indenture Trustee and their respective counsel, the
transactions contemplated by the Operative Documents do not and will not violate
any Requirement of Law and do not and will not subject the Lessor, the Indenture
Trustee or any Participant to any adverse regulatory or tax prohibitions or
constraints.
(p) Responsible Officer's Certificate of the Lessee. The Lessor, each
Participant and the Indenture Trustee shall each have received a Responsible
Officer's Certificate, dated as of the Closing Date, of the Lessee stating that
(i) each and every representation and warranty of the Lessee contained in the
Operative Documents to which it is a party is true and correct on and as of the
Closing Date; (ii) no Default or Event of Default under the Lease, the Ground
Lease or the Construction Agency Agreement has occurred and is continuing; (iii)
each Operative Document to which the Lessee is a party is in full force and
effect with respect to it; and (iv) the Lessee has duly
<PAGE> 27
performed and complied with all covenants, agreements and conditions contained
herein or in any Operative Document required to be performed or complied with by
it on or prior to the Closing Date.
(q) The Lessee's Resolutions and Incumbency Certificate, etc. On or
prior to the Closing Date, the Lessor, each Participant and the Indenture
Trustee shall each have received (i) a certificate of the Secretary or an
Assistant Secretary of the Lessee attaching and certifying as to (A) the
resolutions of the Board of Directors of the Lessee, duly authorizing the
execution, delivery and performance by the Lessee of documents and agreements of
the type represented by each Operative Document to which it is or will be a
party, (B) its articles of incorporation and bylaws, and (C) the incumbency and
signature of persons authorized to execute and deliver on its behalf the
Operative Documents to which it is a party, and (ii) a good standing certificate
from the appropriate officer of the state in which the Property is located.
(r) Responsible Officer's Certificate of the Guarantor. The Lessor,
each Participant and the Indenture Trustee shall each have received a
Responsible Officer's Certificate, dated as of the Closing Date, of the
Guarantor stating that (i) each and every representation and warranty of the
Guarantor contained in the Operative Documents to which it is a party is true
and correct on and as of the Closing Date; (ii) no Default or Event of Default
under the Guarantee has occurred and is continuing; (iii) each Operative
Document to which the Guarantor is a party is in full force and effect with
respect to it; and (iv) the Guarantor has duly performed and complied with all
covenants, agreements and conditions contained herein or in any Operative
Document required to be performed or complied with by it on or prior to the
Closing Date.
(s) The Guarantor's Resolutions and Incumbency Certificate, etc. On or
prior to the Closing Date, the Lessor, each Participant and the Indenture
Trustee shall each have received a certificate of the Secretary or an Assistant
Secretary of the Guarantor attaching and certifying as to (i) the resolutions of
its Board of Directors duly authorizing the execution, delivery and performance
by the Guarantor of documents and agreements of the type represented by each
Operative Document to which it is or will be a party (ii) its articles of
incorporation and by-laws, and (iii) the incumbency and signature of persons
authorized to execute and deliver on its behalf the Operative Documents to which
it is a party.
(t) Ground Lease Interest Acquisition Date. The Ground Lease Interest
Acquisition Date shall occur on or prior to September 28, 1998.
(u) No Material Adverse Effect. As of each Funding Date, there shall
not have occurred any Material adverse change in the Lessee's or the Guarantor's
capital structure, ownership or consolidated assets, liabilities, results of
operations, or financial condition from that set forth or contemplated in the
most recent financial statements delivered pursuant to Section 8.4(m) or Section
10.1(a), and no event or condition shall have occurred that would result in a
Material Adverse Effect, provided that for purposes of this condition precedent,
the Momentum Transaction shall not be deemed to constitute a Material adverse
change or result in a Material Adverse Effect.
<PAGE> 28
(v) Officer's Certificate of the Lessor. The Lessee, the Indenture
Trustee and each Participant shall have received a certificate of an Authorized
Officer of the Lessor, dated as of the Closing Date, stating that (i) each and
every representation and warranty of the Lessor contained in the Operative
Documents to which it is a party is true and correct on and as of the Closing
Date, (ii) each Operative Document to which the Lessor is a party is in full
force and effect with respect to it, (iii) the Lessor has duly performed and
complied with all covenants, agreements and conditions contained herein or in
any Operative Document required to be performed or complied with by it on or
prior to the Closing Date, and (iv) the Lessor has the capacity to act as a
trustee and hold the Property in the jurisdiction in which the Property is
located.
(w) The Lessor's Resolutions and Incumbency Certificate, etc. On or
prior to the Closing Date, the Lessee, the Indenture Trustee and each
Participant shall have received a certificate of the Secretary or an Assistant
Secretary of the Lessor attaching and certifying as to (i) the resolutions of
the Board of Directors duly authorizing the execution, delivery and performance
by the Lessor of documents and agreements of the type represented by each
Operative Document to which it is or will be a party, (ii) the pertinent
provisions of its by-laws and (iii) the incumbency and signature of persons
authorized to execute and deliver on its behalf the Operative Documents to which
it is a party.
(x) Construction Budget; Plans and Specifications. On or prior to the
Ground Lease Interest Acquisition Date, each Participant shall have received a
copy of the "Design Review" Plans and Specifications and Budget, each in a form
reasonably satisfactory to each Participant. The Chief Financial Officer of the
Lessee shall certify that the "Final" Plans and Specifications will conform to
the "Design Review" Plans and Specifications in all Material respects and the
Budget was prepared based on the "Design Review" Plans and Specifications.
(y) Sale of All Notes and Certificates. On the Closing Date, each of
the Notes and Certificates shall have been purchased by the other Note
Purchasers and Certificate Purchasers, as applicable.
(z) Legal Fees and Expenses. The Lessee shall have caused to be paid as
provided in Section 9 all reasonable fees and expenses of attorneys for the
Owner Trustee, the Indenture Trustee and any Participant (which attorneys may be
employees of such Person) paid or incurred in connection with the preparation,
negotiation, execution and delivery of the Operative Documents.
SECTION 6.2. Further Conditions Precedent. The obligation of the Lessor
to acquire the Ground Lease Interest on the Ground Lease Interest Acquisition
Date or to make an Advance on any Funding Date and the obligation of each
Participant to make available its related portion of such Advance on such
Funding Date are subject to satisfaction or waiver of the following conditions
precedent and to satisfaction on or before the Ground Lease Interest Acquisition
Date, the Closing Date or such Funding
<PAGE> 29
Date, as the case may be, of the conditions precedent set forth in Section 6.1
(it being understood that the Lessor's obligations to acquire the Ground Lease
Interest and each Participant's obligation to fund an Advance shall not be
subject to the conditions precedent set forth in Section 6.1, Section 6.3 and
this Section 6.2 to the extent such conditions are actions required of the
Lessor or such Participant, as the case may be):
(a) Representations and Warranties. On such date the representations
and warranties of the Lessee, the Guarantor, the Lessor, the Indenture Trustee
and each Participant contained herein and in each of the other Operative
Documents shall be true and correct as though made on and as of such date,
except to the extent such representations or warranties relate solely to an
earlier date, in which case such representations and warranties shall have been
true and correct on and as of such earlier date.
(b) Performance of Covenants. The parties hereto shall have performed
their respective agreements contained herein and in the other Operative
Documents to be performed by them on or prior to such date.
(c) Title. Title to the Property shall conform to the representations
and warranties set forth in Section 8.4(c).
(d) No Default. There shall not have occurred and be continuing any
Default or Event of Default under any of the Operative Documents, and no Default
or Event of Default under any of the Operative Documents will have occurred
after giving effect to the acquisition of the Property and/or the making of the
Advance requested by such Funding Request, as the case may be.
SECTION 6.3. Conditions Precedent to Closing Date. The obligation of
the Lessor, the Indenture Trustee, each Participant, the Lessee and the
Guarantor to execute and deliver the Operative Documents referred to in Section
6.3(a) hereof on the Closing Date and to consummate the closing on the Closing
Date are subject to satisfaction or waiver of the following conditions precedent
(it being understood that such Person's obligations under this Section 6.3 shall
not be subject to the conditions precedent set forth in this Section 6.3 to the
extent such conditions are actions required of such Person):
(a) Operative Documents. Each of the Operative Documents to be entered
into on the Closing Date shall have been duly authorized, executed and delivered
by the parties thereto, and shall be in full force and effect
(b) Representations and Warranties. On such date the representations
and warranties of the Lessee, the Guarantor, the Lessor, the Indenture Trustee
and each Participant contained herein and in each of the other Operative
Documents shall be true and correct as though made on and as of such date.
<PAGE> 30
(c) Performance of Covenants. The parties hereto shall have performed
their respective agreements contained herein and in the other Operative
Documents to be performed by them on or prior to such date.
(d) No Default. There shall not have occurred and be continuing any
Default or Event of Default under any of the Operative Documents, and no Default
or Event of Default under any of the Operative Documents will have occurred
after giving effect to the execution and delivery of the Operative Documents.
SECTION 7.
COMPLETION DATE CONDITIONS
SECTION 7.1. Conditions. The occurrence of the Completion Date shall be
subject to the fulfillment to the satisfaction of, or waiver by, the Required
Participants of the following conditions precedent at which time "Completion"
shall be deemed to have occurred:
(a) Construction Completion. The construction of the Improvements shall
have been completed substantially in accordance with the Plans and
Specifications and all Applicable Law and Insurance Requirements, and the
Property shall be ready for occupancy and use as a facility described in Recital
A of this Agreement. This shall require, without limiting the generality of the
preceding sentence, that (i) all utilities required to adequately service the
Improvements for their intended use are available and "tapped on" and hooked up
pursuant to adequate permits (including any that may be required under
applicable Environmental Laws) and (ii) access to the Improvements for
pedestrians and motor vehicles from publicly dedicated streets and public
highways is available.
(b) Architect's Certificate; Date-Down Endorsement. The Lessee shall
have furnished to the Lessor and the Indenture Trustee a (i) certificate of the
Architect (substantially in the form of Exhibit H) dated at or about the
Completion Date and stating that (a) the Improvements have been completed
substantially in accordance with the Plans and Specifications and the Property
is ready for occupancy, (b) the Property, as so completed, complies in all
material respects with all Applicable Laws, and certifying that attached thereto
are true and complete copies of an "as built" or "record" set of the Plans and
Specifications, and a plat of survey of the Property "as built" showing all
paving, driveways, fences and exterior improvements; and (ii) a date-down
endorsement to or amendment and restatement of the title insurance policies
described in Section 6.1(g).
(c) Lessee Certification. The Lessee shall have furnished the Lessor
and the Indenture Trustee with a certification of the Lessee (substantially in
the form of Exhibit I) as follows:
<PAGE> 31
(i) The representations and warranties of the Lessee with respect to
the Property set forth in Section 8.4(b) are true and correct as of the
Completion Date. All amounts owing to third parties for the
construction of the Improvements have been paid in full.
(ii) No changes or modifications were made to the related Plans and
Specifications after the Closing Date that have had a Material adverse
effect on the value, use or useful life of the Property.
SECTION 8.
REPRESENTATIONS
SECTION 8.1. Representations of the Bank and the Lessor. Bank, in its
individual capacity and the Owner Trustee, each as to itself, represents and
warrants to each of the other parties hereto as follows, provided that the
representations in the following paragraphs (f), (g), (h), (i), (j), (k) and (l)
are made solely in its capacity as the Owner Trustee:
(a) Due Organization, etc. It is a Delaware banking corporation duly
organized and validly existing and in good standing under the laws of the United
States and has the corporate 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 Certificate Purchasers) 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 Documents to
which the Bank 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 in connection with or as contemplated by each such Operative Document to
which the Bank or the Owner Trustee, as the case may be, is or will be a party.
(b) Authorization; No Conflict. The execution, delivery and performance
of each Operative Document 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 Certificate Purchasers) 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 current United States law, governmental rule or regulation
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, its articles of association or by-laws,
or any indenture, mortgage, deed of trust, conditional sales contract, 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 or (iv) does or will
<PAGE> 32
require any Governmental Action by any Governmental Authority of the United
States and regulating its banking or trust powers.
(c) Enforceability, etc. The Trust Agreement and, assuming the Trust
Agreement is the legal, valid and binding obligation of the Certificate
Purchasers, each other Operative Document to which the Bank or the Owner
Trustee, as the case may be, is or will be a party have been, or on or before
the Closing Date or Ground Lease Interest Acquisition Date will be, duly
executed and delivered by the Bank or the Owner Trustee, as the case may be, and
the Trust Agreement and each such other Operative Document to which the Bank 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 Bank or the Owner Trustee, as the case may be, in accordance with
the terms thereof, except as the same may be limited by insolvency, bankruptcy,
reorganization or other laws relating to or affecting creditors' rights or by
general equitable principles.
(d) Litigation. 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 Owner Trustee, to perform its
obligations under the Operative Documents to which it is a party, would have a
material adverse effect on the financial condition of the Owner Trustee or would
question the validity or enforceability of any of the Operative Documents to
which it is or will become a party.
(e) Assignment. It has not assigned or transferred any of its right,
title or interest in or under the Lease except in accordance with the Operative
Documents.
(f) Defaults. No Default or Event of Default under the Operative
Documents attributable to it has occurred and is continuing.
(g) Use of Proceeds. The proceeds of the Notes and the Certificates
shall be applied solely in accordance with the Operative Documents.
(h) Securities Act. 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 the
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 the Certificate Purchasers, the Note
Purchasers and other accredited investors, 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 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 Document under the Trust Indenture Act of 1939,
as amended.
(i) Chief Place of Business. The Owner Trustee's chief place of
business, chief executive office and office where the documents, accounts and
records relating to
<PAGE> 33
the transactions contemplated by this Participation Agreement and each other
Operative Document are kept are located at Rodney Square North, 1100 North
Market Street, Wilmington, Delaware 19890, Attention: Corporate Trust
Administration.
(j) Federal Reserve Regulations. The Owner Trustee is not engaged
principally in the business of extending credit for the purpose of purchasing or
carrying any margin stock (within the meaning of Regulation U of the Board), and
no part of the proceeds of the Notes or the Certificates 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 Regulation G, T, U, or X of
the Board.
(k) Investment Company Act. 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) No Plan Assets. The Owner Trustee is not acquiring its interests in
the Property with the assets of any Plan (or its related trust).
SECTION 8.2. Representations of the Participants. (a) Representations
of each Participant. Each Participant severally as to itself represents to the
other parties hereto as follows:
(i) The Notes or Certificates to be purchased by it are being acquired
by it for its own account and for investment and not with a view to any
distribution thereof, but without prejudice to the rights of such
Participant at all times to sell or otherwise dispose of all or any
part of its Notes or Certificates in accordance with the terms hereof
and of the Operative Documents and under an exemption from the
Securities Act and otherwise in compliance with all applicable state
securities laws, subject, nevertheless to any requirement of law that
the disposition of such Participant's Notes or Certificates at all
times shall be within its control.
(ii) Each Participant, by its purchase and acceptance of a Note or
Certificate, hereby represents and warrants to each of the other
parties hereto that at least one of the following statements is an
accurate representation as to the source of funds to be used by such
Participant to make its investment hereunder:
(A) If such Participant is an insurance company, no part
of such funds constitutes assets allocated to any
separate account maintained by it in which any Plan
(or its related trust) has any interest; or
(B) If such Participant is an insurance company, to the
extent that any part of such funds constitutes assets
allocated to any separate account maintained by it,
it has disclosed in writing to
<PAGE> 34
the Lessee, the other Participants, the Owner
Trustee, and the Indenture Trustee the names of each
Plan whose assets in such account exceed ten percent
of the total assets or are expected to exceed ten
percent of the total assets of such account as of the
date of such investment (for the purposes of this
subdivision (B), all Plans maintained by the same
employer or employee organization are deemed to be a
single plan); or
(C) If such Participant is a bank, to the extent that any
part of such funds constitutes assets allocated to
any bank collective investment vehicle maintained by
it, it has disclosed in writing to the Lessee, the
Participants, the Owner Trustee, and the Indenture
Trustee the names of each Plan whose assets in such
vehicle exceed ten percent of the total assets or are
expected to exceed ten percent of the total assets of
such vehicle as of the date of such investment (for
the purpose of this subdivision (C), all Plans
maintained by the same employer or employee
organization are deemed to be a single plan); or
(D) If such Participant is other than an insurance
company, no part of such funds constitutes assets of
any Plan (other than a governmental plan exempt from
the coverage of ERISA); or
(E) If such Participant is an insurance company, such
funds constitute assets allocated to a general
account and such general account is an "insurance
company general account" as such term is defined in
Section V(e) of Department of Labor Prohibited
Transaction Exemption ("PTE") 95-60 (issued July 12,
1995) and such investment is eligible for and
satisfies the requirements of PTE 95-60; or
(F) If such funds constitute assets of a specific Plan,
complete and correct information as to the identity
of which such Participant has disclosed in writing to
the Lessee, the other Participants, the Owner Trustee
and the Indenture Trustee; or
(G) The source of funds is an "investment fund" managed
by a "qualified professional asset manager" or "QPAM"
(as defined in Part V of PTE 84-14, issued March 13,
1984), provided that no other party to the
transactions described in this Agreement and no
"affiliate" of such other party (as defined in
Section V(C) of PTE 84-14) has at this time, and
during the immediately preceding one year, exercised
the authority to appoint or terminate said QPAM as
manager of the assets of any plan identified in
writing pursuant to clause (F) or to
<PAGE> 35
negotiate the terms of said QPAM's management
agreement on behalf of any such identified plans.
(b) Representations of each Certificate Purchaser. Each Certificate
Purchaser severally as to itself represents and warrants to each of the other
parties hereto as follows:
(i) Due Organization, etc. It is a duly organized and validly existing
corporation in good standing under the laws of the jurisdiction of its
incorporation and has the corporate power and authority to execute,
deliver and carry out the terms and provisions of the Operative
Documents to which it is or will be a party.
(ii) Authorization; No Conflict. The execution, delivery and
performance of each Operative Document to which it is or will be a
party has been duly authorized by all necessary action on its part and
neither the execution and delivery by it thereof, nor the consummation
of the transactions by it contemplated thereby, nor compliance by it
with any of the terms and provisions thereof (A) does or will require
any approval or consent of any trustee or holders of any of its
indebtedness or obligations, (B) does or will contravene any current
United States law, governmental rule or regulation specifically
applicable to it, (C) 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, its certificate of incorporation
or bylaws, or any indenture, mortgage, deed of trust, conditional sales
contract, 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 would have a material adverse effect on the ability of such
Certificate Purchaser to perform its obligations under the Operative
Documents to which it is a Party or (D) based upon the representations
of the Lessee contained in Section 8.4(j), does or will require on its
behalf any Governmental Action by any Governmental Authority not
already expressly provided for in the Operative Documents.
(iii) Enforceability, etc. Each Operative Document to which such
Certificate Purchaser is or will be a party has been or on or before
the Closing Date or Ground Lease Interest Acquisition Date will be,
duly executed and delivered by such Certificate Purchaser and each such
Operative Document to which such Certificate Purchaser is a party
constitutes, or upon execution and delivery will constitute, a legal,
valid and binding obligation enforceable against such Certificate
Purchaser in accordance with the terms thereof, except as the same may
be limited by insolvency, bankruptcy, reorganization or other laws
relating to or affecting creditors' rights or by general equitable
principles.
(iv) Litigation. There is no action or proceeding pending or, to its
knowledge, threatened to which it is a party on the Closing Date before
any Governmental Authority that, if adversely determined, would
materially and adversely affect its ability to perform its obligations
under the Operative Documents to which it is a party, would have a
material adverse effect on the financial condition of such
<PAGE> 36
Certificate Purchaser or would question the validity or enforceability
of any of the Operative Documents to which it is or will become a
party.
(v) Defaults. No Default or Event of Default under the Operative
Documents attributable to it has occurred and is continuing.
(vi) Securities Act. Neither such Certificate Purchaser nor any Person
authorized by such Certificate Purchaser to act on its behalf has
offered or sold any interest in the Trust Estate, or in any similar
security relating to the 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
and neither such Certificate Purchaser nor any Person authorized by
such Certificate Purchaser to act on its behalf will take any action
which would subject the issuance or sale of any interest in the Trust
Estate to the provisions of Section 5 of the Securities Act or require
the qualification of any Operative Document under the Trust Indenture
Act of 1939, as amended.
(vii) Investment Company Act. Such Certificate Purchaser is not an
"investment company" or a company "controlled" by an investment company
within the meaning of the Investment Company Act.
SECTION 8.3. Representations of the Lessee. The Lessee represents and
warrants to each of the other parties hereto that:
(a) Corporate Status. The Lessee (i) is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and (ii) has duly qualified and is authorized to do business and has obtained a
certificate of authority to transact business as a foreign corporation in the
jurisdiction where the Property is located and in each other jurisdiction where
the failure to so qualify is reasonably likely to be Material.
(b) Corporate Power and Authority. The Lessee has corporate power and
authority to execute, deliver and carry out the terms and provisions of the
Operative Documents to which it is or will be a party and has taken all
necessary corporate action to authorize the execution, delivery and performance
of the Operative Documents to which it is or will be a party and has or will
have duly executed and delivered each Operative Document required to be executed
and delivered by it and, assuming the due authorization, execution and delivery
thereof on the part of each other party thereto, each such Operative Document
constitutes or will constitute a legal, valid and binding obligation enforceable
against it in accordance with its terms, except as the same may be limited by
insolvency, bankruptcy, reorganization or other laws relating to or affecting
the enforcement of creditors' rights or by general equitable principles.
(c) No Violation. Neither the execution, delivery and performance by
the Lessee of the Operative Documents to which it is or will be a party nor
compliance with
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the terms and provisions thereof, nor the consummation by the Lessee of the
transactions contemplated therein (i) will result in a violation by the Lessee
of any applicable provision of any law, statute, rule, regulation, order, writ,
injunction or decree of any court or governmental instrumentality having
jurisdiction over the Lessee or the Property that would (x) adversely affect the
validity or enforceability of the Operative Documents to which the Lessee is a
party, or the title to, or value or condition of, the Property, or (y) have a
Material Adverse Effect on the consolidated financial position, business or
consolidated results of operations of the Lessee, or (z) have an adverse effect
on the ability of the Lessee to perform its obligations under the Operative
Documents, (ii) will conflict with or result in any breach under, or (other than
pursuant to the Operative Documents) result in the creation or imposition of (or
the obligation to create or impose) any Lien upon any of the property or assets
of Lessee pursuant to the terms of, any indenture, loan agreement or other
agreement for borrowed money to which the Lessee is a party or by which it or
any of its property or assets is bound or to which it may be subject (other than
Permitted Liens), or (iii) will violate any provision of the certificate or
articles of incorporation or bylaws of the Lessee.
(d) Litigation. There are no actions, suits or proceedings pending or,
to the knowledge of the Lessee, threatened (i) that are reasonably likely to
have a Material Adverse Effect or (ii) that question the validity of the
Operative Documents or the rights or remedies of the Lessor, the Indenture
Trustee or the Participants with respect to the Lessee or the Property under the
Operative Documents.
(e) Governmental Approvals. No Governmental Action by any Governmental
Authority having jurisdiction over the Lessee or the Property is required to
authorize or is required in connection with (i) the execution, delivery and
performance by the Lessee of any Operative Document or (ii) the legality,
validity, binding effect or enforceability against the Lessee of any Operative
Document, except for the filing or recording of the Operative Documents listed
in Section 8.4(f) hereof with the appropriate Governmental Authorities, all of
which will have been completed on or prior to the Ground Lease Interest
Acquisition Date.
(f) Investment Company Act. The Lessee is not an "investment company"
or a company "controlled" by an "investment company," within the meaning of the
Investment Company Act.
(g) Public Utility Holding Company Act. The Lessee is not a "holding
company, or a "subsidiary company," or an "affiliate" of a "holding company, or
of a "subsidiary company" of a "holding company", within the meaning of the
Public Utility Holding Company Act of 1935, as amended.
(h) Information. The information and materials regarding the Lessee and
the Property which were provided by the Lessee to one or more of the
Participants prior to the Closing Date or the Ground Lease Interest Acquisition
Date are true and accurate in all material respects on the date as of which such
information and materials are dated or certified and not incomplete by omitting
to state any material fact necessary to make such
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information not misleading at such time in light of the circumstances under
which such information was provided.
(i) Taxes. All United States federal income tax returns and all other
Material tax returns which are required to have been filed have been or will be
prepared in accordance with applicable law and filed by or on behalf of the
Lessee by the respective due dates, including extensions, and all taxes due with
respect to the Lessee pursuant to such returns or pursuant to any assessment
received by the Lessee have been or will be paid. The charges, accruals and
reserves on the books of the Lessee in respect of taxes or other governmental
charges are, in the opinion of the Lessee, adequat |
