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EXHIBIT 10.51
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PARTICIPATION AGREEMENT
(SAFESKIN TRUST 1999)
among
SAFESKIN REAL ESTATE INCORPORATED,
as Lessee
UNION BANK OF CALIFORNIA, N.A.,
not in its individual capacity except as expressly
stated herein, but solely as Trustee,
as Lessor,
BANKERS COMMERCIAL CORPORATION,
a California corporation,
as Investor,
UNION BANK OF CALIFORNIA, N.A.,
as Agent for the
Lenders
and
THE LENDERS PARTIES HERETO
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Dated as of March 5, 1999
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TABLE OF CONTENTS
Page
SECTION 1. THE LOANS....................................................................... 1
1.1 Loans...................................................................... 1
1.2 Credit Agreement........................................................... 1
1.3 Collateral For Loans....................................................... 1
1.4 Guarantee.................................................................. 2
SECTION 2. INVESTOR CONTRIBUTION........................................................... 2
2.1 Investor Contribution...................................................... 2
2.2 Investor Yield............................................................. 2
SECTION 3. SUMMARY OF THE TRANSACTIONS..................................................... 2
3.1 Operative Agreements....................................................... 2
3.2 Property Purchase and Lease................................................ 3
3.3 Construction of Improvements............................................... 3
SECTION 4. THE CLOSINGS.................................................................... 3
4.1 Initial Closing Date....................................................... 3
4.2 Subsequent Funding Dates................................................... 3
4.3 Trust Company Authorization................................................ 3
SECTION 5. FUNDING OF ADVANCES............................................................. 4
5.1 General.................................................................... 4
5.2 Procedures for Funding..................................................... 4
SECTION 6. CONDITIONS OF THE CLOSINGS AND ADVANCES......................................... 5
6.1 General Conditions to the Lenders' and the Investor's Obligations
to Make Loans and Investor Contributions................................... 5
6.2 Conditions to the Investor's and the Lenders' Obligations to Make
Advances to Pay Property Acquisition Costs................................. 8
6.3 Conditions to the Investor's and the Lenders' Obligations to Make
Advances to Pay Project Costs for Construction on the Property.............12
SECTION 7. REPRESENTATIONS AND WARRANTIES .................................................15
7.1 Representations and Warranties of the Investor on the Initial
Closing Date ..............................................................15
7.2 Representations and Warranties of Trustee on the Initial Closing Date......16
7.3 Representations and Warranties of the Lessee on the Initial
Closing Date ..............................................................18
7.4 Representations and Warranties of the Lessee on the Property
Closing Date...............................................................21
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7.5 Representations and Warranties of the Trustee on the Property
Closing Date ..............................................................24
7.6 Representations and Warranties of the Lessee Upon each Funding Date........25
7.7 Representations and Warranties of the Trustee Upon each Funding Date.......27
7.8 Representations and Warranties of the Investor Upon Funding Dates..........28
SECTION 8. PAYMENT OF CERTAIN EXPENSES.....................................................28
8.1 Transaction Expenses.......................................................28
8.2 Brokers' Fees and Stamp Taxes..............................................29
8.3 Certain Fees and Expenses..................................................29
8.4 Credit Agreement and Related Obligations...................................29
8.5 Commitment Fees; Amendment Fees............................................29
8.6 Overdue Rate...............................................................30
SECTION 9. OTHER COVENANTS AND AGREEMENTS..................................................30
9.1 Covenants of the Trustee and the Investor..................................30
9.2 Amendment of Certain Documents.............................................32
9.3 Proceeds of Casualty.......................................................32
9.4 Intercreditor Agreement....................................................32
9.6 Covenants of the Lessee....................................................33
SECTION 10. CREDIT AGREEMENT...............................................................33
10.1 Lessee's Credit Agreement Rights...........................................33
SECTION 11. TRANSFER OF INTEREST...........................................................34
11.1 Restrictions on Transfer...................................................35
11.2 Effect of Transfer.........................................................35
SECTION 12. INDEMNIFICATION................................................................35
12.2 General Tax Indemnity......................................................38
SECTION 13. MISCELLANEOUS..................................................................42
13.1 Survival of Agreements.....................................................43
13.2 No Broker, etc.............................................................43
13.3 Notices....................................................................43
13.4 Counterparts...............................................................44
13.5 Amendments and Termination.................................................44
13.6 Headings, etc..............................................................45
13.7 Parties in Interest........................................................45
13.8 GOVERNING LAW..............................................................45
13.9 Severability...............................................................45
13.10 Liability Limited..........................................................45
13.11 Rights of Lessee...........................................................45
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13.12 Further Assurances.........................................................46
13.13 Successors and Assigns.....................................................46
13.14 No Representation or Warranty..............................................46
13.15 Highest Lawful Rate........................................................46
13.16 Ownership of the Property..................................................47
13.17 Confidentiality............................................................49
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PARTICIPATION AGREEMENT (SAFESKIN TRUST 1999), dated as of March
5, 1999 (this "Agreement"), among SAFESKIN REAL ESTATE INCORPORATED, a Delaware
corporation (the "Lessee"); UNION BANK OF CALIFORNIA, N.A., a national banking
association, not in its individual capacity except as expressly stated herein,
but solely as Trustee (the "Trustee" or the "Lessor"); UNION BANK OF CALIFORNIA,
N.A., a national banking association, as agent (in such capacity, the "Agent")
for the Lenders; BANKERS COMMERCIAL CORPORATION, a California corporation, as
investor (the "Investor"); and each of the financial institutions listed on the
signature pages hereof (each, a "Lender"; collectively, the "Lenders").
Capitalized terms used but not otherwise defined in this Agreement shall have
the meanings set forth in Annex A hereto, and the rules of usage set forth in
Annex A hereto shall apply to this Agreement.
Preliminary Statement
In consideration of the mutual agreements herein contained and
other good and valuable consideration, receipt of which is hereby acknowledged,
the parties hereto hereby agree as follows:
SECTION 1. THE LOANS
1.1 Loans. Subject to the terms and conditions of the Credit
Agreement and this Agreement, on each Funding Date, the Lenders shall make loans
to the Lessor in an amount in immediately available funds equal to 97% of the
amount of the Advance requested by the Construction Agent in the Requisition for
such Funding Date, not to exceed an aggregate principal amount of up to
$58,200,000 in order for the Lessor to acquire the Land described on Schedule 1
attached hereto, to develop and construct the Improvements in accordance with
the Construction Agreement (in the form attached hereto as Exhibit A-1) and the
Agency Agreement (in the form attached hereto as Exhibit A-2), and to pay other
Project Costs, and in consideration of the receipt of the proceeds of such
Loans, the Lessor will issue the Tranche A Notes and the Tranche B Notes.
1.2 Credit Agreement. The Loans shall be made and the Notes shall
be issued pursuant to the Credit Agreement. Pursuant to this Agreement and the
Credit Agreement, the Loans will be made to the Lessor from time to time at the
request of the Construction Agent in consideration for the Construction Agent's
agreeing for the benefit of the Lessor, pursuant to the Agency Agreement, to
acquire the land and construct the Improvements in accordance with the Plans and
Specifications.
1.3 Collateral For Loans. The Loans and the obligations of the
Lessor under the Credit Agreement shall be secured by, inter alia, (i) a first
priority assignment of the Lease, granted pursuant to the Assignment of Lease
and consented to by the Lessee pursuant to the Consent to Assignment (in each
case in the respective forms set forth on Exhibit B hereto), (ii) a
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first priority assignment of the Agency Agreement, granted pursuant to the
Contract Assignment and consented to by the Construction Agent pursuant to the
Consent to Contract Assignment (in each case in the respective forms set forth
on Exhibit C hereto); and (iii) a first priority mortgage lien on the Property
pursuant to a Deed of Trust and Security Agreement in the form set forth on
Exhibit D hereto.
1.4 Guarantee. The obligations of the Lessor under the Credit
Agreement and the Lessee under the Lease shall be guaranteed by the Guarantors
to the extent provided in the Guarantee (in the form attached hereto as Exhibit
E-1) and in the Lessor Guarantee (in the form attached hereto as Exhibit E-2).
The Guaranteed Obligations shall be secured pursuant to the Guarantee Collateral
Documents and by the Additional Collateral, if any.
SECTION 2. INVESTOR CONTRIBUTION
2.1 Investor Contribution. Subject to the terms and conditions of
this Agreement, and in reliance on the representations and warranties of each of
the parties hereto contained herein or made pursuant hereto, on each Funding
Date, the Investor shall make an investment in the Lessor (each, an "Investor
Contribution") by making available an amount in immediately available funds
equal to 3% of the amount of the Advance requested by the Construction Agent in
the Requisition for such Funding Date. The aggregate amount of Investor
Contributions made by the Investor shall not exceed the Investor Commitment. The
Lessor shall use the Investor Contributions to pay a portion of the Project
Costs simultaneously and pro rata with the fundings by the Lenders. The Lessee
shall have the right to prepay the Investor Contribution, in connection with the
exercise by the Lessee of its right to direct the Lessor to prepay the Loans in
accordance with Section 10.1(e).
2.2 Investor Yield. During the Construction Period, on each date
which is one Business Day prior to any date on which the Investor is entitled to
a payment on account of the Investor Yield, the Construction Agent shall be
deemed to have requested that the Investor make an Investor Contribution in an
amount equal to the Investor Yield due and payable on such date solely for the
purpose of paying such Investor Yield which is then due and payable.
SECTION 3. SUMMARY OF THE TRANSACTIONS
3.1 Operative Agreements. On the Initial Closing Date, each of
the respective parties hereto and thereto shall execute and deliver or cause to
be executed and delivered this Agreement, the Lease, the Construction Agreement,
the Agency Agreement, the Notes, the Guarantee, the Credit Agreement, the
Assignment of Lease, the Contract Assignment, the
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Consent to Assignment, the Consent to Contract Assignment and such other
documents, instruments, certificates and opinions of counsel as agreed to by the
parties hereto.
3.2 Property Purchase and Lease. On the Property Closing Date and
subject to the terms and conditions of this Agreement and the Credit Agreement
(i) the Investor will make an Investor Contribution in accordance with Section 2
hereof, (ii) the Lenders will make loans in accordance with Section 5 hereof and
the terms and provisions of the Credit Agreement secured by the Mortgage
executed and delivered by the Lessor and joined in by the Lessee, (iii) the
Lessor will purchase all right, title and interest in and to the Land and (iv)
the Lessor will simultaneously lease all of its right, title and interest in the
Property to the Lessee by executing and delivering a Lease Supplement and
Memorandum of Lease which will be recorded in the real estate records in the
county where the Land is located.
3.3 Construction of Improvements. On the Property Closing Date,
the Lessor and Lessee will execute and deliver the Agency Agreement Supplement,
dated as of the Property Closing Date, pursuant to which the Lessee will agree
to act as Construction Agent and to perform the Lessor's obligations under the
Construction Agreement in connection with the construction of the Improvements
on the Land.
SECTION 4. THE CLOSINGS
4.1 Initial Closing Date. All documents and instruments required
to be delivered on the Initial Closing Date shall be delivered at the offices of
Xxxxxxx Xxxxxxx & Xxxxxxxx, 425 Lexington Avenue, New York, New York, or at such
other location as may be determined by the Agent and the Lessee.
4.2 Subsequent Funding Dates. The Lessee shall deliver to the
Lessor, the Investor and the Agent a Requisition appropriately completed, in
connection with each Funding Date.
4.3 Trust Company Authorization. The Investor agrees that, with
respect to the Initial Closing Date and the Property Closing Date, the
satisfaction or waiver of the conditions contained in Section 6 hereof shall
constitute, without further act, the authorization and direction by the Investor
to the Trust Company to take on behalf of the Lessor the actions specified in
Section 2.1 of the Trust Agreement.
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SECTION 5. FUNDING OF ADVANCES
5.1 General. To the extent funds have been made available to the
Lessor as Loans and Investor Contributions, the Lessor will make advances of
such funds to the Construction Agent from time to time in accordance with the
terms and conditions of this Agreement and the other Operative Agreements in
order to provide sufficient funds to: (i) allow the Lessor, at the direction of
the Construction Agent to acquire the Land in accordance with the terms of this
Agreement and the other Operative Agreements; (ii) allow the Lessor, on behalf
of the Lessee, to pay Transaction Expenses; (iii) permit the Construction Agent
to construct the Improvements in accordance with the Plans and Specifications
and the terms of the Construction Agreement, the Agency Agreement, the Lease and
the other Operative Agreements; and (iv) pay all other Project Costs.
5.2 Procedures for Funding. (a) Not later than 11:00 a.m. Pacific
Standard Time five (5) Business Days prior to each proposed Funding Date, the
Construction Agent shall deliver to the Investor and the Agent, a requisition (a
"Requisition"), appropriately completed, in the form of Exhibit F hereto.
(b) Each Requisition shall: (i) be irrevocable; and (ii) request
funds in an amount of at least $250,000 for the period commencing on the Initial
Closing Date and terminating on June 4, 1999 and $500,000 thereafter (or such
lesser amount as shall be equal to the total aggregate of the Available
Commitments plus the Available Investor Commitment at such time) for the payment
of Property Acquisition Costs or other Project Costs which have previously been
incurred and were not the subject of and funded pursuant to a prior Requisition,
in each case as specified in the Requisition.
(c) So long as no Default or Event of Default has occurred and is
continuing and subject to the Lessor and the Agent having each received the
materials required by Section 6.1, 6.2 and/or 6.3, as applicable, on each
Funding Date (i) the Lenders shall make Loans to the Lessor in an aggregate
amount equal to 97% of the funds specified in any Requisition, up to an
aggregate principal amount equal to the Available Commitments; (ii) the Investor
shall make an Investor Contribution in an amount equal to 3% of the funds
specified in any Requisition, up to an amount equal to the Available Investor
Commitment; and (iii) the total amount of such Loans and Investor Contribution
made on such date shall be paid to the Construction Agent to pay the Project
Costs.
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SECTION 6. CONDITIONS OF THE CLOSINGS AND ADVANCES
6.1 General Conditions to the Lenders' and the Investor's
Obligations to Make Loans and Investor Contributions. The agreement of each
Lender to make Loans, and the Investor to make Investor Contributions, is
subject to the satisfaction, immediately prior to or concurrently with the
making of such Loans and Investor Contribution, of the following conditions
precedent:
(a) Operative Agreements. Each of the Operative Agreements
entered into on the Initial Closing Date or subsequently shall have been
duly authorized, executed, acknowledged and delivered by the parties
thereto and shall be in full force and effect, and no default shall
exist thereunder (both before and after giving effect to the
transactions contemplated by the Operative Agreements), and the Agent
and the Investor shall have received a fully executed copy of each of
the Operative Agreements (other than the Notes of which the Agent shall
have received the originals thereof);
(b) Taxes. All taxes, fees and other charges in connection with
the execution, delivery, and, where applicable, recording, filing and
registration of the Operative Agreements shall have been paid or
provisions for such payment shall have been made (or the Requisition
shall provide for the payment thereof) to the satisfaction of the Agent
and the Investor;
(c) Governmental Approvals. All necessary (or, in the reasonable
opinion of the Agent, the Investor and their respective counsel,
advisable) Governmental Actions, in each case required by any
Requirement of Law for the purpose of authorizing the execution,
delivery and performance of the Operative Agreements, shall have been
obtained or made and be in full force and effect;
(d) Litigation. No action or proceeding shall have been
instituted, nor to the knowledge of the Lessee 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 Agreement, any other Operative
Agreement or any of the transactions contemplated hereby or thereby or
(ii) which is reasonably likely to have a Material Adverse Effect;
(e) Legal Requirements. In the opinion of the Agent, the
Investor and their respective counsel, the transactions contemplated by
the Operative Agreements do not and will not violate in any respect any
Legal Requirements and do not and will not
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subject the Agent, any Lender or the Investor to any adverse regulatory
prohibitions or constraints;
(f) Corporate Proceedings of the Lessee and the Guarantors. On
the Initial Closing Date, the Agent and the Investor shall have received
a copy of the resolutions or minutes, in form and substance satisfactory
to the Agent and the Investor, of the Board of Directors of the Lessee
and each Guarantor authorizing the execution, delivery and performance
of this Agreement, the Guarantee and the other Operative Agreements to
which it is a party, certified by the Secretary or an Assistant
Secretary of the Lessee or of such Guarantor as of the Initial Closing
Date, which certificate shall be in form and substance satisfactory to
the Agent and the Investor and shall state that the resolutions or
minutes thereby certified have not been amended, modified, revoked or
rescinded;
(g) Lessee and Guarantors Incumbency Certificate. On the Initial
Closing Date, the Agent and the Investor shall have received a
certificate of the Lessee and each Guarantor, dated the Initial Closing
Date, as to the incumbency and signature of the officers of the Lessee
and such Guarantor executing any Operative Agreement satisfactory in
form and substance to the Agent and the Investor, executed by the
President or any Vice President and the Secretary or any Assistant
Secretary of the Lessee and such Guarantor;
(h) Corporate Proceedings of the Trust Company. On the Initial
Closing Date, the Agent, the Investor and the Lessee shall have received
a copy of the resolutions, in form and substance satisfactory to the
Agent, the Investor and the Lessee, of the Board of Directors of the
Trust Company authorizing the execution, delivery and performance of the
Operative Agreements to which it is a party, certified by the Secretary
or an Assistant Secretary of the Trust Company as of the Initial Closing
Date, which certificate shall be in form and substance satisfactory to
the Agent, the Investor and the Lessee and shall state that the
resolutions thereby certified have not been amended, modified, revoked
or rescinded;
(i) Trust Company Incumbency Certificate. On the Initial Closing
Date, the Agent, the Investor and the Lessee shall have received a
certificate of the Trustee Company, dated the Initial Closing Date, as
to the incumbency and signature of the officers of the Trust Company
executing any Operative Agreement, satisfactory in form and substance to
the Agent, the Investor and the Lessee, executed by the President or any
Vice President, Assistant Vice President, Trust Officer and the
Secretary or any Assistant Secretary of the Trust Company;
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(j) Corporate Documents of Lessee and Guarantors. The Agent and
the Investor shall have received true and complete copies of the
articles of incorporation and by-laws of the Lessee and each Guarantor,
certified as of the Initial Closing Date as complete and correct copies
thereof by the Secretary or an Assistant Secretary of the Lessee and
such Guarantor;
(k) Consents, Licenses and Approvals. The Agent and the Investor
shall have received a certificate of the chief financial officer of the
Lessee and each Guarantor (i) attaching copies of all consents,
authorizations and filings required to consummate the transaction
contemplated by this Agreement, and (ii) stating that such consents,
licenses and filings are in full force and effect, and each such
consent, authorization and filing shall be in form and substance
satisfactory to the Agent and the Investor;
(l) Fees. The Agent and the Arranger shall have received the
fees to be paid on the Initial Closing Date pursuant to the Fee Letter
which fees shall not be paid using the proceeds of the Loans or Investor
Contributions;
(m) Legal Opinions. (i) The Agent and the Investor shall have
received the executed legal opinions of Xxxxxxx, Phleger & Xxxxxxxx LLP
(with respect to enforceability) and Xxxxxx Xxxxx and Bockius LLP (with
respect to due authorization), counsel to the Lessee and the Guarantors,
substantially in the form of Exhibit G-1 hereto; and
(ii) The Agent, the Lessee and the Investor shall have
received the executed legal opinions of Xxxxx X. Xxxxxx, Vice President
and Senior Counsel of the Trust Company, and Seed Xxxxxxx & Xxxx LLP,
outside counsel to the Trustee and the Trust Company, substantially in
the form of Exhibit G-2 hereto;
(n) Actions to Perfect Liens. The Agent shall have received
evidence in form and substance satisfactory to it that all filings,
recordings, registrations and other actions, including the filing of
duly executed Lender Financing Statements and Lessor Financing
Statements, the Mortgage, and the Memorandum of Lease, necessary or, in
the opinion of the Agent, desirable to perfect the Liens created by the
Security Documents shall have been completed or arrangements made
therefor reasonably satisfactory to the Agent;
(o) Lien Searches. The Agent and the Investor shall have
received the results of a recent search by a Person reasonably
satisfactory to the Agent, of the Uniform Commercial Code, judgement and
tax lien filings which may have been filed in the State of California
with respect to personal property of the Lessee and the Company, and the
results of such search shall be satisfactory to the Agent and the
Investor;
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(p) Representations and Warranties. The representations and
warranties of the Lessor, the Lessee, the Investor and the Guarantors
contained herein and in each of the other Operative Agreements shall be
true and correct in all material respects on and as of each Funding Date
as if made on and as of each Funding Date, except to the extent such
representations and warranties relate solely to an earlier date, in
which case such representations and warranties shall have been true and
correct in all material respects on and as of such earlier date;
(q) Performance of Operative Agreements. The parties hereto
(other than the Investor or the Lenders) shall have performed their
respective agreements contained herein and in the other Operative
Agreements on or prior to each such Funding Date;
(r) Default. There shall not have occurred and be continuing any
Default or Event of Default under any of the Operative Agreements and no
Default or Event of Default under any of the Operative Agreements will
have occurred after giving effect to the Advance requested by such
Requisition; and
(s) Material Adverse Change. As of such Funding Date, there
shall not have occurred any material adverse change in the consolidated
assets, liabilities, operations, business or financial condition of the
Lessee or any Guarantor.
(t) Pricing Certificate. The Agent and the Investor shall have
received a Pricing Certificate setting forth in reasonable detail a
calculation of the Leverage Ratio as of the last day of the Fiscal
Quarter ended immediately prior to the Initial Closing Date.
(u) Cross-Collateralization. The Agent shall have received
evidence in form and substance reasonably satisfactory to it that all
filings, recordings, registrations and other actions, including the
filing of duly executed UCC-1 financing statements and the Guarantee
Collateral Documents, necessary or, in the opinion of the Agent,
desirable to perfect the Liens created by the Guarantee Collateral
Documents shall have been completed.
6.2 Conditions to the Investor's and the Lenders' Obligations to
Make Advances to Pay Property Acquisition Costs.
The obligations of the Investor to make an Investor Contribution,
and of the Lenders to make Loans to the Lessor, on the Property Closing
Date for the purpose of providing funds to the Lessor necessary to
acquire the Land are subject to the satisfaction or waiver of the
following conditions precedent:
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(a) Requisition. The Agent shall have received a fully executed
counterpart of the Requisition dated as of the Property Closing Date
(but delivered not later than 11:00 a.m., Pacific Standard Time five (5)
Business Days prior to the Property Closing Date), appropriately
completed;
(b) Deed. There shall have been delivered to the Lessor, a deed
(the "Deed"), in form and substance appropriate for recording with the
applicable Governmental Authority, conveying fee simple title to the
Property to the Lessor, subject only to the Permitted Exceptions;
(c) Title. Title to the Property shall conform to the
representations and warranties set forth in Section 7.5(n);
(d) Lease Supplement and Memorandum of Lease. The Lessee shall
have delivered a Lease Supplement and a Memorandum of Lease executed by
the Lessee and the Lessor with respect to the Property to the Agent;
(e) Mortgage. The Lessee shall have recorded in the real estate
records of the county where the Property is located an original of the
Mortgage executed by the Lessor and Lessee and the Lien of the Mortgage
shall conform to the representations and warranties set forth in Section
7.5(g);
(f) Assignment of Lease. The Lessee shall have recorded in the
real estate records of the county where the Property is located an
original of the Assignment of Lease executed by the Lessor;
(g) Consent to Assignment of Lease. The Lessee and each
Guarantor shall have delivered to the Agent a consent to the Assignment
of Lease executed by the Lessee and such Guarantor;
(h) Environmental Audit. (i) The Agent and the Investor shall
have received not less than thirty (30) days prior to the Property
Closing Date an Environmental Audit, prepared by the Environmental
Engineer and the results of the Environmental Audit shall be in form and
substance satisfactory to the Agent and the Investor; and
(ii) the Agent and the Investor shall have received
letters from the Environmental Engineer stating, among other things,
that the Agent, the Lenders, the Lessor and the Investor may rely on the
Environmental Audit as if it was originally addressed to them in all
respects;
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(i) Appraisal. The Agent and the Investor shall have received an
Appraisal of the Land and such Appraisal shall show a value equal to the
amount of the Advance being requested by the Construction Agent in the
Requisition for the Property Closing Date, and shall otherwise be in
form and substance acceptable to each Lender and the Lessor;
(j) Default. There shall not have occurred and be continuing any
Default or Event of Default under any of the Operative Agreements and no
Default or Event of Default under any of the Operative Agreements will
have occurred after giving effect to the Advance requested by such
Requisition;
(k) Survey. The Agent shall have received, and the Title Company
shall have received, a survey of the Property, certified to the Agent,
the Lessor and the Title Company in a manner satisfactory to them, dated
as of a date within ninety days of the Property Closing Date, by an
independent professionally licensed land surveyor satisfactory to the
Agent, which survey shall be made in accordance with the Minimum
Standard Detail Requirements for Land Title Surveys jointly established
and adopted by the American Land Title Association and the American
Congress on Surveying and Mapping in 1992, and, without limiting the
generality of the foregoing, there shall be surveyed and shown on such
survey the following: (i) the locations on the Property of all the
buildings, structures and other improvements, if any, and the
established building setback lines; (ii) the lines of streets abutting
the Property; (iii) all access and other easements appurtenant to the
Property; (iv) all roadways, paths, driveways, easements, encroachments
and overhanging projections and similar encumbrances affecting the
Property, whether recorded, apparent from a physical inspection of the
Property or otherwise known to the surveyor; (v) any encroachments on
any adjoining property by the building, structures and improvements on
the Property; and (vi) if the Property is described as being on a filed
map, a legend relating the survey to said map;
(l) Mortgagee's Title Insurance Policy. The Agent shall have
received with respect to the Mortgage a mortgagees' title policy or
marked up unconditional binder for such insurance dated the Property
Closing Date; such policy shall (i) be in an amount equal to the
aggregate amount shown on the Budget for the Property (with a pending
disbursements clause); (ii) be issued at ordinary rates; (iii) insure
that the Mortgage insured thereby creates a valid first Lien on the
Property, free and clear of all defects and encumbrances, except
Permitted Exceptions; (iv) name the Agent for the benefit of the Lenders
as the insured thereunder; (v) be in the form of ALTA Loan Policy - 1970
(Amended 10/17/70); (vi) contain comprehensive, zoning, access,
subdivision, tax lot, revolving credit and such other endorsements and
affirmative coverage as the Agent may reasonably request; and (vii) be
issued by the Title Company; and the Agent shall have received evidence
reasonably satisfactory to it that all premiums in respect of such
policy,
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and all charges for any mortgage recording tax with respect to the
Mortgage have been paid or provision made therefor;
(m) Owner's Title Insurance Policy. The Lessor shall have
received an owner's title policy, or marked up unconditional binder for
such insurance, dated the Property Closing Date; and the Lessor shall
have received evidence reasonably satisfactory to it that all premiums
in respect of such policy have been paid or provision made therefor;
(n) Recorded Documents. The Agent and the Investor shall have
received a copy of all recorded documents referred to, or listed as
exceptions to title in, the title policy referred to above;
(o) Local Opinions.
(i) the Agent and the Investor shall have received the
executed legal opinion of California counsel to the Lessee and the
Guarantors, substantially in the form of Exhibit G-1 hereto; and
(ii) the Agent, the Lessee and the Investor shall have
received the executed legal opinion of counsel to Lessor, the Trustee
and the Trust Company, substantially in the form of Exhibit G-2 hereto;
(p) FIRPTA Affidavit. Agent and the Investor shall have received
either (i) a FIRPTA Affidavit from the seller of the Property in
customary form or (ii) if such seller is a "foreign person" as defined
in Section 1445 of the Code, evidence that a portion of the sales price
to be paid to such seller has been withheld, if so required, in
accordance with the provisions of the Code;
(q) Insurance. The Agent and the Investor shall have received
evidence in form and substance satisfactory to them that all of the
requirements of Section 14 of the Lease shall have been satisfied;
(r) Purchase Agreement. The Lessor shall have received an
assignment of all of the Lessee's right, title and interest under the
Purchase Agreement and any ancillary agreements executed in connection
with the Purchase Agreement which, in the Agent's judgment, contain
rights with respect to the Property (any such agreements to be assigned
to the Lessor, collectively, the "Ancillary Agreements"). If any of the
Ancillary Agreements provide for obligations to be performed by the
Lessor, the Lessee shall enter into an agency agreement in form and
substance reasonably satisfactory to the Agent, the
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Lessor and the Lessee, whereby the Lessee shall agree to perform all of
such obligations contained in the Ancillary Agreements, as agent for the
Lessor.
(s) Soils and Geological Report. The Agent shall have received a
soils and geological report, including a summary of soils tests borings,
issued by XXX Xxxxxxx Xxxxxxxx & Xxxxx and satisfactory to the Agent.
6.3 Conditions to the Investor's and the Lenders' Obligations to
Make Advances to Pay Project Costs for Construction on the Property. The
obligations of the Investor to make each Investor Contribution, and of the
Lenders to make Loans to the Lessor, on a Funding Date for the purpose of
providing funds to the Lessor necessary to pay for the construction of the
Improvements or the payment of Transaction Costs or other Project Costs (other
than Property Acquisition Costs) are subject to the satisfaction or waiver of
the following conditions precedent:
(a) Requisition. The Agent shall have received a fully executed
counterpart of the Requisition, appropriately completed and accompanied
by true copies of unpaid invoices, receipted bills and such other
supporting information as the Agent may request;
(b) Title. Title to the Property shall conform to the
representations set forth in Section 7.4(n), and the Agent shall have
received a notice of continuation of, or an endorsement to, the title
insurance policy issued to the Agent pursuant to Section 6.2(m), which
continuation or endorsement shall state that since the last Advance
there have been no changes in the state of title to the Property and
that there are no additional survey exceptions not previously approved
by the Agent;
(c) Budget in Balance. Based upon the Budget, the Available
Commitments and the Available Investor Commitment will be sufficient to
complete the Improvement or Improvements on the Property;
(d) Lien Waivers. The Agent shall have received lien waivers, in
form and substance reasonably satisfactory to the Agent, from each
contractor, subcontractor, supplier and materialmen which the Lessee
reasonably believes will receive total compensation for services
rendered or materials supplied in connection with the construction of
the related Improvements of $25,000 or more; each such lien waiver shall
evidence that such contractor, subcontractor, supplier or materialmen
has been paid in full for all work performed or materials supplied to
the date of the request for such Advance, other than work which is the
subject of such request;
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(e) No Other Security Interests. All materials and fixtures
incorporated in the construction of the Improvements shall have been
purchased so that their absolute ownership shall have vested in the
Lessor immediately upon delivery to the Land and the Construction Agent
shall have produced and furnished, if required by the Agent, the
contracts, bills of sale or other agreements under which title to such
materials and fixtures is claimed;
(f) Statement of Expenditures. The Agent shall have received
with respect to the Improvements, a statement of the Construction Agent
and any contractor or subcontractor, in form and substance satisfactory
to the Agent, setting forth the names, addresses and amounts due or to
become due as well as the amounts previously paid to every contractor,
subcontractor, and supplier furnishing materials for or performing labor
on the construction of any part of the Improvements;
(g) Damage or Injury. The Improvements shall not have been
materially damaged by Casualty unless there shall have been received, by
the Agent, insurance proceeds sufficient in the judgment of the Agent,
to effect satisfactory restoration and Completion of the Improvements on
or before the Outside Completion Date;
(h) Appraisal. On or prior to the Initial Construction Funding
Date, the Agent shall have received an Appraisal of the Property and
such Appraisal shall show a value of at least $60,000,000 with respect
to the Property, and shall otherwise be in form and substance acceptable
to each Lender and the Lessor;
(i) Tranche A Percentage. On or prior to the Initial
Construction Funding Date, the Agent and the Lessee shall have executed
and delivered a supplement to Annex A of this Agreement setting forth
the Tranche A Percentage, which shall not be less than 85%;
(j) Construction Schedule. On or prior to the Initial
Construction Funding Date, the Agent and the Investor shall have
received a copy of the schedule prepared by or at the direction of the
Construction Agent showing the estimated (i) timetable for completion of
each Improvement to be constructed on the Land, and (ii) timetable for
the making of Loans;
(k) Budget. On or prior to the Initial Construction Funding
Date, the Agent and the Investor shall have received a copy of the
Budget with respect to the construction of each Improvement to be
constructed or installed on the Land, and such Budget shall be in form
and substance satisfactory to the Agent and the Lessor;
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(l) Plans and Specifications. On or prior to the Initial
Construction Funding Date, the Agent and the Investor shall have
received a copy of the Plans and Specifications with respect to each
Improvement to be constructed or installed on the Land;
(m) GC Agreement. On or prior to the Initial Construction
Funding Date, the GC Agreement between the Lessee and the General
Contractor relating to the construction of the Improvements shall have
been duly authorized, executed and delivered by the parties thereto and
shall be in full force and effect, and no default shall exist
thereunder, and the Agent shall have received a fully executed copy of
the GC Agreement;
(n) Architect Agreement. On or prior to the Initial Construction
Funding Date, the Architect Agreement between the Lessee and the
Architect relating to the design of the Improvements shall have been
duly authorized, executed and delivered by the parties thereto and shall
be in full force and effect, and no default shall exist thereunder, and
the Agent shall have received a fully executed copy of the Architect
Agreement;
(o) Availability of Utilities. On or prior to the Initial
Construction Funding Date, the Agent shall have received letters from
local utility companies or Governmental Authorities stating, or such
other evidence satisfactory to the Agent, showing that gas, electric
power, sanitary and storm sewers, water and all other utilities (i) that
are necessary and required during the Construction Period have been
completed and will be available in such a manner as to assure Agent that
construction will not be impeded by a lack of utilities and (ii) that
are necessary for operation and occupancy of the Improvements will be
completed in such a manner and at such a time as will assure the opening
and operation of the Improvements on or before the Outside Completion
Date;
(p) Permits, Etc. On or prior to the Initial Construction
Funding Date, the Agent shall have received copies of all consents,
licenses, and building permits required for the construction of the
Improvements as available;
(q) Agency Agreement Supplement. On or prior to the Initial
Construction Funding Date, the Construction Agent shall have delivered
an Agency Agreement Supplement executed by the Construction Agent and
the Lessor to the Agent.
SECTION 7. REPRESENTATIONS AND WARRANTIES
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7.1 Representations and Warranties of the Investor on the Initial
Closing Date. The Investor represents and warrants to each of the other parties
hereto as of the Initial Closing Date as follows:
(a) Due Organization, etc. It is a duly organized and validly
existing corporation in good standing under the laws of the State of
California and has the power and authority to carry on its business as
now conducted and to enter into and perform its obligations under this
Agreement, each Operative Agreement to which it is a party and each
other agreement, instrument and document executed and delivered by it on
the Closing Date in connection with or as contemplated by each such
Operative Agreement to which it is or will be a party.
(b) Authorization; No Conflict. The execution, delivery and
performance of each Operative Agreement to which it is a party has been
duly authorized by all necessary action on its part and neither the
execution and delivery thereof by the Investor, nor the consummation of
the transactions contemplated thereby by the Investor, nor compliance by
it with any of the terms and provisions thereof (i) requires or will
require any approval of (which approval has not been obtained) the
shareholders of, or approval or consent of any trustee or holders of any
indebtedness or obligations of the Investor, (ii) contravenes or will
contravene any Legal Requirement applicable to or binding on it as of
the date hereof, (iii) does or will contravene or result in any breach
of or constitute any default under, or result in the creation of any
Lessor Lien upon the Property or any of the Improvements, its articles
of incorporation or by-laws, any indenture, mortgage, chattel mortgage,
deed of trust, conditional sales contract, bank loan or credit agreement
or other agreement or instrument to which it or its properties may be
bound or (iv) does or will require any Governmental Action by any
Governmental Authority.
(c) Enforceability, etc. Each Operative Agreement to which it is
a party has been duly executed and delivered by it and constitutes, or
upon execution and delivery will constitute, a legal, valid and binding
obligation enforceable against it in accordance with the terms thereof.
(d) ERISA. The Investor is making the Investor Contribution
contemplated to be made by it hereunder for its own account and with its
general corporate assets in the ordinary course of its business, and no
part of such amount constitutes the assets of any Employee Benefit Plan.
(e) Litigation. No litigation, investigation or proceeding of or
before any arbitrator or Governmental Authority is pending or threatened
by or against the Investor (a) with respect to any of the Operative
Agreements or any of the transactions
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contemplated hereby or thereby, or (b) which could reasonably be
expected to have a material adverse effect on the assets, liabilities,
operations, business or financial condition of the Investor.
7.2 Representations and Warranties of Trustee on the Initial
Closing Date. The Trust Company, in its individual capacity (with respect to
paragraphs (a), (b), (c), (e) and (i) only) and as the Trustee, represents and
warrants to each of the other parties hereto as of the Initial Closing Date as
follows:
(a) Due Organization, etc. It is a duly organized and validly
existing national banking association in good standing under the laws of
the United States of America and has the power and authority to enter
into and perform its obligations under the Trust Agreement and (assuming
due authorization, execution and delivery of the Trust Agreement by the
Investor) has the power and authority to act as the Trustee and to enter
into and perform the obligations under this Agreement and each Operative
Agreement to which the Trust Company or the Trustee, as the case may be,
is a party and each other agreement, instrument and document executed
and delivered by it on the Closing Date in connection with or as
contemplated by each such Operative Agreement.
(b) Authorization; No Conflict. The execution, delivery and
performance of each Operative Agreement to which it is a party, either
in its individual capacity or (assuming due authorization, execution and
delivery of the Trust Agreement by the Investor) as the 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) requires or will
require any approval of (which approval has not been obtained) any party
or approval or consent of any trustee or holders of any indebtedness or
obligations, (ii) contravenes or will contravene any Legal Requirement
applicable to or binding on it as of the date hereof, (iii) does or will
contravene or result in any breach of or constitute any default under,
or result in the creation of any Lessor Lien upon the Property or any of
the Improvements or the Trust Agreement, any indenture, mortgage,
chattel mortgage, deed of trust, conditional sales contract, bank loan
or credit agreement or other agreement or instrument to which it or its
properties may be bound or (iv) does or will require any Governmental
Action by any Governmental Authority.
(c) Trust Company Enforceability, etc. The Trust Agreement and,
assuming the Trust Agreement is the legal, valid and binding obligation
of the Investor, each other Operative Agreement to which Trust Company
or the
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Trustee, as the case may be, is a party have been duly executed and
delivered by the Trust Company or the Trustee, as the case may be, and
the Trust Agreement and each such other Operative Agreement to the
extent entered into by the Trust Company constitutes, or upon execution
and delivery will constitute, a legal, valid and binding obligation
enforceable against Trust Company in accordance with the terms thereof.
(d) Trustee Enforceability, etc. The Trust Agreement and,
assuming the Trust Agreement is the legal, valid and binding obligation
of the Investor, each other Operative Agreement to which the Trustee is
a party have been duly executed and delivered by the Trustee and each
such other Operative Agreement to which is a party constitutes, or upon
execution and delivery will constitute, a legal, valid and binding
obligation enforceable against the Trustee in accordance with the terms
thereof.
(e) Litigation. No litigation, investigation or proceeding of or
before any arbitrator or Governmental Authority is pending and served
or, to the best knowledge of it, threatened by or against the Trust
Company or the Trustee (a) with respect to any of the Operative
Agreements or any of the transactions contemplated hereby or thereby, or
(b) which could reasonably be expected to have a material adverse effect
on the assets, liabilities, operations, business or financial condition
of the Trust Company or the Trustee.
(f) Assignment. It has not assigned or transferred any of its
right, title or interest in or under the Lease, any other Operative
Agreement or the Trust Estate, except in accordance with the other
Operative Agreements.
(g) No Default. The Trustee is not in default under or with
respect to any of its Contractual Obligations in any respect which could
have a material adverse effect on the assets, liabilities, operations,
business or financial condition of the Trustee. No Default or Event of
Default attributable to it has occurred and is continuing.
(h) Use of Proceeds. The proceeds of the Loans and the Investor
Contribution shall be applied by the Trustee solely in accordance with
the provisions of the Operative Agreements.
(i) Chief Place of Business. The Trust Company's and the
Trustee's principal corporate trust office and office where the
documents, accounts and records relating to the transactions
contemplated by this Agreement and each other Operative Agreement are
kept are located at its Corporate Trust Division, 000 Xxxxx Xxx Xxxxx
Xxxxxx, Xxxxx 000, Xxx Xxxxxxx, Xxxxxxxxxx 00000.
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(j) Securities Act. Neither the Trustee nor any Person
authorized by the Trustee to act on its behalf has offered or sold any
interest in the Trust Estate or the Notes, or in any similar security or
interest 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, in the case of the Notes, the Agent, and neither the Trustee
nor any Person authorized by the 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 Agreement
under the Trust Indenture Act of 1939, as amended.
(k) Lessor Liens. The Property and the Trust Estate are free and
clear of all Lessor Liens.
7.3 Representations and Warranties of the Lessee on the Initial
Closing Date. The Lessee represents and warrants to each of the other parties
hereto as of the Initial Closing Date as follows:
(a) Existence and Qualification; Power; Compliance With Laws.
The Lessee is a corporation duly formed, validly existing and in good
standing under the Laws of the State of Delaware. The Lessee is duly
qualified or registered to transact business and is in good standing in
California and each other jurisdiction in which the conduct of its
business or the ownership or leasing of its properties makes such
qualification or registration necessary, except where the failure so to
qualify or register and to be in good standing would not constitute a
Material Adverse Effect. The Lessee has all requisite power and
authority to conduct its business, to own and lease its properties and
to execute and deliver each Operative Agreement to which it is a Party
and to perform its Obligations. The chief executive offices of the
Lessee are located in California. All outstanding shares of capital
stock of the Lessee are duly authorized, validly issued, fully paid and
non-assessable, and no holder thereof has any enforceable right of
rescission under any applicable state or federal securities Laws. The
Lessee is in compliance with all Laws and other Legal Requirements
applicable to its business, has obtained all authorizations, consents,
approvals, orders, licenses and permits from, and has accomplished all
filings, registrations and qualifications with, or obtained exemptions
from any of the foregoing from, any Governmental Authority that are
necessary for the transaction of its business, except where the failure
so to comply, obtain authorizations, etc., file, register, qualify to
obtain exemptions does not constitute a Material Adverse Effect.
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(b) Authority; Compliance With Other Agreements and Instruments
and Government Regulations. The execution, delivery and performance by
the Lessee of the Operative Agreements to which it is a Party have been
duly authorized by all necessary corporate action, and do not and will
not:
(i) Require any consent or approval not heretofore
obtained of any partner, director, stockholder, security holder or
creditor of the Lessee;
(ii) Violate or conflict with any provision of the
Lessee's charter, articles of incorporation or bylaws, as applicable;
(iii) Result in or require the creation or imposition of
any Lien (other than pursuant to the Operative Agreements) or Right of
Others upon or with respect to any Property now owned or leased or
hereafter acquired by the Lessee;
(iv) Violate any Requirement of Law applicable to the
Lessee;
(v) Result in a breach of or constitute a default under,
or cause or permit the acceleration of any obligation owed under, any
indenture or loan or credit agreement or any other Contractual
Obligation to which the Lessee is a party or by which the Lessee or any
of its Property is bound or affected;
and the Lessee is not in violation of, or default under, any Requirement of Law
or Contractual Obligation, or any indenture, loan or credit agreement described
in Section 7.3(b)(v), in any respect that constitutes a Material Adverse Effect.
(c) No Governmental Approvals Required. Except as previously
obtained or made, no authorization, consent, approval, order, license or
permit from, or filing, registration or qualification with, any
Governmental Authority is or will be required to authorize or permit
under applicable Laws the execution, delivery and performance by the
Lessee of the Operative Agreements to which it is a Party.
(d) Public Utility Holding Company Act. The Lessee is not a
"holding company", or a "subsidiary company" of a "holding 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.
(e) Litigation. There are no actions, suits, proceedings or
investigations pending as to which the Lessee has been served or has
received notice or, to the best
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knowledge of the Lessee, threatened against or affecting the Lessee or
any of its property before any Governmental Authority.
(f) Binding Obligations. Each of the Operative Agreements to
which the Lessee is a Party will, when executed and delivered by the
Lessee, constitute the legal, valid and binding obligation of the
Lessee, enforceable against the Lessee in accordance with its terms,
except as enforcement may be limited by Debtor Relief Laws to equitable
principles relating to the granting of specific performance and other
equitable remedies as a matter of judicial discretion.
(g) No Default. No event has occurred and is continuing that is
a Default or Event of Default.
(h) Regulation U; Investment Company Act. The Lessee is not
engaged principally, or as one of its important activities, in the
business of extending credit to others for the purpose of purchasing or
carrying, any Margin Stock in violation of Regulation U. The Lessee
neither is, nor is required to be, registered as an "investment company"
under the Investment Company Act of 1940.
(i) Tax Liability. The Lessee has filed all tax returns which
are required to be filed, and has paid, or made provision for the
payment of, all taxes with respect to the periods, property or
transactions covered by said returns, or pursuant to any assessment
received by the Lessee, except (a) such taxes, if any, as are being
contested in good faith by appropriate proceedings and as to which
adequate reserves have been established and maintained and (b)
immaterial taxes so long as no material property of the Lessee is at
impending risk of being seized, levied upon or forfeited.
(j) Separate Entity from Guarantor. The Lessee is a separate and
distinct entity from each of the Guarantors. The Lessee conducts its
business in accordance with the covenants contained in Section 9.6.
7.4 Representations and Warranties of the Lessee on the Property
Closing Date. The Lessee hereby represents and warrants to each of the other
parties hereto as of the Property Closing Date as follows:
(a) Representations and Warranties. The representations and
warranties of the Construction Agent, the Lessee, the Lessor and the Investor
set forth herein and in each of the other Operative Agreements are true and
correct in all respects on and as of the Property Closing Date as if made on and
as of the Property Closing Date. The Construction Agent, the Lessee, the
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Lessor and the Investor are in compliance with their respective obligations
under the Operative Agreements and there exists no Default or Event of Default
under any of the Operative Agreements.
(b) No Default. No Default or Event of Default will occur under
any of the Operative Agreements as a result of, or after giving effect to, the
Advance requested by the Requisition on the Property Closing Date.
(c) Authorization by the Lessee. The execution and delivery of
the Lease Supplement, Memorandum of Lease, Consent to Assignment and other
Operative Agreement delivered by the Lessee on the Property Closing Date and the
performance of the obligations of the Lessee under each such Lease Supplement,
Memorandum of Lease, Consent to Assignment and other Operative Agreements have
been duly authorized by all requisite corporate action of the Lessee.
(d) Execution and Delivery by the Lessee. The Lease Supplement,
Memorandum of Lease, Consent to Assignment and other Operative Agreement
delivered on the Property Closing Date by the Lessee have been duly executed and
delivered by the Lessee.
(e) Valid and Binding Obligations. The Lease Supplement,
Memorandum of Lease, Consent to Assignment and other Operative Agreement
delivered by the Lessee on the Property Closing Date is a legal, valid and
binding obligation of the Lessee, enforceable against the Lessee in accordance
with its respective terms.
(f) Recording of Documents. Each of the Deed, the Lease
Supplement, the Memorandum of Lease, the Assignment of Lease, the Consent to the
Assignment of Lease and the Mortgage delivered on the Property Closing Date has
been recorded with the appropriate Governmental Authority in the order set forth
in this paragraph, and the UCC Financing Statements will be filed with the
appropriate Governmental Authorities.
(g) Priority of Liens. (i) Each of the Mortgage, Assignment of
Lease and Memorandum of Lease delivered on the Property Closing Date,
constitutes a valid and perfected first lien on the Property in an amount not
less than the Tranche A/B Property Cost, subject only to the Permitted
Exceptions, and (ii) the Lessor Financing Statements perfect the Lessor's
interest under the Lease to the extent the Lease is a security agreement
governed by Article 9 of the Uniform Commercial Code.
(h) Flood Zone. No portion of the Property is located in an area
identified as a special flood hazard area by the
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Federal Emergency Management Agency or other applicable agency, or if the
Property is located in an area identified as a special flood hazard area by the
Federal Emergency Management Agency or other applicable agency, then flood
insurance has been obtained for the Property in accordance with Section 14.2(b)
of the Lease and in accordance with the National Flood Insurance Act of 1968, as
amended.
(i) Insurance Coverage. The Lessee maintains insurance coverage
for the Property which meets the requirements of Section 14.1 of the Lease and
all of such coverage is in full force and effect.
(j) Legal Requirements. The Property complies with all Legal
Requirements (including all zoning and land use laws and Environmental Laws).
(k) Consents, etc. All consents, licenses and building permits
required by all Legal Requirements for construction, completion, occupancy and
operation of the Property have been obtained and are in full force and effect.
(l) Utilities. All utility services and facilities necessary for
the use of the Improvements existing, or to be constructed, on the Land
(including gas, electrical, water and sewage services and facilities) will be
available to the Property on or prior to the Outside Completion Date.
(m) Environmental Matters.
(1) Except as disclosed in the Environmental Audit delivered
to the Agent and the Investor, the Property does not contain,
and has not previously contained, any Hazardous Materials in
amounts or concentrations which (i) constitute or constituted a
violation of, or (ii) could give rise to liability under, any
Hazardous Materials Laws.
(2) Except as disclosed in the Environmental Audit delivered
to the Agent and the Investor, the Property and all operations
at the Property are in compliance and have in the last ten years
been in compliance, in all respects with all applicable
Hazardous Materials Laws, and there is no contamination at, on
or under the Property or violation of any Hazardous Materials
Laws with respect to the Property or the business operated by
Lessee or any of its Subsidiaries at the Property (the
"Business").
(3) Neither the Lessee nor any of its Subsidiaries has
received any notice of violation, alleged violation,
non-compliance, liability or potential liability regarding
compliance with Hazardous Materials Laws with regard to the
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Property, nor does the Lessee have knowledge that any such
notice will be received or is being threatened.
(4) Except as disclosed in the Environmental Audit delivered
to the Agent and the Investor, Hazardous Materials have not been
transported or disposed of from the Property in violation of any
Hazardous Materials Laws, nor have any Hazardous Materials been
generated, treated, stored or disposed of at, on or under the
Property in violation of any applicable Hazardous Materials
Laws.
(5) No judicial proceeding or governmental or administrative
action is pending or, to the best knowledge of the Lessee,
threatened, under any Hazardous Materials Laws to which the
Lessee or any Subsidiary is or will be named as a party with
respect to the Property, nor are there any consent decrees or
other decrees, consent orders, administrative orders or other
orders, or other administrative or judicial requirements
outstanding under any Hazardous Materials Laws with respect to
the Property or the Business.
(6) There has been no release or threat of release of
Hazardous Materials at or from the Property, arising from or
related to the operations of the Lessee or any Subsidiary in
connection with the Property, in violation of or in amounts or
in a manner that could reasonably be expected to give rise to
any material liability under any Hazardous Materials Laws.
(n) Title to the Properties. The Lessor has good and marketable
title to the Property in fee simple, subject only to the Permitted Exceptions.
The Lessor has the right to grant the Mortgage on the Property. The Lessor will
at all times have good and marketable title to the Property, subject only to
Permitted Exceptions.
(o) Execution and Delivery by the Construction Agent. The
execution and delivery of each Operative Agreement delivered by the Construction
Agent on such date and the performance of the Construction Agent's obligations
under each Agency Agreement Supplement and Operative Agreement have been duly
authorized by all requisite corporate action of the Construction Agent.
(p) Agency Agreement Supplements. Each Operative Agreement
delivered by the Construction Agent on such date has been duly executed and
delivered by the Construction Agent.
(q) Valid and Binding Obligations of the Construction Agent. Each
Operative Agreement delivered by the Construction Agent on such date is a legal,
valid and binding
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obligation of the Construction Agent, enforceable against the Construction Agent
in accordance with its terms.
(r) Conditions Precedent in Operative Agreements. All conditions
precedent contained in this Agreement and in the other Operative Agreements
relating to the acquisition of the Property by the Lessor have been satisfied in
full or waived by the Agent and the Lessor.
(s) Xxxx-Xxxxx-Xxxxxx. The acquisition of the Property does not
conflict with, violate, or require the consent of any governmental entity, under
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended.
7.5 Representations and Warranties of the Trustee on the Property
Closing Date. The Trustee hereby represents and warrants to each of the other
parties hereto as of the Property Closing Date as follows:
(a) Representations and Warranties; No Default. The
representations and warranties of the Trustee set forth herein and in each of
the other Operative Agreements are true and correct in all material respects on
and as of the Property Closing Date as if made on and as of the Property Closing
Date. The Trustee is in compliance with its respective obligations under the
Operative Agreements and there exists no Default or Event of Default known to
the Trustee under any of the Operative Agreements.
(b) Authorization by the Trustee. The execution and delivery of
the Lease Supplement, Memorandum of Lease, Mortgage, Assignment of Lease and
other Operative Agreement delivered by the Trustee on the Property Closing Date
and the performance of the obligations of the Trustee under the Lease
Supplement, Memorandum of Lease, Mortgage, the Assignment of Lease and other
Operative Agreement (assuming due authorization, execution and delivery of the
Trust Agreement by the Investor) have been duly authorized by all requisite
action of the Trustee.
(c) Execution and Delivery by the Trustee. Each Lease Supplement,
Memorandum of Lease, Mortgage, Assignment of Lease and other Operative Agreement
delivered by the Trustee on the Property Closing Date (assuming due
authorization, execution and delivery of the Trust Agreement by the Investor)
have been duly executed and delivered by the Trustee.
(d) Valid and Binding Obligations. Each Lease Supplement,
Memorandum of Lease, Mortgage, Assignment of Lease and other Operative Agreement
delivered by the Trustee on the Property Closing Date (assuming the Trust
Agreement is the legal, valid and binding
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obligation of the Investor) is a legal, valid and binding obligation of the
Trustee, enforceable against the Trustee in accordance with its terms.
7.6 Representations and Warranties of the Lessee Upon each
Funding Date. The Lessee hereby represents and warrants to each of the other
parties hereto as of each Funding Date as follows:
(a) Representations and Warranties. The representations and
warranties of the Construction Agent, the Lessee and the Guarantors set forth
herein and in each of the other Operative Agreements are true and correct in all
material respects on and as of such Funding Date as if made on and as of such
Funding Date, except to the extent such representations and warranties relate
solely to an earlier date, in which case such representations and warranties
shall have been true and correct in all material respects on such earlier date.
The Construction Agent, the Lessee and the Guarantors are in compliance with
their respective obligations under the Operative Agreements and there exists no
Default or Event of Default under any of the Operative Agreements to which the
Construction Agent, the Lessee or the Guarantors are a party. No Default or
Event of Default will occur under any of the Operative Agreements as a result
of, or after giving effect to, the Advance requested by the Requisition on such
date.
(b) Title to Properties. The Lessor has good and marketable title
to the Property in fee simple, subject only to the Permitted Exceptions.
(c) Priority of Liens. Each of the Mortgage, Supplement to the
Assignment of Lease and Lease Memorandum constitutes a valid and perfected first
lien on the Property in an amount not less than the Tranche A/B Property Cost,
subject only to Permitted Exceptions.
(d) Insurance. The Construction Agent has obtained insurance
coverage covering the Property which meets the requirements of the Agency
Agreement and the other Operative Agreements before commencing construction,
repairs or Modifications, as the case may be, and such coverage is in full force
and effect.
(e) Property-Related Matters. The Property, when improved in
accordance with the Plans and Specifications, will comply in all material
respects with all Legal Requirements (including all applicable zoning and land
use laws and Hazardous Materials Laws) and Insurance Requirements. The Plans and
Specifications have been or will be prepared in accordance with all applicable
Legal Requirements (including all applicable Hazardous Materials Laws and
building, planning, zoning and fire codes) and upon completion of the applicable
Improvements in accordance with the Plans and Specifications, such Improvements
will not encroach in any manner onto any adjoining land (except as permitted by
express written easements or variance) and such Improvements and the use thereof
by the Lessee and its agents,
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assignees, employees, invitees, lessees, licensees and tenants will comply with
all applicable Legal Requirements (including all applicable Hazardous Materials
Laws and building, planning, zoning and fire codes). Upon completion of such
Improvements in accordance with the Plans and Specifications, (i) there will be
no material defects to such Improvements including the plumbing, heating, air
conditioning and electrical systems thereof and (ii) all water, sewer, electric,
gas, telephone and drainage facilities and all other utilities required to
adequately service such Improvements for its intended use will be available
pursuant to adequate permits (including any that may be required under
applicable Hazardous Materials Laws). There is no action, suit or proceeding
(including any proceeding in condemnation or eminent domain or under any
applicable Hazardous Materials Laws) pending or, to the best knowledge of the
Lessee, threatened which adversely affects the title to, or the use, operation
or value of, the Property. No fire or other casualty with respect to the
Property has occurred which fire or other casualty has had a material adverse
effect on the Lessee's ability to perform its obligations under the Agency
Agreement and the other Operative Agreements. All utilities serving the
Property, or proposed to serve the Property in accordance with the Plans and
Specifications, are located in, and in the future will be located in, and
vehicular access to the Improvements on the Property is provided by, either
public rights-of-way abutting the Property or Appurtenant Rights. All applicable
licenses, approvals, authorizations, consents, permits (including, without
limitation, building, demolition and environmental permits, licenses, approvals,
authorizations and consents), easements and rights-of-way, including proof of
dedication, required for (i) the use, treatment, storage, transport, disposal or
disposition of any Hazardous Substance on, at, under or from the Property during
the construction of the Improvements thereon and the use and operation of the
Improvements following such construction, (ii) the construction of the
Improvements in accordance with the Plans and Specifications and the Agency
Agreement and (iii) the use and operation of the Improvements following such
construction as permitted pursuant to the Lease have been obtained from the
appropriate Governmental Authorities having jurisdiction or from private
parties.
(f) Lease Requirements. The Improvements, when completed, will
comply with all requirements and conditions set forth in the Lease and all other
conditions and requirements of the Operative Documents.
(g) Conditions Precedent contained in the Operative Agreements.
All conditions precedent contained in this Agreement and in the other Operative
Agreements to which the Lessee, any Guarantor or the Construction Agent is a
party relating to the relevant Advance have been satisfied in full.
7.7 Representations and Warranties of the Trustee Upon each
Funding Date. The Trustee hereby represents and warrants to each of the other
parties hereto as of each Funding Date as follows:
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(a) Representations and Warranties. The representations and
warranties of the Trustee set forth herein and in each of the other Operative
Agreements are true and correct in all respects on and as of such Funding Date
as if made on and as of such Funding Date. The Trustee is in compliance with its
respective obligations under the Operative Agreements.
(b) Authority of the Trustee. The execution and delivery of each
Operative Agreement delivered by the Trustee on such date and the performance of
the obligations of the Trustee under each Operative Agreement (assuming due
authorization, execution and delivery of the Trust Agreement by the Investor)
has been duly authorized by all requisite action of the Trustee.
(c) Execution and Delivery by the Trustee. Each Operative
Agreement delivered by the Trustee on such date (assuming due authorization,
execution and delivery of the Trust Agreement by the Investor) has been duly
executed and delivered by the Trustee.
(d) Valid and Binding Obligations of the Trustee. Each Operative
Agreement delivered by the Trustee on such date (assuming the Trust Agreement is
the legal, valid and binding obligation of the Investor) is a legal, valid and
binding obligation of the Trustee, enforceable against the Trustee in accordance
with its terms.
(e) Conditions Precedent contained in the Operative Agreements.
All conditions precedent contained in this Agreement and in the other Operative
Agreements to be satisfied by the Trustee relating to the relevant Advance have
been satisfied in full.
7.8 Representations and Warranties of the Investor Upon Funding
Dates. The Investor hereby represents and warrants to each of the other parties
hereto as of each Funding Date that: (a) the representations and warranties of
the Investor set forth herein and in each of the other Operative Agreements are
true and correct in all respects on and as of such Funding Date as if made on
and as of such Funding Date and (b) the Investor is in compliance with its
obligations under the Operative Agreements.
SECTION 8. PAYMENT OF CERTAIN EXPENSES
Lessee agrees, for the benefit of the Investor, the Trust Company, the
Trustee, the Agent and each of the Lenders, to:
8.1 Transaction Expenses. (a) On the Initial Closing Date, pay,
or cause to be paid, all fees, expenses and disbursements of each of the
Lessor's, the Trust Company's, the Agent's, and the Investor's counsel in
connection with the transactions contemplated by the
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Operative Agreements and incurred in connection with such Initial Closing Date,
including all Transaction Expenses, and all other expenses in connection with
such Initial Closing Date, including all expenses relating to all fees, taxes
and expenses for the recording, registration and filing of documents.
(b) On the Property Closing Date, pay, or cause to be paid out of
the Advance made on such date, all fees, expenses and disbursements of each of
the Lessor's, the Trust Company's, the Agent's and the Investor's counsel in
connection with the transactions contemplated by the Operative Agreements and
incurred in connection with the Property Closing Date, including all Transaction
Expenses arising from the Property Closing Date, all other expenses in
connection with the Property Closing Date, including all expenses relating to
the Appraisal, all fees, taxes and expenses for the recording, registration and
filing of documents and including reimbursement for Transaction Expenses paid in
connection with the Initial Closing Date.
8.2 Brokers' Fees and Stamp Taxes. Pay or cause to be paid
brokers' fees and any and all stamp, transfer and other similar taxes, fees and
excises, if any, including any interest and penalties, which are payable in
connection with the transactions contemplated by this Agreement and the other
Operative Agreements.
8.3 Certain Fees and Expenses. Pay or cause to be paid (i) the
initial and annual Trust Company's fee and all expenses of the Trust Company and
any necessary co-trustees (including reasonable counsel fees and expenses) or
any successor owner trustee, for acting as trustee under the Trust Agreement,
(ii) all costs and expenses incurred by the Lessee, the Agent, the Investor, the
Trust Company or the Lessor in entering into any future amendments or
supplements with respect to any of the Operative Agreements, whether or not such
amendments or supplements are ultimately entered into, or giving or withholding
of waivers of consents hereto or thereto, which have been requested by the
Lessee, and (iii) all costs and expenses incurred by the Lessor, the Lessee, the
Investor, the Trust Company or the Agent in connection with any purchase of the
Property by the Lessee pursuant to Section 20 of the Lease.
8.4 Credit Agreement and Related Obligations. (a) Pay, on or
prior to the due date thereof, all costs, fees, indemnities, expenses and other
amounts (other than principal and interest on the Loans, but including breakage
costs and interest on overdue amounts pursuant to Section 2.14 of the Credit
Agreement or otherwise) required to be paid by the Lessor under any Operative
Agreement.
(b) Pay the Agent all fees specified in the Fee Letter at the
time and in the manner required by the Fee Letter.
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(c) Pay the Lessor promptly after receipt of notice therefor any
additional amounts payable to the Investor in respect of the Investor
Contribution under Sections 2.13, 2.14 and 2.15 of the Credit Agreement (it
being agreed that the Investor is, for purposes of this Agreement, a beneficiary
of the provisions of Sections 2.13, 2.14 and 2.15 of the Credit Agreement).
8.5 Commitment Fees; Amendment Fees. (a) Pay to the Agent for the
account of each Lender the Commitment Fee on each Commitment Fee Payment Date.
(b) Pay to the Agent for the account of each Lender the Amendment
Fee on each Amendment Fee Payment Date.
(c) The Commitment Fee and the Amendment Fee shall be calculated
on the basis of a 360 day year for the actual days elapsed. If all or a portion
of the Commitment Fee or the Amendment Fee shall not be paid when due, such
overdue amount shall bear interest, payable by the Lessee on demand, at a rate
per annum equal to the applicable Overdue Rate, from the date of such
non-payment until such amount is paid in full (as well after as before
judgment).
8.6 Overdue Rate. If all or a portion of the Investor Yield, the
Investor Contribution or any other amount owed to the Investor shall not be paid
when due, such overdue amount shall bear interest, payable on demand, at a rate
per annum equal to the applicable Overdue Rate, from the date of such
non-payment until such amount is paid in full (as well after as before
judgment).
SECTION 9. OTHER COVENANTS AND AGREEMENTS
9.1 Covenants of the Trustee and the Investor. Each of the
parties hereby agrees that so long as this Agreement is in effect:
(a) Discharge of Liens. Each of the Investor, the Trustee and the
Trust Company, in its individual capacity, will not create or permit to exist at
any time, and will, at its own cost and expense, promptly take such action as
may be necessary duly to discharge, or to cause to be discharged, all Lessor
Liens on the Property attributable to it or any of its Affiliates; provided,
however, that the Investor, the Trustee and the Trust Company shall not be
required to so discharge any such Lessor Lien while the same is being contested
in good faith by appropriate proceedings diligently prosecuted so long as such
proceedings shall not involve any material danger of impairment of the Liens of
the Security Documents or of the sale, forfeiture or loss of, and shall not
interfere with the use or disposition of, the Property or title thereto or any
interest therein or the payment of Rent.
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(b) Trust Agreement. Without prejudice to any right under the
Trust Agreement of the Trust Company to resign, or the Investor's right under
the Trust Agreement to remove the institution acting as trustee, each of the
Investor and the Trust Company hereby agrees with the Lessee and the Agent (i)
not to terminate or revoke the trust created by the Trust Agreement except as
permitted by the Trust Agreement, (ii) not to amend, supplement, terminate or
revoke or otherwise modify any provision of the Trust Agreement without the
prior written consent of any party hereto adversely affected by such amendment
and (iii) to comply with all of the terms of the Trust Agreement, the
nonperformance of which would adversely affect such party.
(c) Successor Trust Company. The Trust Company or any successor
may resign or be removed by the Investor as trustee of the Trust, a successor
trustee may be appointed, and a corporation may become the trustee under the
Trust Agreement, only in accordance with the provisions of Article 9 of the
Trust Agreement and with the consent of the Lessee, which consent shall not be
unreasonably withheld or delayed.
(d) Indebtedness; Other Business. The Trustee in its capacity as
Trustee under the Trust Agreement, and not in its individual capacity, shall not
contract for, create, incur or assume any indebtedness, or enter into any
business or other activity, other than pursuant to or under the Operative
Agreements.
(e) No Violation. The Investor will not instruct the Trustee to
take any action in violation of the terms of any Operative Agreement.
(f) No Voluntary Bankruptcy. Neither the Investor nor the Trustee
shall (i) commence any case, proceeding or other action under any existing or
future law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization, arrangement, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its debts, or (ii) seek
appointment of a receiver, trustee, custodian or other similar official for it
or for all or any substantial benefit of its creditors; and neither the Investor
nor the Trustee shall take any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the acts set forth in this
paragraph.
(g) Change of Chief Place of Business. The Trustee shall give
prompt notice to the Lessee and the Agent if the Trustee's principal corporate
trust office, or the office where the records concerning the accounts or
contract rights relating to the Property are kept, shall cease to be located at
Corporate Trust Division, 000 Xxxxx Xxx Xxxxx Xxxxxx, Xxxxx 000, Xxx Xxxxxxx,
Xxxxxxxxxx 00000 or if it shall change its name.
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(h) Loan Documents. Provided that no Lease Event of Default has
occurred and is continuing, none of the Lenders, the Trustee, the Agent nor the
Investor shall consent to or permit any material amendment, supplement, waiver
or other modification of the terms and provisions of the Credit Agreement, the
Notes or the Security Documents, in each case without the prior written consent
of the Lessee.
(i) Disposition of Assets. The Trustee shall not convey, sell,
lease, assign, transfer or otherwise dispose of any of its property, business or
assets, whether now owned or hereafter acquired, except to the extent expressly
authorized by the Operative Agreements.
(j) Compliance with Operative Agreements. The Trustee shall at
all times observe and perform all of the covenants, conditions and obligations
required to be performed by it under each Operative Agreement to which it is a
party.
9.2 Amendment of Certain Documents. The Agent, for itself and on
behalf of the Lenders, hereby agrees for the benefit of the Trustee and the
Investor that it will not amend, alter or otherwise modify, or consent to any
amendment, alteration or modification of, the Lease (including the definitions
of any terms used in such document) without the prior written consent of the
Trustee and the Investor, as the case may be, if such amendment, alteration or
modification would materially and adversely affect the interests of the Trustee
or the Investor. Provisions requiring consent, include any amendment, alteration
or modification that would release the Lessee from any of its obligations in
respect of the payment of Basic Rent, Supplemental Rent, Termination Value,
Maximum Residual Guarantee Amount or the Purchase Option Price or any other
payments in respect of the Property as set forth in the Lease, or amend the
provisions of Section 8 of the Credit Agreement, or reduce the amount of, or
change the time or manner of payment of, obligations of the Lessee as set forth
in the Lease, or create or impose any obligation on the part of the Trustee or
the Investor under the Lease, or extend or shorten the duration of the Term, or
modify the provisions of this Section 9.2.
9.3 Proceeds of Casualty. The Lessor and the Investor agree, for
the benefit of the Agent and the Lenders, that if at any time either the Lessor
or the Investor receives any proceeds as a result, directly or indirectly, of
any Casualty or Condemnation with respect to the Property which the Lessor is
entitled to retain and hold in accordance with the terms of the Lease, the
Lessor and the Investor agree that they will promptly deposit such amounts in an
account with the Agent. The Lessor and the Investor also agree that they will
execute and deliver such documents and instruments as the Agent may request in
order to grant the Agent, for the benefit of the Lenders, a valid and perfected,
first priority security interest in such proceeds.
9.4 Intercreditor Agreement. The Lessee, the Agent, the Lenders
and the Lessor hereby agree and confirm that the provisions of Section 8 of the
Credit Agreement are
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intended to constitute an intercreditor agreement and a subordination agreement
under Section 510 of the Bankruptcy Code or any similar provision therein.
9.5 Appraisals The Lessee hereby agrees that the Agent shall have
the right, upon the occurrence of an Event of Default or if required pursuant to
the provisions of the Financial Institutions Reform, Recovery and Enforcement
Act of 1989, as amended, or any other banking Law, to commission, at the
Lessee's cost and expense, an Appraisal of the Property.
9.6 Covenants of the Lessee. The Lessee hereby agrees that so
long as this Agreement is in effect:
(a) Separate Accounts and Records. It will maintain its accounts,
financial statements, accounting records, and books separate from any other
Person, including, any of the Guarantors.
(b) Official Records. It will maintain its books, records,
resolutions and agreements as official records.
(c) Commingling. It will not commingle its funds or assets with
those of any other entity, including any of the Guarantors, and will hold its
assets in its own name.
(d) Own Name. It will conduct its business in its own name.
(e) Own Liabilities. It will pay its own liabilities out of its
own funds and assets.
(f) Formalities. It will observe all corporate formalities, as
applicable.
SECTION 10. CREDIT AGREEMENT
10.1 Lessee's Credit Agreement Rights. Notwithstanding anything
to the contrary contained in the Credit Agreement, the Agent, the Lessee, the
Investor and the Trustee hereby agree that:
(a) the Lessee shall have the right to give the notices and
deliver the Requisitions referred to in Section 2.3 of the Credit Agreement;
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(b) the Lessee shall have the right to convert or continue Loans
in accordance with Section 2.6 of the Credit Agreement;
(c) the Lessee shall receive copies of all notices delivered to
the Lessor under the Credit Agreement and the other Operative Agreements and
such notices shall not be effective until received;
(d) the Lessee shall have the right to select Interest Periods in
accordance with the terms of the Credit Agreement;
(e) the Lessee shall have the right to give notice of prepayment
of the Loans in accordance with the Credit Agreement, provided that if the
Lessee shall give notice of prepayment of the Loans, the Lessee shall prepay a
pro rata portion of the Investor Contribution;
(f) the Lessee shall have the right to cure, to the extent
susceptible to a cure, any Default or Event of Default of the Lessor under the
Credit Agreement;
(g) the Lessee shall have the right to approve any successor
Agent pursuant to Section 7.9 of the Credit Agreement;
(h) the Lessee shall have the right, on behalf of the Lessor, to
select any person or persons (including the Lessee) to whom funds may be paid at
the discretion of the Lessor in accordance with Sections 8.1 and 8.2 of the
Credit Agreement;
(i) the Lessee shall have the right to consent to any assignment
by a Lender, if required pursuant to Section 9.7 of the Credit Agreement;
(j) the Lessee shall have the right to request that another
lending office be designated pursuant to Section 2.16 of the Credit Agreement;
and
(k) without limiting the foregoing clauses (a) through (j), and
in addition thereto, (x) the Trustee shall not exercise any right under the
Credit Agreement without giving the Lessee at least ten (10) Business Days'
prior written notice (or such shorter period as may be required but in no case
less than three (3) Business Days) and, following such notice, the Trustee shall
take such action, or forbear from taking such action, as the Lessee shall direct
and (y) the Lessee shall have the right to exercise any other right of the
Trustee under the Credit Agreement upon not less than two (2) Business Days'
prior written notice from the Lessee to the Trustee. Notwithstanding the
foregoing, the Investor shall retain the exclusive right to direct the Trustee
with respect to the exercise of the Excepted Rights.
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SECTION 11. TRANSFER OF INTEREST
11.1 Restrictions on Transfer. (a) The Investor may not assign,
convey or otherwise transfer any of its right, title or interest in or to the
Trust Estate or the Trust Agreement without the consent of the Agent and
provided no Event of Default shall have occurred and be continuing at the time
of such assignment, conveyance or transfer, the Lessee, which consent shall not
be unreasonably withheld or delayed. Any transfer by the Investor as above
provided, shall be effected pursuant to an agreement in form and substance
reasonably satisfactory to the Agent, the Investor, the Trust Company, the
Lessee and their respective counsel.
(b) Notwithstanding the provisions of Section 11.1(a) to the
contrary, the Investor may at any time sell to an Affiliate or to any Lender or
any Affiliate of any Lender participating interests in the economic interest
held by the Investor in the Trust Estate or the Trust Agreement, provided that
the Investor's obligations under this Agreement and the other Operative
Agreements to the other parties hereto and thereto shall remain unchanged, the
Investor shall remain solely responsible for the performance thereof and the
Agent, the Lessee and the other parties to the Operative Agreements shall
continue to deal solely and directly with the Investor in connection with the
Investor's rights and obligations under this Agreement and the other Operative
Agreements.
11.2 Effect of Transfer. From and after any transfer effected in
accordance with this Section 11, the transferor shall be released, to the extent
of such transfer, from its liability hereunder and under the other documents to
which it is a party in respect of obligations to be performed on or after the
date of such transfer; provided, however, that any transferor Investor shall
remain liable under the Trust Agreement to the extent that the transferee
Investor shall not have assumed the obligations of the transferor Investor
thereunder. Upon any transfer by the Trustee or an Investor as above provided,
any such transferee shall assume the obligations of the Trustee, and the Lessor
or Investor, as the case may be, and shall be deemed the "Trustee", "Lessor" or
"Investor", as the case may be, for all purposes of such documents and each
reference herein to the transferor shall thereafter be deemed a reference to
such transferee for all purposes, except as provided in the preceding sentence.
Notwithstanding any transfer of all or a portion of the transferor's interest as
provided in this Section 11, the transferor shall be entitled to all benefits
accrued and all rights vested prior to such transfer including rights to
indemnification under any such document.
SECTION 12. INDEMNIFICATION
12.1 General Indemnity. (a) The Lessee, whether or not any of the
transactions contemplated hereby shall be consummated, hereby assumes liability
for and agrees to defend,
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indemnify and hold harmless each Indemnified Person on an After Tax Basis from
and against any Claims which may be imposed on, incurred by or asserted against
an Indemnified Person in any way relating to or arising or alleged to arise out
of (i) the financing, refinancing, purchase, acceptance, rejection, ownership,
design, construction, delivery, acceptance, nondelivery, leasing, subleasing,
possession, use, operation, repair, modification, transportation, condition,
sale, return, repossession (whether by summary proceedings or otherwise), or any
other disposition of the Property or any part thereof; (ii) any latent or other
defects in the Property whether or not discoverable by an Indemnified Person or
the Lessee; (iii) a violation of Hazardous Materials Laws, Environmental Claims
or other loss of or damage relating to the Property; (iv) the Operative
Agreements, or any transaction contemplated thereby; (v) any breach by the
Lessee of any of its representations or warranties under the Operative
Agreements or failure by the Lessee to perform or observe any covenant or
agreement to be performed by it under any of the Operative Agreements; and (vi)
personal injury, death or property damage relating to the Property, including
Claims based on strict liability in tort; but in any event excluding (v) Claims
resulting from Lessor Liens which the Lessor is responsible for discharging
under the Operative Agreement, (w) Claims to the extent such Claims arise solely
from legal proceedings commenced against an Indemnified Person by a Participant
or assignee for breach or alleged breach by such Indemnified Person of any
agreement entered into in connection with the participation in or assignment of
any Loan or the Trust Estate, and in any event, none of the costs or expenses of
the transaction by which such participation or assignment is made, (x) Claims to
the extent such Claims arise solely out of the gross negligence or willful
misconduct of such Indemnified Person, (y) Claims to the extent such Claims are
attributable to events occurring after the expiration of the Term and after the
Lessee's discharge of all its obligations under the Lease or (z) any Taxes
including any Claim (or any portion of a Claim) made upon an Indemnified Person
by a third party that at its origin is based upon a Tax (other than amounts
necessary to make any payments hereunder on an After Tax Basis, where the Lessee
is otherwise specifically required to make such payments on an After Tax Basis).
The Lessee shall be entitled to control, and shall assume full responsibility
for the defense of any Claim hereby indemnified against; provided, however, that
the Lessee shall not be entitled to assume and control the defense of any such
Claim, and any Indemnified Person named in such Claim, may retain separate
counsel at the expense of the Lessee in the event and to the extent that (A) in
the reasonable opinion of such Indemnified Person (x) such action, suit or
proceeding involves any risk of imposition of criminal liability or will involve
a risk of the sale, forfeiture or loss of, or the creation of any lien (other
than a Permitted Lien) on the Property or any part thereof unless, in the case
of civil liability, the Lessee shall have posted a bond or other security
satisfactory to the relevant Indemnified Person in respect to such risk or (y)
the control of such action, suit or proceeding would involve an actual or
potential conflict of interest, (B) such proceeding involves claims not fully
indemnified by the Lessee which the Lessee and the Indemnified Person have been
unable to sever from the indemnified claim(s), or (C) a Lease Event of Default
has occurred and is continuing. The Indemnified Person will join in the Lessee's
efforts to sever such action if applicable. The
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Indemnified Person may participate in a reasonable manner at its own expense and
with its own counsel in any proceeding conducted by the Lessee in accordance
with the foregoing. The Lessee shall not enter into any settlement or other
compromise with respect to any claim which is entitled to be indemnified under
this Section 12.1 without the prior written consent of the Indemnified Person,
which consent shall not be unreasonably withheld in the case of a money
settlement not involving an admission of liability of such Indemnified Person.
Each Indemnified Person shall, at the expense of the Lessee,
supply the Lessee with such information and documents reasonably requested by
the Lessee as are necessary or advisable for the Lessee to defend in any action,
suit or proceeding to the extent permitted by Section 12.1. Unless a Lease Event
of Default shall have occurred and be continuing, no Indemnified Person shall
enter into any settlement or other compromise with respect to any Claim which is
entitled to be indemnified under Section 12.1 without the prior written consent
of the Lessee, which consent shall not be unreasonably withheld, unless such
Indemnified Person waives its right to be indemnified under Section 12.1 with
respect to such Claim. The Lessee and each Indemnified Person agree to give each
other prompt written notice of any Claim hereby indemnified against but the
giving of any such notice by an Indemnified Person shall not be a condition to
the Lessee's obligations under this Section 12.1, except to the extent failure
to give such notice materially prejudices Lessee's rights hereunder. After an
Indemnified Person has been fully indemnified for a Claim pursuant to this
Section 12.1, and so long as no Event of Default under the Lease shall have
occurred and be continuing, the Lessee shall be subrogated to any right of such
Indemnified Person without further action by such Indemnified Person with
respect to such Claim and such Indemnified Person shall execute such instruments
of assignment and conveyance, evidence of claims and payment and such other
documents, instruments and agreements as may be necessary to preserve any such
claims and otherwise cooperate with the Lessee and give such further assurances
as are necessary or advisable to enable the Lessee vigorously to pursue such
claims.
(b) Notwithstanding anything to the contrary herein, during the
Construction Period, the Lessee shall not be obligated under any of the
Operative Agreements to indemnify any Person with respect to any costs arising
from third-party damage claims other than those third-party claims caused by or
resulting from the actions or failure to act by Lessee, or any of its agents,
employees, consultants, contractors or subcontractors (or anyone else under the
control of Lessee or such Persons), while Lessee is in possession or control of
the Property and those Claims imposed, incurred or asserted pursuant to (i)
clause (iii) of Section 12.1(a), (ii) a breach of the representations made by
Lessee pursuant to Section 7.4(m), or (iii) a violation by Lessee of the
covenants contained in Section 9.1 of the Lease and Section 2.7(a) of the Agency
Agreement with respect to Hazardous Materials Laws or Section 9.2 of the Lease.
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(c) Without limiting the express rights of the Indemnified
Persons under this Section 12.1, this Section 12.1 shall be construed as an
indemnity only and not a guaranty of the residual value of the Property or as a
guarantee of the Loans or Investor Contribution.
12.2 General Tax Indemnity. (a) The Lessee shall pay and assume
liability for, and does hereby agree to indemnify, protect and defend the
Property and all Tax Indemnitees, and hold them harmless against, all
Impositions on an After Tax Basis.
(b) Provided that no Default or Event of Default has occurred and
is continuing, if any Tax Indemnitee obtains a refund or a reduction in a
liability (but only if such reduction relates to a Tax not otherwise
indemnifiable hereunder and has not been taken into account in determining the
amount of a payment on an After Tax Basis) as a result of any Imposition paid or
reimbursed by the Lessee (in whole or in part), such Tax Indemnitee shall
promptly pay to the Lessee the lesser of (x) the amount of such refund or
reduction in liability and (y) the amount previously so paid or advanced by the
Lessee, in each case net of reasonable expenses not already paid or reimbursed
by the Lessee.
(c)(i) Subject to the terms of Section 12.2(g), the Lessee shall
pay or cause to be paid all Impositions directly to the taxing authorities where
feasible and otherwise to the Tax Indemnitee, as appropriate, and the Lessee
shall at its own expense, upon such Tax Indemnitee's reasonable request, furnish
to such Tax Indemnitee copies of official receipts or other satisfactory proof
evidencing such payment.
(ii) In the case of Impositions for which no contest is conducted
pursuant to Section 12.2(g) and which the Lessee pays directly to the taxing
authorities, the Lessee shall pay such Impositions prior to the latest time
permitted by the relevant taxing authority for timely payment. In the case of
Impositions for which the Lessee reimburses a Tax Indemnitee, the Lessee shall
do so within twenty (20) days after receipt by the Lessee of demand by such Tax
Indemnitee describing in reasonable detail the nature of the Imposition and the
basis for the demand (including the computation of the amount payable), but in
no event shall the Lessee be required to pay such reimbursement prior to thirty
(30) days before the latest time permitted by the relevant taxing authority for
timely payment. In the case of Impositions for which a contest is conducted
pursuant to Section 12.2(g), the Lessee shall pay such Impositions or reimburse
such Tax Indemnitee for such Impositions, to the extent not previously paid or
reimbursed pursuant to subsection (a), prior to the latest time permitted by the
relevant taxing authority for timely payment after conclusion of all contests
under Section 12.2(g).
(iii)Impositions imposed with respect to the Property for a
billing period during which the Lease expires or terminates (unless the Lessee
has exercised the Purchase Option with respect to the Property) shall be
adjusted and prorated on a daily basis between the Lessee and
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the Lessor, whether or not such Imposition is imposed before or after such
expiration or termination and each party shall pay or reimburse the other for
each party's pro rata share thereof.
(iv) At the Lessee's request, the amount of any indemnification
payment by the Lessee pursuant to subsection (a) shall be verified and certified
by an independent public accounting firm mutually acceptable to the Lessee and
the Tax Indemnitee. The fees and expenses of such independent public accounting
firm shall (i) in the case of the Trust Company or the Trustee, be paid by the
Lessee, and (ii) in the case of all other Tax Indemnitees, be paid by the Lessee
unless such verification shall result in an adjustment in the Lessee's favor of
10% or more of the payment as computed by such Tax Indemnitee, in which case
such fee shall be paid by such Tax Indemnitee.
(d)(i) The Lessee shall be responsible for preparing and filing
any real and personal property or ad valorem tax returns in respect of the
Property. In case any other report or tax return shall be required to be made
with respect to any obligations of the Lessee under or arising out of subsection
(a) and of which the Lessee has knowledge, the Lessee, at its sole cost and
expense, shall notify the relevant Tax Indemnitee of such requirement and
(except if such Tax Indemnitee notifies the Lessee that such Person intends to
file such report or return) (A) to the extent required or permitted by and
consistent with Legal Requirements, make and file in its own name such return,
statement or report; and (B) in the case of any other such return, statement or
report required to be made in the name of such Tax Indemnitee, advise such Tax
Indemnitee of such fact and prepare such return, statement or report for filing
by such Tax Indemnitee or, where such return, statement or report shall be
required to reflect items in addition to any obligations of the Lessee under or
arising out of subsection (a), provide such Tax Indemnitee at the Lessee's
expense with information sufficient to permit such return, statement or report
to be properly made with respect to any obligations of the Lessee under or
arising out of subsection (a). Such Tax Indemnitee shall, upon the Lessee's
request and at the Lessee's expense, provide any data maintained by such Tax
Indemnitee (and not otherwise within the control of the Lessee) with respect to
the Property which the Lessee may reasonably require to prepare any required tax
returns or reports;
(e) If as a result of the payment or reimbursement by the Lessee
of any expenses of a Tax Indemnitee or the payment of any Transaction Expenses
incurred in connection with the transactions contemplated by the Operative
Agreements, any Tax Indemnity, shall suffer a net increase in any federal, state
or local income tax liability, the Lessee shall indemnify such Tax Indemnities
(without duplication of any indemnification required by subsection (a)) on an
After Tax Basis for the amount of such increase. The calculation of any such net
increase shall take into account any current or future tax savings realized or
reasonably expected to be realized by such Tax Indemnities, in respect thereof,
as well as any interest, penalties and additions to tax payable by such Tax
Indemnities, in respect thereof;
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(f) As between the Lessee and the Lessor, the Lessee shall be
responsible for, and the Lessee shall indemnify and hold harmless the Trust
Company in its individual capacity and as the Trustee (without duplication of
any indemnification required by subsection (a)) on an After Tax Basis against,
any obligation for United States withholding taxes imposed in respect of the
interest payable on the Notes to the extent, but only to the extent, Lessor has
actually paid funds to a taxing authority with respect to such withholding taxes
(and, if the Lessor receives a demand for such payment from any taxing
authority, the Lessee shall discharge such demand on behalf of the Lessor);
(g)(i) If a written claim is made against any Tax Indemnitee or
if any proceeding shall be commenced against such Tax Indemnitee (including a
written notice of such proceeding), for any Impositions, such Tax Indemnitee
shall promptly notify Lessee in writing and shall not take action with respect
to such claim or proceeding without the consent of Lessee for thirty (30) days
after the receipt of such notice by Lessee; provided, that, in the case of any
such claim or proceeding, if action shall be required by law or regulation to be
taken prior to the end of such 30-day period, such Tax Indemnitee shall, in such
notice to Lessee, inform Lessee, and no action shall be taken with respect to
such claim or proceeding without the consent of Lessee before the end of such
shorter period; provided, further, that the failure of such Tax Indemnitee to
give the notices referred to this sentence shall not diminish Lessee's
obligation hereunder except to the extent such failure precludes Lessee from
contesting all or part of such claim.
(ii) If, within thirty (30) days of receipt of such notice from
the Tax Indemnitee (or such shorter period as the Tax Indemnitee has noticed
Lessee is required by law or regulation for the Tax Indemnitee to commence such
contest), Lessee shall request in writing that such Tax Indemnitee contest such
Imposition, the Tax Indemnitee shall, at the expense of Lessee, in good faith
conduct and control such contest (including, without limitation, by pursuit of
appeals) relating to the validity, applicability or amount of such impositions
(provided, however, that (A) if such contest can be pursued independently from
any other proceeding involving a tax liability of such Tax Indemnitee, the Tax
Indemnitee, at Lessee's request, shall allow Lessee to conduct and control such
contest and (B) in the case of any contest that Lessee is not entitled to
control, the Tax Indemnitee may request Lessee to conduct and control such
contest if possible or permissible under applicable law or regulation) by, in
the sole discretion of the Person conducting and controlling such contest, (1)
resisting payment thereof, (2) not paying the same except under protest, if
protest is necessary and proper, (3) if the payment be made, using reasonable
efforts to obtain a refund thereof in appropriate administrative and judicial
proceedings, or (4) taking such other action as is reasonably requested by
Lessee from time to time.
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(iii) The party controlling any contest shall consult in good
faith with the non-controlling party and shall keep the non-controlling party
reasonably informed as to the conduct of such contest; provided that all
decisions ultimately shall be made in the sole discretion of the controlling
party. The parties agree that a Tax Indemnitee may at any time decline to take
further action with respect to the contest of any Imposition and may settle such
contest if such Tax Indemnitee shall waive its rights to any indemnity from
Lessee that otherwise would be payable in respect of such claim (and any future
claim by any taxing authority with respect to other taxable periods that are
based, in whole or in part, upon the resolution of such claim) and shall pay to
Lessee any amount previously paid or advanced by Lessee pursuant to this Section
12.2 by way of indemnification or advance for the payment of an Imposition, and
no other then future liability of the Lessee is likely with respect to such
Imposition.
(iv) Notwithstanding the foregoing provisions of this Section
12.2, a Tax Indemnitee shall not be required to take any action and Lessee shall
not be permitted to contest any Impositions in its own name or that of the Tax
Indemnitee unless (A) Lessee shall have agreed to pay and shall pay to such Tax
Indemnitee on demand and on an After Tax Basis all reasonable costs, losses and
expenses that such Tax Indemnitee actually incurs in connection with contesting
such Impositions, including, without limitation, all reasonable legal,
accounting and investigatory fees and disbursements, (B) in the case of a claim
that must be pursued in the name of an Tax Indemnitee (or an Affiliate thereof),
the amount of the potential indemnity (taking into account all similar or
logically related claims that have been or could be raised in any audit
involving such Tax Indemnitee for which Lessee may be liable to pay an indemnity
under this Section 12.2) is more than $100,000 and less than $1,000,000, unless
the pursuit of such contest is in a manner mutually satisfactory to the Tax
Indemnitee and the Lessee, but in no event shall such right prevent the Lessee
from prosecuting or continuing such contest, (C) the Tax Indemnitee shall have
reasonably determined that the action to be taken will not result in any
material danger of sale, forfeiture or loss of the Property, or any part thereof
or interest therein, will not interfere with the payment of Rent, and will not
result in risk of criminal liability, (D) if such contest shall involve the
payment of the Imposition prior to the contest, Lessee shall provide to the Tax
Indemnitee an interest-free advance in an amount equal to the Imposition that
the Tax Indemnitee is required to pay (with no additional net after-tax cost to
such Tax Indemnitee), (E) in the case of a claim that must be pursued in the
name of an Tax Indemnitee (or an Affiliate thereof), Lessee shall have provided
to such Tax Indemnitee an opinion of independent tax counsel selected by the
Lessee and reasonably satisfactory to such Tax Indemnitee stating that a
reasonable basis exists to contest such claim (or, in the case of an appeal of
an adverse determination, an opinion of such counsel to the effect that there is
substantial authority for the position asserted in such appeal) and (F) no Event
of Default shall have occurred and be continuing. In no event shall a Tax
Indemnitee be required to appeal an adverse judicial determination to the United
State Supreme Court. In addition, a Tax Indemnitee shall not be required to
contest any claim in its name (or that of an Affiliate) if the subject matter
thereof
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shall be of a continuing nature and shall have previously been decided adversely
by a court of competent jurisdiction pursuant to the contest provisions of this
Section 12.2, unless there shall have been a change in law (or interpretation
thereof) and the Tax Indemnitee shall have received, at the Lessee's expense, an
opinion of independent tax counsel selected by the Tax Indemnitee and reasonably
acceptable to the Lessee stating that as a result of such change in law (or
interpretation thereof), it is more likely than not that the Tax Indemnitee will
prevail in such contest.
(h) At the Lessee's request, the amount of any indemnity payment
by the Lessee or any payment by a Tax Indemnitee to the Lessee pursuant to this
Section 12.2 shall be verified and certified by an independent public accounting
firm mutually acceptable to the Lessee and such Tax Indemnitee. The costs of
such verification shall be borne by the Lessee unless such verification shall
result in an adjustment in the Lessee's favor of 10 percent (10%) of the payment
as computed by such Tax Indemnitee, in which case such fee shall be paid by such
Tax Indemnitee. In no event shall the Lessee have the right to review such Tax
Indemnitee's tax returns or receive any other confidential information from such
Tax Indemnitee in connection with such verification. Any information provided to
such accountants by any Person shall be and remain the exclusive property of
such Person and shall be deemed by the parties to be (and the accountants will
confirm in writing that they will treat such information as) the private,
proprietary and confidential property of such Person, and no Person other than
such Person and the accountants shall be entitled thereto and all such materials
shall be returned to such Person. Such accounting firm shall be requested to
make its determination within thirty (30) days of the Lessee's request for
verifications and the computations of the accounting firm shall be final,
binding and conclusive upon the Lessee and such Tax Indemnitee. The parties
agree that the sole responsibility of the independent public accounting firm
shall be to verify the amount of a payment pursuant to the Lease and that
matters of interpretation of the Lease are not within the scope of the
independent accounting firm's responsibilities.
SECTION 13. MISCELLANEOUS
13.1 Survival of Agreements. The representations, warranties,
covenants, indemnities and agreements of the parties provided for in the
Operative Agreements, and the parties' obligations under any and all thereof,
shall survive the execution and delivery of this Agreement, the transfer of the
Property to the Trustee, the construction of any Improvements, any disposition
of any interest of the Trustee in the Property or the Improvements or any
interest of the Investor in the Trustee, the payment of the Notes and any
disposition thereof and shall be and continue in effect notwithstanding any
investigation made by any party and the fact that any party may waive compliance
with any of the other terms, provisions or conditions of any of the Operative
Agreements. Except as otherwise expressly set forth herein or in other Operative
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Agreements, the indemnities of the parties provided for in the Operative
Agreements shall survive the expiration or termination of any thereof.
13.2 No Broker, etc. Each of the parties hereto represents to the
others that it has not retained or employed any broker, finder or financial
adviser to act on its behalf in connection with this Agreement, nor has it
authorized any broker, finder or financial adviser retained or employed by any
other Person so to act, except for the Arranger, the fees of which shall be paid
by the Lessee. Any party who is in breach of this representation shall indemnify
and hold the other parties harmless from and against any liability arising out
of such breach of this representation.
13.3 Notices. Unless otherwise specifically provided herein, all
notices, consents, directions, approvals, instructions, requests and other
communications required or permitted by the terms hereof to be given to any
Person shall be given in writing by nationally recognized courier service and
any such notice shall become effective five Business Days after being deposited
in the mails, certified or registered with appropriate postage prepaid or one
Business Day after delivery to a nationally recognized courier service
specifying overnight delivery and shall be directed to the address of such
Person as indicated:
If to the Lessee, to it at:
Safeskin Real Estate Incorporated
00000 Xxxx Xxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. XxXxx, Vice President-Treasurer
Telecopy No.: (000) 000-0000
If to the Trustee, to it at:
Union Bank of California, N.A.
Corporate Trust Division
000 Xxxxx Xxx Xxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxxx
Telecopy No.: (000) 000-0000
If to the Investor, to it at:
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Bankers Commercial Corporation
000 Xxxxx Xxxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx XxXxxx
Telecopy No.: (000) 000-0000
If to the Agent, to it at:
Union Bank of California, N.A.
San Diego Commercial Banking Office
530 "B" Street - 0xx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxx
Telecopy No.: (000) 000-0000
From time to time any party may designate a new address for purposes of notice
hereunder by notice to each of the other parties hereto.
13.4 Counterparts. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute but
one and the same instrument.
13.5 Amendments and Termination. Neither this Agreement nor any
of the terms hereof may be terminated, amended, supplemented, waived or modified
except by an instrument in writing signed by the party against which the
enforcement of the termination, amendment, supplement, waiver or modification
shall be sought. This Agreement may be terminated by an agreement signed in
writing by the Trustee, the Investor, the Lessee, the Agent and the Lenders.
Notwithstanding the foregoing provisions to the contrary, in the case of the
Lenders, the action of the Required Lenders shall control, except as otherwise
provided in Section 9.1 of the Credit Agreement.
13.6 Headings, etc. The Table of Contents and headings of the
various Sections and Subsections of this Agreement are for convenience of
reference only and shall not modify, define, expand or limit any of the terms or
provisions hereof.
13.7 Parties in Interest. Except as expressly provided herein,
none of the provisions of this Agreement are intended for the benefit of any
Person except the parties hereto.
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13.8 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
13.9 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
13.10 Liability Limited. The Lessee and the Investor each
acknowledge and agree that the Trust Company is (except as otherwise expressly
provided herein or therein) entering into this Agreement and the other Operative
Agreements to which it is a party (other than the Trust Agreement), solely in
its capacity as trustee under the Trust Agreement and not in its individual
capacity and that Trust Company shall not be liable or accountable under any
circumstances whatsoever in its individual capacity for or on account of any
statements, representations, warranties, covenants or obligations stated to be
those of the Trustee, except for its own gross negligence or willful misconduct
and as otherwise expressly provided herein or in the other Operative Agreements.
13.11 Rights of Lessee. Notwithstanding any provision of the
Operative Agreements, if at any time all obligations (i) of the Trustee under
the Credit Agreement and the Security Documents and (ii) of the Lessee under the
Operative Agreements have in each case been satisfied or discharged in full,
then the Lessee shall be entitled to (a) terminate the Lease (to the extent not
previously terminated) and (b) receive all amounts then held under the Operative
Agreements and all proceeds with respect to the Properties. Upon the fulfillment
of the obligations contained in clauses (i) and (ii) above, the Lessor shall
transfer to the Lessee all of its right, title and interest in and to the
Properties (to the extent not previously transferred to the Lessee in accordance
with the Lease) and any amounts or proceeds referred to in the foregoing clause
(b) shall be paid over to the Lessee.
13.12 Further Assurances. The parties hereto shall promptly cause
to be taken, executed, acknowledged or delivered, at the sole expense of the
Lessee, all such further acts, conveyances, documents and assurances as the
other parties may from time to time reasonably request in order to carry out and
effectuate the intent and purposes of this Agreement, the other Operative
Agreements and the transactions contemplated hereby and thereby (including,
without limitation, the preparation, execution and filing of any and all Uniform
Commercial Code financing statements and other filings or registrations which
the parties hereto may from time to time request to be filed or effected). The
Lessee, at its own expense, shall take such action as
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may be reasonably requested in order to maintain and protect all security
interests provided for hereunder or under any other Operative Agreement.
13.13 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
13.14 No Representation or Warranty. Nothing contained herein, in
any other Operative Agreement or in any other materials delivered to the Lessee
in connection with the transactions contemplated hereby or thereby shall be
deemed a representation or warranty by the Agent or the Arranger or any of their
Affiliates as to the proper accounting treatment or tax treatment that should be
afforded to the Lease and the Lessor's ownership of the Properties and the Agent
expressly disclaims any representation or warranty with respect to such matters.
13.15 Highest Lawful Rate. It is the intention of the parties
hereto to conform strictly to applicable usury laws and, anything herein to the
contrary notwithstanding, the obligations of the Lessee, the Lessor or the
Investor or any other party under any Operative Agreement, shall be subject to
the limitation that payments of interest or of other amounts constituting
interest shall not be required to the extent that receipt thereof would be in
excess of the Highest Lawful Rate, or otherwise contrary to provisions of law
applicable to the recipient limiting rates of interest which may be charged or
collected by the recipient. Accordingly, if the transactions or the amount paid
or otherwise agreed to be paid for the use, forbearance or detention of money
under this Agreement, the Lease and any other Operative Agreement would exceed
the Highest Lawful Rate or otherwise be usurious with respect to the recipient
of any such amount, then, in that event, notwithstanding anything to the
contrary in this Agreement, the Lease or any other Operative Agreement, it is
agreed as follows as to the recipient of any such amount:
(a) the provisions of this Section 13.15 shall govern and control
over any other provision in this Agreement, the Lease and any other Operative
Agreement and each provision set forth therein is hereby so limited;
(b) the aggregate of all consideration which constitutes interest
that is contracted for, charged or received under this Agreement, the Lease, or
any other Operative Agreement shall under no circumstances exceed the maximum
amount of interest allowed by any Requirement of Law (such maximum lawful
interest rate, if any, with respect to such Lender herein called the "Highest
Lawful Rate"), and all amounts owed under this Agreement, the Lease and any
other Operative Agreement shall be held subject to reduction and (i) the amount
of interest which would otherwise be payable to the recipient hereunder and
under the Lease, the Loan Documents and any other Operative Agreement, shall be
automatically reduced to the amount allowed under any Requirement of Law and
(ii) any unearned interest paid in excess of
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the Highest Lawful Rate shall be credited to the payor by the recipient (or, if
such consideration shall have been paid in full, refunded to the payee);
(c) all sums paid, or agreed to be paid for the use, forbearance
and detention of the money under this Agreement, the Lease, or any other
Operative Agreement shall, to the extent permitted by any Requirement of Law, be
amortized, prorated, allocated and spread throughout the full term of such
indebtedness until payment in full so that the actual rate of interest is
uniform throughout the full term thereof; and
(d) if at any time the interest, together with any other fees,
late charges and other sums payable pursuant to or in connection with this
Agreement, the Lease, and any other Operative Agreement executed in connection
herewith or therewith, and deemed interest under any Requirement of Law exceeds
that amount which would have accrued at the Highest Lawful Rate, the amount of
interest and any such fees, charges and sums to accrue to the recipient of such
interest, fees, charges and sums pursuant to the Operative Agreement shall be
limited, notwithstanding anything to the contrary in the Operative Agreement to
that amount which would have accrued at the Highest Lawful Rate for the
recipient, but any subsequent reductions, as applicable, shall not reduce the
interest to accrue pursuant to the Operative Agreement below the recipient's
Highest Lawful Rate until the total amount of interest payable to the recipient
(including all consideration which constitutes interest) equals the amount of
interest which would have been payable to the recipient (including all
consideration which constitutes interest), plus the amount of fees which would
have been received but for the effect of this Section 3.15.
13.16 Ownership of the Property. (a) The parties hereto intend
that (i) for financial accounting purposes with respect to the Lessee (A) the
Lease will be treated as an "operating lease" pursuant to Statement of Financial
Accounting Standards (SFAS) No. 13, as amended, (B) the Lessor will be treated
as the beneficial owner and lessor of the Property and (C) the Lessee will be
treated as the lessee of the Property, but (ii) for federal, state and local
income tax and all other purposes (A) the Lease will be treated as a financing
arrangement, (B) the Lenders will be treated as senior lenders making loans to
the Lessee in an amount equal to the Loans, which Loans will be secured by the
Property, (C) the Lessor will be treated as a subordinated lender making a loan
to the Lessee in an amount equal to the Investor Contribution, which loan is
secured by the Property, and (D) the Lessee will be treated as the beneficial
owner of the Property and will be entitled to all tax benefits ordinarily
available to an owner of property like the Property for such tax purposes.
(b) 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, (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 a real property mortgage or deed of trust, as applicable;
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(ii) the conveyance provided for in Section 2 of the Lease shall be deemed a
grant of a security interest in and a mortgage lien on the Lessee's right, title
and interest in the Property (including the right to exercise all remedies as
are contained in the Mortgage and Memorandum of Lease upon the occurrence of a
Lease Event of Default) 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, for the benefit of the Lessor to secure the Lessee's payment of all
amounts owed by the Lessee under the Lease and the other Operative Agreements
and the Lessor holds title to the Property so as to create and grant a first
lien and prior security interest in the Property (A) pursuant to the Lease for
the benefit of the Agent under the Assignment of Lease, to secure to the Agent
the obligations of the Lessee under the Lease and (B) pursuant to the Mortgage
to secure to the Agent the obligations of the Lessor under the Mortgage and the
Notes; (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 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 the Property,
and acknowledgements, 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 parties hereto shall, to the extent consistent with the Lease, take such
actions as may be necessary to ensure that, if the Lease were deemed to create a
security interest in the Property in accordance with Section 7.1 of the Lease,
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 Basic Term. Nevertheless, the Lessee acknowledges and agrees that none of
Lessor, Investor, the Trust Company, Agent, or any Lender has provided or will
provide tax, accounting or legal advice to Lessee regarding the Lease, the
Operative Agreements or the transactions contemplated hereby and thereby, or
made any representations or warranties concerning the tax, accounting or legal
characteristics of the Operative Agreements, and that the Lessee has obtained
and relied upon such tax, accounting and legal advice concerning the Operative
Agreements as it deems appropriate.
(c) The parties hereto further intend and agree that in the event
of 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 or the Lessor, the transactions evidenced by the Lease shall be regarded
as loans made by an unrelated third party lender to the Lessee.
13.17 Confidentiality. Each Lender, the Agent, the Lessor and the
Investor agree to hold any confidential information that it may receive from the
Company or its Subsidiaries pursuant to this Agreement or the other Operative
Agreements in confidence, except for disclosure: (a) to other Lenders or
Affiliates of a Lender or an Investor; (b) to legal counsel and
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accountants for the Company or its Subsidiaries or any Lender, the Lessor or the
Investor; (c) to other professional advisors to the Company or its Subsidiaries
or any Lender, the Lessor or the Investor, provided that the recipient has
accepted such information subject to a confidentiality agreement substantially
similar to this Section 13.17; (d) to regulatory officials having jurisdiction
over that Lender, the Lessor or the Investor; (e) as required by Law or legal
process, provided that each Lender, the Lessor or the Investor agrees to notify
the Company of any such disclosures unless prohibited by applicable Laws, or in
connection with any legal proceeding to which that Lender, the Lessor or the
Investor and the Company or its Subsidiaries are adverse parties; and (f) to
another financial institution in connection with a disposition or proposed
disposition to that financial institution of all or part of that Lender's
interests hereunder and under the Credit Documents or a participation interest
in its Notes, provided that the recipient has accepted such information subject
to a confidentiality agreement substantially similar to this Section 13.17. For
purposes of the foregoing, "confidential information" shall mean any information
respecting the Company or its Subsidiaries reasonably considered by the Company
to be confidential, other than (i) information previously filed with any
Governmental Authority and available to the public, (ii) information previously
published in any public medium from a source other than, directly or indirectly,
that Lender, the Lessor or the Investor and (iii) information previously
disclosed by the Company to any Person not associated with the Company which
does not owe a professional duty of confidentiality to the Company or which has
not executed an appropriate confidentiality agreement with the Company. Nothing
in this Section shall be construed to create or give rise to any fiduciary duty
on the part of the Agent, the Lenders, the Lessor or the Investor to the Company
or its Subsidiaries.
53
49
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their respective officers thereunto duly authorized as of
the day and year first above written.
SAFESKIN REAL ESTATE INCORPORATED
By: ____________________________________
Name:
Title:
UNION BANK OF CALIFORNIA, N.A., not in its
individual capacity except as expressly
stated herein, but solely as Trustee
By: ____________________________________
Name: Xxxxxx X. Xxxxxxx
Title: Assistant Vice President
BANKERS COMMERCIAL CORPORATION, as
Investor
By: ____________________________________
Name: Xxxxx Xxxxxxxxx
Title: President
UNION BANK OF CALIFORNIA, N.A., as Agent
By: ____________________________________
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
54
50
COMERICA BANK, as a Lender
By: ____________________________________
Name: Xxxxxxxx X. Xxxxxxxxxx
Title: Assistant Vice President
THE FIRST NATIONAL BANK OF CHICAGO,
as a Lender
By: ____________________________________
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
SANWA BANK CALIFORNIA, as a Lender
By: ____________________________________
Name: Xxxxx X. Xxxxxx
Title: Vice President
UNION BANK OF CALIFORNIA, N.A., as a
Lender
By: ____________________________________
Name: Xxxxx X. Xxxxxxx
Title: Vice President
U.S. BANK, NATIONAL ASSOCIATION, as a
Lender
By: ____________________________________
Name: Xxxxx X. Xxxxxx
Title: Vice President
55
51
XXXXX FARGO BANK, NATIONAL
ASSOCIATION, as a Lender
By: ____________________________________
Name: Xxxxxxx Xxxxxxxx
Title: Vice President
56
FIRST AMENDMENT TO PARTICIPATION AGREEMENT
FIRST AMENDMENT, dated as of [*] March 31, 1999 (this
"Amendment"), to the Participation Agreement, dated as of March 5, 1999 (the
"Participation Agreement"), among SAFESKIN REAL ESTATE INCORPORATED, a Delaware
corporation (the "Lessee"); UNION BANK OF CALIFORNIA, N.A., a national banking
association, not in its individual capacity, but solely as Trustee (the
"Trustee" or the "Lessor"); UNION BANK OF CALIFORNIA, N.A., a national banking
association, as agent (in such capacity, the "Agent") for the Lenders; BANKERS
COMMERCIAL CORPORATION, a California corporation, as investor (the "Investor");
and each of the financial institutions listed on the signature pages hereof
(each, a "Lender"; collectively, the "Lenders").
W I T N E S S E T H:
WHEREAS, the Lessee, the Lessor, the Investor, the Lenders and
the Agent are parties to the Participation Agreement;
WHEREAS, the Lessor, the Agent, the Investor and the Lenders are
willing to amend the Participation Agreement upon the terms and conditions set
forth herein;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Defined Terms. Unless otherwise defined herein,
capitalized terms which are defined in Annex A to the Participation Agreement,
as amended hereby, are used herein as therein defined.
2. Amendments. The Participation Agreement is hereby
amended as follows:
(a) Annex A (Rules of Usage and Definitions). The
Rules of Usage and Definitions set forth in Annex A are hereby amended
by (i) deleting the definitions of the defined terms "Applicable
Commitment Fee Rate" and "Applicable Eurodollar Rate Margin" in their
entirety and substituting in their place the following definitions:
"Applicable Commitment Fee Rate" shall mean, for each Pricing
Period, the rate set forth below (expressed in basis points per annum)
opposite the Applicable Pricing Level for that Pricing Period:
57
2
Applicable
Pricing Level Commitment Fee
------------- --------------
I 45
II 50
III 50
IV 62.5
V 62.5
; provided, however, that upon the Agent's receipt of a Compliance
Certificate from the Company evidencing the Company's compliance as of
December 31, 1999 or any subsequent compliance testing date with each of
the financial covenants set forth in Section 6.12 through 6.21 of the
Corporate Credit Agreement, the Applicable Commitment Fee Rate shall be
as set forth below:
Applicable
Pricing Level Commitment Fee
------------- --------------
I 32.5
II 37.5
III 37.5
IV 50
V 50
"Applicable Eurodollar Rate Margin" shall mean, for each Pricing
Period, the interest rate margin set forth below (expressed in basis
points per annum) opposite the Applicable Pricing Level for that Pricing
Period:
Applicable
Pricing Level Margin
------------- ------
I 162.5
II 175
III 187.5
IV 200
V 212.5
; provided, however, that upon the Agent's receipt of a Compliance
Certificate from the Company evidencing the Company's compliance as of
December 31, 1999 or any subsequent compliance testing date with each of
the financial covenants set forth in Sections 6.12 through 6.21 of the
Corporate Credit Agreement, the Applicable Eurodollar Rate Margin shall
be as set forth below:
58
3
Applicable
Pricing Level Margin
------------- ------
I 125
II 137.5
III 150
IV 162.5
V 175
; and provided, further, that from and after the Completion Date and the
date on which the Senior Secured Note Obligations have been paid in
full, the Company shall have the right to cause the Applicable
Eurodollar Rate Margin on any outstanding Eurodollar Tranche of at least
$20,000,000 or a whole multiple of $10,000,000 in excess thereof to be
reduced by 75 basis points per annum (a "Margin Reduction") upon and
subject to the satisfaction of the following conditions: (a) the Company
shall execute and deliver to the Agent the Security Deposit and Pledge
Agreement, (b) the Company, as a Guarantor, shall deposit with the Agent
Additional Collateral from time to time as required so that the fair
market value of such Additional Collateral, as determined by the Agent,
shall at all times be at least 103% of the principal amount of the
Eurodollar Tranche for which such Margin Reduction is in effect and (c)
the Agent shall have a first priority perfected security interest in
such Additional Collateral.
and (ii) adding the following definition in its appropriate
alphabetical place:
"Compliance Certificate" shall have the meaning set
forth in Section 1.1 of the Corporate Credit Agreement.
(b) Section 5.2. Section 5.2 is hereby amended by adding the
following provision at the end of the section:
"Notwithstanding any provision in this Agreement or the Credit
Agreement to the contrary, unless the Company shall be in
compliance as of September 30, 1999 with each of the financial
covenants set forth in the Corporate Credit Agreement and
incorporated by reference in the Guarantee, neither the Lenders
nor the Investor shall have any obligation to make Advances to
the Lessor if after giving effect to any such Advance, the
aggregate outstanding principal amount of the Loans and Investor
Contribution would exceed $16,084,477.09 plus Advances which may
be made to pay interest on the Loans and Investor Yield."
59
4
3. Direction to Trust Company. By its execution hereof, the
Investor hereby authorizes and directs Union Bank of California, N.A., not in
its individual capacity but solely as Trustee, to execute this Amendment.
4. Representations and Warranties. The Lessee hereby
confirms, reaffirms and restates the representations and warranties set forth in
the Participation Agreement. The Lessee represents and warrants that no Default
or Event of Default has occurred and is continuing.
5. Conditions to Effectiveness. The amendments provided for
herein shall become effective on the date of satisfaction of the following
conditions precedent:
(a) The Agent shall have received counterparts of this
Amendment duly executed and delivered by the Lessee, the
Lessor, the Investor, the Required Lenders and the
Guarantors; and
(b) The Agent shall have received, for the account of each
Lender which consents to the amendments contained
herein, the amendment fee referred to in Section 7.
6. Payment of Expenses. The Lessee agrees to pay or
reimburse the Agent for all of its out-of-pocket costs and expenses incurred in
connection with this Amendment, any other documents prepared in connection
herewith and the transactions contemplated hereby, including, without
limitation, the fees and disbursements of counsel to the Agent.
7. Fees. In consideration of the agreement of the Lenders
to consent to the amendments contained herein, the Lessee agrees to pay to the
Agent for the account of each Lender which so consents on or prior to April 20,
1999, an amendment fee in an amount equal to 0.25% of the amount of such
Lender's Commitment, payable on the date hereof in immediately available funds.
8. Affirmation of Guarantee. The Guarantors hereby consent
to the execution and delivery of this Amendment; agrees that all references in
the Guarantee to any Operative Agreement shall be a reference to such agreement
as amended from time to time; reaffirms its obligations under the Guarantee; and
represents and warrants that there exist no offsets, counterclaims or defenses
to its obligations under the Guarantee.
9. Reference to and Effect on the Operative Agreements;
Limited Effect. On and after the date hereof and the satisfaction of the
conditions contained in
60
5
paragraph 5 of this Amendment, each reference in the Participation Agreement to
"this Agreement", "hereunder", "hereof" or words of like import referring to the
Participation Agreement, and each reference in the other Operative Agreements to
"the Participation Agreement", "thereunder", "thereof" or words of like import
referring to the Participation Agreement, shall mean and be a reference to the
Participation Agreement as amended hereby. The execution, delivery and
effectiveness of this Amendment shall not, except as expressly provided herein,
operate as a waiver of any right, power or remedy of the Lessor, the Investor,
any Lender or the Agent under any of the Operative Agreements, nor constitute a
waiver of any provisions of any of the Operative Agreements. Except as expressly
amended herein, all of the provisions and covenants of the Participation
Agreement and the other Operative Agreements are and shall continue to remain in
full force and effect in accordance with the terms thereof and are hereby in all
respects ratified and confirmed.
10. Counterparts. This Amendment may be executed by one or
more of the parties hereto in any number of separate counterparts (which may
include counterparts delivered by facsimile transmission) and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument. Any executed counterpart delivered by facsimile transmission shall
be effective as for all purposes hereof.
11. GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
61
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
SAFESKIN REAL ESTATE INCORPORATED
By:
-------------------------------------
Name:
Title:
UNION BANK OF CALIFORNIA, N.A.,
not in its individual capacity,
but solely as Trustee
By:
-------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Assistant Vice President
BANKERS COMMERCIAL CORPORATION,
as Investor
By:
-------------------------------------
Name: Xxxxx Xxxxxxxxx
Title: President
UNION BANK OF CALIFORNIA, N.A., as Agent
By:
-------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
COMERICA BANK, as a Lender
By:
-------------------------------------
Name: Xxxxxxxx X. Xxxxxxxxxx
Title: Assistant Vice President
62
THE FIRST NATIONAL BANK OF CHICAGO,
as a Lender
By:
-------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
SANWA BANK CALIFORNIA, as a Lender
By:
-------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President
UNION BANK OF CALIFORNIA, N.A.,
as a Lender
By:
-------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Vice President
U.S. BANK, NATIONAL ASSOCIATION,
as a Lender
By:
-------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President
63
GUARANTORS
SAFESKIN CORPORATION
By:
-------------------------------------
Name:
Title:
SAFESKIN SCIENTIFIC CORPORATION
By:
-------------------------------------
Name:
Title:
