EXHIBIT 10.59
------------------------------------------------------------------------------
PARTICIPATION AGREEMENT
among
FRANKLIN TEMPLETON CORPORATE SERVICES, INC.,
as the Construction Agent and as the Lessee,
FRANKLIN RESOURCES, INC.,
as the Guarantor,
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not individually, except as expressly
stated herein, but solely as the Owner Trustee
under the FRI Trust 1999-1,
THE VARIOUS BANKS AND OTHER LENDING INSTITUTIONS WHICH ARE PARTIES HERETO
FROM TIME TO TIME, as the Holders,
THE VARIOUS BANKS AND OTHER LENDING INSTITUTIONS WHICH ARE PARTIES HERETO
FROM TIME TO TIME, as the Lenders,
BANC OF AMERICA SECURITIES, LLC, as Sole Lead Arranger and Book Manager,
THE BANK OF NEW YORK and THE CHASE MANHATTAN BANK,
as Co-Syndication Agents,
and
BANK OF AMERICA, N.A.,
as the Agent for the Lenders
and respecting the Security Documents,
as the Agent for the Lenders and the Holders,
to the extent of their interests
Dated as of September 27, 1999
- ------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
SECTION 1. THE LOANS........................................................1
SECTION 2. HOLDER ADVANCES..................................................2
SECTION 3. SUMMARY OF TRANSACTIONS..........................................2
3.1. Operative Agreements.............................................2
3.2. Property Purchase................................................2
3.3. Construction of Improvements; Commencement of Basic Rent.........3
3.4. Ratable Interests of the Lenders.................................3
3.5. Permitted Facility...............................................3
3.6. Sole Lead Arranger, Book Manager and Co-Syndication Agents Have
Limited Obligation...............................................4
SECTION 4. THE CLOSINGS.....................................................4
4.1. Initial Closing Date.............................................4
4.2. Initial Closing Date; Property Closing Dates; Acquisition
Advances; Construction Advances..................................4
SECTION 5. FUNDING OF ADVANCES; CONDITIONS PRECEDENT; REPORTING REQUIREMENTS
ON COMPLETION DATE; THE LESSEE'S DELIVERY OF NOTICES; RESTRICTIONS
ON LIENS.....................................................................4
5.1. General..........................................................4
5.2. Procedures for Funding...........................................5
5.3. Conditions Precedent for the Lessor, the Agent, the Lenders and
the Holders Relating to the Initial Closing Date and the Advance
of Funds for the Acquisition of a Property.......................7
5.4. Conditions Precedent for the Lessor, the Agent, the Lenders and
the Holders Relating to the Advance of Funds after the Acquisition
Advance.........................................................12
5.5. Additional Reporting and Delivery Requirements on Completion Date
and on Construction Period Termination Date.....................14
5.6. The Construction Agent Delivery of Construction Budget
Modifications...................................................14
5.7. Restrictions on Liens...........................................15
5.8. [Reserved]......................................................15
5.9. Maintenance of the Lessee as a Wholly-Owned Entity..............15
5.10. Payments........................................................15
5.11. Unilateral Right to Increase the Holder Commitments and the
Lender Commitments..............................................15
5.12. Pay-Out of Lenders and Holders Not Consenting to any Renewal.
Term............................................................16
5.13. Advance on the Initial Closing Date may be Prepaid and remain
available for later Advances....................................16
SECTION 6. REPRESENTATIONS AND WARRANTIES..................................16
6.1. Representations and Warranties of the Borrower..................16
6.2. Representations and Warranties of the Credit Parties............19
6.3. Representations and Warranties of the Initial Holders...........29
SECTION 6B. GUARANTY.......................................................30
6B.1. Guaranty of Payment and Performance.............................30
i
6B.2. Obligations Unconditional.......................................30
6B.3. Modifications...................................................31
6B.4. Waiver of Rights................................................32
6B.5. Reinstatement...................................................32
6B.6. Remedies........................................................33
6B.7. Limitation of Guaranty..........................................33
SECTION 7. PAYMENT OF CERTAIN EXPENSES......................................34
7.1. Transaction Expenses............................................34
7.2. No Broker, etc..................................................35
7.3. Certain Fees and Expenses.......................................35
7.4. Unused Fee......................................................36
7.5. Administrative Fee..............................................36
7.6. Upfront Fee.....................................................36
SECTION 8. OTHER COVENANTS AND AGREEMENTS..................................36
8.1. Cooperation with the Construction Agent or the Lessee...........36
8.2. Covenants of the Owner Trustee and the Holders..................37
8.3. Credit Party Covenants, Consent and Acknowledgment..............39
8.4. Sharing of Certain Payments.....................................52
8.5. Grant of Easements, etc.........................................52
8.6. Appointment by the Agent, the Lenders, the Holders and the Owner
Trustee.........................................................54
8.7. Collection and Allocation of Payments and Other Amounts.........55
8.8. Release of Properties, etc......................................58
8.9. Refinancing.....................................................61
8.10 Special Provisions Regarding Unqualified Lessee Obligations.....61
SECTION 9. CREDIT AGREEMENT AND TRUST AGREEMENT............................64
9.1. The Construction Agent's and the Lessee's Credit Agreement
Rights..........................................................64
9.2. The Construction Agent's and the Lessee's Trust Agreement
Rights..........................................................65
9.3. Effect of Defaults by the Lessor, Owner Trustee or Trust
Company.........................................................65
SECTION 10. TRANSFER OF INTEREST...........................................66
10.1. Restrictions on Transfer........................................66
10.2. Effect of Transfer..............................................67
SECTION 11. INDEMNIFICATION................................................68
11.1. General Indemnity...............................................68
11.2. General Tax Indemnity...........................................72
11.3. Increased Costs, Illegality, etc................................77
11.4. Funding/Contribution Indemnity..................................80
11.5. [Reserved]......................................................80
11.6. Additional Provisions Regarding Environmental Indemnification...80
11.7. Additional Provisions Regarding Indemnification.................80
11.8. Indemnifications Provided by the Owner Trustee in Favor of the
Other Indemnified Persons.......................................81
11.9. Limits on Indemnification; Subrogation..........................82
SECTION 12. MISCELLANEOUS..................................................82
12.1. Survival of Agreements..........................................82
12.2. Notices.........................................................82
ii
12.3. Counterparts....................................................84
12.4. Terminations, Amendments, Waivers, Etc.; Unanimous Vote Matters.85
12.5. Headings, etc...................................................86
12.6. Parties in Interest.............................................86
12.7. Governing Law; Submission to Jurisdiction; Waiver of Jury Trial;
Venue...........................................................87
12.8. Severability....................................................87
12.9. Liability Limited...............................................87
12.10 Rights of the Credit Parties....................................89
12.11 Further Assurances..............................................89
12.12 Calculations under Operative Agreements.........................90
12.13 Confidentiality.................................................90
12.14 Financial Reporting/Tax Characterization........................90
12.15 Set-off.........................................................91
iii
SCHEDULES
- ---------
Schedule 1 - Legal Description for Land
Schedule 2 - Development Contracts
Schedule 3 - Title Report
Schedule 4 - Required Consents and Authorizations
Schedule 5 - Investment Advisers
Schedule 6 - Broker-Dealers
Schedule 7 - Subsidiaries
Schedule 8 - Indebtedness
Schedule 8.8 - Site Plan
Schedule 9 - Liens
EXHIBITS
- --------
A - Form of Requisition - Sections 4.2, 5.2, 5.3 and 5.4
B - [Reserved]
C - Form of Officer's Certificate - Section 5.3(z)
D - Form of Secretary's Certificate - Section 5.3(aa)
E - Form of Officer's Certificate - Section 5.3(cc)
F - Form of Secretary's Certificate - Section 5.3(dd)
G - Form of Outside Counsel Opinion for the Owner Trustee - Section 5.3(ee)
H - Form of Outside Counsel and In-House Opinions for the Lessee - Section
5.3(ff)
I - Form of Officer's Certificate - Section 5.5
J - [Reserved]
iv
K - Description of Material Litigation - Section 6.2(d)
L - State of Incorporation/Formation and Principal Place of Business of
Guarantor - Section 6.2(i)
Appendix A - Rules of Usage and Definitions
v
PARTICIPATION AGREEMENT
THIS PARTICIPATION AGREEMENT dated as of September 27, 1999 (as amended,
modified, extended, supplemented, restated and/or replaced from time to time,
this "Agreement") is by and among FRANKLIN TEMPLETON CORPORATE SERVICES, INC., a
Delaware corporation (the "Lessee" or the "Construction Agent"); FRANKLIN
RESOURCES, INC., a Delaware corporation, as guarantor (the "Guarantor"); FIRST
SECURITY BANK, NATIONAL ASSOCIATION, a national banking association, not
individually (in its individual capacity, the "Trust Company"), except as
expressly stated herein, but solely as the Owner Trustee under the FRI Trust
1999-1 (the "Owner Trustee", the "Borrower" or the "Lessor"); the various banks
and other lending institutions which are parties hereto from time to time as
holders of certificates issued with respect to the FRI Trust 1999-1 (subject to
the definition of Holders in Appendix A hereto, individually, a "Holder" and
collectively, the "Holders", it being understood that all obligations of the
Holders set forth herein and in the other Operative Agreements are personal
obligations of the Holders undertaken in their individual capacities); the
various banks and other lending institutions which are parties hereto from time
to time as lenders (subject to the definition of Lenders in Appendix A hereto,
individually, a "Lender" and collectively, the "Lenders"); and BANK OF AMERICA,
N.A., a national banking association, as the agent for the Lenders and
respecting the Security Documents, as the agent for the Lenders and the Holders,
to the extent of their interests (in such capacity, the "Agent"). Capitalized
terms used but not otherwise defined in this Agreement shall have the meanings
set forth in Appendix A hereto.
In consideration of the mutual agreements herein contained and other good
and valuable consideration, the receipt of which is hereby acknowledged, the
parties hereto hereby agree as follows:
SECTION 1. THE LOANS.
Subject to the terms and conditions of this Agreement and the other
Operative Agreements and in reliance on the representations and warranties of
each of the parties hereto contained herein or made pursuant hereto, the Lenders
have agreed to make Loans to the Lessor from time to time in an aggregate
principal amount of up to the aggregate amount of the Commitments of the Lenders
in order for the Lessor to acquire the Properties and certain Improvements, to
develop and construct certain Improvements in accordance with the Agency
Agreement and the terms and provisions hereof and for the other purposes
described herein, and in consideration of the receipt of proceeds of the Loans,
the Lessor will issue the Notes. The Loans shall be made and the Notes shall be
issued pursuant to the Credit Agreement. Pursuant to Section 5 of this Agreement
and Section 2 of the Credit Agreement, the Loans will be made to the Lessor from
time to time at the request of the Construction Agent in consideration for the
Construction Agent agreeing for the benefit of the Lessor, pursuant to the
Agency Agreement, to acquire the Properties, to acquire the Equipment, to
construct certain Improvements and to cause the Lessee to lease the Properties,
each in accordance with the Agency Agreement and the other Operative Agreements.
The Loans and the obligations of the Lessor under the Credit Agreement shall be
secured by the Collateral.
SECTION 2. HOLDER ADVANCES.
Subject to the terms and conditions of this Agreement and the other
Operative Agreements and in reliance on the representations and warranties of
each of the parties hereto contained herein or made pursuant hereto, on each
date Advances are requested to be made in accordance with Section 5 hereof, each
Holder shall make a Holder Advance on a pro rata basis to the Lessor with
respect to the FRI Trust 1999-1 based on its Holder Commitment in an amount in
immediately available funds such that the aggregate of all Holder Advances on
such date shall be three percent (3%) of the amount of the Requested Funds on
such date; provided, that no Holder shall be obligated for any Holder Advance in
excess of its pro rata share of the Available Holder Commitment. The aggregate
amount of Holder Advances shall be up to the aggregate amount of the Holder
Commitments. No prepayment or any other payment with respect to any Advance
shall be permitted such that the Holder Advance with respect to such Advance is
less than three percent (3%) of the outstanding amount of such Advance, except
in connection with termination or expiration of the Term or in connection with
the exercise of remedies relating to the occurrence of a Lease Event of Default.
The representations, warranties, covenants and agreements of the Holders herein
and in the other Operative Agreements are several, and not joint or joint and
several.
SECTION 3. SUMMARY OF TRANSACTIONS.
3.1. OPERATIVE AGREEMENTS.
On the date hereof, each of the respective parties hereto and thereto shall
execute and deliver this Agreement, the Lease, each applicable Ground Lease, the
Agency Agreement, the Credit Agreement, the Notes, the Trust Agreement, the
Certificates, the Security Agreement, each applicable Mortgage Instrument and
such other documents, instruments, certificates and opinions of counsel as
agreed to by the parties hereto. Effective on such date, the obligations of
Lessee and Guarantor under that certain Indemnification Agreement, dated as of
July 1, 1999, among the Owner Trustee, the Lessee, the Guarantor and Bank of
America National Trust and Savings Association (a predecessor to Bank of
America, N.A.), shall be null, void and of no further force or effect.
3.2. PROPERTY PURCHASE.
On each Property Closing Date and subject to the terms and conditions of
this Agreement (a) the Holders will each make a Holder Advance in accordance
with Sections 2 and 5 of this Agreement and the terms and provisions of the
Trust Agreement, (b) the Lenders will each make Loans in accordance with
Sections 1 and 5 of this Agreement and the terms and provisions of the Credit
Agreement, (c) the Lessor will purchase and acquire good and marketable title to
or ground lease pursuant to a Ground Lease, the applicable Property, each to be
within an Approved State, identified by the Construction Agent, in each case
pursuant to a Deed, Bill of Sale or Ground Lease, as the case may be, and grant
2
the Agent a lien on such Property by execution of the required Security
Documents, (d) the Agent, the Lessee and the Lessor shall execute and deliver a
Lease Supplement relating to such Property and (e) the Basic Term shall commence
with respect to such Property.
3.3. CONSTRUCTION OF IMPROVEMENTS; COMMENCEMENT OF BASIC RENT.
Construction Advances will be made with respect to particular Improvements
to be constructed and with respect to ongoing Work regarding the Equipment and
construction of particular Improvements, in each case, pursuant to the terms and
conditions of this Agreement and the Agency Agreement. The Construction Agent
will act as a construction agent on behalf of the Lessor respecting the Work
regarding the Equipment, the construction of such Improvements and the
expenditures of the Construction Advances related to the foregoing. The
Construction Agent shall promptly notify the Lessor upon Completion of the
Improvements and the Lessee shall commence to pay Basic Rent as of the Rent
Commencement Date.
3.4. RATABLE INTERESTS OF THE LENDERS.
Each Lender agrees at all times (a) to hold the same ratable portion of the
aggregate Lender Commitment for Tranche A Loans and the aggregate Lender
Commitment for Tranche B Loans and (b) to make advances consistent with such
committed amounts referenced in Section 3.4(a) in accordance with the
requirements of the Operative Agreements.
3.5. PERMITTED FACILITY.
The Credit Parties, the Owner Trustee, the Agent, the Lenders and the
Holders hereby acknowledge and agree that notwithstanding anything to the
contrary in the Operative Agreements:
(a) There shall be only one Property acquired by the Owner Trustee and
developed by the Construction Agent and leased by the Lessee pursuant to
the Operative Agreements, which Property is the Permitted Facility, which
shall be constructed on the Land described in Schedule 1 attached hereto
(subject to the provisions of Section 8.8(b) of this Agreement, relating to
the confinement of the Land to the Leased Parcel, as described therein);
(b) There shall be only one Property Closing Date which shall occur on
the Initial Closing Date;
(c) In the event of any conflict or inconsistency of the provisions of
this Section 3.5 and the provisions of any of the Operative Agreements
(including without limitation the definitions of terms set forth in
Appendix A to this Agreement), the provisions of this Section 3.5 shall
govern and control.
3
3.6. SOLE LEAD ARRANGER, BOOK MANAGER AND CO-SYNDICATION AGENTS HAVE
LIMITED OBLIGATION.
Notwithstanding that Banc of America Securities, LLC is referenced on the
first page of this Agreement as the sole lead arranger and book manager and that
The Bank of New York and The Chase Manhattan Bank are referenced on the first
page of this Agreement as co-syndication agents, none of those entities (in the
referenced capacities) shall have any obligation under any of the Operative
Agreements except to perform the obligations of an Indemnified Person in
accordance with the provisions of Section 11.
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 Moore & Van Allen, PLLC,
Charlotte, North Carolina, or at such other location as may be determined by the
Lessor, the Agent and the Lessee.
4.2. INITIAL CLOSING DATE; PROPERTY CLOSING DATES; ACQUISITION
ADVANCES; CONSTRUCTION ADVANCES.
The Construction Agent shall deliver to the Agent a requisition (a
"Requisition"), in the form attached hereto as Exhibit A in connection with (a)
the Transaction Expenses and other fees, expenses and disbursements payable,
pursuant to Section 7.1, by the Lessor and (b) each Acquisition Advance pursuant
to Section 5.3 and (c) each Construction Advance pursuant to Section 5.4. No
Requisition shall be required for the Lenders and the Holders to make Advances
pursuant to or in connection with Sections 7.1(a), 7.1(b) and 11.8 or to fund
amounts pursuant to Section 18.1 of the Lease.
SECTION 5. FUNDING OF ADVANCES; CONDITIONS PRECEDENT;
REPORTING REQUIREMENTS ON COMPLETION DATE;
THE LESSEE'S DELIVERY OF NOTICES; RESTRICTIONS ON LIENS.
5.1. GENERAL.
(a) To the extent funds have been advanced to the Lessor as Loans by
the Lenders and to the Lessor as Holder Advances by the Holders, the Lessor
will use such funds from time to time in accordance with the terms and
conditions of this Agreement and the other Operative Agreements (i) at the
direction of the Construction Agent to acquire the Properties in accordance
with the terms of this Agreement, the Agency Agreement and the other
Operative Agreements and to pay during the Construction Period for each
Construction Period Property, as applicable, all Hard Costs, Soft Costs,
costs of ownership and operation of such Construction Period Property
(including, without limitation, real estate taxes, insurance, utilities and
the sums payable by the Lessee under Section 3.3 of the Lease and Section
4
8.3(q) hereof as a result of Lessee's agreement to pay the amounts payable
by the ground lessee in connection with the commencement of the Ground
Lease) and all ground rent and any other sums payable under the Ground
Lease by the ground lessee thereunder (to the extent such obligations are
payable by the Lessee under the Lease), (ii) to make Advances to the
Construction Agent to permit the acquisition, testing, engineering,
installation, development, construction, modification, design, and
renovation, as applicable, of the Properties (or components thereof) in
accordance with the terms of the Agency Agreement and the other Operative
Agreements (including, in connection with an Acquisition Advance, to pay or
reimburse Lessee for such costs incurred prior to the applicable Property
Closing Date, as such costs are listed on the Requisition relating to such
Acquisition Advance) and (iii) to pay Transaction Expenses, fees, expenses
and other disbursements payable by the Lessor under Sections 7.1(a), 7.1(b)
and 11.8 or to fund amounts pursuant to Section 18.1 of the Lease.
(b) In lieu of the payment of interest on the Loans and Holder Yield
on the Holder Advances on any Scheduled Interest Payment Date with respect
to any Property during the period prior to the Rent Commencement Date with
respect to such Property and subject to Section 5.11, (i) each Lender's
Loan shall automatically be increased by the amount of interest accrued and
unpaid on such Loan for such period (except to the extent that at any time
such increase would cause such Lender's Loan to exceed such Lender's
Available Commitment, in which case the Lessee shall pay such excess amount
to such Lender in immediately available funds on the date such Lender's
Available Commitment was exceeded), and (ii) each Holder's Holder Advance
shall automatically be increased by the amount of Holder Yield accrued and
unpaid on such Holder Advance for such period (except to the extent that at
any time such increase would cause the Holder Advance of such Holder to
exceed such Holder's Available Holder Commitment, in which case the Lessee
shall pay such excess amount to such Holder in immediately available funds
on the date the Available Holder Commitment of such Holder was exceeded).
Such increases in a Lender's Loan and a Holder's Holder Advance shall occur
without any disbursement of funds by any Person.
5.2. PROCEDURES FOR FUNDING.
(a) The Construction Agent shall designate the date for Advances
hereunder in accordance with the terms and provisions hereof; provided,
however, it is understood and agreed that no more than two (2) Advances
(excluding any conversion and/or continuation of any Loan or Holder
Advance) may be requested during any calendar month and no such designation
from the Construction Agent is required for funding of Transaction
Expenses, fees, expenses and other disbursements payable by the Lessor
pursuant to or in connection with Sections 7.1(a), 7.1(b) and 11.8 or to
fund amounts pursuant to Section 18.1 of the Lease. Not less than (i) three
(3) Business Days prior to the date that the first Advance is requested
hereunder and (ii) three (3) Business Days prior to the date on which any
subsequent Acquisition Advance or Construction Advance is to be made, the
Construction Agent shall deliver to the Agent, (A) with respect to the date
5
that the first Advance is requested hereunder and each subsequent
Acquisition Advance, a Requisition as described in Section 4.2 hereof
(including without limitation a legal description of the Land covered by
the Ground Lease, a schedule of the Improvements, if any, and a schedule of
the Equipment, if any, acquired or to be acquired on such date, and a
schedule of the Work, if any, to be performed, each of the foregoing in a
form reasonably acceptable to the Agent) and (B) with respect to each
Construction Advance, a Requisition identifying (among other things) the
Property to which such Construction Advance relates.
(b) Each Requisition shall: (i) be irrevocable, (ii) request funds in
an amount that is not in excess of the total aggregate of the Available
Commitments plus the Available Holder Commitments at such time, and (iii)
request that the Holders make Holder Advances and that the Lenders make
Loans to the Lessor for the payment of Transaction Expenses, Property
Acquisition Costs (in the case of an Acquisition Advance) or other Property
Costs (in the case of a Construction Advance) that have previously been
incurred or are to be incurred on the date of such Advance to the extent
such were not subject to a prior Requisition or other Property Costs as are
otherwise requested pursuant to Section 5.13, in each case as specified in
the Requisition.
(c) Subject to the satisfaction of the conditions precedent set forth
in Sections 5.3 or 5.4, as applicable, on each Property Closing Date or the
date on which the Construction Advance is to be made, as applicable, (i)
the Lenders shall make Loans based on their respective Lender Commitments
to the Lessor in an aggregate amount equal to ninety-seven percent (97%) of
the Requested Funds specified in any Requisition plus any additional amount
of Transaction Expenses as referenced in Sections 7.1(a) and 7.1(b), any
additional amount respecting any indemnity payment as referenced in Section
11.8 and any additional amount pursuant to Section 18.1 of the Lease,
unless any such funding of Transaction Expenses or any indemnity payment is
declined in writing by each Lender and each Holder ratably between the
Tranche A Lenders and the Tranche B Lenders with the Tranche A Lenders
funding eight-five percent (85%) of the Requested Funds and the Tranche B
Lenders funding twelve percent (12%) of the Requested Funds), up to an
aggregate principal amount equal to the aggregate of the Available
Commitments, (ii) the Holders shall make Holder Advances based on their
respective Holder Commitments in an aggregate amount equal to three percent
(3%) of the Requested Funds specified in such Requisition plus any
additional amount of Transaction Expenses as referenced in Sections 7.1(a)
and 7.1(b), any additional amount respecting any indemnity payment as
referenced in Section 11.8 and any additional amount pursuant to Section
18.1 of the Lease, unless any such funding of Transaction Expenses or any
indemnity payment is declined in writing by each Lender and each Holder, up
to the aggregate advanced amount equal to the aggregate of the Available
Holder Commitments; and (iii) the total amount of such Loans and Holder
Advances made on such date shall (x) be used by the Lessor to pay Property
Costs including Transaction Expenses within three (3) Business Days of the
receipt by the Lessor of such Advance or (y) be advanced by the Lessor on
the date of such Advance to the Construction Agent or the Lessee to pay
Property Costs, as applicable. Notwithstanding that the Operative
6
Agreements (including the previous provisions of this Section 5.2(c)) state
that Advances shall be directed to the Lessor, each Advance shall in fact
be directed to the Construction Agent (for the benefit of the Lessor) and
applied by the Construction Agent (for the benefit of the Lessor) pursuant
to the requirements imposed on the Lessor under the Operative Agreements.
(d) With respect to an Advance obtained by the Lessor to pay for
Property Costs and/or Transaction Expenses or other costs payable under
Sections 7.1(a), 7.1(b) or 11.8 hereof or any additional amount pursuant to
Section 18.1 of the Lease and not expended by the Lessor for such purpose
on the date of such Advance, such amounts shall be held by the Lessor (or
the Agent on behalf of the Lessor) until the applicable closing date or
payment date or, if such closing date or payment date does not occur within
three (3) Business Days of the date of the Lessor's receipt of such
Advance, shall be applied regarding the applicable Advance to repay the
Lenders and the Holders and, subject to the terms hereof, and of the Credit
Agreement and the Trust Agreement, shall remain available for future
Advances. Any such amounts held by the Lessor (or the Agent on behalf of
the Lessor) shall be subject to the lien of the Security Agreement. In
addition, any amount prepaid by the Construction Agent regarding any
Advance made pursuant to Section 5.13 hereof also shall remain available
for future Advances.
(e) All Operative Agreements which are to be delivered to the Lessor,
the Agent, the Lenders or the Holders shall be delivered to the Agent, on
behalf of the Lessor, the Agent, the Lenders or the Holders, and such items
(except for Notes, Certificates, Bills of Sale, the Ground Leases and
chattel paper originals, with respect to which in each case there shall be
only one original) shall be delivered with originals sufficient for the
Lessor, the Agent, each Lender and each Holder. All other items which are
to be delivered to the Lessor, the Agent, the Lenders or the Holders shall
be delivered to the Agent, on behalf of the Lessor, the Agent, the Lenders
or the Holders, and such other items shall be held by the Agent. To the
extent any such other items are requested in writing from time to time by
the Lessor, any Lender or any Holder, the Agent shall provide a copy of
such item to the party requesting it.
(f) Notwithstanding the completion of any closing under this Agreement
pursuant to Sections 5.3 or 5.4, each condition precedent in connection
with any such closing may be subsequently enforced by the Agent (unless
such has been expressly waived in writing by the Agent).
5.3. CONDITIONS PRECEDENT FOR THE LESSOR, THE AGENT, THE LENDERS AND THE
HOLDERS RELATING TO THE INITIAL CLOSING DATE AND THE ADVANCE OF FUNDS FOR THE
ACQUISITION OF A PROPERTY.
The obligations (i) on the Initial Closing Date of the Lessor, the Agent,
the Lenders and the Holders to enter into the transactions contemplated by this
Agreement, including without limitation the obligation to execute and deliver
the applicable Operative Agreements to which each is a party on the Initial
Closing Date, (ii) on the Initial Closing Date of the Holders to make Holder
7
Advances and of the Lenders to make Loans in order to pay Transaction Expenses,
fees, expenses and other disbursements payable by the Lessor under Sections 5.13
and 7.1(a) of this Agreement and (iii) on a Property Closing Date for the
purpose of providing funds to the Lessor necessary to pay the Transaction
Expenses, fees, expenses and other disbursements payable by the Lessor under
Section 7.1(b) of this Agreement and to acquire or ground lease a Property (an
"Acquisition Advance"), in each case (with regard to the foregoing Sections
5.3(i), (ii) and (iii)) are subject to the satisfaction or waiver of the
following conditions precedent on or prior to the Initial Closing Date or the
applicable Property Closing Date, as the case may be (to the extent such
conditions precedent require the delivery of any agreement, certificate,
instrument, memorandum, legal or other opinion, appraisal, commitment, title
insurance commitment, lien report or any other document of any kind or type,
such shall be in form and substance satisfactory to the Agent, in its reasonable
discretion; notwithstanding the foregoing, the obligations of each party shall
not be subject to any conditions contained in this Section 5.3 which are
required to be performed by such party):
(a) subject to Section 8.10, the correctness of the representations
and warranties of the parties to this Agreement contained herein, in each
of the other Operative Agreements and each certificate delivered pursuant
to any Operative Agreement on each such date;
(b) subject to Section 8.10, the performance by the parties to this
Agreement of their respective agreements contained herein and in the other
Operative Agreements to be performed by them on or prior to each such date;
(c) the Agent shall have received a fully executed counterpart copy of
the Requisition, appropriately completed;
(d) title to each such Property shall conform to the representations
and warranties set forth in Section 6.2(l) hereof;
(e) the Construction Agent shall have delivered to the Agent a good
standing certificate for the Construction Agent in the state where each
such Property is located, the Deed with respect to the Land and existing
Improvements (if any), a copy of the Ground Lease (if any), and a copy of
the Bill of Sale with respect to the Equipment (if any), respecting such of
the foregoing as are being acquired or ground leased on each such date with
the proceeds of the Loans and Holder Advances or which have been previously
acquired or ground leased with the proceeds of the Loans and Holder
Advances and such Land, existing Improvements (if any) and Equipment (if
any) shall be located in an Approved State;
(f) there shall not have occurred and be continuing any Default or
Event of Default under any of the Operative Agreements and no Default or
Event of Default under any of the Operative Agreements will have occurred
after giving effect to the Advance requested by each such Requisition;
8
(g) the Construction Agent shall have delivered to the Agent title
insurance commitments to issue policies respecting each such Property, with
such endorsements as the Agent deems necessary, in favor of the Lessor and
the Agent from a title insurance company acceptable to the Agent, but only
with such title exceptions thereto as are acceptable to the Agent;
(h) the Construction Agent shall have delivered to the Agent an
environmental site assessment respecting each such Property prepared by an
independent recognized professional acceptable to the Agent and evidencing
no pre-existing environmental condition with respect to which there is more
than a remote risk of loss;
(i) the Construction Agent shall have delivered to the Agent a survey
(with a flood hazard certification) respecting each such Property prepared
by (i) an independent recognized professional acceptable to the Agent and
(ii) in a manner and including such information as is required by the
Agent;
(j) unless such an opinion has previously been delivered with respect
to a particular state, the Construction Agent shall have caused to be
delivered to the Agent a legal opinion in a form that is acceptable to the
Agent with respect to local law real property issues respecting the state
in which each such Property is located addressed to the Lessor, the Agent,
the Lenders and the Holders, from counsel located in the state where each
such Property is located, prepared by counsel acceptable to the Agent;
(k) [Reserved];
(l) the Construction Agent shall have delivered to the Agent invoices
for, or other reasonably satisfactory evidence of, the various Transaction
Expenses and other fees, expenses and disbursements referenced in Sections
7.1(a) or 7.1(b) of this Agreement, as appropriate;
(m) the Lessor and the Construction Agent shall have caused to be
delivered to the Agent a Mortgage Instrument (in such form as is acceptable
to the Agent, with revisions as necessary to conform to applicable state
law), Lessor Financing Statements and Lender Financing Statements
respecting each such Property, all fully executed and in recordable form;
(n) the Lessee shall have delivered to the Agent with respect to each
such Property a Lease Supplement and a memorandum (or short form lease)
regarding the Lease and such Lease Supplement (such memorandum or short
form lease to be in the form attached to the Lease as Exhibit B or in such
other form as is acceptable to the Agent, with modifications as necessary
to conform to applicable state law, and in form suitable for recording);
(o) with respect to each Acquisition Advance, the sum of the Available
Commitment plus the Available Holder Commitment (after giving effect to the
9
Acquisition Advance) will be sufficient to pay the costs identified on the
Construction Budget (exclusive of tenant improvements not to be financed
with Advances);
(p) if any such Property is subject to a Ground Lease, the
Construction Agent shall have caused a lease memorandum (or short form
lease) to be delivered to the Agent for such Ground Lease;
(q) counsel (acceptable to the Agent) for the ground lessor of each
such Property subject to a Ground Lease shall have issued to the Lessor,
the Agent, the Lenders and the Holders, its opinion;
(r) the Construction Agent shall have delivered to the Agent a
preliminary Construction Budget for each such Property, if applicable;
(s) the Construction Agent shall have provided evidence to the Agent
of insurance with respect to each such Property as provided in the Lease
(provided, casualty insurance shall not be required until construction of
the Improvements shall have commenced);
(t) the Construction Agent shall have caused an Appraisal regarding
each such Property (showing an appraised value for such Property as
completed equal to at least ninety percent (90%) of the budgeted Property
Cost for such Property) to be provided to the Agent from an appraiser
selected by the Agent;
(u) the Construction Agent shall cause (i) Uniform Commercial Code
lien searches, tax lien searches and judgment lien searches regarding the
Lessee to be conducted (and copies thereof to be delivered to the Agent) in
such jurisdictions as determined by the Agent by a nationally recognized
search company acceptable to the Agent and (ii) the liens referenced in
such lien searches which affect the Collateral and are objectionable to the
Agent to be either removed or otherwise handled in a manner satisfactory to
the Agent;
(v) all taxes, fees and other charges in connection with the
execution, delivery, recording, filing and registration of the Operative
Agreements and/or documents related thereto shall have been paid or
provisions for such payment shall have been made to the satisfaction of the
Agent;
(w) [Reserved];
(x) each of the Operative Agreements to be entered into on such date
shall have been duly authorized, executed and delivered by the parties
thereto, and shall be in full force and effect, and the Agent shall have
received a fully executed copy of each of the Operative Agreements;
10
(y) since the date of the most recent audited financial statements (as
delivered pursuant to the requirements of the Lessee Credit Agreement) of
the Guarantor, there shall not have occurred any event, condition or state
of facts which has had or could reasonably be expected to have a Material
Adverse Effect, other than as specifically contemplated by the Operative
Agreements;
(z) as of the Initial Closing Date only, the Agent shall have received
an Officer's Certificate, dated as of the Initial Closing Date, of the
Lessee in the form attached hereto as Exhibit C or in such other form as is
acceptable to the Agent stating that (i) each and every representation and
warranty of each Credit Party contained in the Operative Agreements to
which it is a party is true and correct on and as of the Initial Closing
Date; (ii) no Default or Event of Default by any Credit Party has occurred
and is continuing under any Operative Agreement; (iii) each Operative
Agreement to which any Credit Party is a party is in full force and effect
with respect to it; and (iv) each Credit Party has duly performed and
complied with all covenants, agreements and conditions contained herein or
in any Operative Agreement required to be performed or complied with by it
on or prior to the Initial Closing Date;
(aa) as of the Initial Closing Date only, the Agent shall have
received (i) a certificate of the Secretary or an Assistant Secretary of
each Credit Party, dated as of the Initial Closing Date, in the form
attached hereto as Exhibit D or in such other form as is acceptable to the
Agent attaching and certifying as to (1) the resolutions of the Board of
Directors of such Credit Party duly authorizing the execution, delivery and
performance by such Credit Party of each of the Operative Agreements to
which it is or will be a party, (2) the articles of incorporation of such
Credit Party certified as of a recent date by the Secretary of State of its
state of incorporation and its by-laws and (3) the incumbency and signature
of persons authorized to execute and deliver on behalf of such Credit Party
the Operative Agreements to which it is or will be a party and (ii) a good
standing certificate (or local equivalent) from the respective states where
such Credit Party is incorporated and where the principal place of business
of such Credit Party is located as to its good standing in each such state.
To the extent any Credit Party is a partnership, a limited liability
company or is otherwise organized, such Person shall deliver to the Agent
(in form and substance satisfactory to the Agent) as of the Initial Closing
Date (A) a certificate regarding such Person and any corporate general
partners covering the matters described in Exhibit D and (B) a good
standing certificate, a certificate of limited partnership or a local
equivalent of either of the foregoing, as applicable;
(bb) [Reserved];
(cc) as of the Initial Closing Date only, the Agent shall have
received an Officer's Certificate of the Lessor dated as of the Initial
Closing Date in the form attached hereto as Exhibit E or in such other form
as is acceptable to the Agent, stating that (i) each and every
representation and warranty of the Lessor contained in the Operative
Agreements to which it is a party is true and correct on and as of the
Initial Closing Date, (ii) each Operative Agreement to which the Lessor is
11
a party is in full force and effect with respect to it and (iii) the Lessor
has duly performed and complied with all covenants, agreements and
conditions contained herein or in any Operative Agreement required to be
performed or complied with by it on or prior to the Initial Closing Date;
(dd) as of the Initial Closing Date only, the Agent shall have
received (i) a certificate of the Secretary, an Assistant Secretary, Trust
Officer or Vice President of the Trust Company in the form attached hereto
as Exhibit F or in such other form as is acceptable to the Agent, attaching
and certifying as to (A) the signing resolutions duly authorizing the
execution, delivery and performance by the Lessor of each of the Operative
Agreements to which it is or will be a party, (B) its articles of
association or other equivalent charter documents and its by-laws, as the
case may be, certified as of a recent date by an appropriate officer of the
Trust Company and (C) the incumbency and signature of persons authorized to
execute and deliver on its behalf the Operative Agreements to which it is a
party and (ii) a good standing certificate from the Office of the
Comptroller of the Currency;
(ee) as of the Initial Closing Date only, counsel for the Lessor
acceptable to the Agent shall have issued to the Lessee, the Holders, the
Lenders and the Agent its opinion in the form attached hereto as Exhibit G
or in such other form as is reasonably acceptable to the Agent;
(ff) as of the Initial Closing Date only, the Construction Agent shall
have caused to be delivered to the Agent legal opinions in the form
attached hereto as Exhibit H or in such other forms as are acceptable to
the Agent, addressed to the Lessor, the Agent, the Lenders and the Holders,
from counsel acceptable to the Agent; and
(gg) as of the Initial Closing Date only, the Construction Agent shall
cause (i) tax lien searches and judgment lien searches regarding each
Credit Party to be conducted (and copies thereof to be delivered to the
Agent) in such jurisdictions as determined by the Agent by a nationally
recognized search company acceptable to the Agent and (ii) the liens
referenced in such lien searches which affect the Collateral and are
objectionable to the Agent to be either removed or otherwise handled in a
manner satisfactory to the Agent.
5.4. CONDITIONS PRECEDENT FOR THE LESSOR, THE AGENT, THE LENDERS AND
THE HOLDERS RELATING TO THE ADVANCE OF FUNDS AFTER THE ACQUISITION ADVANCE.
The obligations of the Holders to make Holder Advances, and the Lenders to
make Loans in connection with all requests for Advances subsequent to the
acquisition of a Property (and to pay the Transaction Expenses, fees, expenses
and other disbursements payable by the Lessor under Section 7.1 of this
Agreement in connection therewith) are subject to the satisfaction or waiver of
the following conditions precedent (to the extent such conditions precedent
require the delivery of any agreement, certificate, instrument, memorandum,
legal or other opinion, appraisal, commitment, title insurance commitment, lien
report or any other document of any kind or type, such shall be in form and
substance satisfactory to the Agent, in its reasonable discretion;
12
notwithstanding the foregoing, the obligations of each party shall not be
subject to any conditions contained in this Section 5.4 which are required to be
performed by such party):
(a) subject to Section 8.10, the correctness on such date of the
representations and warranties of the parties to this Agreement contained
herein, in each of the other Operative Agreements and in each certificate
delivered pursuant to any Operative Agreement;
(b) subject to Section 8.10, the performance by the parties to this
Agreement of their respective agreements contained herein and in the other
Operative Agreements to be performed by them on or prior to each such date;
(c) the Agent shall have received a fully executed counterpart of the
Requisition, appropriately completed;
(d) based upon the applicable Construction Budget which shall satisfy
the requirements of this Agreement (as the same may be revised by the
Construction Agent in accordance with the Operative Agreements), the
Available Commitments and the Available Holder Commitment will be
sufficient to complete the Improvements (exclusive of tenant improvements
not to be financed with Advances);
(e) subject to Section 8.10, there shall not have occurred and be
continuing any Default or Event of Default under any of the Operative
Agreements and no Default or Event of Default under any of the Operative
Agreements will have occurred after giving effect to the Construction
Advance requested by the applicable Requisition;
(f) the title insurance policy delivered in connection with the
requirements of Section 5.3(g) shall provide for (or shall be endorsed to
provide for) insurance in an amount at least equal to ninety percent (90%)
of the maximum total Property Cost indicated by the Construction Budget
referred to in subparagraph (d) above and there shall be no title change or
exception objectionable to the Agent (other than Permitted Liens);
(g) the Construction Agent shall have delivered to the Agent copies of
the Plans and Specifications for the applicable Improvements;
(h) if reasonably required by the Agent, the Construction Agent shall
have delivered to the Agent invoices for, or other reasonably satisfactory
evidence of, any Transaction Expenses and other fees, expenses and
disbursements referenced in Section 7.1(b) that are to be paid with the
Advance;
(i) if reasonably required by the Agent, the Construction Agent shall
have delivered, or caused to be delivered to the Agent, invoices, Bills of
Sale or other documents acceptable to the Agent, in each case with regard
13
to any Equipment or other components of such Property then being acquired
with the proceeds of the Loans and Holder Advances and naming the Lessor as
purchaser and transferee; and
(j) all taxes, fees and other charges in connection with the
execution, delivery, recording, filing and registration of the Operative
Agreements shall have been paid or provisions for such payment shall have
been made to the satisfaction of the Agent.
5.5. ADDITIONAL REPORTING AND DELIVERY REQUIREMENTS ON COMPLETION DATE AND
ON CONSTRUCTION PERIOD TERMINATION DATE.
On or prior to the Completion Date for each Property, the Construction
Agent shall deliver to the Agent an Officer's Certificate in the form attached
hereto as Exhibit I specifying (a) the address for such Property, (b) the
Completion Date for such Property, (c) the aggregate Property Cost for such
Property, (d) a breakdown into major budgetary categories of the Property Cost
figures and (e) that all representations and warranties of the Construction
Agent and Lessee in each of the Operative Agreements and each certificate
delivered pursuant thereto are true and correct as of the Completion Date. The
Agent shall have the right to contest the information contained in such
Officer's Certificate. Furthermore, promptly following, but not more than ten
(10) Business Days after, the Completion Date for each Property (except with
respect to the insurance certificate referenced in clause (y) below, which must
be delivered on or prior to such Completion Date), the Construction Agent shall
deliver or cause to be delivered to the Agent (unless previously delivered to
the Agent) originals of the following, each of which shall be in form and
substance acceptable to the Agent, in its reasonable discretion: (w) a title
insurance endorsement regarding the title insurance policy delivered in
connection with the requirements of Section 5.3(g), but only to the extent such
endorsement is necessary to provide for insurance in an amount at least equal to
ninety percent (90%) of the maximum total Property Cost and, if endorsed, the
endorsement shall not include a title change or exception objectionable to the
Agent; (x) an as-built survey for such Property, (y) insurance certificates
respecting such Property as required hereunder and under the Lease Agreement,
and (z) if requested by the Agent, amendments to the Lessor Financing Statements
executed by the appropriate parties. In addition, on the Completion Date for
such Property the Construction Agent covenants and agrees that the recording
fees, documentary stamp taxes or similar amounts required to be paid in
connection with the related Mortgage Instrument shall be paid in an amount
required by applicable law, subject, however, to the obligations of the Lenders
and the Holders to fund such costs to the extent required pursuant to Section
7.1.
5.6. THE CONSTRUCTION AGENT DELIVERY OF CONSTRUCTION BUDGET MODIFICATIONS.
The Construction Agent covenants and agrees to deliver to the Agent each
month notification of any modification to any Construction Budget regarding any
Property if such modification increases the cost to construct such Property by
either (x) ten percent (10%) of the original Construction Budget when measured
in the aggregate with all prior modifications to the Construction Budget for
such Property or (y) an amount which exceeds the sum of the Available
Commitments plus the Available Holder Commitments; provided no Construction
Budget may be increased unless (a) the title insurance policies referenced in
14
Section 5.3(g) are also modified or endorsed, if necessary, to provide for
insurance in an amount that satisfies the requirements of Section 5.4(f) of this
Agreement and (b) after giving effect to any such amendment, the Construction
Budget remains in compliance with the requirements of Section 5.4(d) of this
Agreement.
5.7. RESTRICTIONS ON LIENS.
On each Property Closing Date, the Construction Agent shall cause each
Property acquired by the Lessor on such date to be free and clear of all Liens
except those Liens referenced in subsection (a) of the definition of Prior
Liens. On each date a Property is either sold to a third party in accordance
with the terms of the Operative Agreements or, pursuant to Section 22.1(a) of
the Lease Agreement, retained by the Lessor, the Lessee shall cause such
Property to be free and clear of all Liens (other than those Liens referenced in
subsection (b) of the definition of Prior Liens).
5.8. [RESERVED].
5.9. MAINTENANCE OF THE LESSEE AS A WHOLLY-OWNED ENTITY.
From the Initial Closing Date and thereafter until such time as all
obligations of all Credit Parties under the Operative Agreements have been
satisfied and performed in full, Franklin Resources, Inc. shall retain the
Lessee as a Wholly-Owned Entity.
5.10. PAYMENTS.
All payments of principal, interest, Holder Advances, Holder Yield and
other amounts to be made by the Construction Agent or the Lessee under this
Agreement or any other Operative Agreements (excluding Excepted Payments which
shall be paid directly to the party to whom such payments are owed) shall be
made to the Agent at the office designated by the Agent from time to time in
Dollars and in immediately available funds, without setoff, deduction, or
counterclaim. Subject to the definition of "Interest Period" in Appendix A
attached hereto, whenever any payment under this Agreement or any other
Operative Agreements shall be stated to be due on a day that is not a Business
Day, such payment may be made on the next succeeding Business Day, and such
extension of time in such case shall be included in the computation of interest,
Holder Yield and fees payable pursuant to the Operative Agreements, as
applicable and as the case may be.
5.11. UNILATERAL RIGHT TO INCREASE THE HOLDER COMMITMENTS AND THE LENDER
COMMITMENTS.
Notwithstanding any other provision of any Operative Agreement or any
objection by any Person (including without limitation any objection by any
Credit Party), (a) each Holder, in its sole discretion, may unilaterally elect
to increase its Holder Commitment in order to fund amounts due and owing
pursuant to Sections 7.1(a), 7.1(b) and/or 11.8 and/or any additional amount
pursuant to Section 18.1 of the Lease and (b) each Lender, in its sole
15
discretion, may unilaterally elect to increase its Lender Commitment in order to
fund amounts due and owing pursuant to Sections 7.1(a), 7.1(b) and/or 11.8
and/or any additional amount pursuant to Section 18.1 of the Lease.
5.12. PAY-OUT OF LENDERS AND HOLDERS NOT CONSENTING TO ANY RENEWAL TERM.
No Lender or Holder shall be required to continue its participation in the
transactions evidenced by the Operative Agreements during any Renewal Term
without the prior consent of such Financing Party. To the extent any Lender or
Holder does not expressly agree to continue its participation in such
transactions during any Renewal Term but the Lessee has otherwise obtained
financing for such Renewal Term, then on the expiration date of the then-current
term of the Lease and prior to the commencement of such Renewal Term, each such
non-consenting Lender and Holder shall be paid all amounts then due and owing to
such party pursuant to the Operative Agreements and shall cease to have any
rights or obligations thereunder, except rights that by the terms of the
Operative Agreements survive termination of the Operative Agreements (including
without limitation rights to indemnification).
5.13. INITIAL ADVANCE MAY BE PREPAID AND REMAIN AVAILABLE FOR LATER
ADVANCES.
Notwithstanding any provisions to the contrary in the Operative Agreements
and only with respect to the initial Advance (whether made on the Initial
Closing Date or thereafter), (a) the Construction Agent may (i) submit a
Requisition and receive an Advance for Property Cost (a portion of such Property
Cost may not at that time have been incurred and may not be incurred on the
Initial Closing Date) and (ii) prepay any part of such Advance and (b) any part
of such Advance so prepaid shall remain available for future Advances.
SECTION 6. REPRESENTATIONS AND WARRANTIES.
6.1. REPRESENTATIONS AND WARRANTIES OF THE BORROWER.
Effective as of the Initial Closing Date and the date of each Advance, the
Trust Company in its individual capacity and as the Borrower, as indicated,
represents and warrants to each of the other parties hereto as follows,
provided, that the representations in the following paragraphs (h), (j) and (k)
are made solely in its capacity as the Borrower:
(a) It is a national banking association and is duly organized and
validly existing and in good standing under the laws of the United States
of America and has the power and authority to enter into and perform its
obligations under the Trust Agreement and (assuming due authorization,
execution and delivery of the Trust Agreement by the Holders) has the
corporate and trust power and authority to act as the Owner Trustee and to
enter into and perform the obligations under each of the other Operative
Agreements to which the Trust Company or the Owner Trustee, as the case may
be, is or will be a party and each other agreement, instrument and document
to be executed and delivered by it on or before such Closing Date or the
date of such Advance, as the case may be, in connection with or as
16
contemplated by each such Operative Agreement to which the Trust Company or
the Owner Trustee, as the case may be, is or will be a party;
(b) The execution, delivery and performance of each Operative
Agreement to which it is or will be a party, either in its individual
capacity or (assuming due authorization, execution and delivery of the
Trust Agreement by the Holders) as the Owner Trustee, as the case may be,
has been duly authorized by all necessary action on its part and neither
the execution and delivery thereof, nor the consummation of the
transactions contemplated thereby, nor compliance by it with any of the
terms and provisions thereof (i) does or will require any approval or
consent of any trustee or holders of any of its indebtedness or
obligations, (ii) does or will contravene any Legal Requirement relating to
its banking or trust powers, (iii) does or will contravene or result in any
breach of or constitute any default under, or (other than pursuant to the
Operative Agreements) result in the creation of any Lien upon any of its
property under, (A) its charter or by-laws, or (B) any indenture, mortgage,
chattel mortgage, deed of trust, conditional sales contract, bank loan or
credit agreement or other agreement or instrument to which it is a party or
by which it or its properties may be bound or affected, which
contravention, breach, default or Lien under clause (B) would materially
and adversely affect its ability, in its individual capacity or as the
Owner Trustee, to perform its obligations under the Operative Agreements to
which it is a party or (iv) does or will require any Governmental Action by
any Governmental Authority regulating its banking or trust powers;
(c) The Trust Agreement and, assuming the Trust Agreement is the
legal, valid and binding obligation of the Holders, each other Operative
Agreement to which the Trust Company or the Owner Trustee, as the case may
be, is or will be a party have been, or on or before such Closing Date or
the date of such Advance, as the case may be, will be, duly executed and
delivered by the Trust Company or the Owner Trustee, as the case may be,
and the Trust Agreement and each such other Operative Agreement to which
the Trust Company or the Owner Trustee, as the case may be, is a party
constitutes, or upon execution and delivery will constitute, a legal, valid
and binding obligation enforceable against the Trust Company or the Owner
Trustee, as the case may be, in accordance with the terms thereof;
(d) There is no action or proceeding pending or, to its knowledge,
threatened to which it is or will be a party, either in its individual
capacity or as the Owner Trustee, before any Governmental Authority that,
if adversely determined, would materially and adversely affect its ability,
in its individual capacity or as the Owner Trustee, to perform its
obligations under the Operative Agreements to which it is a party or would
question the validity or enforceability of any of the Operative Agreements
to which it is or will become a party;
(e) It, either in its individual capacity or as the Owner Trustee, has
not assigned or transferred any of its right, title or interest in or under
17
the Lease or the Agency Agreement or its interest in any Property or any
portion thereof, except in accordance with the Operative Agreements;
(f) No Default or Event of Default under the Operative Agreements
attributable to it has occurred and is continuing;
(g) Except as otherwise contemplated in the Operative Agreements, the
proceeds of the Loans and Holder Advances shall not be applied by the Owner
Trustee, either in its individual capacity or as the Owner Trustee, for any
purpose other than the purchase and/or lease of the Properties, the
acquisition, installation and testing of the Equipment, the construction of
Improvements, the payment of costs referred to in Section 5.1(a), Hard
Costs and Soft Costs relating to the Properties and the payment of
Transaction Expenses and the fees, expenses and other disbursements
referenced in Sections 7.1(a) and 7.1(b) of this Agreement, in each case
which accrue prior to the Rent Commencement Date with respect to a
particular Property;
(h) Neither the Owner Trustee nor any Person authorized by the Owner
Trustee to act on its behalf has offered or sold any interest in the Trust
Estate or the Notes, or in any similar security relating to a Property, or
in any security the offering of which for the purposes of the Securities
Act would be deemed to be part of the same offering as the offering of the
aforementioned securities to, or solicited any offer to acquire any of the
same from, any Person other than, in the case of the Notes, the Agent and
the Lenders, and neither the Owner Trustee nor any Person authorized by the
Owner Trustee to act on its behalf will take any action which would
subject, as a direct result of such action alone, the issuance or sale of
any interest in the Trust Estate or the Notes to the provisions of Section
5 of the Securities Act or require the qualification of any Operative
Agreement under the Trust Indenture Act of 1939, as amended;
(i) The Owner Trustee's principal place of business, chief executive
office and office where the documents, accounts and records relating to the
transactions contemplated by this Agreement and each other Operative
Agreement are kept are located at 79 South Main Street, Salt Lake City,
Utah 84111;
(j) The Owner Trustee is not engaged principally in, and does not have
as one (1) of its important activities, the business of extending credit
for the purpose of purchasing or carrying any margin stock (within the
meaning of Regulation U of the Board of Governors of the Federal Reserve
System of the United States), and no part of the proceeds of the Loans or
the Holder Advances will be used by it to purchase or carry any margin
stock or to extend credit to others for the purpose of purchasing or
carrying any such margin stock or for any purpose that violates, or is
inconsistent with, the provisions of Regulations T, U, or X of the Board of
Governors of the Federal Reserve System of the United States;
18
(k) The Owner Trustee is not an "investment company" or a company
controlled by an "investment company" within the meaning of the Investment
Company Act;
(l) Each Property is free and clear of all Lessor Liens attributable
to the Owner Trustee, either in its individual capacity or as the Owner
Trustee;
(m) Except as authorized by the Holders and consented to by the
Lenders pursuant to Section 2.2(b) of the Trust Agreement, the Owner
Trustee, in its trust capacity, is not a party to any documents,
instruments or agreements other than the Operative Agreements executed by
the Owner Trustee, in its trust capacity; and
(n) Since the Initial Closing Date, there has been no occurrence or
event which has had a material adverse effect on (i) the business, assets,
properties, financial condition, operations, prospects or rights or
interests of the Owner Trustee, which individually or in the aggregate has
caused directly or indirectly net income (as determined in accordance with
GAAP) for any fiscal quarter to be less than zero or (ii) the ability of
the Owner Trustee to perform its obligations under any Operative Agreement
to which it is a party.
6.2. REPRESENTATIONS AND WARRANTIES OF THE CREDIT PARTIES.
Effective as of the Initial Closing Date, the date of each Advance and the
Rent Commencement Date, each Credit Party represents and warrants to each of the
other parties hereto that:
(a) The Lessee has delivered to the Agent the financial statements and
other reports referred to in Sections 5.1 and 5.2 of the Lessee Credit
Agreement for the annual period ending on September 30, 1998 and the
quarterly period ending on June 30, 1999;
(b) The execution and delivery by each Credit Party of this Agreement
and the other applicable Operative Agreements as of such date and the
performance by each Credit Party of its respective obligations under this
Agreement and the other applicable Operative Agreements are within the
corporate, partnership or limited liability company (as the case may be)
powers of each Credit Party, have been duly authorized by all necessary
corporate, partnership or limited liability company (as the case may be)
action on the part of each Credit Party (including without limitation any
necessary shareholder action), have been duly executed and delivered, have
received all necessary governmental approval, and do not and will not (i)
violate any Legal Requirement which is binding on any Credit Party or any
of its Subsidiaries, (ii) contravene or conflict with, or result in a
breach of, any provision of the Articles of Incorporation, By-Laws or other
organizational documents of any Credit Party or any of its Subsidiaries or
of any agreement, indenture, instrument or other document which is binding
on any Credit Party or any of its Subsidiaries or (iii) result in, or
require, the creation or imposition of any Lien (other than pursuant to the
19
terms of the Operative Agreements) on any asset of any Credit Party or any
of its Subsidiaries;
(c) This Agreement and the other Operative Agreements executed prior
to and as of such date by any Credit Party constitute the legal, valid and
binding obligation of such Credit Party, as applicable, enforceable against
such Credit Party, as applicable, in accordance with their terms. Each
Credit Party has executed the various Operative Agreements required to be
executed by such Credit Party as of such date;
(d) There are no actions, suits or proceedings pending or, to such
Credit Party's knowledge, threatened against any Credit Party in any court
or before any other Governmental Authority (nor shall any order, judgment
or decree have been issued or proposed to be issued by any Governmental
Authority to set aside, restrain, enjoin or prevent the full performance of
any Operative Agreement or any transaction contemplated thereby) that (i)
concern any Property or any Credit Party's interest therein, (ii) question
the validity or enforceability of any Operative Agreement to which any
Credit Party is a party or the overall transaction described in the
Operative Agreements to which any Credit Party is a party or (iii) have or
could reasonably be expected to have a Material Adverse Effect; provided,
for purposes of disclosure, the Credit Parties have described the
litigation set forth on Exhibit K or otherwise have made such disclosures
as are contained in the financial statements provided from time to time in
accordance with the Operative Agreements;
(e) No Governmental Action by any Governmental Authority or other
authorization, registration, consent, approval, waiver, notice or other
action by, to or of any other Person pursuant to any Legal Requirement,
contract, indenture, instrument or agreement or for any other reason is
required to authorize or is required in connection with (i) the execution,
delivery or performance of any Operative Agreement, (ii) the legality,
validity, binding effect or enforceability of any Operative Agreement,
(iii) the acquisition, ownership, construction, completion, occupancy,
operation, leasing or subleasing of any Property or (iv) any Advance, in
each case, except those which have been obtained and are in full force and
effect or which are readily obtainable and customarily obtained at a later
time on or prior to Completion;
(f) Upon the execution and delivery of each Lease Supplement to the
Lease, (i) the Lessee will have unconditionally accepted from Lessor the
Property subject to the Lease Supplement (but without limiting Lessee's
rights against any other Person (excepting each of the Financing Parties)
on account of any aspect of the condition, quality or title thereof,
pursuant to any express or implied warranty or covenant) and will have a
valid and subsisting leasehold interest in such Property, subject only to
the Permitted Liens, and (ii) no offset will exist with respect to any Rent
or other sums payable under the Lease;
(g) Except as otherwise contemplated by the Operative Agreements, the
Construction Agent shall not use the proceeds of any Holder Advance or Loan
20
for any purpose other than the purchase and/or lease of the Properties, the
acquisition, installation and testing of the Equipment, the construction of
Improvements, the payment of costs referred to in Section 5.1(a), Hard
Costs and Soft Costs relating to the Properties and the payment of
Transaction Expenses and the fees, expenses and other disbursements
referenced in Sections 7.1(a) and 7.1(b) of this Agreement, in each case
which accrue prior to the Rent Commencement Date with respect to a
particular Property;
(h) [Reserved];
(i) The principal place of business, chief executive office and office
of the Construction Agent and the Lessee where the documents, accounts and
records relating to the transactions contemplated by this Agreement and
each other Operative Agreement are kept are located at 777 Mariners Island
Boulevard, San Mateo, California 94404 and the states of formation and the
chief executive offices of the Guarantor are located at the places set
forth in Exhibit L;
(j) The representations and warranties of each Credit Party set forth
in any of the Operative Agreements are true and correct in all material
respects on and as of each such date as if made on and as of such date.
Each Credit Party is in all material respects in compliance with its
obligations under the Operative Agreements and there exists no Default or
Event of Default under any of the Operative Agreements which is continuing
and which has not been cured within any cure period expressly granted under
the terms of the applicable Operative Agreement or otherwise waived in
accordance with the applicable Operative Agreement. No Default or Event of
Default will occur under any of the Operative Agreements as a result of, or
after giving effect to, the Advance requested by the Requisition on the
date of each Advance;
(k) As of each Property Closing Date, the date of each subsequent
Advance and the Rent Commencement Date only, each Property then being
financed consists of (i) the Lessor's interest in unimproved Land or (ii)
Land and existing Improvements thereon which Improvements are either
suitable for occupancy at the time of acquisition or ground leasing or will
be renovated and/or modified in accordance with the terms of this
Agreement. Each Property then being financed is located at the location set
forth on the applicable Requisition, each of which is in one (1) of the
Approved States;
(l) As of each Property Closing Date, the date of each subsequent
Advance and the Rent Commencement Date only, the Lessor has good and
marketable fee simple title to each Property, or, if any Property is the
subject of a Ground Lease, the Lessor will have a valid ground leasehold
interest enforceable against the ground lessor of such Property in
accordance with the terms of such Ground Lease, subject only to Permitted
Liens;
(m) As of each Property Closing Date, the date of each subsequent
Advance and the Rent Commencement Date only, no portion of any Property is
located in an area identified as a special flood hazard area by the Federal
21
Emergency Management Agency or other applicable agency, or if any such
Property is located in an area identified as a special flood hazard area by
the Federal Emergency Management Agency or other applicable agency, then
flood insurance has been obtained for such Property in accordance with
Section 14.2(b) of the Lease and in accordance with the National Flood
Insurance Act of 1968, as amended;
(n) As of each Property Closing Date, the date of each subsequent
Advance and the Rent Commencement Date only, all then applicable Insurance
Requirements have been satisfied;
(o) As of each Property Closing Date, the date of each subsequent
Advance and the Rent Commencement Date only, each Property complies with
all Legal Requirements as of such date (including without limitation all
zoning and land use laws and Environmental Laws), except to the extent that
failure to comply therewith, individually or in the aggregate, shall not
have and could not reasonably be expected to have a Material Adverse
Effect;
(p) As of each Property Closing Date, the date of each subsequent
Advance and the Rent Commencement Date only, all utility services and
facilities necessary for the construction and operation of the Improvements
and the installation and operation of the Equipment regarding each Property
(including without limitation gas, electrical, water and sewage services
and facilities) are available at the applicable Land or will be constructed
prior to the Completion Date for such Property;
(q) As of each Property Closing Date, the date of each subsequent
Advance and the Rent Commencement Date only, acquisition, installation and
testing of the Equipment (if any) and construction of the Improvements (if
any) to such date shall have been performed in a good and workmanlike
manner, substantially in accordance with the Agency Agreement and
applicable Plans and Specifications;
(r) Provided the Security Documents and the Lease are valid and
enforceable obligations of the Lessor:
(i) The Security Documents create, as security for the
Obligations (as such term is defined in the Security Agreement)
(or, in the case of the Security Documents pursuant to which the
Lessee has granted a Lien, as security for the Company
Obligations), valid and enforceable security interests in, and
Liens on, all of the Collateral, in favor of the Agent (or in
favor of the Lessor and further assigned to the Agent), for the
ratable benefit of the Lenders and the Holders, as their
respective interests appear in the Operative Agreements, and such
security interests and Liens are subject to no other Liens other
than Prior Liens. Upon recordation of the Mortgage Instrument in
the real estate recording office in the applicable Approved State
identified by the Construction Agent or the Lessee, the Lien
created by the Mortgage Instrument in the real property described
therein shall be a perfected first priority mortgage Lien on such
22
real property (or, in the case of a Ground Lease, on the
leasehold estate under such Ground Lease) in favor of the Agent,
for the ratable benefit of the Lenders and the Holders, as their
respective interests appear in the Operative Agreements, subject
only to Prior Liens. To the extent that the security interests in
the portion of the Collateral comprised of personal property can
be perfected by filing in the filing offices in the applicable
Approved States or elsewhere identified by the Construction Agent
or the Lessee, upon filing of the Lender Financing Statements in
such filing offices, the security interests created by the
Security Agreement shall be perfected first priority security
interests in such personal property in favor of the Agent, for
the ratable benefit of the Lenders and the Holders, as their
respective interests appear in the Operative Agreements, subject
only to Prior Liens;
(ii) The Lease Agreement creates, as security for the
obligations of the Lessee under the Lease Agreement, valid and
enforceable security interests in, and Liens on, the Lessee's
leasehold interest in each Property leased thereunder, in favor
of the Lessor, and such security interests and Liens are subject
to no other Liens other than Prior Liens. Upon recordation of the
memorandum of the Lease Agreement and the memorandum of a Ground
Lease (or, in either case, a short form lease) in the real estate
recording office in the applicable Approved State identified by
the Construction Agent or the Lessee, the Lien created by the
Lease Agreement in the Lessee's leasehold interest in the real
property described therein shall be a perfected first priority
mortgage Lien on the Lessee's interest in such real property (or,
in the case of a Ground Lease, the leasehold estate under such
Ground Lease) in favor of the Agent, for the ratable benefit of
the Lenders and the Holders, as their respective interests appear
in the Operative Agreements, subject only to Prior Liens. To the
extent that the security interests in the portion of any Property
comprised of personal property can be perfected by the filing in
the filing offices in the applicable Approved State or elsewhere
identified by the Construction Agent or the Lessee upon filing of
the Lessor Financing Statements in such filing offices, a
security interest created by the Lease Agreement shall be
perfected first priority security interests in the Lessee's
leasehold interest in such personal property in favor of the
Lessor, which rights pursuant to the Lessor Financing Statements
are assigned to the Agent, for the ratable benefit of the Lenders
and the Holders, as their respective interests appear in the
Operative Agreements, subject only to Prior Liens;
(s) The Plans and Specifications for each Property will be prepared
prior to the commencement of construction in accordance with all applicable
Legal Requirements (including without limitation all applicable
Environmental Laws and building, planning, zoning and fire codes), except
to the extent the failure to comply therewith, individually or in the
aggregate, shall not have and could not reasonably be expected to have a
Material Adverse Effect. Upon completion of the Improvements for each
Property in accordance with the applicable Plans and Specifications, such
Improvements will be within any building restriction lines and will not
23
encroach in any manner onto any adjoining land (except as permitted by
express written easements, which have been approved by the Agent);
(t) As of the Rent Commencement Date only, each Property shall be
improved in accordance with the applicable Plans and Specifications in a
good and workmanlike manner and shall be operational;
(u) [Reserved];
(v) As of each Property Closing Date only, each Property has been
acquired or ground leased pursuant to a Ground Lease at a price that is not
in excess of fair market value or fair market rental value, as the case may
be;
(w) The status of Year 2000 readiness efforts by the Credit Parties,
including remediation and testing, as of the date stated therein, are as
set forth in the Form 10-Q filed with the Securities and Exchange
Commission by Franklin Resources on August 12, 1999, a copy of which has
been made available to the Agent. As of the date of this Agreement, neither
of the Credit Parties is aware of any inability of any internal computer
system, other internal system, or internal equipment containing embedded
microchips, to properly process or recognize dates in or after the year
2000 which could reasonably be foreseen to result in a Default or a
Material Adverse Effect. The Credit Parties make this representation in
Section 6.2(w) solely with respect to those functions of each such system
or equipment which are completely within the control of the Credit Parties
or a Subsidiary thereof and do not make this representation with respect to
any part, interface or functionality of such system or equipment that
relies upon or connects to any third party outside of the Credit Parties or
a Subsidiary thereof including public utility providers.
(x) The consolidated balance sheets of the Guarantor and its
Consolidated Subsidiaries as at September 30, 1997 and September 30, 1998,
and the related consolidated statements of income and of cash flows for the
fiscal years ended on such dates, reported on by PricewaterhouseCoopers
LLP, copies of which have heretofore been furnished to each Lender and each
Holder, present fairly the consolidated financial condition of the
Guarantor and its Consolidated Subsidiaries as at such dates, and the
consolidated results of their operations and their consolidated cash flows
for the fiscal years then ended. The unaudited consolidated balance sheet
of the Guarantor and its Consolidated Subsidiaries as at June 30, 1999 and
the related unaudited consolidated statements of income and of cash flows
for the nine-month period ended on such date, certified to the best of his
or her knowledge by a Responsible Officer of the Guarantor, copies of which
have heretofore been furnished to each Lender and each Holder, present
fairly the consolidated financial condition of the Guarantor and its
Consolidated Subsidiaries as at such date, and the consolidated results of
their operations and their consolidated cash flows for the three-month
period then ended (subject to normal year-end audit adjustments). All such
financial statements, including the related schedules and notes thereto,
have been prepared in accordance with GAAP applied consistently throughout
24
the periods involved (except as approved by such accountants or Responsible
Officer, as the case may be, and as disclosed therein). Neither the
Guarantor nor any of its Consolidated Subsidiaries had, at the date of the
most recent balance sheet referred to above, any Guarantee Obligation,
contingent liability or liability for taxes, or any long-term lease or
unusual forward or long-term commitment, including without limitation any
interest rate or foreign currency swap or exchange transaction, which is
not reflected in the foregoing statements or in the notes thereto and which
could not reasonably be expected to result in a Material Adverse Effect or
otherwise to violate the limits on Debt or Indebtedness or any other
obligation of any Credit Party set forth in the Operative Agreements if
measured at the date of the most recent balance sheet referred to above.
During the period from June 30, 1999 to and including the Initial Closing
Date there has been no sale, transfer or other disposition by the Guarantor
or any of its Consolidated Subsidiaries of any part of its business or
property and no purchase or other acquisition of any business or property
(including any capital stock of any other Person) except such which could
not reasonably be expected to result in a Material Adverse Effect;
(y) Since June 30, 1999, there has been no Material Adverse Effect;
(z) Each Credit Party and each Subsidiary of the Credit Parties (i)
are duly organized, validly existing and in good standing under the laws of
the jurisdiction of their respective organization, (ii) have the corporate
power and authority, and the legal right, to own and operate their
respective property, to lease the property each such entity operates as
lessee and to conduct the business in which each such entity is currently
engaged and in which each such entity proposes to be engaged after the
Initial Closing Date, (iii) are duly qualified as foreign corporations and
in good standing under the laws of each jurisdiction where each such
entity's ownership, lease or operation of property or the conduct of each
such entity's business requires such qualification and (iv) are in
compliance with all Requirements of Law except to the extent that the
failure to comply therewith could not, in the aggregate, reasonably be
expected to have a Material Adverse Effect;
(aa) The Credit Parties have the corporate power and authority, and
the legal right, to make, deliver and perform the Operative Agreements to
which they are a party and to engage in the financing thereunder and have
taken all necessary corporate action to authorize (i) the financing on the
terms and conditions of the Operative Agreements and (ii) the execution,
delivery and performance of the Operative Agreements. Except as set forth
on Schedule 4 hereto, no consent or authorization of, filing with or other
act by or in respect of, any Governmental Authority or any other Person is
required in connection with the financing under the Operative Agreements or
with the execution, delivery, performance, validity or enforceability of
the Operative Agreements;
(bb) The execution, delivery and performance of the Operative
Agreements, the financing thereunder and the use of the proceeds pursuant
to such financing will not (i) violate, to the knowledge of any Credit
Party, any Requirement of Law or Contractual Obligation of any Credit
25
Party, any of their Subsidiaries or any of the Funds, or (ii) violate any
Requirement of Law or Contractual Obligation of any Credit Party, any of
their Subsidiaries or any of the Funds which could reasonably be expected
to have a Material Adverse Effect and will not result in, or require, the
creation or imposition of any Lien on any of its or their respective
properties or revenues pursuant to any such Requirement of Law or
Contractual Obligation;
(cc) No litigation, investigation or proceeding of or before any
arbitrator or Governmental Authority is pending or, to the knowledge of any
Credit Party, threatened by or against any Credit Party or any of their
Subsidiaries or against any of the Credit Parties or their respective
properties or revenues or by or against any "affiliated person" of any
Credit Party or any of their Subsidiaries, within the meaning of the
Investment Company Act, (i) with respect to the Operative Agreements or any
of the transactions contemplated thereby or (ii) which could reasonably be
expected to have a Material Adverse Effect;
(dd) Each Credit Party and each Subsidiary of the Credit Parties have
good record and marketable title in fee simple to, or a valid leasehold
interest in, all their respective real property, and good title to all its
other property (except such property with respect to which the failure to
have such title or leasehold interest could not reasonably be expected to
have a Material Adverse Effect and except with respect to such property in
the aggregate having a fair market value, as reasonably estimated by the
Guarantor, not to exceed $25,000,000), and none of such property, and none
of the investment advisory agreements to which any Credit Party or any of
their Subsidiaries is a party or any of the revenues thereunder, is subject
to any Lien except as permitted by Section 8.3(dd);
(ee) Each Credit Party and each Subsidiary of the Credit Parties own,
or are licensed to use, all trademarks, tradenames, copyrights, technology,
know-how and processes necessary for the conduct of their respective
business as currently conducted except for those the failure to own or
license which could not reasonably be expected to have a Material Adverse
Effect (the "Intellectual Property"). To the knowledge of the Credit
Parties, no claim which could reasonably be expected to have a Material
Adverse Effect has been asserted and is pending by any Person challenging
or questioning the use of any such Intellectual Property or the validity or
effectiveness of any such Intellectual Property, nor does any Credit Party
know of any valid basis for any such claim. To the knowledge of each Credit
Party, the use of such Intellectual Property by each Credit Party and each
Subsidiary of the Credit Parties does not infringe on the rights of any
Person, except for such claims and infringements that, in the aggregate,
could not reasonably be expected to have a Material Adverse Effect;
(ff) Each Credit Party and each Subsidiary of the Credit Parties have
filed or caused to be filed all material tax returns which, to the
knowledge of the Credit Parties, are required to be filed and have paid all
taxes shown to be due and payable on said returns or on any assessments
made against them or any of their respective property and all other taxes,
fees or other charges imposed on it or any of its property by any
26
Governmental Authority (other than any the amount or validity of which is
currently being contested in good faith by appropriate proceedings and with
respect to which reserves in conformity with GAAP have been provided on the
books of the Credit Parties or their Subsidiaries, as the case may be); to
the knowledge of the Credit Parties, no tax Lien has been filed, and no
claim is being asserted with respect to any such tax, fee or other charge
which could reasonably be expected to have a Material Adverse Effect;
(gg) No part of the proceeds of any Advance is intended to be or will
be used for "purchasing" or "carrying" any "margin stock" within the
respective meanings of each of the quoted terms under Regulations U and X,
or for any purpose which violates the provisions of the Regulations of the
Board of Governors of the Federal Reserve System. If requested by any
Financing Party, each Credit Party will furnish to each Financing Party a
statement to the foregoing effect in conformity with the requirements of FR
Form U-1 referred to in said Regulation U;
(hh) No Reportable Event has occurred during the five-year period
prior to the date on which this representation is made or deemed made with
respect to any Plan, and each Plan has complied in all material respects
with the applicable provisions of ERISA and the Code. The present value of
all accrued benefits under each Single Employer Plan maintained by the
Guarantor or any Commonly Controlled Entity (based on those assumptions
used to fund the Plans) did not, as of the last annual valuation date prior
to the date on which this representation is made or deemed made, exceed the
value of the assets of such Plan allocable to such accrued benefits. There
are no Multiemployer Plans. No Credit Party nor any Commonly Controlled
Entity has had a complete or partial withdrawal from any Multiemployer
Plan. The present value (determined using actuarial and other assumptions
which are reasonable in respect of the benefits provided and the employees
participating) of the liability of any Credit Party and each Commonly
Controlled Entity for post retirement benefits to be provided to their
current and former employees under Plans which are welfare benefit plans
(as defined in Section 3(1) of ERISA) does not, in the aggregate, exceed
the assets under all such Plans allocable to such benefits by an amount in
excess of $0;
(ii) Neither Credit Party is an "investment company", or a company
"controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended (the "Investment Company Act");
(jj) Each of the Subsidiaries of the Credit Parties listed on Schedule
5 hereto is duly registered as an investment adviser under the Investment
Advisers Act of 1940 (the "Advisers Act"). None of the other Subsidiaries
of any Credit Party or any Credit Party is an "investment adviser" within
the meaning of the Advisers Act and the rules and regulations promulgated
thereunder. Each entity for which any Subsidiary of any Credit Party acts
as an investment adviser and which is required to be registered as an
"investment company" under the Investment Company Act is duly registered as
such thereunder;
27
(kk) Except for the Subsidiaries of the Credit Parties listed on
Schedule 6 hereto, no Credit Party nor any Subsidiary of any Credit Party
is required to be duly registered as a broker-dealer under the Securities
and Exchange Act of 1934, as amended, and such Subsidiaries so listed are
duly registered as such;
(ll) Each Credit Party and each Subsidiary of the Credit Parties are
duly registered, licensed or qualified as an investment adviser or
broker-dealer in each State of the United States where the conduct of such
entity's business requires such registration, licensing or qualification
and are in compliance in all material respects with all Federal and State
laws requiring such registration, licensing or qualification, except to the
extent where the failure to be so registered, licensed or qualified or to
be in such compliance will not have a Material Adverse Effect;
(mm) Each of the investment advisory agreements, distribution
agreements and shareholder servicing contracts to which any Credit Party or
any Subsidiary of any Credit Party is a party is a legal, valid and binding
obligation of the parties thereto enforceable against such parties in
accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforcement of creditors' rights generally and by
general equitable principles (whether enforcement is sought by proceedings
in equity or at law); and no Credit Party nor any Subsidiary of any Credit
Party is in breach or violation of or in default under any such agreement
or contract in any material respect which would individually or in the
aggregate have a Material Adverse Effect;
(nn) The Subsidiaries listed on Schedule 7 hereto constitute all the
Subsidiaries of the Credit Parties at the Initial Closing Date, other than
any Subsidiary having a net worth of less than $5,000,000; provided, that
the aggregate net worth of all Subsidiaries not listed on Schedule 7 may
not exceed $25,000,000;
(oo) The proceeds of Advances shall be used to fund permitted amounts
under the Operative Agreements;
(pp) To the best knowledge of the Credit Parties:
(i) The Additional Properties and all operations at the
Additional Properties are in compliance in all material respects
with all applicable Environmental Laws, and there is no
contamination at, under or about the Additional Properties, or
violation of any Environmental Law with respect to the Additional
Properties or the business conducted at the Additional Properties
which could materially interfere with the continued operation of
the Additional Properties;
28
(ii) No Credit Party nor any Subsidiary of any Credit Party
has received any notice of violation, alleged violation,
non-compliance, liability or potential liability regarding
environmental matters or compliance with Environmental Laws with
regard to any of the Additional Properties or the business
conducted at the Additional Properties, nor do the Credit Parties
have knowledge or reason to believe that any such notice will be
received or is being threatened except insofar as such notice or
threatened notice, or any aggregation thereof, does not involve a
matter or matters that is or are reasonably likely to cause a
Material Adverse Effect; and
(iii) No judicial proceedings or governmental or
administrative action is pending or, to the knowledge of any
Credit Party, threatened under any Environmental Law to which any
Credit Party or any Subsidiary of any Credit Party is or will be
named as a party with respect to the Additional Properties or the
business conducted at the Additional Properties, 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 Environmental Law
with respect to the Additional Properties or such business except
insofar as such proceeding, action, decree, order or other
requirement, or any aggregation thereof, is not reasonably likely
to cause a Material Adverse Effect; and
(qq) To the best of the Credit Parties' knowledge, the documents
furnished and the statements made in writing to the Financing Parties by
the Credit Parties in connection with the negotiation, preparation or
execution of the Operative Agreements taken as a whole do not contain any
untrue statement of fact material to the credit worthiness of the Credit
Parties or omit to state any such material fact necessary in order to make
the statements contained therein not misleading, in either case which has
not been corrected, supplemented or remedied by subsequent documents
furnished or statements made in writing to the Financing Parties prior to
the date hereof.
6.3. REPRESENTATIONS AND WARRANTIES OF THE INITIAL HOLDERS.
Each of the initial Holders represents and warrants to each other party
hereto that:
(a) no part of the assets being used by such Holder to acquire any
Certificates directly or indirectly constitutes Plan assets;
(b) it has received a copy of the Offering Memorandum dated July, 1999
relating to the Certificates, together with such other information as it
deems necessary in order to make its investment decision;
(c) it understands that the offer and sale of the Certificates has not
been registered under the Securities Act or any securities law of any other
applicable jurisdiction and no other party hereto is obligated to effect
any such registration;
29
(d) it understands that any subsequent transfer of the Certificates is
subject to certain restrictions and conditions set forth in the Operative
Agreements and agrees to be bound by, and not to resell, pledge or
otherwise transfer any Certificates except in compliance with, such
restrictions and conditions and the Securities Act; and it further
understands that the Certificates will bear a legend to the foregoing
effect;
(e) it is an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and
has such knowledge and experience in financial and business matters as to
be capable of evaluating the merits and risks of its investment in the
Certificates, and it is able to bear the economic risks of its investment;
and
(f) it is acquiring the Certificates for its own account, and not with
a view to, or for offer or sale in connection with, any distribution
thereof within the meaning of the Securities Act, provided that the
disposition of its property shall at all times be within its control; and
it understands that the other parties hereto will rely upon the accuracy of
the foregoing representations and hereby consents to such reliance.
SECTION 6B. GUARANTY
6B.1. GUARANTY OF PAYMENT AND PERFORMANCE.
Subject to Section 6B.7, Guarantor hereby unconditionally guarantees to
each Financing Party the prompt payment and performance of the Company
Obligations in full when due (whether at stated maturity, as a mandatory
prepayment, by acceleration or otherwise) or when such is otherwise to be
performed; provided, notwithstanding the foregoing, the obligations of Guarantor
under this Section 6B shall not constitute a direct guaranty of the indebtedness
of the Lessor evidenced by the Notes but rather a guaranty of the Company
Obligations arising under the Operative Agreements. This Section 6B is a
guaranty of payment and performance and not of collection and is a continuing
guaranty and shall apply to all Company Obligations whenever arising. All rights
granted to the Financing Parties under this Section 6B shall be subject to the
provisions of Section 8.2(h) and 8.6.
6B.2. OBLIGATIONS UNCONDITIONAL.
Guarantor agrees that the obligations of Guarantor hereunder are absolute
and unconditional, irrespective of the value, genuineness, validity, regularity
or enforceability of any of the Operative Agreements, or any other agreement or
instrument referred to therein, or any substitution, release or exchange of any
other guarantee of or security for any of the Company Obligations, and, to the
fullest extent permitted by applicable law, irrespective of any other
circumstance whatsoever which might otherwise constitute a legal or equitable
discharge or defense of a surety, guarantor or co-obligor, it being the intent
of this Section 6B.2 that the obligations of Guarantor hereunder shall be
absolute and unconditional under any and all circumstances. Guarantor agrees
30
that this Section 6B may be enforced by the Financing Parties without the
necessity at any time of resorting to or exhausting any other security or
collateral and without the necessity at any time of having recourse to the
Notes, the Certificates or any other of the Operative Agreements or any
collateral, if any, hereafter securing the Company Obligations or otherwise and
Guarantor hereby waives the right to require the Financing Parties to proceed
against the Construction Agent, the Lessee or any other Person (including
without limitation a co-guarantor) or to require the Financing Parties to pursue
any other remedy or enforce any other right. Guarantor further agrees that it
hereby waives any and all right of subrogation, indemnity, reimbursement or
contribution against the Lessee and the Construction Agent for amounts paid
under this Section 6B until such time as the Company Obligations have been paid
in full. Without limiting the generality of the waiver provisions of this
Section 6B, Guarantor hereby waives any rights to require the Financing Parties
to proceed against the Construction Agent, the Lessee or any co-guarantor or to
require Lessor to pursue any other remedy or enforce any other right. Guarantor
further agrees that nothing contained herein shall prevent the Financing Parties
from suing on any Operative Agreement or foreclosing any security interest in or
Lien on any collateral, if any, securing the Company Obligations or from
exercising any other rights available to them under any Operative Agreement, or
any other instrument of security, if any, and the exercise of any of the
aforesaid rights and the completion of any foreclosure proceedings shall not
constitute a discharge of Guarantor's obligations hereunder; it being the
purpose and intent of Guarantor that its obligations hereunder shall be
absolute, independent and unconditional under any and all circumstances;
provided that any amounts due under this Section 6B which are paid to or for the
benefit of any Financing Party shall reduce the Company Obligations by a
corresponding amount (unless required to be rescinded at a later date). Neither
Guarantor's obligations under this Section 6B nor any remedy for the enforcement
thereof shall be impaired, modified, changed or released in any manner
whatsoever by an impairment, modification, change, release or limitation of the
liability of the Construction Agent or the Lessee or by reason of the bankruptcy
or insolvency of the Construction Agent or the Lessee. Guarantor waives any and
all notice of the creation, renewal, extension or accrual of any of the Company
Obligations and notice of or proof of reliance by any Financing Party upon this
Section 6B or acceptance of this Section 6B. The Company Obligations shall
conclusively be deemed to have been created, contracted or incurred, or renewed,
extended, amended or waived, in reliance upon this Section 6B. All dealings
between the Construction Agent, the Lessee and Guarantor, on the one hand, and
the Financing Parties, on the other hand, likewise shall be conclusively
presumed to have been had or consummated in reliance upon this Section 6B.
6B.3. MODIFICATIONS.
Guarantor agrees that (a) all or any part of the security now or hereafter
held for the Company Obligations, if any, may be exchanged, compromised or
surrendered from time to time; (b) no Financing Party shall have any obligation
to protect, perfect, secure or insure any such security interests, liens or
encumbrances now or hereafter held, if any, for the Company Obligations or the
properties subject thereto; (c) the time or place of payment of the Company
Obligations may be changed or extended, in whole or in part, to a time certain
or otherwise, and may be renewed or accelerated, in whole or in part; (d) the
Construction Agent, the Lessee and any other party liable for payment under the
Operative Agreements may be granted indulgences generally; (e) any of the
31
provisions of the Notes, the Certificates or any of the other Operative
Agreements may be modified, amended or waived; (f) any party (including any
co-guarantor) liable for the payment thereof may be granted indulgences or be
released; and (g) any deposit balance for the credit of the Construction Agent,
the Lessee or any other party liable for the payment of the Company Obligations
or liable upon any security therefor may be released, in whole or in part, at,
before or after the stated, extended or accelerated maturity of the Company
Obligations, all without notice to or further assent by Guarantor, which shall
remain bound thereon, notwithstanding any such exchange, compromise, surrender,
extension, renewal, acceleration, modification, indulgence or release.
6B.4. WAIVER OF RIGHTS.
Guarantor expressly waives to the fullest extent permitted by applicable
law: (a) notice of acceptance of this Section 6B by any Financing Party and of
all extensions of credit or other Advances to the Construction Agent and the
Lessee by the Lenders pursuant to the terms of the Operative Agreements; (b)
presentment and demand for payment or performance of any of the Company
Obligations; (c) protest and notice of dishonor or of default with respect to
the Company Obligations or with respect to any security therefor; (d) notice of
any Financing Party obtaining, amending, substituting for, releasing, waiving or
modifying any security interest, lien or encumbrance, if any, hereafter securing
the Company Obligations, or any Financing Party's subordinating, compromising,
discharging or releasing such security interests, liens or encumbrances, if any;
(e) all rights and defenses arising out of an election of remedies by the
Financing Parties, even though that election of remedies, such as a nonjudicial
foreclosure with respect to security for a guaranteed obligation, has destroyed
the Guarantor's rights of subrogation and reimbursement against the Lessee, the
Construction Agent or any other Person by operation of Section 580d of the
California Code of Civil Procedure or otherwise; and (f) all other notices to
which Guarantor might otherwise be entitled. Notwithstanding anything to the
contrary herein, (i) Guarantor's payments hereunder shall be due five (5)
Business Days after written demand by the Agent for such payment (unless the
Company Obligations are automatically accelerated pursuant to the applicable
provisions of the Operative Agreements in which case the Guarantor's payments
shall be automatically due) and (ii) any modification of the Operative
Agreements which has the effect of increasing the Company Obligations shall not
be enforceable against Guarantor unless Guarantor executes the document
evidencing such modification or otherwise reaffirms its guaranty in writing in
connection with such modification.
6B.5. REINSTATEMENT.
The obligations of Guarantor under this Section 6B shall be automatically
reinstated if and to the extent that for any reason any payment by or on behalf
of any Person in respect of the Company Obligations is rescinded or must be
otherwise restored by any holder of any of the Company Obligations, whether as a
result of any proceedings in bankruptcy or reorganization or otherwise, and
Guarantor agrees that it will indemnify each Financing Party on demand for all
reasonable costs and expenses (including, without limitation, reasonable fees of
counsel) incurred by any Financing Party in connection with such rescission or
restoration, including without limitation any such costs and expenses incurred
in defending against any claim alleging that such payment constituted a
32
preference, fraudulent transfer or similar payment under any bankruptcy,
insolvency or similar law.
6B.6. REMEDIES.
Guarantor agrees that, as between Guarantor, on the one hand, and each
Financing Party, on the other hand, the Company Obligations may be declared to
be forthwith due and payable as provided in the applicable provisions of the
Operative Agreements (and shall be deemed to have become automatically due and
payable in the circumstances provided therein) notwithstanding any stay,
injunction or other prohibition preventing such declaration (or preventing such
Company Obligations from becoming automatically due and payable) as against any
other Person and that, in the event of such declaration (or such Company
Obligations being deemed to have become automatically due and payable), such
Company Obligations (whether or not due and payable by any other Person) shall
forthwith become due and payable by Guarantor in accordance with the applicable
provisions of the Operative Agreements.
6B.7. LIMITATION OF GUARANTY.
Notwithstanding any provision to the contrary contained herein or in any of
the other Operative Agreements, to the extent the obligations of Guarantor shall
be adjudicated to be invalid or unenforceable for any reason (including without
limitation because of any applicable state or federal law relating to fraudulent
conveyances or transfers) then the obligations of Guarantor hereunder shall be
limited to the maximum amount that is permissible under applicable law (whether
federal or state and including without limitation the Bankruptcy Code).
Subject to Section 6B.5, upon the satisfaction of the Company Obligations
in full, regardless of the source of payment, Guarantor's obligations hereunder
shall be deemed satisfied, discharged and terminated other than indemnifications
set forth herein that expressly survive.
6B.8. PAYMENT OF AMOUNTS TO THE AGENT.
Each Financing Party hereby instructs Guarantor, and Guarantor hereby
acknowledges and agrees, that until such time as the Company Obligations are
paid in full and the Liens evidenced by the Security Agreement and the Mortgage
Instruments have been released any and all Rent (excluding Excepted Payments
which shall be payable to each Holder or other Person as appropriate) and any
and all other amounts of any kind or type under any of the Operative Agreements
in respect of Company Obligations due and owing or payable to any Person shall
instead be paid directly to the Agent (excluding Excepted Payments which shall
be payable to each Holder or other Person as appropriate) or as the Agent may
direct from time to time for allocation and distribution in accordance with the
procedures set forth in Section 8.7 hereof.
33
SECTION 7. PAYMENT OF CERTAIN EXPENSES.
7.1. Transaction Expenses.
(a) The Lessor agrees on the Initial Closing Date, to pay, or cause to
be paid, all Transaction Expenses arising from the Initial Closing Date,
including without limitation all reasonable fees, expenses and
disbursements of the various legal counsels for the Lessee, the Lessor and
the Agent (but not any other Lender or Holder) in connection with the
transactions contemplated by the Operative Agreements and incurred in
connection with such Initial Closing Date (and in connection with the
interim trust arrangement preceding the Initial Closing Date), the initial
fees and expenses of the Owner Trustee due and payable on such Initial
Closing Date, all fees, taxes and expenses for the recording, registration
and filing of documents and all other reasonable fees, expenses and
disbursements incurred in connection with such Initial Closing Date;
provided, however, the Lessor shall pay such amounts described in this
Section 7.1(a) only if funds are made available by the Lenders and the
Holders in an amount sufficient to allow such payment and without regard to
whether such amounts are referenced in any Requisition. On the Initial
Closing Date after satisfaction of the conditions precedent for such date
(excluding the requirement that a Requisition be delivered), the Holders
shall make Holder Advances and the Lenders shall make Loans to the Lessor
to pay for the Transaction Expenses, fees, expenses and other disbursements
referenced in this Section 7.1(a).
(b) Assuming no Default or Event of Default shall have occurred and be
continuing and only for the period prior to the Rent Commencement Date, the
Lessor agrees on each Property Closing Date, on the date of any
Construction Advance and on the Completion Date to pay, or cause to be
paid, all Transaction Expenses including without limitation all reasonable
fees, expenses and disbursements of the various legal counsels for the
Lessee, the Lessor and the Agent (but not any other Lender or Holder) in
connection with the transactions contemplated by the Operative Agreements
and billed in connection with the applicable Property Closing Date, such
Advance or such Completion Date, all amounts described in Section 7.1(a) of
this Agreement which have not been previously paid, the annual fees and
reasonable out-of-pocket expenses of the Owner Trustee, all fees, expenses
and disbursements incurred with respect to the various items referenced in
Sections 5.3, 5.4 and/or 5.5 (including without limitation any premiums for
title insurance policies and charges for any updates to such policies) and
all other reasonable fees, expenses and disbursements in connection with
such Advance or such Completion Date including without limitation all
expenses relating to and all fees, taxes and expenses for the recording,
registration and filing of documents and during the Commitment Period, all
fees, expenses and costs referenced in Sections 7.3(a), 7.3(b), 7.3(d) and
7.4; provided, however, the Lessor shall pay such amounts described in this
Section 7.1(b) only if funds are made available by the Lenders and the
Holders in an amount sufficient to allow such payment and without regard to
whether such amounts are referenced in any Requisition. On each Property
Closing Date, on the date of any Construction Advance or any Completion
Date, after satisfaction of the conditions precedent for such date
34
(excluding the requirement that a Requisition be delivered), the Holders
shall make a Holder Advance and the Lenders shall make Loans to the Lessor
to pay for the Transaction Expenses, fees, expenses and other disbursements
referenced in this Section 7.1(b).
(c) All fees payable pursuant to the Operative Agreements shall be
calculated on the basis of a year of three hundred sixty (360) days for the
actual days elapsed.
7.2. NO BROKER, ETC.
Except as expressly provided in that certain engagement letter dated June
17, 1999 (as amended, modified, supplemented, restated and/or replaced from time
to time, the "Engagement Letter") addressed to Charles R. Sims, Treasurer,
Franklin Resources, Inc., 777 Mariners Island Boulevard, San Mateo, CA 94404
from Douglas E. Neal, Managing Director, Banc of America Securities LLC,
NC1-007-11-07, 100 North Tryon Street, 11th Floor, Charlotte, NC 28255-0001,
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 the Operative Agreements, nor has it authorized any broker,
finder or financial adviser retained or employed by any other Person so to act.
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.
7.3. CERTAIN FEES AND EXPENSES.
The Lessee agrees to pay or cause to be paid (a) the initial and annual
Owner Trustee's fee and all reasonable expenses of the Owner Trustee and any
co-trustees (including without limitation reasonable counsel fees and expenses)
or any successor owner trustee and/or co-trustee, for acting as the owner
trustee under the Trust Agreement to the extent not provided for in Sections
7.1(a) or (b), (b) all reasonable costs and expenses incurred by the Credit
Parties, the Agent, the Lenders, the Holders or the Lessor in entering into any
Lease Supplement and any future amendments, modifications, supplements,
restatements and/or replacements with respect to any of the Operative
Agreements, whether or not such Lease Supplement, amendments, modifications,
supplements, restatements and/or replacements are ultimately entered into, or
giving or withholding of waivers of consents hereto or thereto, which have been
requested by any Credit Party, the Agent, the Lenders, the Holders or the
Lessor, provided that Lessee shall pay for the legal fees and expenses of a
single law firm (and local counsel, to the extent necessary or deemed desirable
by the Financing Parties) representing the Agent, the Lenders and the Holders,
(c) all reasonable costs and expenses incurred by the Credit Parties, the Agent,
the Lenders, the Holders or the Lessor in connection with any exercise of
remedies under any Operative Agreement or any purchase of any Property by the
Construction Agent, the Lessee or any third party pursuant to the Operative
Agreements, (d) all reasonable costs and expenses incurred by the Credit
Parties, the Agent, the Lenders, the Holders or the Lessor in connection with
any transfer or conveyance of any Property pursuant to the Operative Agreements,
whether or not such transfer or conveyance is ultimately accomplished and (e)
the structuring fee payable to Banc of America Securities LLC in accordance with
the Engagement Letter.
35
7.4. UNUSED FEE.
During the Commitment Period, the Lessee, at its option, either (x) shall
have the Lessor pay (in which case the Lessor shall so pay, provided funds are
made available by the Lenders and Holders therefor through Advances) as a
Transaction Expense or (y) to the extent such amounts are not otherwise paid by
the Lessor, shall timely pay, in either case to the Agent for the account of (a)
the Lenders, respectively, an unused fee (the "Lender Unused Fee") equal to the
product of the average daily Available Commitments of the Lenders during the
Commitment Period multiplied by the Applicable Percentage for the Lender Unused
Fee and (b) the Holders, respectively, an unused fee (the "Holder Unused Fee")
equal to the product of the average daily Available Holder Commitments of the
Holders during the Commitment Period multiplied by the Applicable Percentage for
the Holder Unused Fee. Such Unused Fees shall be payable in arrears on each
Unused Fee Payment Date. If all or a portion of any such Unused Fee shall not be
paid when due, such overdue amount shall bear interest, payable by the Lessee on
demand, at a rate per annum equal to the ABR (or in the case of Holder Yield,
the ABR plus the Applicable Percentage for Eurodollar Holder Advances) plus two
percent (2%) from the date of such non-payment until such amount is paid in full
(after as well as before judgment).
7.5. ADMINISTRATIVE FEE.
The Lessee, at its option, either (x) shall cause the Lessor to pay (in
which case the Lessor shall so pay, provided funds are made available by the
Lenders and Holders therefor through Advances) as a Transaction Expense or (y)
to the extent such amount is not otherwise paid by the Lessor, shall timely pay
an administrative fee to the Agent (for its individual account) on the terms and
conditions set forth in the Engagement Letter.
7.6. UPFRONT FEE.
The Lessee, at its option, either (a) shall cause the Lessor to pay (in
which case the Lessor shall so pay, provided funds are made available by the
Lenders and Holders therefor through Advances) as a Transaction Expense or (b)
to the extent such amounts are not otherwise paid by the Lessor, shall timely
pay, in either case on the Initial Closing Date an upfront fee payable to each
Lender (for the respective individual accounts of each such entity) as agreed by
each Lender (with respect to the upfront fee payable to such Lender), the Lessee
and the Agent.
SECTION 8. OTHER COVENANTS AND AGREEMENTS.
8.1. COOPERATION WITH THE CONSTRUCTION AGENT OR THE LESSEE.
The Holders, the Lenders, the Lessor (at the direction of the Majority
Secured Parties) and the Agent shall, at the expense of and to the extent
reasonably requested by the Construction Agent or the Lessee (but without
assuming additional liabilities on account thereof and only to the extent such
is acceptable to the Holders, the Lenders, the Lessor (at the direction of the
36
Majority Secured Parties) and the Agent in their reasonable discretion),
cooperate with the Construction Agent or the Lessee in connection with the
Construction Agent or the Lessee satisfying its covenant obligations contained
in the Operative Agreements including without limitation at any time and from
time to time, promptly and duly executing and delivering any and all such
further instruments, documents and financing statements (and continuation
statements related thereto).
8.2. COVENANTS OF THE OWNER TRUSTEE AND THE HOLDERS.
Each of the Owner Trustee and the Holders hereby agrees that so long as
this Agreement is in effect:
(a) Neither the Owner Trustee (in its trust capacity or in its
individual capacity) nor any Holder will create, incur, assume or permit to
exist at any time, and each of them will, at its own cost and expense,
promptly take such action as may be necessary duly to discharge, or to
cause to be discharged, all Lessor Liens attributable to it; provided,
however, that the Owner Trustee and the Holders shall not be required to so
discharge any such Lessor Lien while the same is being contested in good
faith by appropriate proceedings diligently prosecuted so long as such
proceedings shall not affect the rights of the Lessee under the Lease and
the other Operative Agreements or involve any material danger of impairment
of the Liens of the Security Documents or of the sale, forfeiture or loss
of, and shall not interfere with the use or disposition of, any Property or
title thereto or any interest therein or the payment of Rent, shall not
result in any cost or expense to Lessee and shall be completed prior to the
date of Parcel Map Recordation (in the case of any Lessor Lien affecting
the Surplus Land) and otherwise prior to the Expiration Date or the
Termination Date;
The Trust Company, in its trust capacity with respect to any Lessor
Lien attributable to it as Owner Trustee, and in its individual capacity
with respect to any Lessor Lien attributable to it in its individual
capacity, and each Holder further agrees to indemnify and hold harmless
each other party hereto from and against any loss, cost or expense
(including reasonable legal fees and expenses) which may be suffered or
incurred by any of them as the result of its failure to discharge and
satisfy any such Lessor Lien attributable to it in such capacity. The
indemnity obligations in the previous sentence shall be on an individual,
rather than on a joint and several, basis.
(b) Without prejudice to any right under the Trust Agreement of the
Owner Trustee to resign (subject to the requirement set forth in the Trust
Agreement that such resignation shall not be effective until a successor
shall have agreed to accept such appointment), or the Holders' rights under
the Trust Agreement to remove the institution acting as the Owner Trustee
(after consent to such removal by the Agent as provided in the Trust
Agreement), each of the Owner Trustee (in its individual and trust
capacities) and the Holders hereby agrees with the Lessee and the Agent (i)
not to terminate or revoke the trust created by the Trust Agreement except
as permitted by Article VIII of the Trust Agreement, (ii) not to amend,
supplement, terminate or revoke or otherwise modify any provision of the
37
Trust Agreement in such a manner as to adversely affect the rights of any
such party without the prior written consent of such party and (iii) to
comply with all of the terms of the Trust Agreement, the nonperformance of
which would adversely affect such party;
(c) The Owner Trustee or any successor may resign or be removed by the
Holders as the Owner Trustee, a successor Owner Trustee may be appointed
and a corporation may become the Owner Trustee under the Trust Agreement,
only in accordance with the provisions of Article IX of the Trust Agreement
and, with respect to such appointment, with the consent of the Lessee (so
long as there shall be no Lease Event of Default that shall have occurred
and be continuing), which consent shall not be unreasonably withheld or
delayed;
(d) The Owner Trustee, in its capacity as the Owner Trustee under the
Trust Agreement, and not in its individual capacity, shall not contract
for, create, incur or assume any Indebtedness (other than an
indemnification agreement regarding mechanics' liens on terms approved by
the Agent), or except as provided for in Section 2.1 of the Trust
Agreement, enter into any business or other activity or enter into any
contracts or agreements, other than pursuant to or under the Operative
Agreements;
(e) The Holders will not instruct the Owner Trustee to take any action
in violation of the terms of any Operative Agreement;
(f) Neither any Holder nor the Owner Trustee shall (i) commence any
case, proceeding or other action with respect to the Owner Trustee under
any existing or future law of any jurisdiction, domestic or foreign,
relating to bankruptcy, insolvency, reorganization, arrangement,
winding-up, liquidation, dissolution, composition or other relief with
respect to it or its debts, or (ii) seek appointment of a receiver,
trustee, custodian or other similar official with respect to the Owner
Trustee or for all or any substantial benefit of the creditors of the Owner
Trustee; and neither any Holder nor the Owner Trustee shall take any action
in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in this paragraph;
(g) The Owner Trustee shall give prompt notice to the Lessee, the
Holders and the Agent if the Owner Trustee's principal place of business or
chief executive office, or the office where the records concerning the
accounts or contract rights relating to any Property are kept, shall cease
to be located at 79 South Main Street, Salt Lake City, Utah 84111, or if it
shall change its name;
(h) The Owner Trustee shall take or refrain from taking such actions
and grant or refrain from granting such approvals with respect to the
Operative Agreements and/or relating to any Property in each case as
directed in writing by the Agent (until such time as the Loans are paid in
full, and then by the Majority Holders) or, in connection with Sections
8.5, 9.1 and 9.2 hereof, the Lessee; provided, however, that
notwithstanding the foregoing provisions of this subparagraph (h) the Owner
38
Trustee, the Agent, the Lenders and the Holders each acknowledge, covenant
and agree that neither the Owner Trustee nor the Agent shall act or refrain
from acting, regarding each Unanimous Vote Matter, until such party has
received the approval of each Lender and each Holder affected by such
matter; and
(i) Except as otherwise contemplated in the Operative Agreements, the
proceeds of the Loans and Holder Advances shall not be applied by the Owner
Trustee, either in its individual capacity or as the Owner Trustee, for any
purpose other than the purchase and/or lease of the Properties, the
acquisition, installation and testing of the Equipment, the construction of
Improvements, the payment of costs referred to in Section 5.1(a), Hard
Costs and Soft Costs relating to the Properties and the payment of
Transaction Expenses and the fees, expenses and other disbursements
referenced in Sections 7.1(a) and 7.1(b) of this Agreement, in each case
which accrue prior to the Rent Commencement Date with respect to a
particular Property.
8.3. CREDIT PARTY COVENANTS, CONSENT AND ACKNOWLEDGMENT.
(a) Each Credit Party acknowledges and agrees that the Owner Trustee,
pursuant to the terms and conditions of the Security Agreement and the
Mortgage Instruments, shall create Liens respecting the various personal
property, fixtures and real property described therein in favor of the
Agent. Each Credit Party hereby irrevocably consents to the creation,
perfection and maintenance of such Liens. Each Credit Party shall, to the
extent reasonably requested by any of the other parties hereto, cooperate
with the other parties in connection with their covenants herein or in the
other Operative Agreements and shall from time to time duly execute and
deliver any and all such future instruments, documents and financing
statements (and continuation statements related thereto) as any other party
hereto may reasonably request.
(b) The Lessor hereby instructs each Credit Party, and each Credit
Party hereby acknowledges and agrees, that until such time as the Company
Obligations are paid in full (i) any and all Rent (excluding Excepted
Payments which shall be payable to each Holder or other Person as
appropriate) and any and all other amounts of any kind or type under any of
the Operative Agreements in respect of Company Obligations due and owing or
payable to any Person shall instead be paid directly to the Agent
(excluding Excepted Payments which shall be payable to each Holder or other
Person as appropriate) or as the Agent may direct from time to time for
allocation and distribution in accordance with the procedures set forth in
Section 8.7 hereof, (ii) all rights of the Lessor under the Lease shall be
exercised by the Agent on an exclusive basis and (iii) each Credit Party
shall cause all notices, certificates, financial statements, communications
and other information which are delivered, or are required to be delivered,
to the Lessor to also be delivered at the same time to the Agent.
(c) No Credit Party shall consent to or permit any amendment,
supplement or other modification of the terms or provisions of any
Operative Agreement except in accordance with Section 12.4 of this
Agreement.
39
(d) Each Credit Party hereby covenants and agrees that, except for
amounts payable as Basic Rent, certain Transaction Expenses funded by
Advances pursuant to the Operative Agreements, payments of Supplemental
Rent to the extent such payments have been previously paid in full by
Lessee in accordance with the provisions of the Operative Agreements,
principal, interest and yield due and owing under the Notes and the
Certificates, respectively, amounts expressly excluded from indemnification
pursuant to Sections 11.1, 11.2, 11.7 and 11.8 of this Agreement, amounts
due and owing (between the buyer and seller thereof) as a result of any
voluntary sale of an assignment or participation interest by any Lender or
Holder under the Operative Agreements and any interest calculated at a rate
equal to the daily average Federal Funds Effective Rate payable by any
Lender to the Agent pursuant to Section 2.10(b) of the Credit Agreement,
any and all payment obligations owing from time to time under the Operative
Agreements by the Owner Trustee or the Trust Company to the Agent, any
Lender, any Holder or any other Person shall (without further action) be
deemed to be Supplemental Rent obligations payable by the Lessee within
thirty (30) days after demand (unless such payment of Supplemental Rent is
due on the due date of any payment of Termination Value in which case such
payment of Supplemental Rent shall be due on the due date for such payment
of Termination Value and provided, to the extent any such payment of
Supplemental Rent is reimbursement for amounts paid by one or more
Financing Parties on behalf of any Credit Party pursuant to the Operative
Agreements then the Lessee shall also pay interest on such Supplemental
Rent calculated at the Overdue Rate from the date any Credit Party has
knowledge of the applicable payment from any such Financing Party until
such payment of Supplemental Rent plus such interest is paid by one of the
Credit Parties to the Agent for the account of each such Financing Party).
Without limitation, but subject to the exception set forth above, such
obligations of the Credit Parties shall include without limitation
participation fees, prepayment fees, penalties, arrangement fees,
administrative fees, unused fees, breakage costs, indemnities, trustee fees
and transaction expenses incurred by the parties hereto in connection with
the transactions contemplated by the Operative Agreements. Upon Lessee's
payment of any such obligations of the Owner Trustee, Lessee shall have the
same subrogation rights as against the Owner Trustee with respect thereto
as are provided in respect of Claims set forth in Section 11.9, but such
rights of subrogation shall be subject and subordinate in all respects to
any and all obligations and/or amounts due and owing from time to time by
the Owner Trustee to any Financing Party.
(e) The Lessee hereby covenants and agrees to cause an Appraisal or
reappraisal (in form and substance satisfactory to the Agent and from an
appraiser selected by the Agent) to be issued respecting any Property as
requested by the Agent in its reasonable discretion from time to time (i)
at each and every time as such shall be required to satisfy any Legal
Requirements imposed on the Agent, the Lessor, the Trust Company, any
Lender and/or any Holder and (ii) after the occurrence of an Event of
Default.
40
(f) Except as otherwise contemplated by the Operative Agreements, the
Construction Agent shall not use the proceeds of any Holder Advance or Loan
for any purpose other than the purchase and/or lease of the Properties, the
acquisition, installation and testing of the Equipment, the construction of
Improvements, the payment of costs referred to in Section 5.1(a), Hard
Costs and Soft Costs relating to the Properties and the payment of
Transaction Expenses and the fees, expenses and other disbursements
referenced in Sections 7.1(a) and 7.1(b) of this Agreement, in each case
which accrue prior to the Rent Commencement Date with respect to a
particular Property.
(g) At any time the Lessor or the Agent is entitled under the
Operative Agreements to possession of a Property or any component thereof,
each of the Construction Agent and the Lessee hereby covenants and agrees,
at its own cost and expense, to assemble and make the same available to the
Agent (on behalf of the Lessor).
(h) The Lessee hereby covenants and agrees that, respecting each
Property, Non-Integral Equipment financed under the Operative Agreements
may constitute up to, but shall not exceed, ten percent (10%) of the
aggregate Advances extended at or prior to such time with respect to such
Property.
(i) The Lessee hereby covenants and agrees that the Operative
Agreements shall be used to finance one, and only one Property and that the
Property shall be the Permitted Facility.
(j) The Lessee hereby covenants and agrees that it shall give prompt
notice to the Agent if the Lessee's principal place of business or chief
executive office, or the office where the records concerning the accounts
or contract rights relating to any Property are kept, shall cease to be
located at 777 Mariners Island Boulevard, San Mateo, California 94404 or if
it shall change its name.
(k) To the extent that the Lessee Credit Agreement, the Short-Term
Facility, any other principal credit facility of the Guarantor or any
replacement facility of any of the foregoing becomes collateralized, the
Company Obligations will be secured (on a pari-passu basis with such other
facility) by such collateral in favor of the Financing Parties.
(l) [Reserved].
(m) The Lessee hereby covenants and agrees that the rights of the
Lessee under this Agreement and the Lease shall not impair or in any way
diminish the obligations of the Construction Agent and/or the rights of the
Lessor under the Agency Agreement.
(n) [Reserved].
(o) Each Credit Party shall promptly notify the Agent, or cause the
Agent to be promptly notified, upon such Credit Party gaining knowledge of
41
the occurrence of any Default or Event of Default which is continuing at
such time. In any event, such notice shall be provided to the Agent within
ten (10) days of when such Credit Party gains such knowledge.
(p) Until all of the Company Obligations have been finally and
indefeasibly paid and satisfied in full, unless consent has been obtained
from the Majority Secured Parties, each Credit Party will:
(i) except as permitted by the express provisions of the Lessee
Credit Agreement, preserve and maintain its separate legal existence
and all rights, franchises, licenses and privileges necessary to the
conduct of its business, and qualify and remain qualified as a foreign
corporation (or partnership, limited liability company or other such
similar entity, as the case may be) and authorized to do business in
each jurisdiction in which the failure to do so qualify would have a
Material Adverse Effect;
(ii) pay and perform all obligations of the Credit Parties under
the Operative Agreements and pay and perform (A) all taxes,
assessments and other governmental charges that may be levied or
assessed upon it or any of its property, and (B) all other
indebtedness, obligations and liabilities in accordance with customary
trade practices, which if not paid would have a Material Adverse
Effect; provided that any Credit Party may contest any item described
in this Section 8.3(p)(ii) in good faith so long as adequate reserves
are maintained with respect thereto in accordance with GAAP;
(iii) to the extent failure to do so would have a Material
Adverse Effect, observe and remain in compliance with all applicable
Laws and maintain in full force and effect all Governmental Actions,
in each case applicable to the conduct of its business; and
(iv) provided that the Agent, the Lenders and the Holders use
reasonable efforts to minimize disruption to the business of the
Credit Parties and, subject to Section 12.13, permit representatives
of the Agent or any Lender or Holder, from time to time and, so long
as no Default or Event of Default shall have occurred and be
continuing, during normal business hours and upon written notice, to
visit and inspect its properties; inspect, audit and make extracts
from its books, records and files, including without limitation
management letters prepared by independent accountants; and discuss
with its principal officers, and its independent accountants, its
business, assets, liabilities, financial condition, results of
operations and business prospects.
(q) Lessee shall perform any and all obligations of Lessor under, and
cause Lessor to otherwise remain in full compliance with, the terms and
provisions of each Ground Lease, if any.
42
(r) Promptly after obtaining any required architectural approvals by
any business park or any other applicable entity with oversight
responsibility for the applicable Improvements, the Construction Agent
shall deliver to the Agent copies of the same.
(s) Each Credit Party shall (a) do or cause to be done all things
reasonably necessary in the judgment of such Credit Party to test all of
its mission-critical systems and mission-critical equipment supplied by
others or with which such Credit Party's mission-critical systems interface
on or prior to September 30, 1999; and (b) furnish to the Agent quarterly
updates on the status of its programs in relation to year 2000
readiness as set forth in Section 6.2(w).
(t) The Guarantor shall furnish to the Agent (for distribution to each
Holder and each Lender):
(i) as soon as available, but in any event within ninety (90)
days after the end of each fiscal year of the Guarantor, a copy of the
consolidated balance sheet of the Guarantor and its Consolidated
Subsidiaries as at the end of such year and the related consolidated
statements of income and retained earnings and of cash flows for such
year, setting forth in each case in comparative form the figures for
the previous year, reported on without a "going concern" or like
qualification or exception, or qualification arising out of the scope
of the audit, by PricewaterhouseCoopers LLP or other independent
certified public accountants of nationally recognized standing.
(ii) as soon as available, but in any event within ten (10) days
after delivery of the financial statements described in Section
8.3(t)(i), the corresponding consolidating balance sheet as at the end
of such year and the related consolidating statements of income and
retained earnings and of cash flows for such year, all showing
separately the principal lines of business conducted by separate
Subsidiaries or groups of Subsidiaries to the extent requested by the
Agent, certified by a Responsible Officer of the Guarantor as being
fairly stated in all material respects when considered in relation to
the consolidated financial statements of the Guarantor and its
Consolidated Subsidiaries, taken as a whole;
(iii) as soon as available, but in any event not later than
forty-five (45) days after the end of each of the first three (3)
quarterly periods of each fiscal year of the Guarantor, the unaudited
consolidated balance sheet of the Guarantor and its Consolidated
Subsidiaries as at the end of such quarter and the related unaudited
consolidated statements of income and retained earnings and of cash
flows of the Guarantor and its Consolidated Subsidiaries for such
quarter and the portion of the fiscal year through the end of such
quarter, setting forth in each case in comparative form the figures
for the previous year, certified by a Responsible Officer as being
fairly stated in all material respects when considered in relation to
43
the consolidated financial statements of the Guarantor and its
Consolidated Subsidiaries (subject to normal year-end audit
adjustments); and
(iv) as soon as available, but in any event within ten (10) days
after delivery of the financial statements described in Section
8.3(t)(iii), the corresponding consolidating balance sheet as at the
end of such quarter and the related consolidating statements of income
and retained earnings and of cash flows for the portion of the fiscal
year through such date, all showing separately the entities described
in Section 8.3(t)(ii), certified by a Responsible Officer of the
Guarantor as being fairly stated in all material respects when
considered in relation to the consolidated financial statements of the
Guarantor for such quarter taken as a whole;
all such financial statements to be complete and correct in all material
respects and to be prepared in reasonable detail and in accordance with
GAAP applied consistently throughout the periods reflected therein and with
prior periods (except as approved by such accountants or officer, as the
case may be, and disclosed therein).
(u) The Lessee shall furnish, or cause to be furnished, to the Agent
(for distribution to each Financing Party):
(i) concurrently with the delivery of the financial statements
referred to in Sections 8.3(t)(i) and 8.3(t)(iii), a certificate of a
Responsible Officer of the Lessee (A) stating that, to the best of
such officer's knowledge, each Credit Party during such period has
observed or performed all of its covenants and other agreements, and
satisfied every condition, contained in the Operative Agreements to be
observed, performed or satisfied by it, and that such officer has
obtained no knowledge of any Lease Default or Lease Event of Default
except as specified in such certificate and (B) with respect to the
covenants contained in Section 8.3(bb), setting forth such
calculations as are necessary to demonstrate compliance with such
covenants;
(ii) within five (5) days after the same are sent, copies of all
financial statements and reports which the Guarantor sends to its
stockholders and, within five (5) days after the same are filed,
copies of all financial statements and reports which the Guarantor may
make to, or file with, the Securities and Exchange Commission or any
successor or analogous Governmental Authority; and
(iii) promptly, such additional financial and other information
as any Financing Party may from time to time reasonably request.
(v) The Credit Parties shall, and shall cause each of their
Subsidiaries to, pay, discharge or otherwise satisfy at or before maturity
or before they become delinquent, as the case may be, all such entity's
obligations of whatever nature, except where the amount or validity thereof
is currently being contested in good faith by appropriate proceedings and
44
reserves in conformity with GAAP with respect thereto have been provided on
the books of the Credit Parties or their Subsidiaries, as the case may be.
(w) The Credit Parties shall, and shall cause each of their
Subsidiaries to, continue to engage in business of the same general type as
now conducted by the Credit Parties and their Subsidiaries and preserve,
renew and keep in full force and effect such entity's corporate existence
and take all reasonable action to maintain all rights, registrations,
licenses, privileges and franchises necessary or desirable in the normal
conduct of its business (including without limitation all such
registrations under the Advisers Act and all material investment advisory
agreements, distribution agreements and shareholder servicing contracts),
except as otherwise permitted pursuant to Section 8.3(ff); comply, and to
the extent reasonably within its control cause each Fund to comply, with
all Contractual Obligations and Requirements of Law except to the extent
that failure to comply therewith could not, in the aggregate, have a
Material Adverse Effect.
(x) Each Credit Party shall, and shall cause each of its Subsidiaries
to, keep all property useful and necessary in its business in good working
order and condition; maintain with financially sound and reputable
insurance companies insurance on all its property in at least such amounts
and against at least such risks as are usually insured against in the same
general area by companies engaged in the same or a similar business; and
furnish to the Agent, upon written request, full information as to the
insurance carried.
(y) Each Credit Party shall, and shall cause each of its Subsidiaries
to, keep proper books of records and account in which full, true and
correct entries in conformity with GAAP, or with respect to foreign
Subsidiaries in conformity with appropriate local accounting practices, and
all Requirements of Law shall be made of all dealings and transactions in
relation to its business and activities; and permit representatives of any
Financing Party to visit and inspect any of its properties and examine and
make abstracts from any of its books and records at any reasonable time and
as often as may reasonably be desired and to discuss the business,
operations, properties and financial and other condition of each Credit
Party and its Subsidiaries with officers and employees of each Credit Party
and its Subsidiaries and with its independent certified public accountants.
(z) A Credit Party shall promptly give notice to the Agent, which
shall promptly give notice to each other Financing Party, of:
(i) the occurrence of any Lease Default or Lease Event of
Default;
(ii) any (A) default or event of default under any Contractual
Obligation of any Credit Party or any of their Subsidiaries or (B)
litigation, investigation or proceeding which may exist at any time
between any Credit Party or any of its Subsidiaries and any
Governmental Authority or any Fund, which in either case, if not cured
45
or if adversely determined, as the case may be, would have a Material
Adverse Effect;
(iii) any litigation or proceeding affecting any Credit Party or
any of its Subsidiaries or any "affiliated person" of any Credit Party
or any of its Subsidiaries, within the meaning of the Investment
Company Act, in which the amount involved is $10,000,000 or more and
not covered by insurance or in which injunctive or similar relief is
sought or which could reasonably be expected to have a Material
Adverse Effect;
(iv) the following events, as soon as possible and in any event
within thirty (30) days after any Credit Party knows or has reason to
know thereof: (A) the occurrence or expected occurrence of any
Reportable Event with respect to any Plan, or any withdrawal from, or
the termination, Reorganization or Insolvency of any Multiemployer
Plan or (B) the institution of proceedings or the taking of any other
action by the PBGC or any Credit Party or any Commonly Controlled
Entity or any Multiemployer Plan with respect to the withdrawal from,
or the terminating, Reorganization or Insolvency of, any Plan;
(v) any suspension or termination of the registration of any
Subsidiary of any Credit Party as an investment adviser under the
Advisers Act or any cancellation or expiration without renewal of any
investment advisory agreement, distribution agreement or shareholder
servicing contract to which any Credit Party or any of its
Subsidiaries is a party the revenues under which have exceeded in the
most recent fiscal year of any Credit Party $25,000,000; and
(vi) a development or event which could reasonably be expected to
have a Material Adverse Effect.
Each notice pursuant to this subsection shall be accompanied by a statement
of a Responsible Officer of such Credit Party setting forth details of the
occurrence referred to therein and stating what action such Credit Party
proposes to take, or cause to be taken, with respect thereto.
(aa) Each Credit Party shall, and shall cause each of its Subsidiaries
to:
(i) Comply with, and ensure compliance by all tenants and
subtenants, if any, with, all applicable Environmental Laws and obtain
and comply with and maintain, and ensure that all tenants and
subtenants obtain and comply with and maintain, any and all licenses,
approvals, notifications, registrations or permits required by
applicable Environmental Laws except to the extent that failure to do
so could not be reasonably expected to have a Material Adverse Effect;
(ii) Conduct and complete all investigations, studies, sampling
and testing, and all remedial, removal and other actions required
46
under Environmental Laws and promptly comply with all lawful orders
and directives of all Governmental Authorities regarding Environmental
Laws except to the extent that the same are being contested in good
faith by appropriate proceedings and the pendency of such proceedings
could not be reasonably expected to have a Material Adverse Effect;
and
(iii) Defend, indemnify and hold harmless the Indemnified Parties
from and against any claims, demands, penalties, fines, liabilities,
settlements, damages, costs and expenses of whatever kind or nature
known or unknown, contingent or otherwise, arising out of, or in any
way relating to the violation of, noncompliance with or liability
under any Environmental Laws applicable to the operations of any
Credit Party or the Additional Properties, or any orders, requirements
or demands of Governmental Authorities related thereto, including,
without limitation, attorney's and consultant's fees, investigation
and laboratory fees, response costs, court costs and litigation
expenses, except to the extent that any of the foregoing arise out of
the gross negligence or willful misconduct of the party seeking
indemnification therefor. This indemnity shall continue in full force
and effect regardless of the termination of any Operative Agreement.
(bb) The Guarantor shall not:
(i) Permit for any period of four (4) consecutive fiscal quarters
of the Guarantor commencing on or after the Initial Closing Date (or
for any of the periods of one, two and three consecutive fiscal
quarters of the Guarantor commencing on or immediately after the
Initial Closing Date) the ratio of (i) the sum of Consolidated Net
Income for such period plus income taxes deducted in determining such
Consolidated Net Income plus Consolidated Interest Expense for such
period to (ii) Consolidated Interest Expense for such period to be
less than 4.0 to 1.
(ii) Permit Consolidated Working Capital on any date on or after
the Initial Closing Date to be less than $100,000,000.
(iii) Permit the Capitalization Ratio at any time to be greater
than fifty-five percent (55%).
(cc) Except as otherwise required to comply with the express
provisions of the Operative Agreements, the Guarantor shall not create,
incur, assume or suffer to exist any secured Indebtedness, and shall not
permit any of its Included Subsidiaries to create, incur, assume or suffer
to exist any Indebtedness, except for:
(i) Indebtedness of the Guarantor or any of its Subsidiaries in
an aggregate principal amount not exceeding as to the Guarantor and
its Included Subsidiaries $50,000,000 at any time outstanding;
47
(ii) Indebtedness outstanding on the Initial Closing Date and
listed on Schedule 8 or reflected in the financial statements referred
to in Section 6.2(x);
(iii) Indebtedness of a Person which becomes a Subsidiary after
the date hereof, provided that (A) such Indebtedness existed at the
time such corporation became a Subsidiary and was not created in
anticipation thereof and (B) immediately after giving effect to the
acquisition of such corporation by the Guarantor or any existing
Subsidiary no Lease Default or Lease Event of Default shall have
occurred and be continuing; and
(iv) unsecured Indebtedness of any Subsidiary owing to the
Guarantor or any Subsidiary of the Guarantor or secured Indebtedness
of any Subsidiary of the Guarantor owing to the Guarantor.
(dd) Except as otherwise required to comply with the express
provisions of the Operative Agreements, the Guarantor shall not, and shall
not permit any of its Included Subsidiaries to, create, incur, assume or
suffer to exist any Lien upon any of its property, assets or revenues,
whether now owned or hereafter acquired, except for:
(i) Liens for taxes not yet due or which are being contested in
good faith by appropriate proceedings, provided that adequate reserves
with respect thereto are maintained on the books of the Guarantor or
its Subsidiaries, as the case may be, in conformity with GAAP;
(ii) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of
business which are not overdue for a period of more than sixty (60)
days or which are being contested in good faith by appropriate
proceedings;
(iii) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security
legislation and deposits securing liability to insurance carriers
under insurance or self-insurance arrangements;
(iv) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations, surety
and appeal bonds, performance bonds and other obligations of a like
nature incurred in the ordinary course of business;
(v) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not in any case
detract from the value of the property subject thereto (in a manner
which reasonably could be expected to have a Material Adverse Effect
or in a manner, when assessing the aggregate value of all the
properties of the Credit Parties, does not detract from such aggregate
48
value by an amount in excess of ten percent (10%) thereof) or
interfere with the ordinary conduct of the business of the Guarantor
or any Subsidiary of Guarantor;
(vi) Liens in existence on the Initial Closing Date listed on
Schedule 9 or described in the financial statements referred to in
Section 6.2(x) or in any notes thereto, securing Indebtedness
permitted by Section 8.3(cc)(ii), provided that no such Lien is spread
to cover any additional property after the Initial Closing Date and
that the amount of Indebtedness secured thereby is not increased;
(vii) Liens securing Indebtedness of the Guarantor and its
Subsidiaries permitted by Section 8.3(cc)(i) incurred to finance the
acquisition of fixed or capital assets, provided that (A) such Liens
shall be created substantially simultaneously with the acquisition of
such fixed or capital assets, (B) such Liens do not at any time
encumber any property other than the property financed by such
Indebtedness, (C) the amount of Indebtedness secured thereby is not
increased and (D) the principal amount of Indebtedness secured by any
such Lien shall at no time exceed the purchase price of such property;
(viii) Liens on the property or assets of a Person which becomes
a Subsidiary after the date hereof securing Indebtedness permitted by
Section 8.3(cc)(iii), provided that (A) such Liens existed at the time
such Person became a Subsidiary and were not created in anticipation
thereof, (B) any such Lien is not spread to cover any property or
assets of such Person after the time such Person becomes a Subsidiary,
and (C) the amount of Indebtedness secured thereby is not increased;
(ix) Liens (not otherwise permitted hereunder) which secure
obligations in an aggregate amount at any one time outstanding not
exceeding as to the Guarantor and its Included Subsidiaries an amount
equal to five percent (5%) of the Consolidated Net Worth, measured at
the time of the creation, incurrence or assumption of any such Lien
and based upon the Consolidated Net Worth as at the end of the most
recently completed fiscal quarter of the Guarantor for which financial
statements have been furnished to the Agent pursuant to Section
8.3(t); and
(x) Liens on "margin stock" within the meaning of Regulation U to
the extent that margin stock would, but for this Section 8.3(dd)(x),
represent more than twenty-five percent (25%) of the value of the
assets subject to this Section 8.3(dd).
(ee) The Guarantor shall not, and shall not permit any of its
Subsidiaries to, enter into any merger, consolidation or amalgamation, or
liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution), or convey, sell, lease, assign, transfer or otherwise dispose
49
of, all or substantially all of its property, business or assets, except,
so long as no Lease Default or Lease Event of Default has occurred and is
continuing or would result therefrom:
(i) that the Guarantor may enter into any merger, consolidation
or amalgamation for the purpose of effecting any corporate or tax
reorganization of the Guarantor and the Subsidiaries or for the
purpose of effecting any investment permitted under Section 8.3(gg),
provided that such merger, consolidation or amalgamation is not with
any Banking Subsidiary, Insurance Subsidiary or Real Estate Subsidiary
(or with any other Person which is principally engaged in the banking
or trust, insurance or real estate business), that the ownership of
the Guarantor (or its successor) is not materially different after
such transaction from what it was prior thereto, that the Guarantor
(or its successor) remains the holding company for the Subsidiaries of
the Guarantor prior thereto, and that, if the Guarantor is not the
successor corporation in such transaction, such successor corporation
is a corporation organized and validly existing under the laws of the
United States or any state thereof and, by operation of law or
otherwise, assumes the obligations of the Guarantor hereunder and
under the other Operative Agreements and such organization and
assumption are evidenced by an opinion of counsel to such successor
satisfactory in form and substance to the Agent; and
(ii) that any Subsidiary of the Guarantor may enter into any such
transaction for the purpose of effecting any corporate or tax
reorganization of the Guarantor and its Subsidiaries or for the
purpose of effecting any sale or other disposition of any of its
property, business or assets permitted under Section 8.3(ff) or any
investment permitted under Section 8.3(gg), provided that such merger,
consolidation or amalgamation is not with any Banking Subsidiary,
Insurance Subsidiary or Real Estate Subsidiary (or with any other
Person which is principally engaged in the banking or trust, insurance
or real estate business), unless such Subsidiary is also a Banking
Subsidiary, Insurance Subsidiary or Real Estate Subsidiary, as the
case may be.
(ff) Except as otherwise required to comply with the express
provisions of the Operative Agreements, the Guarantor shall not, and shall
not permit any of its Included Subsidiaries to, make any Asset Disposition,
unless the Revolving Credit Loans (as such term is defined in the Lessee
Credit Agreement) are reduced to the extent required pursuant to Section
2.7 of the Lessee Credit Agreement and the Guarantor makes the mandatory
prepayment, if any, required in connection therewith pursuant to Section
2.7 of the Lessee Credit Agreement.
(gg) The Guarantor shall not, and shall not permit any of its Included
Subsidiaries to, make any advance, loan, extension of credit or capital
contribution to, or purchase any stock, bonds, notes, debentures or other
securities of or any assets constituting a business unit of, or make any
other investment in (any of the foregoing, an "investment"), any Person,
except for:
50
(i) investments in marketable securities, liquid investments and
other financial instruments that are acquired for investment purposes
and that have a value which may be readily established, including any
such investment that may be readily sold or otherwise liquidated in
any Fund or in any investment company managed by any Joint Venture
pursuant to an investment advisory agreement;
(ii) any investment in any Included Subsidiary of the Guarantor
or in any other Person principally engaged in the business of
providing investment advisory services and related (including
distribution and shareholder servicing) services, provided that, after
giving effect to any such investment in any such other Person, such
other Person is a Subsidiary or a Joint Venture;
(iii) any investment in any Banking Subsidiary or in any other
Person which, after giving effect to any such investment, is a Banking
Subsidiary, provided that after giving effect to each such investment,
the aggregate of the investments made pursuant to this Section
8.3(gg)(iii) in any fiscal year of the Guarantor shall not exceed,
$15,000,000, provided that any portion of such amount not so invested
in any fiscal year may be carried over for expenditure in any
following fiscal year;
(iv) extensions of trade credit in the ordinary course of
business;
(v) loans to officers of the Guarantor or any of its Subsidiaries
consistent with past practices of the Guarantor and its Subsidiaries,
and advances to employees of the Guarantor or its Subsidiaries for
travel, entertainment and relocation expenses in the ordinary course
of business;
(vi) investments in the Finance Subsidiary;
(vii) investments constituting non-cash consideration received in
connection with an Asset Disposition, provided that such non-cash
consideration shall not exceed twenty-five percent (25%) of the
aggregate consideration received for such Asset Disposition; and
provided further that the aggregate amount of any such non-cash
consideration with respect to Asset Dispositions shall not exceed
$10,000,000 at any one time outstanding; and
(viii) other investments in an aggregate amount as to the
Guarantor and its Subsidiaries (other than the Banking Subsidiaries
and the Finance Subsidiary) not exceeding $125,000,000 for the period
since the Initial Closing Date.
(hh) The Guarantor shall not, and shall not permit any of its
Subsidiaries to, enter into any transaction, including, without limitation,
any purchase, sale, lease or exchange of property or the rendering of any
service, with any Affiliate or any Subsidiary less than eighty percent
(80%) owned, directly or indirectly, by the Guarantor, unless such
51
transaction is otherwise permitted under the Operative Agreements, is in
the ordinary course of the Guarantor's or such Subsidiary's business and is
upon fair and reasonable terms no less favorable to the Guarantor or such
Subsidiary, as the case may be, than it would obtain in a comparable arm's
length transaction with a Person not an Affiliate.
(ii) The Guarantor shall not permit the fiscal year of the Guarantor
to end on a day other than September 30, except with the consent of the
Majority Secured Parties (which consent shall not be unreasonably withheld
and which consent may be conditioned upon adjusting the covenants in a
manner to give each of the parties hereto substantially the same protection
and benefits as were in effect prior to any such change in the fiscal year
of the Guarantor).
(jj) The Guarantor shall not, and shall not permit any of its Included
Subsidiaries to, enter into, or suffer to exist, any agreement with any
Person other than the Financing Parties which prohibits or limits the
ability of any Included Subsidiary to (a) pay dividends or make other
distributions or pay any Indebtedness owed to the Guarantor or any other
Included Subsidiary, (b) make loans or advances to the Guarantor or any
other Included Subsidiary or (c) transfer any of its properties or assets
to the Guarantor or any other Included Subsidiary.
(kk) The Credit Parties shall not permit the construction of any
Improvements on any portion of any Property in which the Seller, pursuant
to the Purchase and Sale Agreement, has retained any interest or with
respect to which Seller may exercise its rights.
(ll) The Lessee shall not permit the Purchase and Sale Agreement to be
amended or modified in any fashion from and after the Initial Closing Date
unless any such amendment or modification has been approved in writing by
the Agent.
8.4. SHARING OF CERTAIN PAYMENTS.
Except for Excepted Payments, the parties hereto acknowledge and agree that
all payments due and owing by any Credit Party to the Lessor under the Lease or
any of the other Operative Agreements shall be made by such Credit Party
directly to the Agent as more particularly provided in Section 8.3 hereof. The
Lessor, the Holders, the Agent, the Lenders and the Credit Parties acknowledge
the terms of Section 8.7 of this Agreement regarding the allocation of payments
and other amounts made or received from time to time under the Operative
Agreements and agree, that all such payments and amounts are to be allocated as
provided in Section 8.7 of this Agreement.
8.5. GRANT OF EASEMENTS, ETC.
(a) The Agent, the Lenders and the Holders hereby agree that, so long
as no Event of Default shall have occurred and be continuing, the Owner
Trustee shall, from time to time at the request of the Lessee (and with the
prior consent of the Agent), in connection with the transactions
52
contemplated by the Agency Agreement, the Lease or the other Operative
Agreements, (i) grant easements and other rights in the nature of easements
with respect to any Property, (ii) release existing easements or other
rights in the nature of easements which are for the benefit of any
Property, (iii) execute and deliver to any Person any instrument
appropriate to confirm or effect such grants or releases, (iv) dedicate or
transfer portions of any Property not improved with a building, for road,
highway or other public purposes if (A) the conveyance of such portion of
any Property will not impair the access, use, occupancy or fair market
value of the portion of such Property remaining in the Trust, (B) the
portion of any Property remaining in the Trust (1) shall constitute one or
more legal and tax parcels, (2) shall contain or be expected to contain at
least one building, (3) shall be viable as a separate property in
compliance with Legal Requirements and (4) shall have a fair market value
equal to at least 100% of the Property Cost of such Property and (C) at the
time of such conveyance, no Default or Event of Default shall have occurred
and be continuing, (v) execute documents required to create or administer a
governmental special benefit district or assessment district for public
improvements and collection of special assessments if such special benefit
district or assessment district will not impair the access, use, occupancy
or fair market value of any Property, (vi) execute instruments necessary or
desirable for the exercise or enforcement of rights or performance of
obligations under any Permitted Liens or any contract, permit, license,
franchise or other right included within the term "Property", (vii) execute
modifications of the Permitted Liens, (viii) execute permit applications or
other documents required to accommodate construction of the improvements
described in the Participation Agreement permitted by the Lease, (ix)
execute and deliver to any Person such other documents or materials in
connection with the acquisition, development, construction, testing or
operation of any Property, including without limitation reciprocal easement
agreements, construction contracts, operating agreements, development
agreements, plats, replats or subdivision documents and (x) consent to,
exercise, or assist Lessee in exercising, rights under any of the
foregoing; provided, that each of the agreements referred to in this
Section 8.5 shall be in the ordinary course of the Lessee's business and
shall be on commercially reasonable terms so as not to diminish the value
of any Property in any material respect.
(b) Subject to the other terms and conditions of the Operative
Agreements, Lessee shall be entitled to do any of the following in Lessee's
own name and to the exclusion of the Owner Trustee during the Term without
any notice to or consent of the Owner Trustee, the Agent, any Lender or
Holder, so long as no Default or Event of Default has occurred and is
continuing and so long as Lessee does not thereby create any encumbrance or
cloud on Lessor's title to the Property (other than a Permitted Lien):
(A) perform obligations arising under, enter into amendments of
and to exercise and enforce the rights of the buyer under the Purchase
and Sale Agreement;
53
(B) perform obligations arising under, enter into amendments of
and to exercise and enforce the rights of Lessee, the Owner Trustee or
the owner of the Property under the Development Contracts and the
Permitted Liens;
(C) perform obligations arising under, enter into amendments of
and to exercise and enforce the rights of Lessee, the Owner Trustee or
the owner of the Property with respect to any other contracts or
documents (such as Plans and Specifications) included within the
definition of the term "Property"; and
(D) recover and retain any monetary damages or other benefit
inuring to Lessee, the Owner Trustee or the owner of the Property
through the enforcement of any rights, contracts or other documents
included within the Property as described in the Lease (including
without limitation the Purchase and Sale Agreement, the Development
Contracts and the Permitted Liens and any ordinances, regulations and
laws); provided, that to the extent any such monetary damages may
become payable as compensation for an adverse impact on value of the
Property, the rights of the Owner Trustee and Lessee hereunder with
respect to the collection and application of such monetary damages
shall be the same as for condemnation proceeds payable because of a
taking of a part of the Property.
8.6. APPOINTMENT BY THE AGENT, THE LENDERS, THE HOLDERS AND THE OWNER
TRUSTEE.
The Holders hereby appoint the Agent to act as collateral agent for the
Holders in connection with the Lien granted by the Security Documents to secure
the Holder Amount. The Lenders and the Holders acknowledge and agree and direct
that the rights and remedies of the beneficiaries of the Lien of the Security
Documents shall be exercised on an exclusive basis by the Agent on behalf of the
Lenders and the Holders as directed from time to time by the Majority Secured
Parties or, pursuant to Sections 8.2(h) and 12.4, all of the Lenders and the
Holders, as the case may be; provided, in all cases, the Agent shall allocate
payments and other amounts received in accordance with Section 8.7. The Agent is
further appointed to provide notices under the Operative Agreements on behalf of
the Owner Trustee (as determined by the Agent, in its reasonable discretion), to
receive notices under the Operative Agreements on behalf of the Owner Trustee
and (subject to Sections 8.5 and 9.2) to take such other action under the
Operative Agreements on behalf of the Owner Trustee as the Agent shall determine
in its reasonable discretion from time to time. The Agent hereby accepts such
appointments. For purposes hereof, the provisions of Section 7 of the Credit
Agreement, together with such other terms and provisions of the Credit Agreement
and the other Operative Agreements as required for the full interpretation and
operation of Section 7 of the Credit Agreement are hereby incorporated by
reference as if restated herein for the mutual benefit of the Agent and each
Holder as if each Holder were a Lender thereunder. Outstanding Holder Advances
and outstanding Loans shall each be taken into account for purposes of
determining Majority Secured Parties. Further, the Agent shall be entitled to
take such action on behalf of the Owner Trustee as is delegated to the Agent
under any Operative Agreement (whether express or implied) as may be reasonably
incidental thereto. The parties hereto hereby agree to the provisions contained
54
in this Section 8.6. Any appointment of a successor agent under Section 7.9 of
the Credit Agreement shall also be effective as an appointment of a successor
agent for purposes of this Section 8.6.
8.7. COLLECTION AND ALLOCATION OF PAYMENTS AND OTHER AMOUNTS.
(a) Each Credit Party has agreed pursuant to Section 5.10 and
otherwise in accordance with the terms of this Agreement to pay to (i) the
Agent any and all Rent (excluding Excepted Payments) and any and all other
amounts of any kind or type under any of the Operative Agreements due and
owing or payable to any Person and (ii) each Person as appropriate the
Excepted Payments. Promptly after receipt, the Agent shall apply and
allocate, in accordance with the terms of this Section 8.7, such amounts
received from any Credit Party and all other payments, receipts and other
consideration of any kind whatsoever received by the Agent pursuant to the
Security Agreement or otherwise received by the Agent, the Holders or any
of the Lenders in connection with the Collateral, the Security Documents or
any of the other Operative Agreements. Ratable distributions among the
Lenders and the Holders under this Section 8.7 shall be made based on (in
the case of the Lenders) the ratio of the outstanding Loans to the
aggregate Property Cost and (in the case of the Holders) the ratio of the
outstanding Holder Advances to the aggregate Property Cost. Ratable
distributions among the Tranche A Lenders under this Section 8.7 shall be
made based on the ratio of the individual Tranche A Lender's Commitment for
Tranche A Loans to the aggregate of all the Tranche A Lenders' Commitments
for Tranche A Loans. Ratable distributions among the Tranche B Lenders
under this Section 8.7 shall be made based on the ratio of the individual
Tranche B Lender's Commitment for Tranche B Loans to the aggregate of all
the Tranche B Lenders' Commitments for Tranche B Loans. Ratable
distributions among the Lenders (in situations where the Tranche A Lenders
are not differentiated from the Tranche B Lenders) shall be made based on
the ratio of the individual Lender's Commitment to the aggregate of all the
Lenders' Commitments. Ratable distributions among the Holders under this
Section 8.7 shall be based on the ratio of the individual Holder's Holder
Commitment to the aggregate of all the Holders' Holder Commitments.
(b) Payments and other amounts received by the Agent from time to time
in accordance with the terms of subparagraph (a) shall be applied and
allocated as follows (subject in all cases to Section 8.7(c)):
(i) Any such payment or amount identified as or deemed to be
Basic Rent shall be applied and allocated by the Agent first, ratably
to the Lenders and the Holders for application and allocation to the
payment of interest on the Loans and thereafter the principal of the
Loans which is due and payable on such date and to the payment of
accrued Holder Yield with respect to the Holder Advances and
thereafter the portion of the Holder Advances which is due on such
date; and second, if no Default or Event of Default is in effect, any
excess shall be paid to such Person or Persons as the Lessee may
designate; provided, that if a Default or Event of Default is in
effect, such excess (if any) shall instead be held by the Agent until
the earlier of (I) the first date thereafter on which no Default or
55
Event of Default shall be in effect (in which case such payments or
returns shall then be made to such other Person or Persons as the
Lessee may designate) and (II) the Maturity Date or the Expiration
Date, as the case may be (or, if earlier, the date of any
Acceleration), in which case such amounts shall be applied and
allocated in the manner contemplated by Section 8.7(b)(iv); provided,
further, that (x) Supplemental Rent shall be payable to the Financing
Parties in accordance with their interests pursuant to the Operative
Agreements and (y) to the extent that the Holders and/or the Lenders
are affected in the same manner by any matter giving rise to a payment
of Supplemental Rent, then such payment of Supplemental Rent shall be
distributed ratably to the Holders and/or the Lenders based on their
respective Holder Commitments and/or Lender Commitments.
(ii) If on any date the Agent or the Lessor shall receive any
amount in respect of (A) any Casualty or Condemnation pursuant to
Sections 15.1(a) or 15.1(g) of the Lease (excluding any payments in
respect thereof which are payable to the Lessee in accordance with the
Lease), or (B) the Termination Value in connection with the delivery
of a Termination Notice pursuant to Article XVI of the Lease, or (C)
the Termination Value in connection with the exercise of the Purchase
Option under Section 20.1 of the Lease or the exercise of the option
of the Lessor to transfer the Properties to the Lessee pursuant to
Section 20.3 of the Lease, or (D) any payment required to be made or
elected to be made by the Construction Agent to the Lessor pursuant to
the terms of the Agency Agreement, then in each case, the Lessor shall
be required to pay such amount received (1) if no Acceleration has
occurred, to prepay the principal balance of the Loans and the Holder
Advances, on a pro rata basis, or (2) if an Acceleration has occurred,
in accordance with Section 8.7(b)(iii) hereof.
(iii) An amount equal to any payment identified as proceeds of
the sale or other disposition (or lease upon the exercise of remedies)
of the Properties or any portion thereof, whether pursuant to Article
XXII of the Lease or the exercise of remedies under the Security
Documents or otherwise, the execution of remedies set forth in the
Lease and any payment in respect of a violation of Lessee's
maintenance obligations pursuant to Section 22.3 of the Lease (whether
such payment relates to a period before or after the Construction
Period Termination Date) shall be applied and allocated by the Agent
first, ratably to the payment of the principal and interest of the
Tranche B Loans then outstanding, second, ratably to the payment to
the Holders of the outstanding principal balance of all Holder
Advances plus all outstanding Holder Yield with respect to such
outstanding Holder Advances, third, to the extent such amount exceeds
the maximum amount to be returned pursuant to the foregoing provisions
of this paragraph (iii), ratably to the payment of the principal and
interest of the Tranche A Loans then outstanding, fourth, to any and
all other amounts owing under the Operative Agreements to the Lenders
under the Tranche B Loans, fifth, to any and all other amounts owing
under the Operative Agreements to the Holders, sixth, to any and all
other amounts owing under the Operative Agreements to the Lenders
56
under the Tranche A Loans, and seventh, to the extent moneys remain
after application and allocation pursuant to clauses first through
sixth above, to the Owner Trustee for application and allocation to
any and all other amounts owing to the Holders or the Owner Trustee
and to the other amounts owing to the other Financing Parties pursuant
to the Operative Agreements; provided, where no Event of Default shall
exist and be continuing and a prepayment is made for any reason with
respect to less than the full amount of the outstanding principal
amount of the Loans and the outstanding Holder Advances, the proceeds
shall be applied and allocated ratably to the Lenders and to the
Holders.
(iv) An amount equal to (A) any payment identified as a payment
of the Maximum Amount or any payment pursuant to Section 22.1(b) of
the Lease (or otherwise) of the Maximum Residual Guarantee Amount (and
any such lesser amount as may be required by Section 22.1(b) of the
Lease) in respect of the Properties and (B) any other amount payable
upon any exercise of remedies after the occurrence of an Event of
Default not covered by Sections 8.7(b)(i) or 8.7(b)(iii) above
(including without limitation any amount received in connection with
an Acceleration which does not represent proceeds from the sale or
liquidation of the Properties) and (C) any other amount payable by the
Guarantor pursuant to Section 6B shall be applied and allocated by the
Agent first, ratably, to the payment of the principal and interest
balance of Tranche A Loans then outstanding, second, ratably to the
payment of the principal and interest balance of the Tranche B Loans
then outstanding, third, ratably to the payment of the principal
balance of all Holder Advances plus all outstanding Holder Yield with
respect to such outstanding Holder Advances, fourth, to the payment of
any other amounts owing to the Lenders hereunder or under any of the
other Operative Agreement, and fifth, to the extent moneys remain
after application and allocation pursuant to clauses first through
fourth above, to the Owner Trustee for application and allocation to
Holder Advances and Holder Yield and any other amounts owing to the
Holders or the Owner Trustee or any other Financing Party.
(v) An amount equal to any payment identified as Supplemental
Rent and not covered pursuant to any of the preceding subparagraphs
hereof shall be applied and allocated by the Agent to the payment of
any amounts then owing to the Agent, the Lenders, the Holders and the
other parties to the Operative Agreements (or any of them) (other than
any such amounts payable pursuant to the preceding provisions of this
Section 8.7(b)) as shall be determined by the Agent in its reasonable
discretion; provided, however, that Supplemental Rent received upon
the exercise of remedies after the occurrence and continuance of an
Event of Default in lieu of or in substitution of the Maximum Residual
Guarantee Amount or as a partial payment thereon shall be applied and
allocated as set forth in Section 8.7(b)(iv).
57
(vi) The Agent in its reasonable judgment shall identify the
nature of each payment or amount received by the Agent and apply and
allocate each such amount in the manner specified above.
(c) Upon the payment in full of the Company Obligations, any moneys
remaining with the Agent shall be returned to the Lessee. In the event of
an Acceleration it is agreed that, prior to the application and allocation
of amounts received by the Agent in the order described in Section 8.7(b)
above or any distribution of money to the Lessee, any such amounts shall
first be applied and allocated to the payment of (i) any and all sums
advanced by the Agent in order to preserve the Collateral or to preserve
its Lien thereon, (ii) the expenses of retaking, holding, preparing for
sale or lease, selling or otherwise disposing or realizing on the
Collateral, or of any exercise by the Agent of its rights under the
Security Documents, together with reasonable attorneys' fees and expenses
and court costs and (iii) any and all other amounts reasonably owed to the
Agent under or in connection with the transactions contemplated by the
Operative Agreements (including without limitation any accrued and unpaid
administration fees).
8.8. RELEASE OF PROPERTIES, ETC.
(a) If the Lessee shall at any time purchase any Property pursuant to
the Lease, or the Construction Agent shall purchase any Property pursuant
to the Agency Agreement, or if any Property shall be sold in accordance
with Article XXII of the Lease, then, upon payment in full of the Company
Obligations, the Agent is hereby authorized and directed to release such
Properties from the Liens created by the Security Documents to the extent
of its interest therein. In addition, upon the termination of the
Commitments and the Holder Commitments and the payment in full of the
Loans, the Holder Advances and all other amounts owing by the Owner Trustee
and the Lessee hereunder or under any other Operative Agreement the Agent
is hereby authorized and directed to release all of the Properties from the
Liens created by the Security Documents to the extent of its interest
therein (except for the Lease and related Lease Supplements to the extent
that the Renewal Term has become effective but the Advances have been
refinanced). Upon request of the Owner Trustee following any such release,
the Agent shall, at the sole cost and expense of the Lessee, execute and
deliver to the Owner Trustee and the Lessee such documents as the Owner
Trustee or the Lessee shall reasonably request to evidence such release.
(b) PARTIAL RELEASE OF SURPLUS LAND. The Agent, the Owner Trustee, the
Lenders, the Holders and the Lessee acknowledge that Lessee as the owner of
the fee simple estate in the Land and ground lessor under the Ground Lease,
has reserved the right to subdivide, in compliance with all Legal
Requirements, the Property covered by the Ground Lease into two (2) or more
parcels and in connection therewith, to release from the Ground Lease all
portions of the Property except for a parcel or parcels consisting of
approximately 17 acres and located approximately as shown on the site plan
attached hereto as Schedule 8.8 (which parcel or parcels, as shown on the
recorded parcel or subdivision map (the "Parcel Map"), and with the acreage
and dimensions established as a result thereof, is referred to herein as
58
the "Leased Parcel"). The Agent, the Owner Trustee, the Lenders, the
Holders and the Lessee acknowledge that the Lessee shall have the right to
subdivide and cause the Surplus Land (as defined below) to be released from
the Ground Lease in accordance with this Section 8.8(b) only if (i) the
Leased Parcel is a separate legal parcel and (ii) Lessee shall have
delivered to the Agent an Officer's Certificate certifying to the
following: (A) that Parcel Map Recordation has occurred; (B) that the
Leased Parcel is comprised of no less than 17.2 gross acres; (C)
identifying the legal description of the Leased Parcel and the legal
description of the Surplus Land effective after Parcel Map Recordation; (D)
that the Leased Parcel, upon completion of construction of the extensions
of Franklin Parkway and Saratoga Drive described on the Parcel Map, shall
have access to Franklin Parkway and Saratoga Drive which shall be
sufficient for the use of the Property as contemplated by the Construction
Budget and the Plans and Specifications and as a Permitted Facility in
accordance with all applicable Legal Requirements (including without
limitation all applicable zoning laws), and that completion of such
extensions of Franklin Parkway and Saratoga Drive is secured and otherwise
provided for pursuant to bonds or other deposited security posted with the
City of San Mateo and the Subdivision Agreement (Bay Meadows 96-087)
entered into between the City of San Mateo and the Seller; and (E) that the
dimensions of the Leased Parcel as described in the Parcel Map are
sufficient for the use and occupancy of the Property as contemplated by the
Construction Budget and the Plans and Specifications and otherwise as a
Permitted Facility, upon the completion of construction and the obtaining
of all occupancy permits as contemplated by the Agency Agreement. All
portions of the Property excluding the Leased Parcel are referred to herein
as the "Surplus Land." Immediately upon the recordation of the Parcel Map
(the "Parcel Map Recordation"), regardless of whether a Default or Event of
Default is then continuing, without payment of any release price or other
consideration, and without further action or the execution of any documents
by any Person, the "Land," for all purposes of the Operative Agreements,
shall exclusively mean the Leased Parcel, and neither the Owner Trustee,
the Agent, the Lenders or the Holders shall have any right, title or
interest in the Surplus Land. The Owner Trustee, the Agent, each Lender and
Holder shall, upon demand by the Lessee (and at Lessee's cost), at any time
after Parcel Map Recordation, regardless of whether a Default or Event of
Default is then continuing, execute, deliver and cause to be recorded such
quitclaim deeds, reconveyances, releases, amendments, supplements and other
instruments as may be necessary or deemed advisable by Lessee to evidence
that the ground leasehold interest in the Leased Parcel is the exclusive
interest in land covered by (and that the Surplus Land is excluded from the
land covered by) the Ground Lease, the Lease, the Operative Agreements and
the Security Documents. Without limiting Lessee's rights to obtain Advances
therefor, Lessee shall pay all costs and expenses necessary for Parcel Map
Recordation and for the execution, delivery and recordation of such further
documents. Under no circumstances shall the obligations of the Owner
Trustee and the Holders set forth in Section 8.2(a) of this Agreement, to
discharge Lessor Liens applicable to the Surplus Land on or prior to Parcel
Map Recordation, be limited in any respect by the provisions of this
Section 8.8(b).
59
(c) The Ground Lessor shall have the right (so long as the provisions
of Sections 8.8(b)(i) and 8.8(b)(ii) are satisfied), without any prior
consent of any party to the Operative Agreements, to process a tentative or
final Parcel Map subdividing the Property as described above with the
appropriate governmental authorities for approval; to execute such maps,
documents and instruments as may be necessary in connection therewith
(including without limitation such instruments as may provide for
dedications of public easements and subdivision improvement agreements and
bonds relating thereto); and to record or cause to be recorded such maps,
documents and instruments at any time following the approval thereof by the
appropriate governmental authorities (all of which shall be "Permitted
Liens" for all purposes of the Operative Agreements). The Owner Trustee and
Agent shall cooperate in a commercially reasonable manner (at the cost and
expense of the Lessee, but without limiting Lessee's rights to obtain
Advances therefor) with Ground Lessor in processing and recording any
tentative or final Parcel Maps with the appropriate governmental
authorities and shall execute and acknowledge such maps and documents
(including without limitation any dedications of public easements and any
subdivision improvement agreements) as may be necessary to complete, or may
be reasonably requested by the Ground Lessor in connection with, the parcel
or subdivision map process.
(d) The Owner Trustee, Agent, Lenders and Holders acknowledge that one
of the Permitted Liens is a "Buy-Back Right" reserved by the seller under
the Purchase and Sale Agreement as provided for in the "Reservation of
Buy-Back Right" which is attached to and made part of the grant deed
recorded on June 11, 1999 as Instrument No. 99-101828 in the Official
Records of San Mateo County, California, and to which reference is hereby
made. Pursuant to such "Buy Back Right," the seller has the right to
reacquire on the terms set forth in such Reservation a "Buy-Back Parcel"
during the period and for the purchase price set forth therein. At such
time as the seller or its designee shall be entitled to the conveyance of
the Buy-Back Parcel in accordance with the instructions of the Lessee, the
Lessee shall certify in writing to the Financing Parties (pursuant to a
certificate from a Responsible Officer in form and substance satisfactory
to the Agent) that the sale of the Buy-Back Parcel is required under the
Purchase and Sale Agreement and upon delivery of such Officer's
Certificate, the Owner Trustee and Agent shall (at the cost and expense of
the Lessee), without payment of any release price or other consideration,
and without further action or the execution of any documents by any Person,
execute, deliver and cause to be recorded such quitclaim deeds, amendments,
supplements and other instruments as may be necessary or deemed advisable
by Lessee (or required by the seller in accordance with such Reservation)
to deliver title to the Buy-Back Parcel to the seller or its designee free
and clear of any right, title, interest of Lessor or the Agent or any
Lessor Lien or any other Lien in favor of the Agent arising under the
Operative Agreements. The obligations of the Owner Trustee and Agent set
forth in this Section 8.8(d) shall be applicable and effective
notwithstanding that any Default or Event of Default by any of the Credit
Parties or any default by any other Person shall have occurred or be
continuing.
60
8.9. REFINANCING.
(a) Refinancing of the Advances. The Lessee shall have the right to
cause the Advances to be refinanced on terms and conditions acceptable to
the Lessee, provided that (i) any such refinancing shall be subject to
payment in full of all amounts then due and owing to the Financing Parties
under the Operative Agreements and (ii) the Lessee shall be responsible for
all costs and expenses incurred by the Financing Parties in connection with
any such refinancing.
(b) Conditions to Refinancing. The Lessee may not cause the
outstanding Advances to be refinanced unless no changes to the Operative
Agreements required as a result of such refinancing shall increase the
liabilities of the Owner Trustee thereunder or impair any of its rights
thereunder. If the Lessee elects to cause the Owner Trustee to refinance
the Advances, it shall give the Owner Trustee notice of such intention
specifying the date (which shall be no earlier than forty (40) days after
the date of such notice of intent) upon which the refinancing is to take
place (the "Refinancing Date") and shall thereafter give the Owner Trustee
and the Agent a written notice of prepayment with respect to the Advances
outstanding not less than fifteen (15) days prior to the Refinancing Date,
which notice shall specify the Refinancing Date. Subject to the
satisfaction of the conditions set forth herein, the Owner Trustee agrees
to cooperate in good faith with the Lessee in effecting any such
refinancing.
8.10 SPECIAL PROVISIONS REGARDING UNQUALIFIED LESSEE OBLIGATIONS.
(a) General Rule. The provisions of this Section 8.10(a) and Section
8.10(b) shall only apply with respect to any particular Property prior to
the Completion Date for such Property, and the limitations of the
obligations of the Credit Parties under this Section 8.10(a) and Section
8.10(b) shall not apply to any Unqualified Lessee Obligation. Subject to
the previous sentence and notwithstanding anything to the contrary set
forth in the Operative Agreements, the occurrence of a Potential
Presumptive Event shall not entitle the Lenders, the Holders or the Lessor
to withhold from the Lessee or the Construction Agent any Advances or
entitle the Lender, the Holders or the Lessor to pursue any right or remedy
against the Lessee, the Construction Agent, the Guarantor or any interest
of the Lessee or the Construction Agent in the Property unless the Agent
shall have given written notice to the Lessee of the Potential Presumptive
Event, and on or before the expiration of a cure period of thirty (30) days
after such notice (except regarding any payment due in accordance with
Section 17.1(a)(ii) of the Lease or Section 6(c) of the Credit Agreement in
which case the cure period shall terminate on the date such payment is due
pursuant to such Section 17.1(a)(ii) or Section 6(c), as the case may be),
either (i) the Lessee shall not have cured the Potential Presumptive Event
(it being understood that a Potential Presumptive Event arising as a result
of a misrepresentation concerning any matter may be cured within such cure
period if the Lessee is able, by the end of such cure period, as a result
of any act or occurrence or otherwise, truthfully to make the
representations as to such matters that are required under the Operative
Agreements and actually so makes such representations) or (ii) the Lessee
61
shall not have established that the Potential Presumptive Event was not the
result of the failure to perform any and all Unqualified Lessee
Obligations. If the Lessee fails so to cure such Potential Presumptive
Event in accordance with clause (i), it shall be rebuttably presumed that
the original breach or misrepresentation and the Lessee's failure to cure
were the result of a failure to perform any and all Unqualified Lessee
Obligations. In order to rebut this presumption, the Lessee shall bear the
burden of proof, and shall be obligated to establish that such Potential
Presumptive Event was not the result of a failure to perform any and all
Unqualified Lessee Obligations by a showing of clear and convincing
evidence. If the Lessee within such cure period rebuts the presumption and
establishes that the Potential Presumptive Event was not the result of the
failure to perform any and all Unqualified Lessee Obligations, then the
Lenders, the Holders or the Lessor on account of such Potential Presumptive
Event shall have no right, respecting such Potential Presumptive Event, to
withhold from the Lessee or the Construction Agent any Advances or to
pursue, during the Construction Period, any right or remedy against the
Lessee, the Construction Agent, the Guarantor or any interest of the Lessee
or the Construction Agent in the Property notwithstanding the continuation
of such Potential Presumptive Event. If the Lessee within such cure period
is not able to rebut the presumption and to establish that the Potential
Presumptive Event was not the result of the failure to perform any and all
Unqualified Lessee Obligations, then the Lenders, the Holders or the Lessor
on account of such Potential Presumptive Event shall have the right to
withhold from the Lessee and the Construction Agent any Advances and to
pursue any right or remedy against the Lessee, the Construction Agent, the
Guarantor or any interest of the Lessee or the Construction Agent in the
Property.
(b) Cure Periods. The presumption described above shall apply only for
the purposes of establishing whether or not the Lenders, the Holders and
the Lessor have the right to withhold Advances or to pursue any right or
remedy against the Lessee or the Construction Agent, the Guarantor or any
interest of the Lessee or the Construction Agent in the Property, and shall
not apply for other purposes. The thirty (30) day cure period provided for
in Section 8.10(a) shall run concurrently with the periods for cure
described in Sections 17.1(d), 17.1(e) and 17.1(k) of the Lease, Sections
6(d), 6(e) and 6(f) of the Credit Agreement and Sections 5.1(c) and 5.1(d)
of the Agency Agreement.
(c) Definitions for Section 8.10.
(i) "Presumptive Event of Default" shall mean:
(A) a Lease Event of Default as described in Sections
17.1(b), 17.1(d), 17.1(e) (solely to the extent arising pursuant
to Sections 5.1(b), 5.1(c) (solely to the extent arising pursuant
to one of the Lease Events of Default or Credit Agreement Events
of Default otherwise referenced in this definition of
"Presumptive Event of Default") or 5.1(d) of the Agency
Agreement) or 17.1(k) of the Lease;
62
(B) a Credit Agreement Event of Default as described in
Sections 6(b), 6(d), 6(e), 6(f)(i) (solely to the extent arising
pursuant to a Lease Event of Default as described in Sections
17.1(b), 17.1(d), 17.1(e) (solely to the extent arising pursuant
to Sections 5.1(b), 5.1(c) (solely to the extent arising pursuant
to one of the Lease Events of Default or Credit Agreement Events
of Default otherwise referenced in this definition of
"Presumptive Event of Default") or 5.1(d) of the Agency
Agreement) or 17.1(k) of the Lease) or 6(f)(ii) of the Credit
Agreement; or
(C) an Agency Agreement Event of Default as described in
Sections 5.1(b), 5.1(c) (solely to the extent arising pursuant to
one of the Lease Events of Default or Credit Agreement Events of
Default otherwise referenced in this definition of "Presumptive
Event of Default") or 5.1(d) of the Agency Agreement.
(ii) "Presumptive Default" shall mean a breach or default under
the Operative Agreements which would, if any required notice of
default were duly given and no cure thereof were effected within the
applicable cure period (if any), constitute a Presumptive Event of
Default.
(iii) "Potential Presumptive Event" shall mean (a) the failure of
the Lessee, the Owner Trustee, the Construction Agent or any other
Person to comply with the disbursement conditions requiring the
correctness of representations and warranties, the performance of
obligations and agreements under the Operative Agreements or the lack
of any Presumptive Default or Presumptive Event of Default, as set
forth in Section 5.4(a), 5.4(b) or 5.4(e) of the Participation
Agreement or Section 4.2 of the Credit Agreement (solely to the extent
arising pursuant to Sections 5.4(a), 5.4(b) or 5.4(e) of the
Participation Agreement) or (b) the occurrence during the Construction
Period of any Presumptive Default or Presumptive Event of Default.
(iv) "Unqualified Lessee Obligation" shall mean each of the
following: (a) the obligations of the Indemnity Provider, the Lessee
and/or the Construction Agent pursuant to Section 11.6 of this
Agreement (including without limitation all such obligations provided
in connection with subsection (c) of the first paragraph of Section
11.1), (b) the obligations of the Indemnity Provider, the Lessee
and/or the Construction Agent pursuant to Sections 11.1 through 11.9
regarding indemnity obligations in favor of the Owner Trustee
(excluding such matters referenced in the foregoing subsection (a)),
(c) the obligations of the Indemnity Provider, the Lessee and/or the
Construction Agent regarding Claims brought by the Owner Trustee
relating to fraud, misapplication of funds, illegal acts or willful
misconduct on the part of any Credit Party or the occurrence of any
bankruptcy of any Credit Party (including without limitation the
occurrence of any Lease Event of Default as specified in Section
17.1(g) of the Lease), and (d) the obligations of the Guarantor in
63
connection with each of the foregoing subsections (a) through (c).
SECTION 9. CREDIT AGREEMENT AND TRUST AGREEMENT.
9.1. THE CONSTRUCTION AGENT'S AND THE LESSEE'S CREDIT AGREEMENT RIGHTS.
Notwithstanding anything to the contrary contained in the Credit Agreement,
the Agent, the Lenders, the Holders, the Construction Agent, the Credit Parties
and the Owner Trustee hereby agree that, prior to the occurrence and
continuation of any Default or Event of Default, the Construction Agent or the
Lessee, as the case may be, shall have the following rights (unless otherwise
referenced below, all of which shall be exclusively exercisable by the
Construction Agent or Lessee):
(a) (i) the right to determine whether Loans are to be Eurodollar
Loans or ABR Loans pursuant to Section 2.1(b) of the Credit Agreement and
(ii) the right to request Advances, give all notices in respect thereof,
designate Borrowing Dates, Interest Periods and amounts and types thereof,
and designate an account to which amounts funded under the Operative
Agreements shall be credited, all pursuant to Section 2.3(a) of the Credit
Agreement;
(b) the right to terminate or reduce the Commitments pursuant to
Section 2.5(a) of the Credit Agreement and to elect to prepay the Loans in
accordance with Section 2.6(a) of the Credit Agreement;
(c) the right to exercise the conversion and continuation options
pursuant to Section 2.7 of the Credit Agreement;
(d) the right to receive any notice and any certificate, in each case
issued pursuant to Sections 2.9 and 2.11(a) of the Credit Agreement as well
as the right (but not to the exclusion of the Borrower) to receive any
notice delivered by the Agent to the Borrower of a Credit Agreement Default
or Credit Agreement Event of Default and to tender cure of any such default
within the same cure period applicable to the Borrower;
(e) the right to replace any Lender and make any other election
pursuant to Section 2.11(b) of the Credit Agreement;
(f) the right to approve any successor agent pursuant to Section 7.9
of the Credit Agreement; and
(g) the right to consent to any assignment by a Lender to which the
Lessor has the right to consent pursuant to Section 9.8 of the Credit
Agreement.
64
Except with respect to the right to receive notices referenced above in
Section 9.1(d), such rights shall be exercisable as if all references to the
"Borrower" in the referenced sections of the Credit Agreement were references to
the Lessee or Construction Agent.
9.2. THE CONSTRUCTION AGENT'S AND THE LESSEE'S TRUST AGREEMENT RIGHTS.
Notwithstanding anything to the contrary contained in the Trust Agreement,
the Credit Parties, the Owner Trustee and the Holders hereby agree that, prior
to the occurrence and continuation of any Default or Event of Default, the
Construction Agent or the Lessee, as the case may be, shall have the following
rights (all of which shall be exclusively exercisable by the Construction Agent
or the Lessee):
(a) (i) the right to determine whether Holder Advances are to be
Eurodollar Holder Advances or ABR Holder Advances and (ii) the right to
request Advances, give all notices in respect thereof, designate the
requested date of Advances, Interest Periods and amounts and types
thereof, all pursuant to Section 3.1(a) of the Trust Agreement;
(b) the right to terminate or reduce the Holder Commitments pursuant
to Section 3.1(e) of the Trust Agreement and to elect the prepay the
Certificates in accordance with Section 3.4(a) of the Trust Agreement;
(c) the right to exercise the conversion and continuation
options pursuant to Section 3.8 of the Trust Agreement;
(d) the right to receive any notice and any certificate, in
each case issued pursuant to Sections 3.7 or 3.9(a) of the Trust
Agreement;
(e) the right to replace any Holder and make any other election
pursuant to Section 3.9(b) of the Trust Agreement;
(f) the right to exercise the removal options and to appoint (or
apply for the appointment of) a successor trustee contained in Section 9.1
of the Trust Agreement; provided, however, that no removal of the Owner
Trustee and appointment of a successor Owner Trustee shall be made without
the prior written consent (not to be unreasonably withheld or delayed) of
the Agent; and
(g) the right to elect to terminate the Trust Agreement pursuant to
the Section 8.2 of the Trust Agreement prior to the payment in full of the
Company Obligations.
9.3. EFFECT OF DEFAULTS BY THE LESSOR, OWNER TRUSTEE OR TRUST COMPANY.
Notwithstanding anything to the contrary set forth in the Operative
Agreements, any Credit Agreement Default or Credit Agreement Event of Default
(other than one arising pursuant to any Lease Default or Lease Event of
Default), in each case arising from any breach of covenants, representations or
warranties by the Lessor, Owner Trustee or the Trust Company, shall be deemed
65
cured (notwithstanding that such cure may occur after the expiration of any
applicable cure period) if the Trust Company is replaced by a successor trustee
appointed in accordance with the Trust Agreement as modified by Section 9.2 of
this Agreement within forty-five (45) days of the occurrence of any such Credit
Agreement Event of Default (other than one arising pursuant to any Lease Event
of Default) provided that, after the appointment of such replacement or
successor trustee, the replacement Lessor, Owner Trustee and the Trust Company
are in compliance with all of the covenants, representations and warranties
applicable to each of them under the Operative Agreements as of the date of such
appointment. If any Credit Agreement Default or Credit Agreement Event of
Default (other than one arising pursuant to any Lease Default or Lease Event of
Default) shall occur, Lessee shall have the right, by notice to the Agent and
the Lessor (with the consent of the Agent, not to be unreasonably withheld or
delayed), to replace the Owner Trustee within forty-five (45) days of the
occurrence of any such Credit Agreement Default or Credit Agreement Event of
Default (other than one arising pursuant to any Lease Default or Lease Event of
Default) with a bank or trust company designated by Lessee that complies with
the provisions of Sections 9.1(b) and (c) of the Trust Agreement. The Owner
Trustee, Agent, Lenders and Holders shall not pursue or continue to pursue any
right or remedy against Lessee, Guarantor or any interest of Lessee in the
Property (nor shall Lessee forfeit any right, power or privilege, the continued
exercise of which is subject to the condition that no Credit Agreement Default
or Credit Agreement Event of Default (other than one arising pursuant to any
Lease Default or Lease Event of Default) for a period of forty-five (45) days
after the occurrence of such Credit Agreement Default or Credit Agreement Event
of Default (other than one arising pursuant to any Lease Default or Lease Event
of Default) except that the Lenders and Holders shall have no obligation to
provide any Advances unless no Default or Event of Default shall have occurred
and be continuing (subject to the cure rights for any Credit Agreement Default
or Credit Agreement Event of Default (other than one arising pursuant to any
Lease Default or Lease Event of Default) through the appointment of a
replacement trustee as provided herein); provided, however, that nothing
contained in this sentence shall limit any right or remedy of the Lenders or
Holders as against the Lessor, Owner Trustee or the Trust Company on account of
any Credit Agreement Default (other than one arising pursuant to any Lease
Default) or Credit Agreement Event of Default (other than one arising pursuant
to any Lease Event of Default).
Such rights shall be exercisable as if all references to the "Owner
Trustee" in the referenced sections of the Trust Agreement were references to
the Lessee or Construction Agent.
SECTION 10. TRANSFER OF INTEREST.
10.1. RESTRICTIONS ON TRANSFER.
Each Lender may participate, assign or transfer all or a portion of its
interest hereunder and under the other Operative Agreements in accordance with
Sections 9.7 and 9.8 of the Credit Agreement with the prior written consent of
the Lessee (to the extent no Default or Event of Default shall have occurred and
be continuing and which consent shall not be unreasonably withheld or delayed
and the Agent (which consent shall not be unreasonably withheld or delayed);
66
provided, each participant, assignee or transferee must obtain the same ratable
interest in Tranche A Loans, Tranche A Commitments, Tranche B Loans and Tranche
B Commitments (and to the extent the selling Lender is also a Holder (or an
Affiliate of a Holder), each such participant, assignor or transferee must also
obtain the same ratable interest in and to the Holder Advances, Holder
Commitments and the Trust Estate); provided further, that each Lender that
assigns all or a portion of its interest hereunder and under the other Operative
Agreements shall deliver to the Agent a copy of each Assignment and Acceptance
(as referenced in Section 9.8 of the Credit Agreement) for purposes of
maintaining the Register. The Holders may, directly or indirectly, assign,
convey or otherwise transfer any of their right, title or interest in or to the
Trust Estate or the Trust Agreement to a bank or financial institution with the
prior written consent of the Agent and the Lessee (which consent shall not be
unreasonably withheld or delayed) and in accordance with the terms of Section
11.8(b) of the Trust Agreement; provided, to the extent the selling Holder is
also a Lender (or an Affiliate of a Lender), each such assignee, receiver of a
conveyance or other transferee must also obtain the same ratable interest in and
to the Tranche A Loans, Tranche A Commitments, Tranche B Loans and Tranche B
Commitments. No Credit Party may assign any of the Operative Agreements or any
of its respective rights or obligations thereunder or with respect to any
Property in whole or in part to any Person without the prior written consent of
the Agent, the Lenders, the Holders and the Lessor.
10.2. EFFECT OF TRANSFER.
From and after any transfer (but not a participation) effected in
accordance with this Section 10, the transferor shall be released, to the extent
of such transfer, from its liability hereunder and under the other Operative
Agreements to which it is a party in respect of obligations to be performed on
or after the date of such transfer; provided, however, that any transferor shall
remain liable hereunder and under such other Operative Agreements for any
obligations for which it has personal liability hereunder and to the extent that
the transferee shall not have assumed the obligations of the transferor
thereunder. Upon any transfer by the Owner Trustee, a Holder or a Lender as
above provided, any such transferee shall assume the obligations of the Owner
Trustee, the Holder or the Lender, as the case may be, and shall be deemed an
"Owner Trustee", "Holder", or "Lender", as the case may be, for all purposes of
such Operative Agreements and each reference herein to the transferor shall
thereafter be deemed a reference to such transferee for all purposes, except as
provided in the preceding sentence. Notwithstanding any transfer of all or a
portion of the transferor's interest as provided in this Section 10, the
transferor shall be entitled to all benefits accrued and all rights vested prior
to such transfer including without limitation rights to indemnification under
any such Operative Agreements. The Owner Trustee may not assign or otherwise
transfer any of its right, title or interest in the Trust Estate except as
required by the Operative Agreements, as permitted pursuant to the Operative
Agreements in favor of a successor trustee or a co-trustee or as otherwise
permitted pursuant to the Operative Agreements.
67
SECTION 11. INDEMNIFICATION.
11.1. GENERAL INDEMNITY.
Subject to and limited by in all respects the provisions of Sections 11.6
through 11.8 and whether or not any of the transactions contemplated hereby
shall be consummated, the Indemnity Provider hereby assumes liability for and
agrees to defend, indemnify and hold harmless each Indemnified Person on an
After Tax Basis from and against any Claims, which may be imposed on, incurred
by or asserted against an Indemnified Person by any third party, including
without limitation Claims arising from the negligence of an Indemnified Person
(but not to the extent such Claims arise from the gross negligence or willful
misconduct of such Indemnified Person itself, as determined by a court of
competent jurisdiction, as opposed to gross negligence or willful misconduct
imputed to such Indemnified Person) in any way relating to or arising or alleged
to arise out of the execution, delivery, performance or enforcement of this
Agreement, the Lease or any other Operative Agreement or on or with respect to
any Property or any component thereof, including without limitation Claims in
any way relating to or arising or alleged to arise out of (a) the financing,
refinancing, purchase, acceptance, rejection, ownership, design, construction,
refurbishment, development, delivery, acceptance, nondelivery, leasing,
subleasing, possession, use, occupancy, operation, maintenance repair,
modification, transportation, condition, sale, return, repossession (whether by
summary proceedings or otherwise), or any other disposition of any Property or
any part thereof, including without limitation the acquisition, holding or
disposition of any interest in the Property, lease or agreement comprising a
portion of any thereof; (b) any latent or other defects in any Property or any
portion thereof whether or not discoverable by an Indemnified Person or the
Indemnity Provider; (c) a violation of Environmental Laws, Environmental Claims
or other loss of or damage to any property or the environment relating to the
Property, the Lease, the Agency Agreement or the Indemnity Provider; (d) the
Operative Agreements, or any transaction contemplated thereby; (e) any breach by
the Indemnity Provider of any of its representations or warranties under the
Operative Agreements to which the Indemnity Provider is a party or failure by
the Indemnity Provider to perform or observe any covenant or agreement to be
performed by it under any of the Operative Agreements; (f) the transactions
contemplated hereby or by any other Operative Agreement, in respect of the
application of Parts 4 and 5 of Subtitle B of Title I of ERISA; (g) personal
injury, death or property damage, including without limitation Claims based on
strict or absolute liability in tort; and (h) any fees, expenses and/or other
assessments by any business park or any other applicable entity with oversight
responsibility for the applicable Property.
If a written Claim is made against any Indemnified Person or if any
proceeding shall be commenced against such Indemnified Person (including without
limitation a written notice of such proceeding), for any Claim, such Indemnified
Person shall promptly notify the Indemnity Provider in writing and shall not
take action with respect to such Claim without the consent of the Indemnity
Provider for thirty (30) days after the receipt of such notice by the Indemnity
Provider; provided, however, that in the case of any such Claim, if action shall
be required by law or regulation to be taken prior to the end of such period of
thirty (30) days, such Indemnified Person shall endeavor to, in such notice to
the Indemnity Provider, inform the Indemnity Provider of such shorter period,
and no action shall be taken with respect to such Claim without the consent of
68
the Indemnity Provider before seven (7) days before the end of such shorter
period; provided, further, that the failure of such Indemnified Person to give
the notices referred to in this sentence shall not diminish the Indemnity
Provider's obligation hereunder except to the extent such failure arises from
the gross negligence or willful misconduct of such Indemnified Person and in
such case, the Indemnity Provider shall be relieved of its indemnity obligation
respecting such Claim to the extent, but only to the extent, the failure of such
Indemnified Person to give such notice has materially precluded the Indemnity
Provider from contesting such Claim.
If, within thirty (30) days of receipt of such notice from the Indemnified
Person (or such shorter period as the Indemnified Person has notified the
Indemnity Provider is required by law or regulation for the Indemnified Person
to respond to such Claim), the Indemnity Provider shall request in writing that
such Indemnified Person respond to such Claim, the Indemnified Person shall, at
the expense of the Indemnity Provider, in good faith conduct and control such
action (including without limitation by pursuit of appeals) (provided, however,
that (A) if such Claim, in the Indemnity Provider's reasonable discretion, can
be pursued by the Indemnity Provider on behalf of or in the name of such
Indemnified Person, the Indemnified Person, at the Indemnity Provider's request,
shall allow the Indemnity Provider to conduct and control the response to such
Claim and (B) in the case of any Claim (and notwithstanding the provisions of
the foregoing subsection (A)), the Indemnified Person may request the Indemnity
Provider to conduct and control the response to such Claim (with counsel to be
selected by the Indemnity Provider and consented to by such Indemnified Person,
such consent not to be unreasonably withheld; provided, however, that any
Indemnified Person may retain separate counsel at the expense of the Indemnity
Provider in the event of a conflict of interest between such Indemnified Person
and the Indemnity Provider)) by, in the sole discretion of the Person conducting
and controlling the response to such Claim (1) resisting payment thereof, (2)
not paying the same except under protest, if protest is necessary and proper,
(3) if the payment be made, using reasonable efforts to obtain a refund thereof
in appropriate administrative and judicial proceedings, or (4) taking such other
action as is reasonably requested by the Indemnity Provider from time to time.
The party controlling the response to any Claim shall consult in good faith
with the non-controlling party and shall keep the non-controlling party
reasonably informed as to the conduct of the response to such Claim; provided,
that all decisions ultimately shall be made in the discretion of the controlling
party. The parties agree that an Indemnified Person may at any time decline to
take further action with respect to the response to such Claim and may settle
such Claim if such Indemnified Person shall waive its rights to any indemnity
from the Indemnity Provider that otherwise would be payable in respect of such
Claim (and any future Claim, the pursuit of which is precluded by reason of such
resolution of such Claim) and shall pay to the Indemnity Provider any amount
previously paid or advanced by the Indemnity Provider pursuant to this Section
11.1 by way of indemnification or advance for the payment of an amount regarding
such Claim.
Notwithstanding the foregoing provisions of this Section 11.1, an
Indemnified Person shall not be required to take any action and the Indemnity
Provider shall not be permitted to respond to any Claim in the name of the
Indemnified Person unless (A) the Indemnity Provider shall have agreed to pay
and shall pay to such Indemnified Person on demand and on an After Tax Basis all
69
reasonable costs, losses and expenses that such Indemnified Person actually
incurs in connection with such Claim, including without limitation all
reasonable legal, accounting and investigatory fees and disbursements and, if
the Indemnified Person has informed the Indemnity Provider that it intends to
contest such Claim (whether or not the control of the contest is then assumed by
the Indemnity Provider), the Indemnity Provider shall have agreed that the Claim
is an indemnifiable Claim hereunder, (B) the Indemnified Person shall have
reasonably determined that the action to be taken will not result in any
material danger of sale, forfeiture or loss of the Property, or any part thereof
or interest therein, will not interfere with the payment of Rent, and will not
result in risk of criminal liability, (C) if such Claim shall involve the
payment of any amount indemnified hereunder prior to the resolution of such
Claim, the Indemnity Provider shall provide to the Indemnified Person an
interest-free advance in an amount equal to the amount that the Indemnified
Person is required to pay (with no additional net after-tax cost to such
Indemnified Person) prior to the date such payment is due, (D) in the case of an
appeal of a Claim that must be pursued in the name of an Indemnified Person (or
an Affiliate thereof), the Indemnity Provider shall have provided to such
Indemnified Person an opinion of independent counsel selected by the Indemnity
Provider and reasonably satisfactory to the Indemnified Person stating that the
position asserted in such appeal will more likely than not prevail and (E) no
Event of Default shall have occurred and be continuing. In no event shall an
Indemnified Person be required to appeal an adverse judicial determination to
the United States Supreme Court. In addition, an Indemnified Person shall not be
required to contest any Claim in its name (or that of an Affiliate) if the
subject matter thereof shall be of a continuing nature and shall have previously
been decided adversely by a court of competent jurisdiction pursuant to the
contest provisions of this Section 11.1, unless there shall have been a change
in law (or interpretation thereof) and the Indemnified Person shall have
received, at the Indemnity Provider's expense, an opinion of independent counsel
selected by the Indemnity Provider and reasonably acceptable to the Indemnified
Person stating that as a result of such change in law (or interpretation
thereof), it is more likely than not that the Indemnified Person will prevail in
such contest. In no event shall the Indemnity Provider be permitted to adjust or
settle any Claim without the consent of the Indemnified Person to the extent any
such adjustment or settlement involves, or is reasonably likely to involve, any
performance by or adverse admission by or with respect to the Indemnified
Person.
Each Indemnified Person shall use commercially reasonable efforts to supply
the Indemnity Provider with such information and documents reasonably requested
by the Indemnity Provider as are necessary for the Indemnity Provider to
participate in any action, suit or proceeding to the extent permitted by Section
11.1.
Notwithstanding anything to the contrary in this Section 11.1, the
following shall be excluded from the obligations of the Indemnity Provider to
indemnify, defend and hold harmless required by this Section 11.1:
(i) as to any Indemnified Person, Claims attributable to or which
would not have arisen but for the breach of representations,
warranties or covenants of such Indemnified Person in any Operative
Agreement;
70
(ii) Claims arising as a result of any liabilities or obligations
of an Indemnified Person which would not have arisen but for the
transfer, conveyance or assignment by such Indemnified Person of any
portion of its interest or the grant of a participation with respect
thereto (except for any such transfer, conveyance, assignment or
participation requested by any Credit Party or otherwise made to any
Eligible Assignee);
(iii) Claims otherwise due to an Indemnified Person arising out
of any matters expressly excluded from any provision of the Operative
Agreements purporting to exculpate such Person from liability
thereunder;
(iv) Claims for any loss as a result of the exercise by Lessee of
the Sale Option or Construction Agent Options under circumstances
where Lessee pays all sums required to be paid by it in connection
therewith but such sums are less than the full Termination Value;
(v) Claims arising from any decline in the value of the Property
or failure to repay the Notes or Certificates not resulting from any
breach of any Operative Agreement by any Credit Party;
(vi) costs or expenses of satisfying, discharging or removing any
Lessor Lien;
(vii) costs or expenses incurred by Lenders or Holders (other
than the Agent) in connection with their negotiation or execution of
the Operative Agreements or in connection with any due diligence they
may undertake before entering into the Operative Agreements;
(viii) Claims with respect to Taxes or Impositions (the Indemnity
Provider's sole indemnification obligations with respect thereto being
as set forth in Section 11.2);
(ix) Claims arising out of the handling of funds by Agent or
Owner Trustee;
(x) without limiting Lessee's obligations to pay Basic Rent,
Supplemental Rent, Termination Value, Maximum Residual Guarantee
Amount or Maximum Amount to the extent required by the Operative
Agreements, Claims for the repayment of any amount advanced by the
Lenders or the Holders pursuant to the provisions of Sections 5.2, 5.3
or 5.4;
(xi) Claims arising as a result of a Credit Agreement Default or
a Credit Agreement Event of Default unless attributable to a Default
or an Event of Default by Lessee;
71
(xii) Claims arising as a result of acts or occurrences after the
Expiration Date or Termination Date; and
(xiii) Claims arising from the failure of the Lessee to pay more
than the Maximum Amount regarding any instance in which the
Construction Agent has elected the second Construction Agent Option
set forth in Section 2.1 (as opposed to the first Construction Agent
Option to pay the Termination Value for the Properties plus other
amounts and pursuant to which option the Construction Agent would then
be entitled to receive all right, title and interest of the Lessor in
and to the Properties); provided, the exclusion set forth in this
Section 11.1(xiii) (A) shall only apply to Claims that the repayment
of the Property Costs for the Properties (as opposed to Claims for
other matters) should not have been limited to the Maximum Amount and
(B) such exclusion shall not apply to any other Claims.
11.2. GENERAL TAX INDEMNITY.
(a) Subject to and limited by in all respects the provisions of
Sections 11.6 through 11.8, the Indemnity Provider shall pay and assume
liability for, and does hereby agree to indemnify, protect and defend each
Property and all Indemnified Persons, and hold them harmless against, all
Impositions on an After Tax Basis, and all payments pursuant to the
Operative Agreements shall be made free and clear of and without deduction
for any and all present and future Impositions.
(b) Notwithstanding anything to the contrary in Section 11.2(a)
hereof, the following shall be excluded from the obligations to pay, assume
liability for, indemnify, protect, defend and hold harmless required by
Section 11.2(a) (collectively, the "Excluded Taxes"):
(i) Taxes (other than Taxes that are, or are in the nature of,
sales, use, rental, value added, transfer or property taxes) that are
imposed on a Indemnified Person (other than the Lessor, the Owner
Trustee and the Trust) by the United States federal government that
are franchise or conduct of business taxes or that are based on or
measured by the gross or net income (including without limitation
taxes based on capital gains and minimum and alternative minimum taxes
measured by items of tax preference), gross or net receipts, excess
profits, shareholders' capital or net worth of such Person; provided,
that this clause (i) shall not be interpreted to prevent a payment
from being made on an After Tax Basis if such payment is otherwise
required to be so made;
(ii) Taxes (other than Taxes that are, or are in the nature of,
sales, use, rental, value added, transfer or property taxes) that are
imposed on any Indemnified Person (other than the Lessor, the Owner
Trustee and the Trust) by any state or local jurisdiction or taxing
authority within any state or local jurisdiction that are franchise or
conduct of business taxes or that are based upon or measured by the
gross or net income (including without limitation taxes based on
72
capital gains and minimum and alternative minimum taxes measured by
items of tax preference), gross or net receipts, excess profits,
shareholders' capital or net worth of such Person; provided that such
Taxes shall not be excluded under this subparagraph (ii) to the extent
such Taxes are imposed because the location, possession or use of any
Property in, the location or the operation of the Lessee in, or the
Lessee's making payments under the Operative Agreements from, the
jurisdiction imposing such Taxes is the sole connection between such
Indemnified Person and the jurisdiction imposing such Taxes and either
(x) the transactions contemplated by the Operative Agreements are
characterized by such state authority as something other than a loan
or (y) such Taxes would not have been imposed had legal title to the
Property not been held in the name of the Owner Trustee; provided,
further, that this clause (ii) shall not be interpreted to prevent a
payment from being made on an After Tax Basis if such payment is
otherwise required to be so made;
(iii) any Tax to the extent it relates to any act, event or
omission that occurs after the termination of the Lease and redelivery
or sale of the Property in accordance with the terms of the Lease (but
not any Tax that relates to such termination, redelivery or sale
and/or to any period prior to such termination, redelivery or sale);
(iv) any Taxes which are imposed on an Indemnified Person as a
result of the gross negligence or willful misconduct of such
Indemnified Person itself, as determined by a court of competent
jurisdiction (as opposed to gross negligence or willful misconduct
imputed to such Indemnified Person), but not Taxes imposed as a result
of ordinary negligence of such Indemnified Person;
(v) Taxes or Impositions imposed against the Trust Company or
Owner Trustee with respect to fees or compensation for services
rendered in its capacity as trustee;
(vi) Taxes or Impositions resulting from the voluntary transfer,
assignment or disposition by the Owner Trustee, Agent, any Lender or
any Holder or of any interest in the Property, other than a transfer,
assignment or disposition (x) while an Event of Default has occurred
and is continuing, (y) resulting from the exercise of any of Lessee's
rights or obligations under the Lease, including without limitation
any substitution, replacement, sublease or removal of the Property or
any part thereof or the exercise of any purchase option under the
Lease, or (z) at the request of the Lessee (other than as a result of
an election by the Lessee to cause the replacement of any Lender or
Holder pursuant to express rights granted to the Lessee in the
Operative Agreements (but with respect to any such replacement of any
Lender or Holder, only to the extent that such replacement relates to
an express breach of obligation by such Lender or Holder pursuant to
the terms of the Operative Agreements));
73
(vii) Any Tax or Imposition for so long as, but only for so long
as, it is being contested in accordance with the provisions of Section
11.2(g) of this Agreement; or
(viii) Taxes or Impositions which are expressly (based on
legislative history) in substitution for, or relieve such Indemnified
Person from, any actual Taxes or Impositions based upon or measured by
any of the foregoing.
(c) (i) Subject to the terms of Section 11.2(f), the Indemnity
Provider shall pay or cause to be paid all Impositions directly to the
taxing authorities where feasible and otherwise to the Indemnified Person,
as appropriate, and the Indemnity Provider shall at its own expense, upon
such Indemnified Person's reasonable request, furnish to such Indemnified
Person copies of official receipts or other satisfactory proof evidencing
such payment.
(ii) In the case of Impositions for which no contest is conducted
pursuant to Section 11.2(g) and which the Indemnity Provider pays
directly to the taxing authorities, the Indemnity Provider shall pay
such Impositions prior to the latest time permitted by the relevant
taxing authority for timely payment. In the case of Impositions for
which the Indemnity Provider reimburses an Indemnified Person, the
Indemnity Provider shall do so within thirty (30) days after receipt
by the Indemnity Provider of demand by such Indemnified Person
describing in reasonable detail the nature of the Imposition and the
basis for the demand (including without limitation the computation of
the amount payable), accompanied by receipts or other reasonable
evidence of such demand, but in no event shall the Lessee be required
to pay such reimbursement prior to ten (10) 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 11.2(g), the Indemnity Provider shall pay such Impositions or
reimburse such Indemnified Person for such Impositions, to the extent
not previously paid or reimbursed pursuant to subsection (a), prior to
the latest time permitted by the relevant taxing authority for timely
payment after conclusion of all contests under Section 11.2(g).
(iii) At the Indemnity Provider's request, the amount of any
indemnification payment by the Indemnity Provider pursuant to
subsection (a) shall be verified and certified by an independent
public accounting firm mutually acceptable to the Indemnity Provider
and the Indemnified Person. The fees and expenses of such independent
public accounting firm shall be paid by the Indemnity Provider unless
such verification shall result in an adjustment in the Indemnity
Provider's favor of ten percent (10%) or more of the payment as
computed by the Indemnified Person, in which case such fee shall be
paid by the Indemnified Person.
74
(iv) In the event that the Indemnified Person receives a refund
(or like adjustment) in respect of any Taxes or Impositions (or
deduction or withholding thereof) paid by the Indemnity Provider or
for which the Indemnified Person has been reimbursed by the Indemnity
Provider, the Indemnified Person shall within thirty (30) days after
such receipt (or effectiveness of such adjustment) remit the amount of
such refund (or like adjustment) to the Indemnity Provider, net of all
reasonable cost and expenses incurred by such Indemnified Person;
provided, however, no such payment shall be required as long as an
Event of Default shall have occurred and be continuing.
(d) The Indemnity Provider shall be responsible for preparing and
filing any real and personal property or ad valorem tax returns in respect
of each Property and any other tax returns required for the Owner Trustee
respecting the transactions described in the Operative Agreements. Neither
the Owner Trustee nor any other party to the Trust Agreement will cause the
Owner Trust to elect to be taxed (or take the position that the Owner Trust
is taxable) as an association or corporation for federal or applicable
state or income or franchise tax purposes, without the consent of the
Lessee. In case any other report or tax return shall be required to be made
with respect to any obligations of the Indemnity Provider under or arising
out of subsection (a) and of which the Indemnity Provider has knowledge or
should have knowledge, the Indemnity Provider, at its sole cost and
expense, shall notify the relevant Indemnified Person of such requirement
and (except if such Indemnified Person notifies the Indemnity Provider that
such Indemnified Person intends to prepare and file such report or return)
(A) to the extent required or permitted by and consistent with Legal
Requirements, make and file in the Indemnity Provider's name such return,
statement or report; and (B) in the case of any other such return,
statement or report required to be made in the name of such Indemnified
Person, advise such Indemnified Person of such fact and prepare such
return, statement or report for filing by such Indemnified Person or, where
such return, statement or report shall be required to reflect items in
addition to any obligations of the Indemnity Provider under or arising out
of subsection (a), provide such Indemnified Person at the Indemnity
Provider's expense with information sufficient to permit such return,
statement or report to be properly made with respect to any obligations of
the Indemnity Provider under or arising out of subsection (a). Such
Indemnified Person shall, upon the Indemnity Provider's request and at the
Indemnity Provider's expense, provide any data maintained by such
Indemnified Person (and not otherwise available to or within the control of
the Indemnity Provider) with respect to each Property which the Indemnity
Provider may reasonably require to prepare any required tax returns or
reports.
(e) As between the Indemnity Provider on one hand, and each Financing
Party on the other hand, the Indemnity Provider shall be responsible for,
and the Indemnity Provider shall indemnify and hold harmless each Financing
Party (without duplication of any indemnification required by subsection
(a)) on an After Tax Basis against, any obligation for United States
withholding taxes or similar levies, imposts, charges, fees, deductions or
withholdings (collectively, "Withholdings") imposed in respect of the
interest payable on the Notes, Holder Yield payable on the Certificates or
75
with respect to any other payments under the Operative Agreements except
for withholdings on account of Excluded Taxes described in subsections
(iii), (iv) or (v) of Section 11.2(b) hereof (all such payments being
referred to herein as "Exempt Payments" to be made without deduction,
withholding or set off except for withholdings on account of Excluded Taxes
described in subsections (iii), (iv) or (v) of Section 11.2(b) hereof)
(and, if any Financing Party receives a demand for such payment from any
taxing authority or a Withholding is otherwise required with respect to any
Exempt Payment, the Indemnity Provider shall discharge such demand on
behalf of such Financing Party except for withholdings on account of
Excluded Taxes described in subsections (iii), (iv) or (v) of Section
11.2(b) hereof); provided, however, that the obligation of the Indemnity
Provider under this Section 11.2(e) shall not apply to:
(i) Withholdings on any Exempt Payment to any Financing Party
which is a non-U.S. Person unless such Financing Party is, on the date
hereof (or on the date it becomes a Financing Party hereunder) and on
the date of any change in the principal place of business or the
lending office of such Financing Party, entitled to submit a Form 1001
(relating to such Financing Party and entitling it to a complete
exemption from Withholding on such Exempt Payment) or Form 4224 or is
otherwise subject to exemption from Withholding with respect to such
Exempt Payment (except where the failure of the exemption results from
a change in the principal place of business of the Lessee; provided if
a failure of exemption for any Financing Party results from a change
in the principal place of business or lending office of any other
Financing Party, then such other Financing Party shall be liable for
any Withholding or indemnity with respect thereto), or
(ii) Any U.S. Taxes imposed solely by reason of the failure by a
non-U.S. Person to comply with applicable certification, information,
documentation or other reporting requirements concerning the
nationality, residence, identity or connections with the United States
of America of such non-U.S. Person if such compliance is required by
statute or regulation of the United States of America as a
precondition to relief or exemption from such U.S. Taxes.
For the purposes of this Section 11.2(e), (A) "U.S. Person" shall mean a
citizen, national or resident of the United States of America, a
corporation, partnership or other entity created or organized in or under
any laws of the United States of America or any State thereof, or any
estate or trust that is subject to Federal income taxation regardless of
the source of its income, (B) "U.S. Taxes" shall mean any present or future
tax, assessment or other charge or levy imposed by or on behalf of the
United States of America or any taxing authority thereof or therein, (C)
"Form 1001" shall mean Form 1001 (Ownership, Exemption, or Reduced Rate
Certificate) of the Department of the Treasury of the United States of
America and (D) "Form 4224" shall mean Form 4224(R) (Exemption from
Withholding of Tax on Income Effectively Connected with the Conduct of a
Trade or Business in the United States) of the Department of Treasury of
the United States of America (or in relation to either such Form such
successor and related forms as may from time to time be adopted by the
relevant taxing authorities of the United States of America to document a
76
claim to which such Form relates). Each of the Forms referred to in the
foregoing clauses (C) and (D) shall include such successor and related
forms as may from time to time be adopted by the relevant taxing
authorities of the United States of America to document a claim to which
such Form relates.
If a Financing Party or an Affiliate with whom such Financing Party
files a consolidated tax return (or equivalent) subsequently receives the
benefit in any country of a tax credit or an allowance resulting from U.S.
Taxes with respect to which it has received a payment of an additional
amount under this Section 11.2(e), such Financing Party will pay to the
Indemnity Provider such part of that benefit as in the opinion of such
Financing Party will leave it (after such payment) in a position no more
and no less favorable than it would have been in if no additional payment
had been required to be paid, provided always that (i) such Financing Party
will be the sole judge of the amount of any such benefit and of the date on
which it is received, (ii) such Financing Party will have the absolute
discretion as to the order and manner in which it employs or claims tax
credits and allowances available to it and (iii) such Financing Party will
not be obliged to disclose to the Indemnity Provider any information
regarding its tax affairs or tax computations.
Each non-U.S. Person that shall become a Financing Party after the
date hereof shall, upon the effectiveness of the related transfer or
otherwise upon becoming a Financing Party hereunder, be required to provide
all of the forms and statements referenced above or other evidences of
exemption from Withholdings.
(f) If Legal Requirements require the Lessee to make Withholdings on
account of any Taxes for which Lessee is not responsible under this Section
11.2 (and the Lessee pays such Withholdings), then the Indemnified Person
responsible for such Taxes shall immediately reimburse the Lessee for the
Withholdings so paid by it.
(g) If a written Claim is made against any Indemnified Person or if
any proceeding shall be commenced against such Indemnified Person
(including without limitation a written notice of such proceeding), for any
Impositions, the provisions in Section 11.1 relating to notification and
rights to contest shall apply; provided, however, that the Indemnity
Provider shall have the right to conduct and control such contest only if
such contest involves a Tax other than a Tax on net income of the
Indemnified Person and can be pursued independently from any other
proceeding involving a Tax liability of such Indemnified Person.
11.3. INCREASED COSTS, ILLEGALITY, ETC.
(a) If, due to either (i) the introduction of or any change in or in
the interpretation of any law or regulation or (ii) the compliance with any
guideline or request hereafter adopted, promulgated or made by any central
bank or other Governmental Authority (whether or not having the force of
law but, if not having the force of law, generally applicable to and
complied with by banks of the same general type as such Financing Party in
77
the relevant jurisdiction) from any central bank or other Governmental
Authority made subsequent to the Effective Date, there shall be any
increase in the cost to any Financing Party of agreeing to make or making,
funding or maintaining Eurodollar Loans or Eurodollar Holder Advances in an
amount that such Financing Party deems material, then the Lessee shall from
time to time, upon demand by such Financing Party (with a copy of such
demand to the Agent but subject to the terms of Section 2.11 of the Credit
Agreement and 3.9 of the Trust Agreement, as the case may be), pay to the
Agent for the account of such Financing Party additional amounts sufficient
to compensate such Financing Party for such increased cost. A certificate
as to the amount of such increased cost, submitted to the Lessee and the
Agent by such Financing Party, shall be prima facie evidence of the
accuracy of the information so recorded. This covenant shall survive the
termination of this Agreement and the payment of the Advances and all other
amounts payable hereunder or under any other Operative Agreement for one
year thereafter.
(b) If any Financing Party determines (taking into account its
policies concerning capital adequacy) that compliance with any law or
regulation or any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law, but in each
case promulgated or made after the date hereof) affects or would affect the
amount of capital required or expected to be maintained by such Financing
Party or any corporation controlling such Financing Party and that the
amount of such capital is increased by or based upon the existence of such
Financing Party's commitment to make Advances and other commitments of this
type or upon the Advances, then, upon demand by such Financing Party (with
a copy of such demand to the Agent but subject to the terms of Section 2.11
of the Credit Agreement and 3.9 of the Trust Agreement), the Lessee shall
pay to the Agent for the account of such Financing Party, from time to time
as specified by such Financing Party, additional amounts sufficient to
compensate such Financing Party or such corporation in the light of such
circumstances, to the extent that such Financing Party reasonably
determines such increase in capital to be allocable to the existence of
such Financing Party's commitment to make such Advances. A certificate as
to such amounts submitted to the Lessee and the Agent by such Financing
Party setting forth in reasonable detail the computation of any such
increased costs shall be prima facie evidence of the accuracy of the
information so recorded. This covenant shall survive the termination of
this Agreement and the payment of the Advances and all other amounts
payable hereunder or under any other Operative Agreement for one year
thereafter.
(c) Without limiting the effect of the foregoing, the Lessee shall pay
to each Financing Party on the last day of the Interest Period therefor so
long as such Financing Party is maintaining reserves against "Eurocurrency
liabilities" under Regulation D an additional amount (determined by such
Financing Party and notified to the Lessee through the Agent) equal to the
product of the following for each Eurodollar Loan or Eurodollar Holder
Advance, as the case may be, for each day during such Interest Period:
(i) the principal amount of such Eurodollar Loan or Eurodollar
Holder Advance, as the case may be, outstanding on such day; and
78
(ii) the remainder of (x) a fraction the numerator of which is
the rate (expressed as a decimal) at which interest accrues on such
Eurodollar Loan or Eurodollar Holder Advance, as the case may be, for
such Interest Period as provided in the Credit Agreement or the Trust
Agreement, as the case may be (less the Applicable Percentage), and
the denominator of which is one (1) minus the effective rate
(expressed as a decimal) at which such reserve requirements are
imposed on such Financing Party on such day minus (y) such numerator;
and
(iii) 1/360.
(d) Without affecting its rights under Sections 11.2, 11.3(a), 11.3(b)
or 11.3(c) or any other provision of any Operative Agreement, each
Financing Party agrees that if there is any Imposition payable by or any
increase in any cost to or reduction in any amount receivable by such
Financing Party with respect to which the Lessee would be obligated to
compensate such Financing Party pursuant to Sections 11.2, 11.3(a) or
11.3(b), such Financing Party shall use reasonable efforts to select an
alternative office for Advances which would not result in any such increase
in any cost to or reduction in any amount receivable by such Financing
Party; provided, however, that no Financing Party shall be obligated to
select an alternative office for Advances if such Financing Party
determines that (i) as a result of such selection such Financing Party
would be in violation of any applicable law, regulation, treaty, or
guideline or would incur additional costs or expenses or (ii) such
selection would be materially disadvantageous for regulatory, financial or
other reasons.
(e) With reference to the obligations of the Lessee set forth in
Sections 11.3(a) through 11.3(d), the Lessee shall not have any obligation
to pay to any Financing Party amounts owing under such Sections for any
period which is more than one (1) year prior to the date upon which the
request for payment therefor is delivered to the Lessee.
(f) Notwithstanding any other provision of this Agreement, if any
Financing Party shall notify the Agent that the introduction of or any
change in or in the interpretation of any law or regulation makes it
unlawful, or any central bank or other Governmental Authority asserts that
it is unlawful, for such Financing Party to perform its obligations
hereunder to make or maintain Eurodollar Loans or Eurodollar Holder
Advances, as the case may be, then (i) each Eurodollar Loan or Eurodollar
Holder Advance, as the case may be, of such Financing Party will
automatically, at the earlier of the end of the Interest Period for such
Eurodollar Loan or Eurodollar Holder Advance, as the case may be, or the
date required by law, convert into an ABR Loan or an ABR Holder Advance, as
the case may be, and (iii) the obligation of such Financing Party to make,
convert or continue Eurodollar Loans or Eurodollar Holder Advances, as the
case may be, shall be suspended until the Agent shall notify the Lessee
that such Financing Party has determined that the circumstances causing
such suspension no longer exist.
79
11.4. FUNDING/CONTRIBUTION INDEMNITY.
Subject to the provisions of Section 2.11(a) of the Credit Agreement and
3.9(a) of the Trust Agreement, as the case may be, the Lessee agrees to
indemnify each Financing Party and to hold each Financing Party harmless from
any loss or expense which such Financing Party may sustain or incur as a
consequence of (a) default by the Lessee in payment when due of a principal
amount or interest on any Eurodollar Loan or Eurodollar Holder Advance, (b)
default by the Lessee in making a borrowing of, conversion into or continuation
of Eurodollar Loans or Eurodollar Holder Advances after the Lessee has given a
notice requesting the same in accordance with the provisions of the Operative
Agreements, (c) default by the Lessee in making any prepayment after the Lessee
has given a notice thereof in accordance with the provisions of the Operative
Agreements or (d) the making by the Lessee of a prepayment of Eurodollar Loans
or Eurodollar Holder Advances on a day which is not the last day of an Interest
Period with respect thereto, including, without limitation, in each case, any
such loss or expense arising from the reemployment of funds obtained by it or
from fees payable to terminate the deposits from which such funds were obtained.
This covenant shall survive the termination of the Operative Agreements and the
payment of the Notes, the Holder Certificates and all other amounts payable
hereunder or under any other Operative Agreement for one year thereafter.
11.5. [RESERVED.]
11.6. ADDITIONAL PROVISIONS REGARDING ENVIRONMENTAL INDEMNIFICATION.
Each and every Indemnified Person shall at all times have the rights and
benefits, and the Indemnity Provider shall have the obligations, in each case
provided pursuant to the Operative Agreements with respect to environmental
matters, violations of any Environmental Law, any Environmental Claim or other
loss of or damage to any property or the environment relating to any Property,
the Lease, the Agency Agreement or the Indemnity Provider (including without
limitation the rights and benefits provided pursuant to subsection (c) of the
first paragraph of Section 11.1.
11.7. ADDITIONAL PROVISIONS REGARDING INDEMNIFICATION.
Notwithstanding the provisions of Sections 11.1, 11.2 and 11.5 (other than
with respect to matters concerning environmental indemnification referenced in
Section 11.6), (a) the Owner Trustee shall be the only beneficiary of the
provisions set forth in Sections 11.1, 11.2 and 11.5 (again, subject to the
immediately preceding parenthetical phrase) with respect to each Property solely
for the period prior to the earlier to occur of the applicable Completion Date
or Construction Period Termination Date for such Property, as applicable, and
(b) such limited rights of indemnification referenced in Section 11.7(a) (to the
extent relating to third-party Claims) shall be limited to third-party Claims
caused by or resulting from the Indemnity Provider's acts or omissions and/or
all other Persons acting by, through or under the Indemnity Provider. After the
earlier to occur of the applicable Completion Date or Construction Period
Termination Date for such Property, as applicable, each Indemnified Person shall
be a beneficiary of the provisions set forth in Sections 11.1, 11.2 and 11.5.
80
11.8. INDEMNIFICATIONS PROVIDED BY THE OWNER TRUSTEE IN FAVOR OF THE OTHER
INDEMNIFIED PERSONS.
To the extent the Indemnity Provider is not obligated to indemnify each
Indemnified Person with respect to the various matters described in this Section
11.8, the Owner Trustee shall provide such indemnities (but only to the extent
amounts sufficient to pay such indemnity are funded by the Lenders and the
Holders) in favor of each Indemnified Person in accordance with this Section
11.8 and shall pay all such amounts owed with respect to this Section 11.8 with
amounts advanced by the Lenders and the Holders (a) to the extent, but only to
the extent, amounts are available therefor with respect to the Available
Commitments and the Available Holder Commitments (subject to the rights of the
Lenders and the Holders to increase their respective commitment amounts in
accordance with the provisions of Section 5.11) and (b) unless each Lender and
each Holder has declined in writing to fund such amount. Notwithstanding any
other provision in any other Operative Agreement to the contrary, all amounts so
advanced shall be deemed added (ratably, based on the ratio of the Property Cost
for each Property individually to the Aggregate Property Cost of all Properties
at such time) to the Property Cost of all Properties then subject to the terms
of the Operative Agreements.
Whether or not any of the transactions contemplated hereby shall be
consummated, the Owner Trustee hereby assumes liability for and agrees to
defend, indemnify and hold harmless each Indemnified Person on an After Tax
Basis from and against any Claims, which may be imposed on, incurred by or
asserted against an Indemnified Person by any third party, including without
limitation Claims arising from the negligence of an Indemnified Person (but not
to the extent such Claims arise from the gross negligence or willful misconduct
of such Indemnified Person itself, as determined by a court of competent
jurisdiction, as opposed to gross negligence or willful misconduct imputed to
such Indemnified Person or breach of such Indemnified Person's obligations under
this Agreement, the Lease or any other Operative Agreement) in any way relating
to or arising or alleged to arise out of the execution, delivery, performance or
enforcement of this Agreement, the Lease or any other Operative Agreement or on
or with respect to any Property or any component thereof, including without
limitation Claims in any way relating to or arising or alleged to arise out of
the matters set forth in Sections 11.1(a) through 11.1(h); provided, however,
that the obligations of the Owner Trustee to assume liability for, defend,
indemnify and hold harmless set forth above shall not apply to any Claims which
are excluded from Lessee's obligations under Section 11.1 and the last paragraph
of such section.
The Owner Trustee shall pay and assume liability for, and does hereby agree
to indemnify, protect and defend each Property and all Indemnified Persons, and
hold them harmless against, all Impositions on an After Tax Basis, and all
payments pursuant to the Operative Agreements shall be made free and clear of
and without deduction for any and all present and future Impositions.
Notwithstanding anything to the contrary in this paragraph, the Excluded Taxes
shall be excluded from the indemnity provisions afforded by this paragraph.
81
THE INDEMNITY OBLIGATIONS UNDERTAKEN BY THE OWNER TRUSTEE PURSUANT TO THIS
SECTION 11.8 ARE IN ALL RESPECTS SUBJECT TO THE LIMITATIONS ON LIABILITY
REFERENCED IN SECTION 12.9.
11.9. LIMITS ON INDEMNIFICATION; SUBROGATION.
The indemnities provided in this Section 11 shall not be construed to
require the Indemnity Provider to pay any indemnified Claim more than one time.
Upon payment of any Claim pursuant hereto, the Indemnity Provider shall be
subrogated to all the rights and remedies which the Indemnified Person would
have had against any Person or property in respect to such Claim and, if
requested by the Indemnity Provider, the applicable Indemnified Person shall
transfer (at the cost and expense of the Indemnity Provider) to the Indemnity
Provider all such rights and remedies in order to perfect such right of
subrogation and to preserve any such Claims and otherwise cooperate on a
commercially reasonable basis (at the cost and expense of the Indemnity
Provider) with the Indemnity Provider to enable the Indemnity Provider
vigorously to pursue such Claims.
SECTION 12. MISCELLANEOUS.
12.1. SURVIVAL OF AGREEMENTS.
Subject to the last sentence of this Section 12.1, the representations,
warranties, covenants, indemnities and agreements of the parties provided for in
the Operative Agreements, and the parties' obligations under any and all
thereof, shall survive the execution and delivery of this Agreement, the
transfer of any Property to the Owner Trustee, the acquisition of any Property
(or any of its components), the construction of any Improvements, the Completion
of any Property, any disposition of any interest of the Owner Trustee in any
Property or any interest of the Holders in the Trust Estate, until the payment
of the Notes and Certificates (except in the case of the Lessee and the
Guarantor, such shall survive until the payment and performance of the Company
Obligations) 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 to the extent provided in such waiver). Except as otherwise
expressly set forth herein or in other Operative Agreements, the indemnities of
the parties provided for in the Operative Agreements shall survive the
expiration or termination of any thereof.
12.2. NOTICES.
All notices required or permitted to be given under any Operative Agreement
shall be in writing. Notices may be served by certified or registered mail,
postage paid with return receipt requested; by private courier, prepaid; by
telex, facsimile, or other telecommunication device capable of transmitting or
creating a written record; or personally. Mailed notices shall be deemed
delivered five (5) days after mailing, properly addressed. Notices delivered by
a nationally recognized overnight delivery service shall be deemed delivered one
82
(1) Business Day after mailing, properly addressed. Couriered notices shall be
deemed delivered when delivered as addressed, or if the addressee refuses
delivery, when presented for delivery notwithstanding such refusal. Telex or
telecommunicated notices shall be deemed delivered when receipt is either
confirmed by confirming transmission equipment or acknowledged by the addressee
or its office. Personal delivery shall be effective when accomplished. Unless a
party changes its address by giving notice to the other party as provided
herein, notices shall be delivered to the parties at the following addresses:
If to the Construction Agent or the Lessee, to such entity at the
following address:
Franklin Templeton Corporate Services, Inc.
777 Mariners Island Boulevard
San Mateo, CA 94404
Attention: Charles R. Sims,
Senior Vice President and Treasurer
(Mail Code: C/Treas SM-1810/1)
Telephone: (650) 312-5647
Telecopy: (650) 525-7259
and
Leslie M. Kratter,
Vice President and Secretary
(Mail Code: Exec SM-777/7)
Telephone: (650) 312-4018
Telecopy: (650) 312-2804
If to Guarantor, to such entity in care of Franklin Resources, Inc. at
the following address:
Franklin Resources, Inc.
Franklin Templeton Corporate Services, Inc.
777 Mariners Island Boulevard
San Mateo, CA 94404
Attention: Charles R. Sims,
Senior Vice President and Treasurer
(Mail Code: C/Treas SM-1810/1)
Telephone: (650) 312-5647
Telecopy: (650) 525-7259
83
and
Leslie M. Kratter,
Vice President and Secretary
(Mail Code: Exec SM-777/7)
Telephone: (650) 312-4018
Telecopy: (650) 312-2804
If to the Owner Trustee, to it at the following address:
First Security Bank, National Association
79 South Main Street
Salt Lake City, Utah 84111
Attention: Val T. Orton,
Vice President
Telephone: (801) 246-5300
Telecopy: (801) 246-5053
If to the Holders, to each such Holder at the address set forth for
such Holder on Schedule I of the Trust Agreement.
If to the Agent, to it at the following address:
Bank of America, N.A.
231 South LaSalle Street
10th Floor, Mail Code IL1-231-1052
Chicago, IL 60697
Attention: Lizet Flores
Telephone: 312-828-6642
Telecopy: 312-987-0889
If to any Lender, to it at the address set forth for such Lender in
Schedule 2.1 of the Credit Agreement.
From time to time any party may designate additional parties and/or
another address for notice purposes by notice to each of the other parties
hereto.
12.3. COUNTERPARTS.
This Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute but one (1) and the same
instrument.
84
12.4. TERMINATIONS, AMENDMENTS, WAIVERS, ETC.; UNANIMOUS VOTE MATTERS.
Each Basic Document may be terminated, amended, supplemented, waived or
modified only by an instrument in writing signed by, subject to Article VIII of
the Trust Agreement regarding termination of the Trust Agreement, the Majority
Secured Parties and each Credit Party regardless of whether such Credit Party is
a party to such Basic Document). Each Operative Agreement which is not a Basic
Document may be terminated, amended, supplemented, waived or modified only by an
instrument in writing signed by the parties thereto and (without the consent of
any other Financing Party) the Agent. In addition, the Unanimous Vote Matters
shall require the consent of each Lender and each Holder affected by such
matter.
Notwithstanding the foregoing, no such termination, amendment, supplement,
waiver or modification shall, without the consent of the Agent and, to the
extent affected thereby, each Lender and each Holder (collectively, the
"Unanimous Vote Matters") (i) increase or reduce the Lender Commitments and/or
the Holder Commitments except as otherwise provided in Section 2.5 of the Credit
Agreement and Section 3.1(e) of the Trust Agreement, reduce the principal of any
Loan or Holder Advance, reduce any fee payable to any Lender or any Holder,
extend the scheduled date of maturity of any Note, extend the scheduled
Expiration Date, extend any payment date of any Note or Certificate, reduce the
stated rate of interest payable on any Note, reduce the stated Holder Yield
payable on any Certificate (other than as a result of waiving the applicability
of any post-default increase in interest rates or Holder Yields), modify the
priority of any Lien in favor of the Agent under any Security Document (except
in favor of easements, covenants, conditions or restrictions which are normal
and customary in connection with the development of the Property and which are
approved by the Agent at the request of the Construction Agent), subordinate any
obligation owed to such Lender or Holder, reduce any Lender Unused Fees or any
Holder Unused Fees payable to such Lender or Holder (as the case may be) under
this Participation Agreement, extend the scheduled date of payment of any Lender
Unused Fees or any Holder Unused Fees payable to such Lender or Holder (as the
case may be), fund any Advance referenced in Section 2.1 of the Agency Agreement
in excess of the then current aggregate sum of the Available Commitments and the
Available Holder Commitments, elect to decline the funding of any Transaction
Expense with respect to Sections 7.1(a) or 7.1(b), elect to decline the funding
of any indemnity payment by the Owner Trustee with respect to Section 11.8 or
extend the expiration date of such Lender's Commitment or the Holder Commitment
of such Holder, or (ii) terminate, amend, supplement, waive or modify any
provision of this Section 12.4 or reduce the percentages specified in the
definitions of Majority Lenders, Majority Holders or Majority Secured Parties,
or (except for the designation of a successor trustee or a co-trustee) consent
to the assignment or transfer by the Owner Trustee of any of its rights and
obligations under any Credit Document or release a material portion of the
Collateral (except in accordance with Section 8.8) or release any Credit Party
from its obligations under any Operative Agreement or otherwise alter any
payment obligations of any Credit Party to the Lessor or any Financing Party
under the Operative Agreements, or (iii) terminate, amend, supplement, waive or
modify any provision of Section 7 of the Credit Agreement (which shall also
require the consent of the Agent), or (iv) eliminate the automatic option under
Section 5.3(b) of the Agency Agreement requiring that the Construction Agent pay
certain liquidated damages in exchange for the conveyance of a Property to the
Construction Agent. Any such termination, amendment, supplement, waiver or
85
modification shall apply equally to each of the Lenders and the Holders and
shall be binding upon all the parties to this Agreement. In the case of any
waiver, each party to this Agreement shall be restored to its former position
and rights under the Operative Agreements as if the Default or Event of Default
waived had not occurred, and any Default or Event of Default waived shall be
deemed to be cured and not continuing; but no such waiver shall extend to any
subsequent or other Default or Event of Default, or impair any right consequent
thereon. The parties to this Agreement agree that any increase in the Lender
Commitment of any Lender (except under Section 2.11(b) of the Credit Agreement)
and/or any increase in the Holder Commitment of any Holder shall be a matter
decided as a Unanimous Vote Matter.
If at a time when the conditions precedent set forth in the Operative
Agreements to any Loan are, in the opinion of the Majority Lenders, satisfied,
any Lender shall fail to fulfill its obligations to make such Loan (any such
Lender, a "Defaulting Lender") then, for so long as such failure shall continue,
the Defaulting Lender shall (unless the Lessee and the Majority Lenders,
determined as if the Defaulting Lender were not a "Lender", shall otherwise
consent in writing) be deemed for all purposes relating to terminations,
amendments, supplements, waivers or modifications under the Operative Agreements
to have no Loans, shall not be treated as a "Lender" when performing the
computation of Majority Lenders or Majority Secured Parties, and shall have no
rights under this Section 12.4.
If at a time when the conditions precedent set forth in the Operative
Agreements to any Holder Advance are, in the opinion of the Majority Holders,
satisfied, any Holder shall fail to fulfill its obligations to make such Holder
Advance (any such Holder, a "Defaulting Holder") then, for so long as such
failure shall continue, the Defaulting Holder shall (unless the Lessee and the
Majority Holders, determined as if the Defaulting Holder were not a "Holder",
shall otherwise consent in writing) be deemed for all purposes relating to
terminations, amendments, supplements, waivers or modifications under the
Operative Agreements to have no Holder Advances, shall not be treated as a
"Holder" when performing the computation of Majority Holders or Majority Secured
Parties, and shall have no rights under this Section 12.4.
12.5. HEADINGS, ETC.
The Table of Contents and headings of the various Articles and Sections of
this Agreement are for convenience of reference only and shall not modify,
define, expand or limit any of the terms or provisions hereof.
12.6. PARTIES IN INTEREST.
Except as expressly provided herein, none of the provisions of this
Agreement are intended for the benefit of any Person except the parties hereto.
86
12.7. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL;
VENUE.
(a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED, INTERPRETED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA. Any legal action or
proceeding with respect to this Agreement or any other Operative Agreement
may be brought in the courts of the State of California in San Mateo County
or of the United States for the Northern District of California, and, by
execution and delivery of this Agreement, each of the Credit Parties hereby
irrevocably accepts for itself and in respect of its property, generally
and unconditionally, the nonexclusive jurisdiction of such courts. Each of
the Credit Parties further irrevocably consents to the service of process
out of any of the aforementioned courts in any such action or proceeding by
the mailing of copies thereof by registered or certified mail, postage
prepaid, to it at the address set out for notices pursuant to Section 12.2,
such service to become effective three (3) days after such mailing. Nothing
herein shall affect the right of any party to serve process in any other
manner permitted by Law or to commence legal proceedings or to otherwise
proceed against any party in any other jurisdiction.
(b) EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY, TO THE
FULLEST EXTENT ALLOWED BY APPLICABLE LAW, WAIVES TRIAL BY JURY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, ANY OTHER OPERATIVE
AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.
(c) Each of the Credit Parties hereby irrevocably waives any objection
which it may now or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in connection with this
Agreement or any other Operative Agreement brought in the courts referred
to in subsection (a) above and hereby further irrevocably waives and agrees
not to plead or claim in any such court that any such action or proceeding
brought in any such court has been brought in an inconvenient forum.
12.8. SEVERABILITY.
Any provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
12.9. LIABILITY LIMITED.
(a) The Lenders, the Agent, the Credit Parties, the Owner Trustee and
the Holders each acknowledge and agree that the Owner Trustee is (except as
87
otherwise expressly provided herein or therein) entering into this
Agreement and the other Operative Agreements to which it is a party (other
than the Trust Agreement and to the extent otherwise provided in Section
6.1 of this Agreement), solely in its capacity as Owner Trustee under the
Trust Agreement and not in its individual capacity and that the Trust
Company shall not be liable or accountable under any circumstances
whatsoever in its individual capacity for or on account of any statements,
representations, warranties, covenants or obligations stated to be those of
the Owner Trustee, except for its own gross negligence or willful
misconduct and as otherwise expressly provided herein or in the other
Operative Agreements.
(b) Anything to the contrary contained in this Agreement, the Credit
Agreement, the Notes or in any other Operative Agreement notwithstanding,
no Exculpated Person shall be personally liable in any respect for any
liability or obligation of the Owner Trustee arising hereunder or in any
other Operative Agreement including without limitation the payment of the
principal of, or interest on, the Notes, or for monetary damages for the
breach of performance by the Owner Trustee of any of the covenants
contained in the Credit Agreement, the Notes, this Agreement, the Security
Agreement or any of the other Operative Agreements. The Lenders, the
Holders and the Agent agree that, in the event they pursue any remedies
under any Operative Agreement, neither the Lenders, the Holders nor the
Agent shall have any recourse against any Exculpated Person, for any
deficiency, loss or Claim for monetary damages or otherwise resulting from
a breach thereof by the Owner Trustee and recourse shall be had solely and
exclusively against the Trust Estate (excluding Excepted Payments) and the
Credit Parties (with respect to the Credit Parties' obligations under the
Operative Agreements); but nothing contained herein shall be taken to
prevent recourse against or the enforcement of remedies against the Trust
Estate (excluding Excepted Payments) in respect of any and all liabilities,
obligations and undertakings contained herein and/or in any other Operative
Agreement. The Lenders, Holders and Agent further agree that,
notwithstanding the provisions of this Section, nothing in any Operative
Agreement shall: (i) constitute a waiver, release or discharge of any
indebtedness or obligation evidenced by the Notes and/or the Certificates
arising under any Operative Agreement or secured by any Operative
Agreement, but the same shall continue until paid or discharged; (ii)
relieve any Exculpated Person from liability and responsibility for (but
only to the extent of the damages arising by reason of): active waste
knowingly committed by any Exculpated Person with respect to any Property,
or any fraud, gross negligence or willful misconduct on the part of any
Exculpated Person; (iii) relieve any Exculpated Person from liability and
responsibility for (but only to the extent of the moneys misappropriated,
misapplied or not turned over) (A) misappropriation or misapplication by
the Lessor (i.e., application in a manner contrary to any of the Operative
Agreements) of any insurance proceeds or condemnation award paid or
delivered to the Lessor by any Person other than the Agent, (B) any
deposits or any escrows or amounts owed by the Construction Agent under the
Agency Agreement held by the Lessor or (C) any Rent or other income
received by the Lessor from any Credit Party that is not turned over to the
Agent in accordance with the Operative Agreements; (iv) affect or in any
way limit the Agent's rights and remedies under any Operative Agreement
with respect to the Rent and rights and powers of the Agent under the
88
Operative Agreements or to obtain a judgment against the Lessee's or
Lessor's interest in the Properties or the Agent's rights and powers to
obtain a judgment against the Lessor or any Credit Party (provided, that no
deficiency judgment or other money judgment shall be enforced against any
Exculpated Person except to the extent of the Lessor's interest in the
Trust Estate (excluding Excepted Payments) or to the extent the Lessor may
be liable as otherwise contemplated in Section 12.9(a) or clauses (ii) and
(iii) of this Section 12.9(b)); (v) relieve any Exculpated Person from
liability for its obligations undertaken in its individual capacity; (vi)
relieve the Owner Trustee from any obligations under the Trust Agreement or
under Section 5.8 of the Credit Agreement; or (vii) relieve any Exculpated
Person from any obligation to make any payment under any provision of the
Operative Agreements if such payment is due as a result of a Claim against
such Exculpated Person for which Lessee has no indemnification obligation
pursuant to Sections 11.1, 11.2 or 11.7 and for which such Exculpated
Person has not been exculpated pursuant to the provisions of this Section
12.9 or any other provision of the Operative Agreements.
12.10. RIGHTS OF THE CREDIT PARTIES.
If at any time all obligations (i) of the Owner Trustee under the Credit
Agreement, the Security Documents and the other Operative Agreements and (ii) of
the Credit Parties under the Operative Agreements have in each case been
satisfied or discharged in full, then the Credit Parties shall be entitled to
(a) terminate the Lease and the guaranty obligations under Section 6B and (b)
receive all amounts then held under the Operative Agreements and all proceeds
with respect to any of the Properties. Upon the termination of the Lease and
Section 6B pursuant to the foregoing clause (a) or as a result of the payment
and performance of the Company Obligations, the Lessor shall transfer to the
Lessee all of its right, title and interest, free and clear of the Lien of the
Lease, the Lien of the Security Documents and all Lessor Liens, in and to any
Properties then subject to the Lease and any amounts or proceeds referred to in
the foregoing clause (b) shall be paid over to the Lessee.
12.11. FURTHER ASSURANCES.
The parties hereto shall promptly cause to be taken, executed, acknowledged
or delivered, at the sole expense of the Lessee, all such further acts,
conveyances, documents and assurances as the other parties may from time to time
reasonably request in order to carry out and effectuate the intent and purposes
of this Participation Agreement, the other Operative Agreements and the
transactions contemplated hereby and thereby (including without limitation the
preparation, execution and filing of any and all Uniform Commercial Code
financing statements, filings of Mortgage Instruments and other filings or
registrations which the parties hereto may from time to time request to be filed
or effected). The Lessee, at its own expense and without need of any prior
request from any other party, shall take such action as may be necessary
(including without limitation any action specified in the preceding sentence),
or (if the Owner Trustee shall so request) as so requested, in order to maintain
and protect all security interests provided for hereunder or under any other
Operative Agreement. In addition, in connection with the sale or other
disposition of any Property or any portion thereof permitted under the Operative
89
Agreements, the Lessee agrees to execute such instruments of conveyance as may
be reasonably required in connection therewith.
12.12. CALCULATIONS UNDER OPERATIVE AGREEMENTS.
The parties hereto agree that all calculations and numerical determinations
to be made under the Operative Agreements by the Owner Trustee shall, except as
expressly provided herein, be made by the Agent and that such calculations and
determinations shall be conclusive and binding on the parties hereto in the
absence of manifest error.
12.13. CONFIDENTIALITY.
Each Financing Party agrees to keep confidential any information furnished
or made available to it by any Credit Party or any of its Subsidiaries pursuant
to this Agreement, provided that nothing herein shall prevent any Financing
Party from disclosing such information (a) to any other Financing Party or any
Affiliate of any Financing Party, or any officer, director, employee, agent, or
advisor of any Financing Party or Affiliate of any Financing Party who is
directed to maintain the confidentiality of such information, (b) to any other
Person who is directed to maintain the confidentiality of such information if
reasonably incidental to the administration of the credit facility provided
herein, (c) as required by any law, rule, or regulation, (d) upon the order of
any court or administrative agency, (e) upon the request or demand of any
regulatory agency or authority, (f) that is or becomes available to the public
or that is or becomes available to any Financing Party other than as a result of
a disclosure by such Financing Party prohibited by this Agreement, (g) in
connection with any litigation to which such Financing Party or any of its
Affiliates may be a party, (h) to the extent necessary in connection with the
exercise of any remedy under this Agreement or any other Operative Agreement,
and (i) subject to provisions substantially similar to those contained in this
Section, to any actual or proposed participant or assignee. So long as Lessee
remains in possession of the Property, any representative of the Owner Trustee,
the Agent, any Lender or any Holder shall, before making any inspection or
performing any work on the Property authorized by the Operative Agreements, if
then reasonably requested to do so by Lessee to maintain Lessee's security: (i)
sign in at Lessee's security or information desk if Lessee has such a desk on
the premises, (ii) wear a visitor's badge or other reasonable identification,
(iii) permit an employee of Lessee to observe such inspection or work, and (iv)
comply with other similar reasonable nondiscriminatory security requirements of
Lessee that do not, individually or in the aggregate, materially interfere with
inspections or work authorized by the Operative Agreements.
12.14. FINANCIAL REPORTING/TAX CHARACTERIZATION.
Lessee agrees to obtain advice from its own accountants and tax counsel
regarding the financial reporting treatment and the tax characterization of the
transactions described in the Operative Agreements. Lessee further agrees that
Lessee shall not rely upon any statement of any Financing Party or any of their
respective Affiliates and/or Subsidiaries regarding any such financial reporting
treatment and/or tax characterization. Notwithstanding the provisions of this
90
Section 12.14, the parties to this Agreement hereby reaffirm the statement of
intention by the Lessor and the Lessee as set forth in Article VII of the Lease.
12.15. SET-OFF.
In addition to any rights now or hereafter granted under applicable Law and
not by way of limitation of any such rights, upon and after the occurrence of
any Event of Default and during the continuance thereof, the Lenders, the
Holders, their respective Affiliates and any assignee or participant of a Lender
or a Holder in accordance with the applicable provisions of the Operative
Agreements are hereby authorized by the Credit Parties at any time or from time
to time, without notice to the Credit Parties or to any other Person, any such
notice being hereby expressly waived, to set-off and to appropriate and to apply
any and all deposits (general or special, time or demand, including without
limitation indebtedness evidenced by certificates of deposit, whether matured or
unmatured) and any other indebtedness at any time held or owing by the Lenders,
the Holders, their respective Affiliates or any assignee or participant of a
Lender or a Holder in accordance with the applicable provisions of the Operative
Agreements to or for the credit or the account of any Credit Party against and
on account of the obligations of any Credit Party under the Operative Agreements
irrespective of whether or not (a) the Lenders or the Holders shall have made
any demand under any Operative Agreement or (b) the Agent shall have declared
any or all of the obligations of any Credit Party under the Operative Agreements
to be due and payable and although such obligations shall be contingent or
unmatured. Notwithstanding the foregoing, neither the Agent nor any Lender,
Holder, any of their respective Affiliates or any assignee or participant of any
Lender or Holder shall exercise, or attempt to exercise, any right of setoff,
banker's lien, or the like, against any deposit account or property of any
Credit Party held by the Agent or any Lender, Holder, any of their respective
Affiliates or any assignee or participant of any Lender or Holder, without the
prior written consent of the Majority Secured Parties, and any Lender, Holder,
any of their respective Affiliates or any assignee or participant of any Lender
or Holder violating this provision shall indemnify the Agent and the other
Financing Parties from any and all costs, expenses, liabilities and damages
resulting therefrom. The contractual restriction on the exercise of setoff
rights provided in the foregoing sentence is solely for the benefit of the Agent
and the Financing Parties and may not be enforced by any Credit Party.
[signature pages follow]
91
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized as of the
day and year first above written.
CONSTRUCTION AGENT
AND LESSEE: FRANKLIN TEMPLETON CORPORATE SERVICES,
INC., as the Construction Agent and as
the Lessee
By: /s/ Charles R. Sims
------------------------------------
Name: Charles R. Sims
------------------------------------
Title: Treasurer
------------------------------------
GUARANTOR: FRANKLIN RESOURCES, INC., as Guarantor
By: /s/ Charles R. Sims
--------------------------------
Name: Charles R. Sims
--------------------------------
Title: Vice President and Treasurer
--------------------------------
[signature pages continued]
OWNER TRUSTEE AND
LESSOR: FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not individually, except as
expressly stated herein, but solely as
the Owner Trustee under the FRI Trust
1999-1
By: /s/ C. Scott Nielson
--------------------------------
Name: C. Scott Nielson
---------------------------------
Title: Vice President
--------------------------------
[signature pages continued]
AGENT AND LENDERS: BANK OF AMERICA, N.A.,
as a Lender and as the Agent
By: /s/ John G. Hayes
--------------------------------
Name: John G. Hayes
--------------------------------
Title: Principal
--------------------------------
[signature pages continued]
THE CHASE MANHATTAN BANK,
as a Lender
By: /s/ Gail Weiss
--------------------------------
Name: Gail Weiss
--------------------------------
Title: Vice President
--------------------------------
[signature pages continued]
THE BANK OF NEW YORK,
as a Lender
By: /s/ Scott H. Buitekant
--------------------------------
Name: Scott H. Buitekant
--------------------------------
Title: V.P.
--------------------------------
[signature pages continued]
ROYAL BANK OF CANADA,
as a Lender
By: /s/ Y. J. Bernard
--------------------------------
Name: Y. J. Bernard
--------------------------------
Title: Manager
--------------------------------
[signature pages continued]
CITICORP USA, INC.,
as a Lender
By: /s/ Alexander Duka
--------------------------------
Name: Alexander Duka
--------------------------------
Title: Vice President
--------------------------------
[signature pages continued]
BANQUE NATIONALE DE PARIS,
as a Lender
By: /s/ Laurent Vaderzyppe
--------------------------------
Name: Laurent Vaderzyppe
--------------------------------
Title: Vice President
--------------------------------
By: /s/ Marguerite L. Lebon
--------------------------------
Name: Marguerite L. Lebon
--------------------------------
Title: Assistant Vice President
--------------------------------
[signature pages continued]
BANK OF MONTREAL,
as a Lender
By: /s/ Bruce A. Pietka
--------------------------------
Name: Bruce A. Pietka
--------------------------------
Title: Director
--------------------------------
[signature pages continued]
FIRST UNION NATIONAL BANK,
as a Lender
By: /s/ Austin Rodgers
--------------------------------
Name: Austin Rodgers
--------------------------------
Title: Senior Vice President
--------------------------------
[signature pages continued]
HOLDERS: BANK OF AMERICA, N.A.,
as a Holder
By: /s/ John G. Hayes
--------------------------------
Name: John G. Hayes
--------------------------------
Title: Principal
--------------------------------
CSL LEASING, INC.,
as a Holder
By: /s/ Michael P. Handago
--------------------------------
Name: Michael P. Handago
--------------------------------
Title: Vice President
--------------------------------
[signature pages continued]
THE BANK OF NEW YORK,
as a Holder
By: /s/ Scott H. Buitekant
--------------------------------
Name: Scott H. Buitekant
--------------------------------
Title: Vice President
--------------------------------
[signature pages continued]
ROYAL BANK OF CANADA,
as a Holder
By: /s/ Y. J. Bernard
--------------------------------
Name: Y. J. Bernard
--------------------------------
Title: Manager
--------------------------------
[signature pages continued]
BANQUE NATIONALE DE PARIS,
as a Holder
By: /s/ Laurent Vanderzyppe
--------------------------------
Name: Laurent Vanderzyppe
--------------------------------
Title: Vice President
--------------------------------
By: /s/ Marguerite L. Lebon
--------------------------------
Name: Marguerite L. Lebon
--------------------------------
Title: Assistant Vice President
--------------------------------
[signature pages continued]
BANK OF MONTREAL,
as a Holder
By: /s/ Bruce A. Pietka
--------------------------------
Name: Bruce A. Pietka
--------------------------------
Title: Director
--------------------------------
[signature pages continued]
FIRST UNION NATIONAL BANK,
as a Holder
By: /s/ Austin Rodgers
--------------------------------
Name: Austin Rodgers
--------------------------------
Title: Senior Vice President
--------------------------------
[signature pages end]
Schedule 1-1
SCHEDULE 1
[Legal Description for Land]
A copy of which is on file with the Agent
Schedule 1-1
SCHEDULE 2
Development Contracts
1. Amended, Restated and Superseding Agreement of Purchase and Sale and Joint
Escrow Instructions, dated May 28, 1999, by and between Franklin Resources,
Inc., a Delaware corporation ("Buyer") and PW Acquisitions IV, LLC, a
Delaware limited liability company ("Seller"), together with including any
applicable City of San Mateo approvals and permits and contracts referred
to therein.
(a) Agreement of Purchase and Sale, dated May 31, 1995, by and between
California Jockey Club, a Delaware corporation ("Seller") and Property
Resources, Inc., a California corporation ("Buyer").
(b) First Amendment to Agreement of Purchase and Sale, dated June, 1995,
by and between California Jockey Club, a Delaware corporation
("Seller") and Property Resources, Inc., a California corporation
("Buyer").
(c) Second Amendment to Agreement of Purchase and Sale, dated December,
1995, by and between California Jockey Club, a Delaware corporation
("Seller") and Property Resources, Inc., a California
corporation ("Buyer").
(d) Third Amendment to Agreement of Purchase and Sale, dated January 31,
1996, by and between California Jockey Club, a Delaware corporation
("Seller") and Property Resources, Inc., a California corporation
("Buyer").
(e) Fourth Amendment to Agreement of Purchase and Sale, dated March 18,
1996, by and between California Jockey Club, a Delaware corporation
("Seller") and Franklin Resources, Inc., a California corporation
("Buyer").
(f) Fifth Amendment to Agreement of Purchase and Sale, dated April 25,
1996, by and between California Jockey Club, a Delaware corporation
("Seller") and Property Resources, Inc., a California corporation
("Buyer").
(g) Sixth Amendment to Agreement of Purchase and Sale, dated August 18,
1996, by and between California Jockey Club, a Delaware corporation
("Seller") and Property Resources, Inc., a California corporation
("Seller").
2. Site grading and excavation permits and construction permits for Buildings
2, 3, 4 and Parking Structure A, issued by the City of San Mateo.
3. Bay Meadows Specific Plan, adopted by the San Mateo City Council on April
27, 1997.
Schedule 2-1
4. Standard Form of Agreement between Owner and Architect, dated July 1, 1997,
by and between Franklin Resources, Inc. ("Owner") and Devcon Construction
Incorporated ("Architect").
5. Standard Form of Agreement between Owner and Contractor, dated July 6,
1999, by and between Franklin Templeton Corporate Services, Inc. ("Owner")
and Devcon Construction Incorporated ("Contractor").
(a) First Amendment to the General Conditions of the Contract for
Construction, dated July 6, 1999, by and between Franklin Templeton
Corporate Services, Inc. ("Owner") and Devcon Construction
Incorporated ("Contractor").
6. Temporary Project Management Services Agreement, dated June 10, 1997, by
and between Alex L. Ingram & Associates, Inc. and Franklin Resources, Inc.
7. Standard Agreement Between Client and Consultant, dated June 30, 1999, by
and between Brian Kangas Foulk and Franklin Resources, Inc.
(a) Standard Agreement Between Client and Consultant, dated December 15,
1998, by and between Brian Kangas Foulk and Franklin Resources, Inc.
(b) Standard Agreement Between Client and Consultant, dated August 11,
1997, by and between Brian Kangas Foulk and Franklin Resources, Inc.
(c) Standard Agreement Between Client and Consultant, dated October 26,
1995, by and between Brian Kangas Foulk and Franklin Resources, Inc.
8. Agreement dated January 29, 1998, by and between Calthorpe Associates and
Franklin Resources, Inc.
Schedule 2-2
SCHEDULE 3
[Title Report]
A copy of which is on file with the Agent
Schedule 3-1
SCHEDULE 4
Required Consents and Authorizations
1. Filings and recordings contemplated by the Operative Agreements.
2. Standard permits, inspections, certificates and similar documentation
required in connection with the construction of the Permitted Facility
which have not and cannot be obtained until a later stage of construction
of the Permitted Facility.
Schedule 4-1
SCHEDULE 5
Investment Advisers
Franklin Advisers, Inc.
Franklin Advisory Services, LLC
Franklin Investment Advisory Services, Inc.
Franklin Management, Inc.
Franklin Mutual Advisers, LLC
Templeton Asset Management Limited
Templeton Global Advisors Ltd.
Templeton Investment Counsel, Inc.
Templeton Investment Management Ltd. (UK)
Templeton/Franklin Investment Services, Inc.
Schedule 5-1
SCHEDULE 6
Broker-Dealers
Franklin/Templeton Distributors, Inc.
Templeton/Franklin Investment Services. Inc
Schedule 6-1
SCHEDULE 7
Subsidiaries
Franklin Resources, Inc.
Closed Joint-Stock Company Templeton
Continental Property Management Company
FCC Receivables Corporation
Franklin Advisers, Inc.
Franklin Advisory Services, LLC
Franklin Agency, Inc.
Franklin Asset Management (Proprietary) Limited (South Africa)
Franklin Bank
Franklin Capital Corporation
Franklin Investment Advisory Services, Inc.
Franklin Management, Inc.
Franklin Mutual Advisers, LLC
Franklin Properties Inc.
Franklin Receivables, LLC
Franklin Templeton Corporate Services, Inc.
Franklin Templeton Distributors, Inc.
Franklin Templeton Holding Limited
Franklin Templeton Investor Services, Inc.
Franklin Templeton Management Company Limited
Franklin Templeton Management Luxembourg SA
Franklin Templeton Services, Inc.
Franklin Templeton Travel, Inc.
Franklin Templeton Trust Company
FS Capital Group
FS Properties, Inc.
Happy Dragon Holdings Ltd.
Property Resources, Inc.
T.G.H. Holdings Ltd.
Templeton Asset Management (India) Pvt. Ltd.
Templeton Asset Management Ltd.
Templeton China Research Limited
Templeton do Brasil
Templeton France S.A.
Templeton Franklin Global Distributors Ltd.
Templeton/Franklin Investment Services, Inc.
Templeton/Franklin Investment Services (Asia) Limited
Templeton Funds Annuity Company
Templeton Funds Trust Company
Templeton Global Advisors Limited
Schedule 7-1
Templeton Global Investors Limited
Templeton Global Investors, Inc.
Templeton Global Strategic Services S.A.
Templeton Global Strategic Services (Deutschland GmbH)
Templeton Global Value Investors, Inc.
Templeton Heritage Limited
Templeton International, Inc.
Templeton Investment Counsel, Inc.
Templeton Investment Holdings (Cyprus) Limited
Templeton Investment Management (Australia) Limited
Templeton Investment Management Limited
Templeton Investment Management Co, Ltd.
Templeton Italia Sim S.p.S.
Templeton Management Limited
Templeton Research and Management Venezuela, C.A.
Templeton Research Poland SP .z.o.o
Templeton (Switzerland) Ltd.
Templeton Trust Services Pvt. Ltd.
Templeton Unit Trust Managers Limited
Templeton Worldwide, Inc.
Schedule 7-2
SCHEDULE 8
Indebtedness
No other material indebtedness, other than is included in the financial
statements referred to in Section 6.2 (x).
Schedule 8-1
SCHEDULE 8.8
Site Plan
A copy of which is on file with the Agent
Schedule 8.8-1
SCHEDULE 9
Liens
No material liens, other than are included in the financial statements referred
to in Section 6.2 (x).
Schedule 9-1
EXHIBIT A
REQUISITION FORM
(Pursuant to Sections 4.2, 5.2, 5.3 and 5.4 of the Participation Agreement)
FRANKLIN TEMPLETON CORPORATE SERVICES, INC., a Delaware corporation (the
"Company"), hereby certifies as true and correct and delivers the following
Requisition to Bank of America, N.A., as the agent for the Lenders (hereinafter
defined) and respecting the Security Documents, as the agent for the Lenders and
the Holders (hereinafter defined), to the extent of their interests (the
"Agent"):
Reference is made herein to that certain Participation Agreement dated as
of September 27, 1999 (as amended, modified, extended, supplemented, restated
and/or replaced from time to time, the "Participation Agreement") among the
Company, in its capacity as the Lessee and as the Construction Agent, Franklin
Resources, Inc., as guarantor (the "Guarantor"), First Security Bank, National
Association, as the Owner Trustee, the various banks and other lending
institutions which are parties thereto from time to time, as holders (the
"Holders"), the various banks and other lending institutions which are parties
thereto from time to time, as lenders (the "Lenders"), and the Agent.
Capitalized terms used herein but not otherwise defined herein shall have the
meanings set forth therefor in the Participation Agreement.
Check one:
____ INITIAL CLOSING DATE: _________________
(three (3) Business Days prior notice required for Advance)
____ PROPERTY CLOSING DATE:_________________
(three (3) Business Days prior notice required for Advance)
____ CONSTRUCTION ADVANCE DATE:_____________
(three (3) Business Days prior notice required for Advance)
1. Transaction Expenses and other fees, expenses and disbursements under
Sections 7.1(a) or 7.1(b) of the Participation Agreement and any and all
other amounts contemplated to be financed under the Participation Agreement
including without limitation any Work, broker's fees, taxes, recording fees
and the like (with supporting invoices or closing statement attached to the
extent required under the Participation Agreement):
Party to Whom Amount Owed
Amount is Owed (in U.S. Dollars)
============== =================
-------------- -----------------
-------------- -----------------
-------------- -----------------
-------------- -----------------
-------------- -----------------
A-1
2. Description of Land (which shall be a legal description and the street
address of the Land in connection with an Advance to pay Property
Acquisition Costs): See attached Schedule 1
3. Description of Improvements: See attached Schedule 2
4. Description of Equipment: See attached Schedule 3
5. Description of Work: See attached Schedule 4
6. Aggregate Loans and Holder Advances requested since the Initial Closing
Date with respect to each Property for which Advances are requested under
this Requisition (listed on a Property by Property basis), including
without limitation all amounts requested under this Requisition: [IDENTIFY
ON A PROPERTY BY PROPERTY BASIS]
$______________ [Property]
In connection with this Requisition, the Company hereby requests that the
Lenders make Loans to the Lessor in the amount of $______________ and that the
Holders make Holder Advances to the Lessor in the amount of $________________.
The Company hereby certifies (i) that the foregoing amounts requested do not
exceed the total aggregate of the Available Commitments plus the Available
Holder Commitments and (ii) each of the provisions of the Participation
Agreement applicable to the Loans and Holder Advances requested hereunder have
been complied with as of the date of this Requisition.
The Company requests the Loans be allocated as follows:
$______________ Tranche A Loans as ABR Loans
$______________ Tranche B Loans as ABR Loans
$______________ Tranche A Loans as Eurodollar Loans
$______________ Tranche B Loans as Eurodollar Loans
The Company requests the Holder Advances be allocated as follows:
$______________ ABR Holder Advances
$______________ Eurodollar Holder Advances
7. Each and every representation and warranty of the Company contained in any
Operative Agreement to which it is a party is true and correct on and as of
the date hereof.
A-2
The Company has caused this Requisition to the executed by its duly
authorized officer as of this _____ day of __________, ______.
FRANKLIN TEMPLETON CORPORATE SERVICES,
INC.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
A-3
Schedule 1
Description of Land
(Legal Description and Street Address)
A-4
Schedule 2
Description of Improvements
A-5
Schedule 3
General Description of Equipment
A-6
Schedule 4
Work
Work Performed for which the Advance is requested:
-------------------------------------------------------------------
-------------------------------------------------------------------
A-7
EXHIBIT B
[Reserved]
B-1
EXHIBIT C
FRANKLIN TEMPLETON CORPORATE SERVICES, INC.
OFFICER'S CERTIFICATE
(Pursuant to Section 5.3(z) of the Participation Agreement)
FRANKLIN TEMPLETON CORPORATE SERVICES, INC., a Delaware corporation (the
"Company"), DOES HEREBY CERTIFY as follows:
1. Each and every representation and warranty of each Credit Party
contained in the Operative Agreements to which it is a party is true
and correct on and as of the date hereof.
2. No Default or Event of Default has occurred and is continuing under
any Operative Agreement.
3. Each Operative Agreement to which any Credit Party is a party is in
full force and effect with respect to it.
4. Each Credit Party has duly performed and complied with all covenants,
agreements and conditions contained in the Participation Agreement
(hereinafter defined) or in any Operative Agreement required to be
performed or complied with by it on or prior to the date hereof.
Capitalized terms used in this Officer's Certificate and not otherwise defined
herein have the respective meanings ascribed thereto in the Participation
Agreement dated as of September 27, 1999 among the Company, as the Lessee and as
the Construction Agent, Franklin Resources, Inc., as guarantor (the
"Guarantor"), First Security Bank, National Association, as the Owner Trustee,
the various banks and other lending institutions which are parties thereto from
time to time, as holders (the "Holders"), the various banks and other lending
institutions which are parties thereto from time to time, as lenders (the
"Lenders") and Bank of America, N.A., as the agent for the Lenders and
respecting the Security Documents, as the agent for the Lenders and the Holders,
to the extent of their interests (the "Agent").
IN WITNESS WHEREOF, the Company has caused this Officer's Certificate to be duly
executed and delivered as of this _____ day of __________, ______.
FRANKLIN TEMPLETON CORPORATE SERVICES, INC.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
C-1
EXHIBIT D
[NAME OF CREDIT PARTY]
SECRETARY'S CERTIFICATE
(Pursuant to Section 5.3(aa) of the Participation Agreement)
[NAME OF CREDIT PARTY], a [__________] corporation (the "Company"), DOES
HEREBY CERTIFY as follows:
1. Attached hereto as Schedule 1 is a true, correct and complete copy of
the resolutions of the Board of Directors of the Company duly adopted
by the Board of Directors of the Company on __________. Such
resolutions have not been amended, modified or rescinded since their
date of adoption and remain in full force and effect as of the date
hereof.
2. Attached hereto as Schedule 2 is a true, correct and complete copy of
the Articles of Incorporation of the Company on file in the Office of
the Secretary of State of __________. Such Articles of Incorporation
have not been amended, modified or rescinded since their date of
adoption and remain in full force and effect as of the date hereof.
3. Attached hereto as Schedule 3 is a true, correct and complete copy of
the Bylaws of the Company. Such Bylaws have not been amended, modified
or rescinded since their date of adoption and remain in full force and
effect as of the date hereof.
4. The persons named below now hold the offices set forth opposite their
names, and the signatures opposite their names and titles are their
true and correct signatures.
Name Office Signature
------------------- ----------------------- -------------------------
------------------- ----------------------- -------------------------
IN WITNESS WHEREOF, the Company has caused this Secretary's Certificate to be
duly executed and delivered as of this _____ day of ___________, ______.
[NAME OF CREDIT PARTY]
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
D-1
Schedule 1
Board Resolutions
D-2
Schedule 2
Articles of Incorporation
D-3
Schedule 3
Bylaws
D-4
EXHIBIT E
FIRST SECURITY BANK, NATIONAL ASSOCIATION
OFFICER'S CERTIFICATE
(Pursuant to Section 5.3(cc) of the Participation Agreement)
FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking association,
not individually (except with respect to paragraph 1 below, to the extent any
such representations and warranties are made in its individual capacity) but
solely as the owner trustee under the FRI Trust 1999-1 (the "Owner Trustee"),
DOES HEREBY CERTIFY as follows:
1. Each and every representation and warranty of the Owner Trustee
contained in the Operative Agreements to which it is a party is true
and correct in all material respects on and as of the date hereof.
2. Each Operative Agreement to which the Owner Trustee is a party is in
full force and effect with respect to it.
3. The Owner Trustee has duly performed and complied with all covenants,
agreements and conditions contained in the Participation Agreement
(hereinafter defined) or in any Operative Agreement required to be
performed or complied with by it on or prior to the date hereof.
Capitalized terms used in this Officer's Certificate and not otherwise defined
herein have the respective meanings ascribed thereto in the Participation
Agreement dated as of September 27, 1999 among Franklin Templeton Corporate
Services, Inc., as the Lessee and as the Construction Agent, Franklin Resources,
Inc., as guarantor (the "Guarantor"), the Owner Trustee, the various banks and
other lending institutions which are parties thereto from time to time, as
holders (the "Holders"), the various banks and other lending institutions which
are parties thereto from time to time, as lenders (the "Lenders") and Bank of
America, N.A., as the agent for the Lenders and respecting the Security
Documents, as the agent for the Lenders and the Holders, to the extent of their
interests (the "Agent").
E-1
IN WITNESS WHEREOF, the Owner Trustee has caused this Officer's Certificate to
be duly executed and delivered as of this _____ day of __________, ______.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not individually, except as
expressly stated herein, but solely as
the Owner Trustee under the FRI Trust
1999-1
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
E-2
EXHIBIT F
FIRST SECURITY BANK, NATIONAL ASSOCIATION
SECRETARY'S CERTIFICATE
(Pursuant to Section 5.3(dd) of the Participation Agreement)
CERTIFICATE OF ASSISTANT SECRETARY
I, ______________________, duly elected and qualified Assistant Secretary
of the Board of Directors of First Security Bank, National Association (the
"Association"), hereby certify as follows:
1. The Association is a National Banking Association duly organized,
validly existing and in good standing under the laws of the United States. With
respect thereto the following is noted:
A. Pursuant to Revised Statutes 324, et seq., as amended, 12 U.S.C. 1, et
seq., the Comptroller of the Currency charters and exercises
regulatory and supervisory authority over all National Banking
Associations;
B. On December 9, 1881, the First National Bank of Ogden, Utah was
chartered as a National Banking Association under the laws of the
United States and under Charter No. 2597;
C. On October 2, 1922, in connection with a consolidation of The First
National Bank of Ogden, Ogden, Utah, and The Utah National Bank of
Ogden, Ogden, Utah, the title was changed to "The First & Utah
National Bank of Ogden"; on January 18, 1923, The First & Utah
National Bank of Ogden changed its title to "First Utah National Bank
of Ogden"; on January 19, 1926, the title was changed to "First
National Bank of Ogden"; on February 24, 1934, the title was changed
to "First Security Bank of Utah, National Association"; on June 21,
1996, the title was changed to "First Security Bank, National
Association"; and
D. First Security Bank, National Association, Ogden, Utah, continues to
hold a valid certificate to do business as a National Banking
Association.
2. The Association's Articles of Association, as amended, are in full force
and effect, and a true, correct and complete copy is attached hereto as Schedule
A and incorporated herein by reference. Said Articles were last amended October
20, 1975, as required by law on notice at a duly called special meeting of the
shareholders of the Association.
F-1
3. The Association's By-Laws, as amended, are in full force and effect; and
a true, correct and complete copy is attached hereto as Schedule B and
incorporated herein by reference. Said By-Laws, still in full force and effect,
were adopted September 17, 1942, by resolution, after proper notice of
consideration and adoption of By-Laws was given to each and every shareholder,
at a regularly called meeting of the Board of Directors with a quorum present.
4. Pursuant to the authority vested in it by an Act of Congress approved
December 23, 1913 and known as the Federal Reserve Act, as amended, the Federal
Reserve Board (now the Board of Governors of the Federal Reserve System) has
granted to the Association now known as "First Security Bank, National
Association" of Ogden, Utah, the right to act, when not in contravention of
State or local law, as trustee, executor, administrator, registrar of stocks and
bonds, guardian of estates, assignee, receiver, committee of estates of
lunatics, or in any other fiduciary capacity in which State banks, trust
companies or other corporations which come into competition with National Banks
are permitted to act under the laws of the State of Utah; and under the
provisions of applicable law, the authority so granted remains in full force and
effect.
5. Pursuant to authority vested by Act of Congress (12 U.S.C. 92a and 12
U.S.C. 481, as amended) the Comptroller of the Currency has issued Regulation 9,
as amended, dealing, in part, with the Fiduciary Powers of National Banks, said
regulation providing in subparagraph 9.7 (a) (1-2):
(1) The board of directors is responsible for the proper exercise of
fiduciary powers by the Bank. All matters pertinent thereto, including
the determination of policies, the investment and disposition of
property held in fiduciary capacity, and the direction and review of
the actions of all officers, employees, and committees utilized by the
Bank in the exercise of its fiduciary powers, are the responsibility
of the board. In discharging this responsibility, the board of
directors may assign, by action duly entered in the minutes, the
administration of such of the Bank's fiduciary powers as it may
consider proper to assign to such director(s), officer(s), employee(s)
or committee(s) as it may designate.
(2) No fiduciary account shall be accepted without the prior approval of
the board, or of the director(s), officer(s), or committee(s) to whom
the board may have designated the performance of that responsibility.
6. A Resolution relating to Exercise of Fiduciary Powers was adopted by the
Board of Directors at a meeting held July 26, 1994 at which time there was a
quorum present; said resolution is still in full force and effect and has not
been rescinded. Said resolution is attached hereto as Schedule C and
incorporated herein by reference.
F-2
7. A Resolution relating to the Designation of Officers and Employees to
Exercise Fiduciary Powers was adopted by the Trust Policy Committee at a meeting
held February 7, 1996 at which time a quorum was present; said resolution is
still in full force and effect and has not been rescinded. Said resolution is
attached hereto as Schedule D and is incorporated herein by reference.
8. Attached hereto as Schedule E and incorporated herein by reference, is a
listing of facsimile signatures of persons authorized (herein "Authorized
Signatory or Signatories") on behalf of the Association and its Trust Group to
act in exercise of its fiduciary powers subject to the resolutions in Paragraphs
6 and 7, above.
9. The principal office of the First Security Bank, National Association,
Trust Group and of its departments, except for the St. George, Utah, Ogden,
Utah, and Provo, Utah, branch offices, is located at 79 South Main Street, Salt
Lake City, Utah 84111 and all records relating to fiduciary accounts are located
at such principal office of the Trust Group or in storage facilities within Salt
Lake County, Utah, except for those of the Ogden, Utah, St. George, Utah, and
Provo, Utah, branch offices, which are located at said offices.
10. Each Authorized Signatory (i) is a duly elected or appointed, duly
qualified officer or employee of the Association; (ii) holds the office or job
title set forth below his or her name on the date hereof and the facsimile
signature appearing opposite the name of each such officer or employee is a true
replica of his or her signature.
F-3
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of the
Association this __________ day of _________________, ______.
(SEAL)
----------------------------------------
R. James Steenblik
Senior Vice President
Assistant Secretary
F-4
Schedule A
Articles of Association
F-5
Schedule B
Bylaws
F-6
Schedule C
Resolution Relating to
Exercise of Fiduciary Powers
F-7
Schedule D
Resolution Relating to the
Designation of Officers and Employees
To Exercise Fiduciary Powers
F-8
Schedule E
Authorized Signatory or Signatories
F-9
EXHIBIT G
[Outside Counsel Opinion for the Owner Trustee]
(Pursuant to Section 5.3(ee) of the
Participation Agreement)
-----------, ------
TO THOSE ON THE ATTACHED DISTRIBUTION LIST
Re: Amended, Restated and Replacement Trust Agreement dated as of
September 27, 1999
Dear Sirs:
We have acted as special counsel for First Security Bank, National
Association, a national banking association, in its individual capacity ("FSB")
and in its capacity as trustee (the "Owner Trustee") under the Amended, Restated
and Replacement Trust Agreement dated as of September 27, 1999 (the "Trust
Agreement") by and among it and the various banks and other lending institutions
which are parties thereto from time to time, as holders (the "Holders"), in
connection with the execution and delivery by the Owner Trustee of the Operative
Agreements to which it is a party. Except as otherwise defined herein, the terms
used herein shall have the meanings set forth in Appendix A to the Participation
Agreement dated as of September 27, 1999 (the "Participation Agreement") by and
among Franklin Templeton Corporate Services, Inc. (the "Construction Agent" and
the "Lessee"), Franklin Resources, Inc., as guarantor (the "Guarantor"), First
Security Bank, National Association, as the Owner Trustee, the Holders, the
various banks and other lending institutions which are parties thereto from time
to time as lenders (the "Lenders") and Bank of America, N.A., as the agent for
the Lenders and respecting the Security Documents, as the agent for the Lenders
and the Holders, to the extent of their interests (the "Agent").
We have examined originals or copies, certified or otherwise identified to
our satisfaction, of such documents, corporate records and other instruments as
we have deemed necessary or advisable for the purpose of rendering this opinion.
Based upon the foregoing, we are of the opinion that:
1. FSB is a national banking association duly organized, validly existing
and in good standing under the laws of the United States of America and each of
FSB and the Owner Trustee has under the laws of the State of Utah and federal
banking law the power and authority to enter into and perform its obligations
under the Trust Agreement and each other Operative Agreement to which it is a
party.
G-1
2. The Owner Trustee is the duly appointed trustee under the Trust
Agreement.
3. The Trust Agreement has been duly authorized, executed and delivered by
one (1) of the officers of FSB and, assuming due authorization, execution and
delivery by the Holders, is a legal, valid and binding obligation of the Owner
Trustee (and, to the extent set forth therein, of FSB), enforceable against the
Owner Trustee (and to the extent set forth therein, against FSB) in accordance
with its terms, and the Trust Agreement creates under the laws of the State of
Utah for the Holders the beneficial interest in the Trust Estate it purports to
create and is a valid trust under the laws of the State of Utah.
4. The Operative Agreements to which it is party have been duly authorized,
executed and delivered by FSB, and, assuming due authorization, execution and
delivery by the other parties thereto, are legal, valid and binding obligations
of FSB, enforceable against FSB in accordance with their
respective terms.
5. The Operative Agreements to which it is party have been duly authorized,
executed and delivered by the Owner Trustee, and, assuming due authorization,
execution and delivery by the other parties thereto, are legal, valid and
binding obligations of the Owner Trustee, enforceable against the Owner Trustee
in accordance with their respective terms. The Notes and Certificates have been
duly issued, executed and delivered by the Owner Trustee, pursuant to
authorization contained in the Trust Agreement, and the Certificates are
entitled to the benefits and security afforded by the Trust Agreement in
accordance with its terms and the terms of the Trust Agreement.
6. The execution and delivery by each of FSB and the Owner Trustee of the
Trust Agreement and the Operative Agreements to which it is a party, and
compliance by FSB or the Owner Trustee, as the case may be, with all of the
provisions thereof do not and will not contravene any Laws applicable to or
binding on FSB, or as the Owner Trustee, or contravene the provisions of, or
constitute a default under, its charter documents or by-laws or, to our
knowledge after due inquiry, any indenture, mortgage contract or other agreement
or instrument to which FSB or Owner Trustee is a party or by which it or any of
its property may be bound or affected.
7. The execution and delivery of the Operative Agreements by each of FSB
and the Owner Trustee and the performance by each of FSB and the Owner Trustee
of their respective obligations thereunder does not require on or prior to the
date hereof the consent or approval of, the giving of notice to, the
registration or filing with, or the taking of any action in respect of any
Governmental Authority or any court.
8. Assuming that the trust created by the Trust Agreement is not taxable as
a corporation or an association for federal income tax purposes, there are no
fees, taxes, or other charges (except taxes imposed on fees payable to the Owner
Trustee) payable to the State of Utah or any political subdivision thereof in
connection with the execution, delivery or performance by the Owner Trustee, the
Agent, the Lenders, the Lessee or the Holders, as the case may be, of the
Operative Agreements or in connection with the acquisition of any Property by
G-2
the Owner Trustee or in connection with the making by any Holder of its
investment in the Trust or its acquisition of the beneficial interest in the
Trust Estate or in connection with the issuance and acquisition of the
Certificates, or the Notes, and neither the Owner Trustee, the Trust Estate nor
the trust created by the Trust Agreement will be subject to any fee, tax or
other governmental charge (except taxes on fees payable to the Owner Trustee)
under the laws of the State of Utah or any political subdivision thereof on,
based on or measured by, directly or indirectly, the gross receipts, net income
or value of the Trust Estate by reason of the creation or continued existence of
the trust under the terms of the Trust Agreement pursuant to the laws of the
State of Utah or the Owner Trustee's performance of its duties under the Trust
Agreement.
9. There is no fee, tax or other governmental charge under the laws of the
State of Utah or any political subdivision thereof in existence on the date
hereof on, based on or measured by any payments under the Certificates, Notes or
the beneficial interest in the Trust Estate, by reason of the creation of the
trust under the Trust Agreement pursuant to the laws of the State of Utah or the
Owner Trustee's performance of its duties under the Trust Agreement within the
State of Utah.
10. Upon the filing of the financing statement on form UCC-1 in the form
attached hereto as Schedule 1 with the Utah Division of Corporation and
Commercial Code, the Agent's security interest in the Trust Estate, for the
benefit of the Lenders and the Holders, will be perfected, to the extent that
such perfection is governed by Article 9 of the Uniform Commercial Code as in
effect in the State of Utah (the "Utah UCC").
11. The Owner Trustee is not (i) an "investment company," or a company
"controlled" by an "investment company," within the meaning of the Investment
Company Act of 1940, as amended, or (ii) a "holding company" as defined in, or
otherwise subject to regulation under, the Public Utility Holding Company Act of
1935.
Your attention is directed to the Utah UCC, which provides, in part, that a
filed financing statement which does not state a maturity date or which states a
maturity date of more than five (5) years is effective only for a period of five
(5) years from the date of filing, unless within six (6) months prior to the
expiration of said period a continuation statement is filed in the same office
or offices in which the original statement was filed. The continuation statement
must be signed by the secured party, identify the original statement by file
number and state that the original statement is still effective. Upon the timely
filing of a continuation statement, the effectiveness of the original financing
statement is continued for five (5) years after the last date to which the
original statement was effective. Succeeding continuation statements may be
filed in the same manner to continue the effectiveness of the original
statement.
The foregoing opinions are subject to the following assumptions, exceptions and
qualifications:
A. We are attorneys admitted to practice in the State of Utah and in
rendering the foregoing opinions we have not passed upon, or purported to pass
upon, the laws of any jurisdictions other than the State of Utah and the federal
banking law governing the banking and trust powers of FSB. In addition, without
limiting the foregoing, we express no opinion with respect to (i) federal
G-3
securities laws, including the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended, and the Trust Indenture Act of
1939, as amended, (ii) the Federal Aviation Act of 1958, as amended, (iii) the
Federal Communications Act of 1934, as amended, or (iv) state securities or blue
sky laws. Insofar as the foregoing opinions relate to the legality, validity,
binding effect and enforceability of the documents involved in these
transactions, which by their terms are governed by the laws of a state other
than Utah, we have assumed that the laws of such state (as to which we express
no opinion) are in all material aspects identical to the laws of the State of
Utah.
B. The opinions set forth in paragraphs 3, 4, and 5 above are subject to
the qualification that enforceability of the Trust Agreement and the other
Operative Agreements to which FSB and the Owner Trustee are parties, in
accordance with their respective terms, may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium, receivership or similar laws affecting
enforcement of creditors' rights generally, and (ii) general principles of
equity, regardless of whether such enforceability is considered in a proceeding
in equity or at law.
C. As to the documents involved in these transactions, we have assumed that
each is a legal, valid and binding obligation of each party thereto, other than
FSB or the Owner Trustee, and is enforceable against each such party in
accordance with its respective terms.
D. We have assumed that all signatures, other than those of the Owner
Trustee or FSB, on documents and instruments involved in these transactions are
genuine, that all documents and instruments submitted to us as originals are
authentic, and that all documents and instruments submitted to us as copies
conform with the originals, which facts we have not independently verified.
E. We do not purport to be experts in respect of, or express any opinion
concerning, laws, rules or regulations applicable to the particular nature of
the equipment or property involved in these transactions.
F. We have made no investigation of, and we express no opinion concerning,
the nature of the title to any part of the equipment or property involved in
these transactions or the priority of any mortgage or security interest.
G. We have assumed that the Participation Agreement and the transactions
contemplated thereby are not within the prohibitions of Section 406 of the
Employee Retirement Income Security Act of 1974.
H. In addition to any other limitation by operation of law upon the scope,
meaning, or purpose of this opinion, the opinions expressed herein speak only as
of the date hereof. We have no obligation to advise the recipients of this
opinion (or any third party) and make no undertaking to amend or supplement such
opinions if facts come to our attention or changes in the current law of the
jurisdictions mentioned herein occur which could affect such opinions, the legal
analysis, a legal conclusion or any information confirmation herein.
G-4
I. This opinion is for the sole benefit of the Lessee, the Construction
Agent, the Guarantor, the Owner Trustee, the Holders, the Lenders, the Agent and
their respective successors and assigns in matters directly related to the
Participation Agreement or the transaction contemplated thereunder and may not
be relied upon by any other Person other than such parties and their respective
successors and assigns without the express written consent of the undersigned.
The opinions expressed in this letter are limited to the matter set forth in
this letter, and no other opinions should be inferred beyond the matters
expressly stated.
Very truly yours,
RAY, QUINNEY & NEBEKER
M. John Ashton
G-5
DISTRIBUTION LIST
Bank of America, N.A., as the Agent, a Holder and a Lender
The various banks and other lending institutions which are parties to the
Participation Agreement from time to time as additional Holders
The various banks and other lending institutions which are parties to the
Participation Agreement from time to time as additional Lenders
Franklin Templeton Corporate Services, Inc., as the Construction Agent and the
Lessee
Franklin Resources, Inc., as the Guarantor
First Security Bank, National Association, not individually, but solely as the
Owner Trustee under the FRI Trust 1999-1
G-6
Schedule 1
Form of UCC-1 to be Filed in Owner Trustee's Principal Place of Business
G-7
EXHIBIT H
[In-House Opinion for the Lessee]
(Pursuant to Section 5.3(ff) of the Participation Agreement)
September __, 1999
TO THOSE ON THE ATTACHED DISTRIBUTION LIST
Re: Synthetic Lease Financing provided Franklin Templeton Corporate
Services, Inc.
Ladies and Gentlemen:
I am counsel to Franklin Templeton Corporate Services, Inc., a Delaware
corporation (the "Lessee") and Franklin Resources, Inc., a Delaware corporation
(the "Guarantor"). This opinion is furnished to you in connection with certain
transactions contemplated by the Participation Agreement dated as of September
27, 1999 (the "Participation Agreement"), among the Lessee, the Guarantor, First
Security Bank, National Association, in its individual capacity, and in its
capacity as the Owner Trustee (the "Owner Trustee"), the various banks and other
lending institutions which are identified on the Distribution List attached
hereto as lenders (the "Lenders") the various banks and other lending
institutions which are identified on the Distribution List attached hereto as
holders (the "Holders"), and Bank of America, N.A., as the agent for the Lenders
and respecting the Security Documents, as the agent for the Lenders and the
Holders, to the extent of their interests (the "Agent"). This opinion is
delivered pursuant to Section 5.3(ff) of the Participation Agreement. All
capitalized terms used herein, and not otherwise defined herein, shall have the
meanings assigned thereto in Appendix A to the Participation Agreement.
In connection with the foregoing, I have examined originals, or copies
certified to my satisfaction, of the Operative Agreements. In addition, I have
examined such records, documents, certificates of public officials and of Lessee
and Guarantor, made such inquiries of officials of Lessee and Guarantor, and
considered such questions of law as I have deemed necessary for the purpose of
rendering the opinions set forth herein.
I express no opinion as to the matters governed by any laws other than the
laws of the State of California, the General Corporation Law of the State of
Delaware and the federal laws of the United States of America as in effect on
the date hereof.
Based upon and subject to the foregoing, I am of the opinion that:
(a) Each Credit Party is a corporation, duly incorporated, validly existing
and in good standing under the laws of the state of its incorporation and has
the power and authority to own its properties and conduct its business as
presently conducted and to execute, deliver and perform its obligations under
the Operative Agreements to which it is a party. Each Credit Party is duly
qualified to do business in California and in each other state in which its
failure to so qualify would materially impair its ability to perform its
obligations under the Operative Agreements to which it is a party or would have
H-1
a material adverse effect on the condition of the Guarantor and its
subsidiaries, taken as a whole.
(b) The execution, delivery and performance by each Credit Party of the
Operative Agreements to which it is a party have been duly authorized by all
necessary corporate action on the part of such Credit Party, and the Operative
Agreements to which such Credit Party is a party have been duly executed and
delivered by such Credit Party.
(c) The execution and delivery by each Credit Party of the Operative
Agreements to which it is a party and compliance by each Credit Party with all
of the provisions thereof do not and will not (i) contravene the provisions of
or result in the creation of a Lien under its Articles of Incorporation or
By-Laws or (ii) violate any Laws or any order of any Governmental Authority
applicable to or binding on any Credit Party.
(e) There is no litigation, investigation or proceeding of or before any
arbitrator or governmental authority pending or threatened by or against Lessee
or Guarantor, (i) with respect to the Operative Agreements, (ii) that concern
the Properties or the interest of any Credit Party therein, or (iii) which could
reasonably be expected to have a material adverse effect on the business,
operations, property, or condition (financial or otherwise) of the Guarantor and
its subsidiaries taken as a whole.
(f) Neither the nature of the Property, nor any circumstance in connection
with the execution, delivery and performance of the Operative Agreements to
which any Credit Party is a party, is such as to require any approval of
stockholders of, or approval or consent of any trustee or holders of
indebtedness of, any Credit Party, except for such approvals and consents which
have been duly obtained and are in full force and effect.
(g) FTCS is not (i) an "investment company," or a company "controlled" by
an "investment company," within the meaning of the Investment Company Act of
1940, as amended, or (ii) a "holding company" as defined in, or otherwise
subject to regulation under, the Public Utility Holding Company Act of 1935.
This opinion is solely for the benefit of the persons listed on the
Distribution List attached hereto as Schedule 1 and their respective successors
and assigns in connection with the consummation of the transactions under the
Operative Agreements and may not be relied upon by, nor may copies be delivered
to, any other person or entity or for any other purpose without
H-2
my prior written consent. The opinions expressed herein are as of the date
hereof and I make no undertaking to amend or supplement such opinions if facts
come to my attention or changes in the current law of the jurisdictions
mentioned herein occur which could affect such opinions.
Very truly yours,
Name and Title
H-3
Schedule 1
Distribution List
Bank of America, N.A., as the Agent
First Security Bank, National Association, not individually, but solely as the
Owner Trustee under the FRI Trust 1999-1
Bank of America, N.A.
The Chase Manhattan Bank
CSL Leasing, Inc.
The Bank of New York
Bank of Montreal
Citicorp USA, Inc.
Royal Bank of Canada
Banque Nationale de Paris
First Union National Bank
H-4
[Outside Counsel Opinion for the Lessee]
(Pursuant to Section 5.3(ff) of the Participation Agreement)
TO THOSE ON THE DISTRIBUTION LIST
ATTACHED AS SCHEDULE 1
Re: Synthetic Lease Financing provided to Franklin Templeton Corporate
Services, Inc.
Ladies and Gentlemen:
A. Matters Reviewed.
We have acted as special counsel to Franklin Templeton Corporate Services,
Inc., a Delaware corporation, in its capacities as Lessee, Construction Agent
and Ground Lessor ("FTCS"), and Franklin Resources, Inc., a Delaware
corporation, in its capacity as Guarantor ("FRK"), in connection with certain
transactions contemplated by the Participation Agreement dated as of September
27, 1999 (the "Participation Agreement"), among FTCS, FRK, First Security Bank,
National Association, in its individual capacity (in such capacity, the "Trust
Company") and in its capacity as the Owner Trustee (the "Owner Trustee"; in
either such capacity, "FSB"), the banks and other lending institutions which are
parties thereto identified on the Distribution List attached hereto as Schedule
1 as lenders (the "Lenders"), the banks and other lending institutions which are
parties thereto identified on the Distribution List attached hereto as Schedule
1 as holders (the "Holders"), and Bank of America, N.A. ("BofA"), as the agent
for the Lenders and, respecting the Security Documents, as the agent for the
Lenders and the Holders (in such capacity, the "Agent"). This opinion is
delivered pursuant to Sections 5.3(j) and 5.3(ff) of the Participation
Agreement. All capitalized terms used herein, and not otherwise defined herein,
shall have the meanings assigned thereto in Appendix A to the Participation
Agreement. The Holders and Lenders are sometimes collectively referred to herein
as the "Participants," and the Owner Trustee, the Agent and the Participants are
sometimes referred to herein as the "Other Parties."
In connection with the foregoing, we have examined originals, or copies
certified to our satisfaction, of:
(i) The Participation Agreement; such Participation Agreement
includes, in Section 6B thereof, a guaranty by FRK of certain obligations
of FTCS under the Operative Agreements (such guaranty is referred to herein
as the "Guaranty");
(ii) That certain Amended and Restated Ground Lease executed by FTCS,
as lessor, and Owner Trustee, as lessee (the "Ground Lease"), granting to
the Owner Trustee a leasehold interest (the "Leasehold Interest") in the
land described therein, which land is located in the City of San Mateo,
County of San Mateo, State of California (the "Land");
(iii) That certain Memorandum of Ground Lease executed by FTCS, as
lessor, and Owner Trustee, as lessee (the "Memorandum of Ground Lease");
H-5
(iv) That certain Lease Agreement, between the Owner Trustee, as
lessor, and FTCS, as Lessee (the "Lease"), relating to the Land and certain
improvements and fixtures thereon (the "Real Property") and certain
equipment and other personal property located therein (collectively, the
"Personal Property" and, together with the Real Property, the "Property");
(v) That certain Lease Supplement No. 1, between Owner Trustee and
FTCS, relating to the property covered by the Lease;
(vi) That certain Memorandum of Lease between Owner Trustee and FTCS,
relating to the property covered by the Lease (the "Memorandum of Lease");
(vii) That certain Construction Deed of Trust With Assignment of
Leases, Security Agreement, Financing Statement and Fixture Filing,
executed by Owner Trustee in favor of the Agent (the "Owner Trustee Deed of
Trust"), relating to, among other things, the interest of the Owner Trustee
in the Property, [including, without limitation, the Leasehold Interest];
(viii) That certain Construction Deed of Trust With Assignment of
Leases, Security Agreement, Financing Statement and Fixture Filing,
executed by FTCS in favor of Owner Trustee (the "FTCS Deed of Trust" and,
together with the Owner Trustee Deed of Trust, the "Deeds of Trust"),
relating to, among other things, the interest of FTCS in the Land;
(ix) That certain Security Agreement, executed by Owner Trustee and
FTCS in favor of Agent (the "Security Agreement");
(x) That Amended and Restated Agency Agreement, executed by FTCS, as
Construction Agent, and Owner Trustee;
(xi) That certain Amended and Restated Trust Agreement, executed by
Owner Trustee and the Holders (the "Trust Agreement");
---------------
(xii) Those certain "Tranche A Notes" and "Tranche B Notes" executed
by the Owner Trustee to the order of the Lenders (collectively, the
"Notes");
(xiii) UCC-1 Financing Statement executed by the Owner Trustee (the
"Owner Trustee UCC-1") to be filed in the office of the California
Secretary of State;
(xiv) UCC-1 Financing Statement executed by FTCS to be filed in the
office of the California Secretary of State (the "FTCS UCC-1"; the Owner
Trustee UCC-1 and the FTCS UCC-1 are collectively referred to herein as the
"UCC Financing Statements");
(xv) UCC-1 Financing Statement (Fixture Filing) executed by the Owner
Trustee (the "Owner Trustee Fixture Filing") to be recorded in the
Official Records of San Mateo County,
California; and
H-6
(xvi) UCC-1 Financing Statement (Fixture Filing) executed by FTCS to
be recorded in the Official Records of San Mateo County, California (the
"FTCS Fixture Filing"; the Owner Trustee Fixture Filing and the FTCS
Fixture Filing are collectively referred to herein as the "Fixture
Filings").
As used herein, the term "FTCS Documents" refers to the Operative Agreements to
which FTCS is a party and which are referenced in paragraphs (i), (ii), (iii),
(iv), (v), (vi), (viii), (ix) and (x) above and the term "Owner Trustee
Documents" refers to the Operative Agreements to which the Owner Trustee is a
party and which are referenced in paragraphs (i), (ii), (iii), (iv), (v), (vi),
(vii), (ix), (x) and (xii).
In addition, we have considered such questions of law as we have deemed
necessary for the purpose of rendering the opinions set forth herein.
B. Assumptions.
We have assumed the genuineness of all signatures and the authenticity of
all items submitted to us as originals and the conformity with originals of all
items submitted to us as copies. In making our examination of the Operative
Agreements, we have assumed that each party to one or more of the Operative
Agreements has the power and capacity to enter into and perform its obligations
thereunder, has duly authorized, executed and delivered such Operative
Agreements, and that, as to each party other than FTCS, FRK and (except in
respect of the opinions set forth in Paragraph F.4 below) the Owner Trustee,
such Operative Agreements constitute the legal, valid and binding obligations of
each such party and are enforceable against each such party in accordance with
their terms.
With your permission, we have also assumed, without further inquiry or
investigation, that:
(a) Each of FTCS and FRK is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware and is
duly qualified and in good standing under the laws of the State of California.
(b) Each of FTCS and FRK has the power and authority to enter into and
perform its obligations under the Operative Agreements to which it is a party,
to own its properties and to carry on its business as it is now conducted.
(c) The Operative Agreements to which either of FTCS or FRK is party have
been duly authorized, executed, acknowledged (in the case of those agreements
which are to be recorded in the Official Records at San Mateo County,
California, in compliance with Section 1180 et seq. of the California Civil
Code) and delivered by FTCS and FRK, as applicable.
(d) The execution and delivery by each of FTCS and FRK of the Operative
Agreements to which it is a party, and compliance by FTCS and FRK with all of
the provisions thereof, do not and will not contravene the provisions of, or
constitute a breach or default under, its charter documents or by-laws or any
indenture, mortgage, contract or other agreement or instrument to which it is a
H-7
party or by which it or any of its property may be bound or affected (except
that the foregoing assumption shall not apply in respect of those agreements of
FTCS and FRK which are described in the opinion set forth in paragraph F.13
below).
(e) FTCS is not (i) an "investment company," or a company "controlled" by
an "investment company," within the meaning of the Investment Company Act of
1940, as amended, or (ii) a "holding company" as defined in, or otherwise
subject to regulation under, the Public Utility Holding Company Act of 1935.
(f) FSB is a national banking association duly organized, validly existing
and in good standing under the laws of the United States of America and FSB has
the power and authority to enter into and perform its obligations under the
Trust Agreement and each other Operative Agreement to which it is a party, to
own its properties and to carry on its business as it is now conducted.
(g) The Owner Trustee is the duly appointed trustee under the Trust
Agreement.
(h) The Trust Agreement has been duly authorized, executed and delivered by
FSB and is a legal, valid and binding obligation of FSB, enforceable against FSB
in accordance with its terms, and the Trust Agreement creates for the Holders
the beneficial interest in the Trust Estate it purports to create and is a valid
trust.
(i) The Operative Agreements to which FSB is party have been duly
authorized, executed, acknowledged (in the case of those agreements which are to
be recorded in the Official Records at San Mateo County, California, in
compliance with Section 1180 et seq. of the California Civil Code) and delivered
by FSB.
(j) The Notes and Certificates have been duly issued, executed and
delivered by the Owner Trustee, pursuant to authorization contained in the Trust
Agreement, and the Certificates are entitled to the benefits and security
afforded by the Trust Agreement in accordance with the terms of the Certificates
and the Trust Agreement.
(k) The execution and delivery by FSB of the Trust Agreement and the
Operative Agreements to which it is a party, and compliance by FSB with all of
the provisions thereof, do not and will not contravene any Laws applicable to or
binding on FSB or contravene the provisions of, or constitute a default under,
its charter documents or by-laws or, any indenture, mortgage, contract or other
agreement or instrument to which FSB is a party or by which it or any of its
property may be bound or affected.
(l) The execution and delivery of the Operative Agreements by FSB and the
performance by FSB of its obligations thereunder do not require the consent or
approval of, the giving of notice to, the registration or filing with, or the
taking of any action in respect of any Governmental Authority or any court.
(m) The Owner Trustee is not (i) an "investment company," or a company
"controlled" by an "investment company," within the meaning of the Investment
H-8
Company Act of 1940, as amended, or (ii) a "holding company" as defined in, or
otherwise subject to regulation under, the Public Utility Holding Company Act of
1935.
We note that, as to certain of the matters set forth in the assumptions in
paragraphs (a) through (m) above, you are relying exclusively upon separate
opinions of Leslie M. Kratter, Esq. of Franklin Resources, Inc. and Ray, Quinney
& Nebeker, Utah counsel for FSB.
With respect to our opinions in paragraphs F.3, F.5 and F.12 below, we have
assumed that no discretionary action under the Operative Agreements will be
taken by or on behalf of any of FTCS, FRK or the Owner Trustee that will violate
any federal or state statute or regulation applicable to it.
In rendering this opinion, we have assumed that the Guaranty has been
entered into at the same time as the FTCS Documents, or with the acceptance of
the FTCS Documents by the Other Parties, and forms with the FTCS Documents a
part of the consideration to the Other Parties for the extension of credit or
lease evidenced by the FTCS Documents.
With respect to the opinions expressed in paragraphs F.1, F.6, F.7, F.8,
F.9 and F.10 below, we have assumed that (i) at all times material to our
opinions, goods included in the Personal Property are located in the State of
California, (ii) FTCS has an interest of record in the Real Property at the time
of the recording of the Memorandum of Ground Lease and FTCS Deed of Trust and
the Owner Trustee has an interest of record in the Leasehold Interest at the
time of the recording of the Memorandum of Lease and the Owner Trustee Deed of
Trust, as applicable, (iii) the granting of a security interest in property
consisting of a governmental permit, license or other authorization is not
prohibited or restricted by law, (iv) the granting of a security interest in
property consisting of rights under a contract is not restricted by the terms of
such contract or by law, (v) at all times material to our opinions FTCS and the
Owner Trustee, as applicable, have "rights" in the Personal Property in which a
security interest has been granted pursuant to the Security Agreement or the
Deeds of Trust within the meaning of Section 9203(1)(c) of the California
Uniform Commercial Code (the "CUCC"), and (vi) at all times material to our
opinions FTCS's place of business, or if it has more than one place of business,
chief executive office, is located in the State of California and the Owner
Trustee's place of business, or if it has more than one place of business, chief
executive office, is located in the State of Utah.
As to our opinion concerning compliance with the usury laws of the State of
California set forth in paragraph F.2 below, we have assumed that the Persons
described on Schedule 2 meet the applicable requirements for an exemption from
the usury laws of the State of California set forth on Schedule 2.
C. Exclusions.
We express no opinion as to (i) except as expressly set forth in the
opinions expressed in paragraphs F.6, F.7, F.8 and F.9 below, the due
recordation or filing of any Operative Agreement; (ii) except as expressly set
forth in the opinion expressed in paragraph F.9 below, the perfection of any
liens or any interests in the Real Property, the Personal Property, the
Leasehold Interest or the Land (each of the foregoing being referred to herein
as "Collateral") arising under the Operative Agreements; (iii) the priority of
H-9
the liens and interests arising under the Operative Agreements; (iv) the effect
of the absence of such perfection or priority; (v) the state of title to any
Collateral; (vi) the accuracy or legal sufficiency of any description of any
Collateral; (vii) the effect of any regulation, law, covenant or agreement
relating to zoning, building codes, use, occupancy, subdivision or environmental
control requirements as applied to the Collateral; (viii) application of any of
the provisions of the Operative Agreements to any property other than the
Permitted Facility; or (ix) the enforceability of a security interest in any
property excluded from the CUCC in Section 9104 thereof. We are also not
rendering any opinion herein on the application of the laws of any jurisdiction
(other than substantive laws of the State of California) which might result from
the operation of Section 9103 of the CUCC, which specifies which jurisdiction's
laws govern perfection and the effect of perfection or nonperfection of security
interests in personal property.
We are also not rendering any opinion herein as to the proper tax or
accounting treatment of the transactions contemplated by the Operative
Agreements, or as to any disclosure, reporting or other obligations of FTCS,
FRK, FSB or any other Person under securities or other laws with respect to the
transactions contemplated by the Operative Agreements. We are also not rendering
any opinion herein as to the proper characterization of the legal relationship
between FTCS, on the one hand, and any one or more of the Other Parties, on the
other hand, created by the Operative Agreements. We would note in this respect
that it is possible that these relationships could be characterized not only as
lessee and lessor, but also as borrower and lender in a loan transaction in
which Owner Trustee is considered to hold legal title to the Property as
security for such loan and in which any one or more of the Other Parties may be
construed to have an equitable mortgage or actual deed of trust or mortgage
lien. Nor are we rendering any opinion herein as to the proper characterization
of the legal relationship between or among any of the Other Parties, inter se,
arising under the Operative Agreements.
We are also not rendering any opinion as to the enforceability of any power
of sale granted in the Lease or the right to proceed with judicial or
nonjudicial foreclosure without declaring all Secured Obligations (as defined in
the Deeds of Trust) due (as provided for in Section 5.4 of the Deeds of Trust)).
As indicated elsewhere herein, we are also not rendering any opinion as to
the effect of the laws of any jurisdiction other than the State of California
(exclusive of its conflicts or choice-of-laws law). We note in this respect that
the Trust Agreement and Certificates provide that they are to be governed by
Utah law.
We are also not rendering any opinions concerning (i) federal banking laws,
rules or regulations governing the banking and trust powers of FSB, (ii) federal
securities laws, including the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended, the Trust Indenture Act of 1939, as
amended, and the Investment Company Act of 1940, as amended, or (iii) state
securities or blue sky laws.
We have been retained as special California counsel to FTCS and FRK in
connection with the transactions contemplated by the Operative Agreements, and
while we represent FRK in connection with certain other matters, we do not
represent FTCS and FRK in all their business activities and are not necessarily
H-10
familiar with the nature and extent of such activities. We are also rendering
certain opinions herein with respect to FSB, although we do not represent FSB
and (apart from its involvement in the transactions contemplated by the
Operative Agreements) are not familiar with its business activities.
Accordingly, we have assumed that the business activities of FRK, FTCS and FSB
are not of such a nature as to cause the transactions contemplated by the
Operative Agreements to be governed by statutes, rules or regulations of the
State of California or federal statutes, rules or regulations applicable only
because of such activities but not applicable to business corporations
generally. We have further assumed that neither FRK, nor FTCS, nor any of their
Subsidiaries, nor FSB in any capacity, conducts any business in the State of
California or elsewhere of such a nature as to cause any of them to be bound by
California or federal statutes, rules or regulations not applicable to business
corporations generally. Without limiting the foregoing, our opinions in
paragraphs F.3, F.5 and F.12 below are based on a review of those statutes,
rules and regulations which, in our experience, are normally applicable to
transactions of the type contemplated by the Operative Agreements, and, in
addition to all other assumptions, exclusions, qualifications and exceptions set
forth herein, we are not rendering, in the opinions set forth in paragraphs F.3,
F.5 and F.12 below, any opinions with respect to any statutes, rules or
regulations which relate to (1) anti-trust, (2) utilities regulation, (3)
pension and employee benefits, (4) labor, (5) health and safety, (6)
environmental, zoning, subdivision, land use, and building codes and ordinances,
(7) licensing of general contractors, architects or other businesses or
professions, (8) tax, (9) intellectual property, (10) racketeering, or (11)
fiduciary duty.
D. Qualifications and Exceptions.
The opinions hereinafter expressed are subject to the following further
qualifications and exceptions:
(1) The effect of bankruptcy, insolvency, reorganization, arrangement,
moratorium or other similar laws relating to or affecting the rights of
landlords and creditors generally, including, without limitation, laws
relating to fraudulent transfers or conveyances, preferences, equitable
subordination, the rejection of leases and other executory contracts and
the limitation of damages on account thereof.
(2) Limitations imposed by general principles of equity upon the
availability of equitable remedies or the enforcement of provisions of the
Operative Agreements; and the effect of judicial decisions which have held
that certain provisions are unenforceable where their enforcement would
violate the implied covenant of good faith and fair dealing, or would be
commercially unreasonable.
(3) The effect of statutes or judicial decisions rendering ineffective
or limiting certain waivers or provisions contained in the Operative
Agreements. However, in our opinion, subject to all other limitations set
forth in this opinion, such statutes and decisions do not invalidate the
Operative Agreements in their entirety, and will not prevent the Other
Parties from enforcing FTCS's obligation to pay any accrued Basic Rent and
Supplemental Rent and (a) provided the transaction is characterized by a
court of competent jurisdiction as a lease to FTCS, and subject to the
H-11
limitations expressed elsewhere in this opinion letter, such
unenforceability will not preclude (i) an action for damages in accordance
with applicable California law and (ii) the termination of the Lease upon a
material breach by FTCS of a material covenant contained in the FTCS
Documents; (b) provided the transaction is characterized by a court of
competent jurisdiction as a loan to FTCS, and subject to the limitations
expressed elsewhere in this opinion, such unenforceability will not
preclude acceleration of the maturity of FTCS's obligation to pay the
Termination Value, the Maximum Residual Guarantee Amount or the Maximum
Amount pursuant to the FTCS Documents upon a material breach by FTCS of a
material covenant contained in the FTCS Documents or, except as provided in
Section 2924c of the California Civil Code, from exercising its remedy of
foreclosure against any right, title and interest of FTCS in and to the
Property described in the FTCS Deed of Trust following such acceleration,
provided the rules and restrictions set forth in such statutes and judicial
decisions with respect to foreclosure are observed by the Owner Trustee and
Agent; (c) subject to the limitations expressed elsewhere in this opinion,
from enforcing the Guaranty against FRK upon a material breach by FTCS of a
material covenant contained in the FTCS Documents (provided that, in the
event that the transaction is characterized by a court of competent
jurisdiction as a lease to FTCS, the amounts recoverable from FRK as a
result of such enforcement may be limited to the damages which are
recoverable from FTCS as lessee in accordance with applicable California
law); or (d) provided the transaction is characterized by a court of
competent jurisdiction as a loan to the Owner Trustee, and subject to the
limitations expressed elsewhere in this opinion, such unenforceability will
not preclude acceleration of the maturity of the Owner Trustee's
obligations to pay the Notes upon a material breach by the Owner Trustee of
a material covenant contained in the Owner Trustee Documents or, except as
provided in Section 2924c of the California Civil Code, preclude exercise
of the remedy of foreclosure against any right, title and interest of the
Owner Trustee in and to the Property described in the Owner Trustee Deed of
Trust following such acceleration, provided the rules and restrictions set
forth in such statutes and judicial decisions with respect to foreclosure
are observed.
The provisions referred to in this paragraph D(3) which may be so
limited or rendered ineffective include, without limitation: (i) those
which purport to waive statutory or common law rights; (ii) those which
permit a party to increase the rate of interest or to collect a late
charge, a prepayment charge or liquidated damages in the event of default,
or any charge or fee which is deemed to constitute a penalty or forfeiture
or to be unreasonable under the circumstances; (iii) those which provide
for indemnification to the extent such indemnification is against public
policy (including, without limitation, where a party is indemnified with
respect to its own negligence (and even in cases where the indemnifying
party expressly and unequivocally agrees to such indemnification, the
indemnified party may be entitled to indemnification only if its conduct is
passively negligent), a past act constituting a felony, or a future action
known by the indemnitee at the time of doing it to be unlawful); (iv) those
which provide for the exercise of set-off or similar rights; and (v) those
pursuant to which any party waives rights (including, without limitation,
statutory protections, rights of redemption, trial by jury, and other
H-12
protections) if such waiver is held to contravene public policy or an
express or implied statutory prohibition rendering such waiver invalid or
unenforceable.
(4) If the Lease is characterized by a court of competent jurisdiction
as a lease, then, as to the enforceability of Owner Trustee's rights and
remedies as landlord under the Lease, the effect of Section 1950.7,
Sections 1951.2 through 1951.8, Sections 1995.010 through 1995.340, and
Sections 1997.010 through 1997.270 of California Civil Code. Further, the
obligations of FTCS under the Lease may also be affected by the provisions
of California Civil Code Sections 1932 and 1933 (relating, inter alia, to
termination of a lease upon casualty to the leasehold estate) or by Section
1265.130 of the C.C.P. (relating to termination of a lease upon a taking of
the leasehold estate for public use in certain circumstances).
(5) In addition to the other assumptions, qualifications and
exceptions set forth herein, our opinions hereinafter expressed are subject
to the following additional qualifications and exceptions, in relation to
the obligations secured by any of the Deeds of Trust and, also, if the
relationship between FTCS, on the one hand, and any one or more of the
Other Parties, on the other hand, is characterized by a court of competent
jurisdiction as that of a borrower and lender(s) in a lending transaction
in which Owner Trustee, Agent and/or Participants have an equitable
mortgage or actual deed of trust or mortgage lien on any of the Collateral
as security:
(a) The effect of Sections 726, 580a and 580d of the California
Code of Civil Procedure (the "C.C.P.") and Section 9501(4) of the
California Uniform Commercial Code (sometimes referred to as the
"one-form-of-action," "fair value," "anti-deficiency" and "mixed
collateral" rules), which provide procedural and substantive rules
with respect to foreclosure on real and, in some circumstances,
personal property, application of foreclosure proceeds, and deficiency
judgments against the obligor of a loan or other obligation secured by
real property or by real and personal property (including, without
limitation, a guarantor of a real estate-secured guaranty) and, in
some cases, a guarantor of such obligation (even if its guaranty is
unsecured). In general, under those statutes (i) the obligor of a real
estate-secured obligation may require its creditor to foreclose on all
of its security before a personal judgment against the obligor may be
obtained for a deficiency, (ii) the exercise by the creditor of any
other remedies prior to foreclosure on its security (including,
without limitation, any conduct, judicial or otherwise, by which
property of the obligor, not encumbered pursuant to a duly granted and
perfected security interest in favor of the creditor as security for
the obligation, is levied upon, seized or applied against the secured
obligations, whether through the exercise of setoff rights or
otherwise) may impair the subsequent ability of the creditor to
realize on the creditor's security or to obtain a deficiency judgment,
(iii) no deficiency judgment may be rendered after exercise of the
power of sale, and (iv) the amount of any deficiency judgment will be
limited. In addition, under Section 2924c of the California Civil
Code, the obligor under a real estate-secured obligation is permitted
to cure its default and reinstate its obligations after maturity of
those obligations is accelerated. Section 9504 of the CUCC provides
procedural and substantive rules applicable in some circumstances with
respect to foreclosure on personal property security. Failure to
H-13
comply with those rules may result in a loss of the right to a
deficiency judgment or the waiver of the real property security. These
statutes create rights or defenses which can be asserted by guarantors
under real-estate secured guaranties (such as the Guaranty), and
certain of these statutes may also create rights or defenses which can
be asserted by guarantors of real estate secured loans (even if that
guarantor's guaranty is not so secured), and by others (such as
general partners or sole shareholders) who are considered to be the
alter ego of the obligor. Provisions in loan documents or guaranties
which are in conflict with these rules, or which purport to waive
these rules, may not be enforceable. Without limiting the foregoing,
in relation to the FTCS Documents, we believe that there is a
substantial risk that the Other Parties will be deemed to have waived
any interests or liens in the Real Property and other Collateral, any
rights to a personal judgment against FTCS for a deficiency, any other
rights against FTCS under the FTCS Documents (including, without
limitation, their rights to enforce FTCS's obligations to pay any
accrued Basic Rent, Supplemental Rent, the Termination Value, the
Maximum Residual Guarantee Amount, the Maximum Amount, and/or any
other sums due under the FTCS Documents), and/or any rights to enforce
FRK's obligation under the Guaranty, unless: (i) the Other Parties,
prior to exercising any other remedy under the FTCS Documents or the
Guaranty, first commence a judicial foreclosure action in full
compliance with Section 726 of the C.C.P. and Section 9501(4) of the
California Uniform Commercial Code, naming FTCS as defendant, and
pursuant to which all right, title and interest of FTCS in and to the
Real Property and all other Collateral are foreclosed and FTCS's
liability for the payment of the sums referred to above is
established; and (ii) following any such foreclosure sale, any claim
by the Other Parties against FTCS to enforce the liability of FTCS for
payment of any amounts due under the FTCS Documents (including,
without limitation, any accrued Basic Rent, Supplemental Rent, the
Termination Value, the Maximum Residual Guarantee Amount, the Maximum
Amount and/or any other sums due under FTCS Documents) is duly filed
within the three (3)-month period described in Section 726(b) of the
C.C.P. and otherwise pursued in full compliance with all other
provisions in Section 726 of the C.C.P. applicable with respect to
deficiency judgments. Moreover, in such a case, we believe that there
is a substantial risk that the amounts recoverable by the Other
Parties against FTCS under the FTCS Documents will be limited by the
"fair value" rule contained in Sections 580a and 726(b) of the C.C.P.,
or by similar principles (including under circumstances where the
transaction is characterized as other than a loan), to the excess, if
any, of the aggregate unpaid amount due to the Other Parties by FTCS
under FTCS Documents (immediately prior to such foreclosure sale) over
the greater of the purchase price for the Real Property and other
Collateral paid at a foreclosure sale or the fair value of the Real
Property and such other Collateral at the time of such sale. Without
limiting the other rights and defenses which may be available to FRK
as a guarantor which are referred to herein, in relation to the
Guaranty, we would note that, since FRK's obligations under the
Guaranty are secured by the liens on the Real Property provided for in
the FTCS Deed of Trust, FRK will have, in the event of any attempted
enforcement of the FTCS Deed of Trust (or any other lien on real
property securing such obligation) or any obligations of FRK under the
Guaranty, all rights and defenses which are available to the obligor
of a real estate-secured obligation under California's
H-14
one-form-of-action, anti-deficiency, fair value, mixed collateral and
reinstatement rules.
(b) FTCS and any other obligor under any of the Deeds of Trust
may have the redemption and other rights provided for in Sections
729.010-729.090 of the C.C.P. and redemption rights under general
equitable principles including, without limitation, in the case of the
election of the Owner Trustee to retain the Property pursuant to
Section 22.1 of the Lease.
(c) FTCS and any other obligor under any of the Deeds of Trust
may have the cure and reinstatement rights provided under Section
2924c of the California Civil Code.
(d) FTCS's obligations under Sections 6.2(o), 11.1 and 11.5 of
the Participation Agreement and Sections 9.1, 10.2, 15.2, 15.3, 16.1,
16.2 and 17.7 of the Lease (to the extent any of the foregoing relate
to any Hazardous Substances, any Release, any violation of any
Environmental Laws, any Environmental Violations or any Environmental
Claims) and the obligations of FTCS or any other obligor under any
other "environmental provision" (as such term is defined in Section
736 of the C.C.P.) may be limited by Sections 564, 726.5 and 736 of
the C.C.P.
(e) Provisions which provide for the acceleration of any
obligations upon any transfer or further encumbrance of any of the
Collateral may not be enforceable, except to the extent that (i) such
provisions are made enforceable pursuant to the federal preemption
afforded by the Garn-St. Germain Depository Institutions Act of 1982,
as set forth at 12 U.S.C. 1701j-3 and the regulations adopted pursuant
thereto or (ii) enforcement is reasonably necessary to protect against
an impairment of security or an increase in the risk of default.
(f) To the extent that the obligor of a real estate secured
obligation maintains earthquake insurance in an amount which exceeds
the minimum amount required to be maintained under the applicable
documents, provisions that the creditor will be entitled to all of the
earthquake insurance proceeds or to determine the manner in which they
will be applied may not be enforceable with respect to the excess
insurance proceeds above those required to be maintained except if it
can be shown that the creditor was intended to have a security
interest in such excess insurance proceeds or was otherwise intended
to be benefited by such excess insurance proceeds. Ziello v. Superior
Court, 36 Cal. App. 4th 321 (1995). In addition, the creditor's right
to elect to apply casualty or earthquake insurance proceeds or
condemnation proceeds to the secured obligation may be restricted if
application of such proceeds to the repair or restoration of the
property would not result in a material impairment of the creditor's
security interest. Schoolcraft v. Ross, 81 Cal. App. 3d (1977).
(g) The enforceability of any assignment of rents set forth in
the Lease or any of the Deeds of Trust is subject to the limitations
set forth in California Civil Code Section 2938.
H-15
(h) Provisions which require a borrower or other obligor to
maintain hazard insurance coverage against risks in an amount
exceeding the replacement value of improvements to real property may
not be enforceable.
(6) Sections 1671 through 1681 of the California Civil Code may limit
any liquidated damages purported to be agreed to in the Operative
Agreements.
(7) The effect of judicial decisions permitting the introduction of
extrinsic evidence to modify the terms or the interpretation of the
Operative Agreements.
(8) Certain waivers and other provisions in the Guaranty which purport
to waive or alter rights provided to FRK as a guarantor or surety by
statute or judicial decision may be unenforceable. Such provisions include,
without limitation, those which permit a creditor to alter the obligation
of the principal, elect remedies on default that impair the subrogation
rights of the guarantor against the principal, or otherwise take action
that materially prejudices the guarantor. In this connection, we advise you
that, if such a provision is unenforceable, action on the part of the Other
Parties as permitted by that provision may operate to exonerate FRK in
whole or in part from obligations under the Guaranty. Further, we advise
you that, under certain circumstances, a guaranty executed by a shareholder
or other owner of a corporate borrower may not be enforced as an obligation
separate from the obligation guaranteed if it is determined that the
borrower is merely an alter ego or nominee of the guarantor and that the
"true" borrower is the guarantor. FRK, if it is deemed to be liable as a
principal, may be entitled to the rights and defenses available to the
obligor of a real estate-secured obligation, including the protection of
California's anti-deficiency, one-form-of-action and fair value laws.
Further, insofar as the FTCS Deed of Trust, the Security Agreement and
other FTCS Operative Agreements provide for the grant by FTCS of security
interests in the Property as security for the obligations of FRK under the
Guaranty, enforceability of the FTCS Deed of Trust, the Security Agreement
and other FTCS Operative Agreements as security for such obligations may be
limited by statutes or principles of law applicable to guaranties. Those
statutes and principles may, inter alia, limit the right of a creditor to
alter materially the original obligations of FRK under the Guaranty, to
elect remedies as against FRK on default that impair the subrogation rights
of FTCS against FRK, or to take other action that materially prejudices
FTCS in relation to FRK. In this connection we advise you that failure to
comply with such statutes or principles may operate to release the
collateral under the FTCS Deed of Trust, the Security Agreement and other
FTCS Operative Agreements as security for the obligations of FRK under the
Guaranty.
(9) Provisions of the Operative Agreements which purport to transfer
governmental permits, licenses or other authorizations, or claims against
governmental entities, the transfer of which is restricted by law, may not
be enforceable.
(10) Provisions of the Operative Agreements which purport to transfer
rights under contracts, the transfer of which is restricted by the terms
thereof or by law, may not be enforceable.
H-16
(11) Provisions of the Operative Agreements which purport to establish
evidentiary standards or to make determinations conclusive may not be
enforceable.
(12) The effect of California law which provides that where a contract
permits one party to the contract to recover attorneys' fees, the
prevailing party in any action to enforce any provision of the contract
shall be entitled to recover its reasonable attorneys' fees notwithstanding
the absence of a written agreement to such effect.
(13) Provisions of the Operative Agreements, providing that rights or
remedies are not exclusive, that every right or remedy is cumulative, or
that the election of a particular remedy or remedies does not preclude
recourse to one or more other remedies, may not be enforceable.
(14) A requirement that provisions of the Operative Agreements may
only be modified in writing, to the extent that an oral agreement has been
executed modifying provisions of the Operative Agreements, may not be
enforceable.
(15) Provisions of the Operative Agreements which purport to establish
a particular court as the forum for the adjudication of any controversy
relating to such Operative Agreements may not be enforceable.
(16) We express no opinion as to the effect on the opinions expressed
herein of (1) the compliance or non-compliance of any party to the
Operative Agreements (other than, in the respects expressly provided in the
opinion set forth in paragraph F.3 below, FTCS and FRK) with any laws or
regulations applicable to it, or (2) the legal or regulatory status or the
nature of the business of any such party.
(17) The enforceability under the Deeds of Trust or the Lease of
rights against collateral consisting of rights under contracts may be
subject to the terms of those contracts or other contracts between FTCS or
the Owner Trustee and other parties thereto and claims or defenses of such
other parties against FTCS or other Owner Trustee, respectively.
(18) Our opinion with respect to Personal Property consisting of
"proceeds" as defined in CUCC Section 9306 is limited to the extent set
forth in that section.
(19) The effect of Section 9504 of the California Uniform Commercial
Code, which provides procedural and substantive rules applicable in some
circumstances with respect to foreclosure on personal property security.
Failure to comply with those rules may result in a loss of the right to a
deficiency judgment.
E. Analysis Concerning California Usury Law.
You have asked us to consider the application of the California usury law
to the obligations of FTCS under the Lease should the Lease be characterized as
a loan transaction between FSB, in its capacity as the Owner Trustee, as the
lender, and FTCS, as the borrower. If the Lease were to be so characterized, we
assume for purposes of our analysis herein that the obligations of FTCS to make
H-17
payments of "Basic Rent" thereunder would be treated as equivalent to the
payment of interest for purposes of the California usury law, and that the
obligations of FTCS to make payments of any portion of the Termination Value
which is attributable to the principal balance of the Notes or the Certificates
or to make payments of the Maximum Amount or the Maximum Residual Guarantee
Amount would be treated as equivalent to the payment of principal. If the Lease
is so characterized, we are not aware of any basis upon which FSB, in such
capacity, may claim an exemption from the California usury law as an exempt
lender.
Section 1 of Article XV of the California Constitution prescribes a maximum
rate of interest on any loan or forbearance for commercial purposes as the
greater of (a) 10% per annum or (b) 5% per annum "plus the rate prevailing on
the 25th day of the month preceding the earlier of (i) the date of execution of
the contract to make the loan or forbearance, or (ii) the date of making the
loan or forbearance established by the Federal Reserve Bank of San Francisco on
advances to member banks under Sections 13 and 13a of the Federal Reserve Act. .
. ." The maximum rate of interest allowed by the usury law is a simple rather
than a compound rate.
The Federal Reserve Bank rate referred to in clause (b) of that provision
is the Federal Reserve discount rate, which, as of September 25, 1999, was
4.75%, so that the maximum non-usurious rate at that time was 10%.
The usury law prohibits the receipt of "interest" in excess of the
statutory ceiling. For purposes of the usury law, "interest" includes not only a
payment designated as interest but other charges (e.g., fees, bonuses,
commissions, discounts) and consideration received by the lender or its agents
deemed to constitute compensation to the lender for the use or forbearance of
money. Cal. Const. Article XV, Section 1. These fees, bonuses, commissions, or
other compensations are added to the charges designated as interest, and are, in
addition, subtracted from the balance of the loan considered to be advanced to
the borrower for purposes of the calculation of interest under the usury law if
they are funded from the loan proceeds . See, e.g., Otis v. I. Eisner Co., 7
Cal. App. 2d 496, 499-500, 46 P.2d 235, 236 (1935). The total of the charges
designated as interest is then calculated against the balance of the loan
principal considered to be outstanding for usury law purposes, based on the full
term of the loan, to determine if the loan is usurious. Hoffman v. Key Fed. Sav.
& Loan Ass'n, 286 Md. 28, 416 A.2d 1265 (1979). However, reasonable charges for
specific services or expenses that are incidental to making a loan have not been
treated as "interest." See, e.g., Klett v. Security Acceptance Co., 38 C.2d 770
(1952).
To determine if interest exceeds the maximum rate, interest is generally
calculated for the full term of the loan between the date of execution and
stated maturity. See e.g., French v. Morgan Guarantee Co., 16 C.2d 26 (1940).
However for variable rate loans, a different rule applies, as more fully
explained below. If the Lease is characterized as a loan transaction between
FSB, in its capacity as the Owner Trustee, as the lender, and FTCS, as the
borrower, we would note that the Lease provides that the "Basic Rent" payable
thereunder is to be calculated based upon a formula which includes a number of
variable features. These variable features include a base rate, which is
determined during a specific Interest Period which can consist of a period of 1,
2, 3 or 6 months, by reference to the Eurodollar Rate applicable to that
Interest Period and a spread, which is determined in accordance with the
H-18
definition of the term Applicable Percentage, and which varies depending on the
credit rating of FRK from a low of 45.0 basis points (i.e., 0.45%) to a high of
one hundred basis points (i.e., 1.00%) with respect to the portion of Basic Rent
allocable to the Loans, and from a low of 120.0 basis points (i.e., 1.20%) to a
high of 175.0 basis points (i.e., 1.75%) with respect to the portion of Basic
Rent allocable to the Holder Advances. During periods when the Eurodollar Rate
is not applicable, the "Basic Rent" is calculated by reference to the ABR (a
rate for any day equal to the greater of (i) the Prime Lending Rate, or (ii) the
Federal Funds Effective Rate plus one-half of one percent (0.50%)), plus, with
respect to that portion of Basic Rent allocable to Holder Advances, a spread of
75 basis points (i.e., 0.75%). We understand and assume that the initial
Applicable Percentage to be added to the Eurodollar Rate will be 50.0 basis
points (i.e., 0.50%) with respect to the portion of Basic Rent allocable to
Loans and 125.0 basis points (i.e., 1.25%) with respect to the portion of Basic
Rent allocable to Holder Advances.
The calculation of Basic Rent under the Lease is based upon the sum of the
base rate plus the spread accruing with respect to the Loans (representing 97%
of the sums outstanding) plus the base rate plus the spread accruing with
respect to the Holder Advances (representing 3% of the sums outstanding). We
assume for purposes of our opinion that, if the Lease is characterized as a loan
transaction between FSB, in its capacity as the Owner Trustee, as the lender,
and FTCS, as the borrower, that loan will be treated as a single indivisible
loan (rather than as two (2) separate loans, one equivalent to the Loans made by
the Lenders and the other equivalent to the Holder Advances made by the Holders)
in the maximum amount of $170,000,000.
We assume that the calculation of interest and Basic Rent provided for in
the Operative Agreements with respect to the initial advance under the
Participation Agreement will be based on the six month Eurodollar Rate, and we
further assume that, as of October 13, 1999 the Initial Closing Date, the six
month Eurodollar Rate was 6.08250%.
Based on the foregoing six month Eurodollar Rate, the Applicable
Percentages provided for in the Operative Agreements and the assumptions
provided for above, we further assume for purposes of our opinion that the
maximum stated interest rate (exclusive of fees, bonuses, commissions, discounts
and other consideration to the lender) that would be charged for the initial
period of the deemed loan from the Owner Trustee to FTCS would be 6.605%, which
represents a rate equal to the sum of {97% x [0.50% (the assumed initial
Applicable Percentage for Loans) plus 6.08250% (the assumed six month Eurodollar
Rate applicable to the initial advance)]} plus {3% x [1.25% (the assumed initial
Applicable Percentage for Holder Advances) plus 6.08250% (the assumed six month
Eurodollar Rate applicable to the initial advance)]}.
We also assume for purposes of our opinion that an advance in the amount of
$10,000,000 will be made on the Initial Closing Date, and that such advance will
bear interest at the stated interest rate referred to hereinabove (6.605%)
during an initial interest rate period of 180 days. We further assume that not
more than $900,000 of that advance will be used to pay fees, bonuses,
commissions, discounts and other consideration payable by FTCS to or for the
benefit of FSB as the Owner Trustee (including trustee fees) or to or for the
benefit of the Lenders and Holders or their affiliates which, for purposes of
our opinion, we assume will not be considered as validly paid for specific
services rendered, and that the remaining $9,100,000 of that advance will be
used by FTCS to pay costs relating to the construction of the Permitted Facility
H-19
or for other permissible purposes other than interest, fees, bonuses,
commissions, discounts or other consideration to or for the benefit of FSB, the
Lenders, the Holders or their affiliates considered to be interest for purposes
of the usury law.
Since fees, bonuses, commissions, discounts and other consideration payable
by FTCS to or for the benefit of FSB as the Owner Trustee (including trustee
fees) or to or for the benefit of the Lenders and Holders or their affiliates
which, for purposes of our opinion, we assume will not be considered as validly
paid for specific services rendered, will be deducted from the initial advance
of the loan, cases applying the California usury laws require that the usury
calculation be undertaken by subtracting such fees, bonuses, commissions,
discounts and other consideration from the outstanding balance of the loan, and
then determining whether the interest paid by the borrower (inclusive of an
interest equivalency factor with respect to such fees, bonuses, commissions,
discounts and other consideration, measured over the entire term of the loan and
based upon the maximum "net" amount available to be drawn) on the "net"
principal balance outstanding exceeds the applicable usury limit. See, e.g.,
Lewis v. Pacific States Savings and Loan Co., 1 Cal. 2d 691 (1934), Brown v.
Cardoza, 67 Cal. App. 2d 187 (1944).
Accordingly, we also assume for purposes of our opinion that if the sum
total of all fees, bonuses, commissions, discounts and other consideration
payable by FTCS to or for the benefit of FSB as the Owner Trustee (including
trustee fees) or to or for the benefit of the Lenders and Holders or their
affiliates over the entire term of the loan (including, without limitation,
structuring fees, upfront fees, unused fees) and not considered as validly paid
for specific services rendered were to be calculated as a percentage rate over
the entire term of the loan based upon the maximum "net" amount available to be
drawn were $1,650,000, such calculation would produce the equivalent of a simple
interest rate not in excess of 0.25% per annum of the maximum "net" amount
available to be drawn of $168,350,000 over the 5-year maximum term. Thus, based
on the foregoing assumption, we assume that the maximum "all-in" interest rate
for the initial interest rate period of the deemed loan will not exceed 6.855%
per annum (the stated rate of 6.605% plus the interest equivalency factor of
0.25% attributable to fees, etc. considered to be interest).
In this case, based on the assumptions set forth above, the "net" balance
outstanding during the initial interest rate period of the loan will be
$9,100,000 ($10,000,000 minus $900,000). We further assume that, since the
assumed initial interest rate period is 180 days and the maximum non-usurious
rate is 10%, the maximum interest which could be charged on such "net" balance
during that assumed initial interest rate period is $448,767.12 ($9,100,000 x
10% x 180/365). Since, under the assumptions set forth above, the full initial
outstanding balance bearing interest at the rate provided for in the Operative
Agreements is $10,000,000, the assumed initial interest rate period is 180 days
and the "all-in" interest rate which the loan bears under the Operative
Agreements is 6.855% during the assumed initial interest rate period, we further
assume that the actual interest which will accrue on the full outstanding
balance of the loan during that initial interest rate period is $338,054.79
($10,000,000 x 6.855% x 180/365). This amount is less than the maximum
permissible amount of $448,767.12 referred to above. We note that California
case law has determined that the calculation of the effective interest rate of
interest on a loan is a question of fact, as to which expert testimony is
admissible. See White v. Sweeney, 138 Cal. App. 2d 199 (1955).
H-20
California law is settled that, in the case of variable rate loans, the
interest for each interest period is separately calculated. Hence, the general
rule would require that the rate for each interest rate period must come within
the maximum, and the fact that the total interest paid for the full term does
not exceed the maximum would not be a defense where the interest paid for any
interest rate period is usurious. See Arneill Ranch v. Petit, 64 C.A.3d 277
(1976), and McConnell v. Merrill Lynch, 21 C.3d 365 (1978). In the Arneill Ranch
and McConnell cases, the California Court of Appeal and the California Supreme
Court reviewed financing arrangements involving variable rate loans. In the
Arneill Ranch case, the interest rate charged by a non-exempt lender was the
greater of 7% or 2% over a bank's prime rate. In the McConnell case, involving a
customer's margin account with a broker, the rate was based on the federal call
money rate which during certain periods exceeded 10%. In these cases, the courts
determined that a variable interest rate loan does not violate the California
usury law if the parties act in good faith and without intent to avoid the usury
laws, even if the interest rate exceeds the legal rate during certain periods.
While no precise guidelines have been provided by California courts for
resolving when parties are acting in good faith and with the requisite intent
for these purposes, the lack of good faith or an intent to avoid the usury laws
might be inferred if the interest rate could change based on a contingency under
the control of the lender or if the initial interest rate on the loan exceeds
the maximum non-usurious rate. These cases make clear that whether the parties
act in good faith and without intent to avoid the usury laws is a factual
matter. Thus we assume for purposes of our opinion that, if the Lease
transaction is characterized as a loan transaction entered into between FSB, in
its capacity as the Owner Trustee, as the lender, and FTCS, as the borrower,
then such parties in entering into such lending transaction, and agreeing upon
the manner in which the interest is to be charged for purposes thereof, acted in
good faith and without intent to avoid the usury laws.
The Arneill Ranch and McConnell cases were decided prior to the amendment
of the California usury law in 1979. That amendment changed the usury ceiling
provided for in the California Constitution from 10% per annum to the present
ceiling, (i.e., the greater of 10% per annum or a rate based on the Federal
Reserve Bank discount rate on a given date in the month prior to the time of the
loan). If strictly construed, that amendment could be viewed as overruling
Arneill Ranch and McConnell and fixing a maximum rate by reference to the time
of the loan and making a variable interest rate provision usurious to the extent
that the rate subsequently exceeds that limit. There has been no reported
decision on that issue under that amendment. Thus, there exists a risk that a
variable rate provision will be held usurious during any interest period during
which the rate exceeds 10% per annum if the Arneill Ranch and McConnell good
faith standard is rejected in light of the enactment of that amendment. In light
of the foregoing, and in the absence of any judicial authority concerning
whether the exception for variable rate loans based on the standards requiring
good faith and the lack of requisite intent provided for in the Arneill Ranch
and McConnell cases continues to apply following the amendment of the California
Constitution in 1979, we assume for purposes of our opinion set forth in
paragraph F.2(b) below that such exception continues to so apply.
Our opinion is based on the further assumption that all fees, costs and
expenses paid by or on behalf of FTCS in connection with the Loan (other than
those which have been taken into account in the "all-in" interest rate
assumption set forth above) represent reasonable charges for services actually
rendered in connection with the Loan; that no interest will be prepaid; and that
H-21
all interest will be determined on simple, annual interest basis and calculated
on the amounts disbursed and outstanding under the Loan. We do not take into
account for purposes of this opinion the compounding effect that may result from
the capitalization of Basic Rent, interest, Holder Yield, fees, bonuses,
commissions, discount and other consideration during the Construction Period,
and assume that any incremental interest resulting from such compounding will
not cause the interest rate to exceed the maximum non-usurious rate.
F. Opinions.
Based upon and subject to the foregoing, we are of the opinion that:
1. The FTCS Documents and the Guaranty are valid and binding obligations of
FTCS and FRK, respectively, enforceable in accordance with their respective
terms.
2. (a) Assuming the transactions reflected in the Operative Agreements are
characterized as (i) a loan directly from the Lenders and Holders to FTCS, or
(ii) a loan directly from the Lenders and Holders to the Owner Trustee, the
obligations of FTCS under the FTCS Documents and the Owner Trustee under the
Owner Trustee Documents are not in violation of the laws of the State of
California concerning usury.
(b) Assuming the transactions reflected in the Operative Documents are
characterized as a loan from the Owner Trustee to FTCS, and subject to all of
the qualifications and assumptions set forth in paragraph E above and based on
the analysis set forth therein, the California Supreme Court should hold that
the obligations of FTCS under the FTCS Documents are not in violation of the
laws of the State of California concerning usury.
3. The execution and delivery by FTCS and FRK of the Operative Agreements
to which FTCS or FRK is a party and the performance by FTCS and FRK of their
respective obligations thereunder, do not violate any applicable provision of
any statute, rule or regulation of the State of California (exclusive of local
statutes, ordinances, rules or regulations, as to which we render no opinion,
and exclusive of the California usury law, as to which paragraph F.2 above
exclusively applies) or any federal statute, rule or regulation.
4. The Owner Trustee Documents constitute valid and binding obligations of
FSB and are enforceable against FSB individually or as the Owner Trustee, as the
case may be, in accordance with the terms thereof.
5. The execution and delivery by FSB, individually or as the Owner Trustee,
as the case may be, of the Owner Trustee Documents and performance by FSB,
individually or as the Owner Trustee, of its obligations thereunder do not
violate any applicable provision of any statute, rule or regulation of the State
of California (exclusive of local statutes, ordinances, rules or regulations, as
to which we render no opinion, exclusive of the California usury law, as to
which paragraph F.2 above exclusively applies and except for the possible
violation by FSB of Section 1503 of the California Financial Code, relating to
the conduct of a trust business in California, which violation does not
invalidate the Operative Agreements entered into by FSB or the interests it has
been granted or liens it has granted pursuant to the Operative Agreements, and
H-22
so long as a Co-Trustee, duly qualified to conduct a trust business in the State
of California, is appointed and granted the Owner Trustee's rights under the
Operative Agreements, those rights may be enforced against FTCS and FRK by such
Co-Trustee, provided that any applicable penalties set forth in Section 3395 of
the Financial Code have been paid and provided that both the Owner Trustee and
such Co-Trustee conform to California law applicable to qualification to do
business (including, without limitation, obligations to pay accrued franchise
taxes and other taxes on business and property in California).
6. The Memorandum of Ground Lease is in appropriate form for filing and
recording in the Official Records of San Mateo County, California, and upon the
filing and recordation thereof in the Official Records of San Mateo County,
California, will have been filed and recorded in all public offices in the State
of California in which filing or recording is necessary to provide constructive
notice of the Ground Lease. The Memorandum of Lease is in appropriate form for
filing and recording in the Official Records of San Mateo County, California,
and upon the filing and recordation thereof in the Official Records of San Mateo
County, California, will have been filed and recorded in all public offices in
the State of California in which filing or recording is necessary to provide
constructive notice of the Lease.
7. Each Deed of Trust is in an appropriate form (i) for recordation as an
encumbrance on the Real Property (or the Leasehold Interest, in the case of the
Owner Trustee Deed of Trust) in California and (ii) to create a lien on the real
property interest owned by the trustor thereunder.
8. Each of the UCC Financing Statements is in appropriate form for filing
as a financing statement with the California Secretary of State pursuant to the
CUCC.
9. Recording of the Deeds of Trust in the Official Records of San Mateo
County, California, is effective as a fixture filing under the CUCC. Such
recording is the only recording or filing necessary to give constructive notice
to third Persons of the lien of the Deed of Trust on the Real Property and,
except for the filings referred to below, of the security interest in any
fixtures described in the Deeds of Trust. The Deeds of Trust, Lease and Security
Agreement create a valid security interest in that portion of the Collateral as
to which a security interest may be created under Article 9 of the CUCC and in
which a security interest has been granted in such document. Filing of both UCC
Financing Statements with the California Secretary of State and recording the
Fixture Filings in the Official Records of San Mateo County, California, are the
only filings or recordings necessary to perfect the security interests created
by the Deeds of Trust, Lease and the Security Agreement, in FTCS's and the Owner
Trustee's rights in that part of the Personal Property (i) constituting fixtures
and (ii) constituting other than fixtures in which a security interest may be
perfected by the filing of a financing statement or fixture filing with the
California Secretary of State or other governmental authorities in California.
In this connection, we advise you that (x) the office where a deed of trust on
the real estate would be recorded is the proper place to file a financing
statement to perfect a security interest in "crops," or certain "timber,"
"minerals or the like (including oil and gas)," or "accounts resulting from
[their] sale" (as those terms are used in Sections 9103 and 9401 of the CUCC),
and (y) action other than the filing of a financing statement or fixture filing
is necessary to perfect a security interest in certain Personal Property (e.g.,
deposit accounts insurance, motor vehicles).
H-23
10. Except for a Notice of Intent to Preserve Security Interest pursuant to
California Civil Code Sections 880.310, et seq., no re-recording in California
real property records is necessary with respect to the Deeds of Trust.
Continuation statements complying with the CUCC must be filed with the Office of
the Secretary of State of the State of California not more than six months prior
to the expiration of the five-year period dating from the date of filing of the
Financing Statements and Fixture Filings, and not more than six months prior to
the expiration of each subsequent five-year period after the original filing, in
order to continue the perfection of the security interest in the Personal
Property. We also advise you that additional action may be necessary to continue
such perfection (i) if FSB, the Owner Trustee or FTCS changes its name, identity
or structure, or if there is a change in the jurisdiction in which its place of
business (or, if it has more than one place of business, its chief executive
office) or where the Personal Property is located, or (ii) with respect to
Personal Property constituting "proceeds" under Section 9306 of the CUCC.
11. Title to real property may be held in the name of a trustee under the
laws of California.
12. No registration with, consent or approval of, notice to, or other
action by, any governmental entity is required on the part of any of FTCS or FRK
for the execution and delivery by FTCS and FRK of the Operative Agreements to
which FTCS or FRK is a party, the performance by FTCS and FRK of their
respective obligations thereunder (except for the filings and recordings
contemplated by the Operative Agreements) or, if required, such registration has
been made, such consent or approval has been obtained, such notice has been
given or such other appropriate action has been taken.
13. The execution and delivery by FTCS and FRK of the Operative Agreements
to which FTCS or FRK is a party and the performance by FTCS and FRK of their
respective obligations thereunder do not and will not result in any breach of or
constitute any default under, or result in the creation of any Lien (other than
liens arising under the Operative Agreements) upon any property of FTCS or FRK
under any existing agreement to which FTCS or FRK is a party or by which FTCS or
FRK or any property of FTCS or FRK may be bound or affected and which is
identified in the certificates which are attached hereto as Exhibit A and
Exhibit B. We exclude from the foregoing opinion any potential violation of
financial covenants set forth in Section 6.1 of the 5-Year Credit Agreement or
Section 6.1 of the 364-Day Credit Agreement referred to in such certificates. In
addition, as to any such agreement which by its terms is or may be governed by
the laws of a jurisdiction other than the State of California, we assume that
such agreements will be enforced as written. The foregoing opinion is based
solely on the knowledge that we have obtained from the certificate described
above and our review of the agreements referred to therein.
14. The forms of notary acknowledgments [which are attached to the
Memorandum of Ground Lease, the Memorandum of Lease, the Owner Trustee Deed of
Trust and the FTCS Deed of Trust--this assumes that the California forms remain
attached] are in compliance, as to form and assuming such acknowledgments are
properly executed and completed by a duly licensed notary within the State of
California, with the requirements of California law governing the acknowledgment
of documents executed within the State of California.
H-24
We express no opinion as to matters governed by any laws other than the
substantive laws of the State of California (without reference to its
choice-of-law rules) and federal laws of the United States which are in effect
on the date hereof.
This opinion is solely for the benefit of the Persons listed on the
Distribution List attached hereto as Schedule 1 and their respective permitted
successors and assigns in connection with the consummation of the transactions
under the Operative Agreements and may not be relied upon by, nor may copies be
delivered to, any other Person or entity or for any other purpose without our
prior written consent. Notwithstanding the foregoing grant of permission to a
permitted successor or assignee to rely on this opinion, we express no opinion
as to the enforceability of the Operative Agreements by any Person other than
the Persons listed on the Distribution List attached hereto as Schedule 1.
Very truly yours,
H-25
Schedule 1
Distribution List
Bank of America, N.A., as the Agent
First Security Bank, National Association, not individually, but solely as the
Owner Trustee under the FRI Trust 1999-1
Bank of America, N.A., as a Lender and a Holder
The Chase Manhattan Bank, as a Lender
The Bank of New York, as a Lender and a Holder
Bank of Montreal, as a Lender and a Holder
Citicorp USA, Inc., as a Lender and a Holder
Royal Bank of Canada, as a Lender and a Holder
Banque Nationale de Paris, as a Lender and a Holder
First Union National Bank, as a Lender and a Holder
CSL Leasing, Inc, as a Holder
H-26
Schedule 2
Lenders and Holders
- --------------------------------------------------------------------------------
Name of Lender or Holder Assumption as to its status for purposes of the
California usuary law
- --------------------------------------------------------------------------------
Bank of America, N.A. A national banking association described in
California Constitution Article XV and
California Civil Code Section 1916.1
- --------------------------------------------------------------------------------
The Chase Manhattan Bank A foreign (other state) bank described in
Section 3805 of the California Financial Code
- --------------------------------------------------------------------------------
The Bank of New York A foreign (other state) bank described in
Section 3805 of the California Financial Code
- --------------------------------------------------------------------------------
Bank of Montreal A foreign (other nation) bank described in
Section 1716 of the California Financial Code
that has assets equal to at least $100,000,000,
is licensed to maintain an office in California,
is licensed or otherwise authorized by another
state of the United States to maintain an agency
or branch office in that state or maintains a
federal agency or federal branch in any state of
the United States
- --------------------------------------------------------------------------------
Citicorp USA, Inc. A subsidiary of a bank holding company described
in Section 3707 of the California Financial
Code.
- --------------------------------------------------------------------------------
Royal Bank of Canada A foreign (other nation) bank described in
Section 1716 of the California Financial Code
that has assets equal to at least $100,000,000,
is licensed to maintain an office in California,
is licensed or otherwise authorized by another
state of the United States to maintain an
agency or branch office in that state or
maintains a federal agency or federal branch in
any state of the United States
- --------------------------------------------------------------------------------
Banque Nationale de Paris A foreign (other nation) bank described in
Section 1716 of the California Financial Code
that has assets equal to at least $100,000,000,
is licensed to maintain an office in California,
is licensed or otherwise authorized by another
state of the United States to maintain an agency
or branch office in that state or maintains a
federal agency or federal branch in any state of
the United States
- --------------------------------------------------------------------------------
First Union National Bank A national banking association described in
California Constitution Article XV and
California Civil Code Section 1916.1
- --------------------------------------------------------------------------------
CSL Leasing, Inc. A subsidiary of a bank holding company described
in Section 3707 of the California Financial
Code.
- --------------------------------------------------------------------------------
H-27
EXHIBIT A
OFFICER'S CERTIFICATE
(Franklin Resources, Inc.)
The undersigned hereby certifies that I am the duly appointed
____________________________ [insert title] of Franklin Resources, Inc. (the
"Corporation"), and that, as such, I am authorized to execute this Certificate
on behalf of the Corporation, and I further certify that the Corporation is not
a party to any agreement which contains restrictions on the incurrence of
indebtedness other than the agreements which are identified on Schedule 1
attached hereto.
I am duly qualified for, am acting in, and on the date hereof, do hold the
office of ___________________________ and the signature appearing below opposite
my name is my authentic signature.
Name Office Signature
- --------- ------------------ ----------------------
This Certificate is being delivered in connection with the delivery by
Morrison & Foerster LLP of an opinion letter, dated October __, 1999, addressed
to certain Persons including First Security Bank, National Association, and Bank
of America, N.A., in connection with certain matters relating to the
Participation Agreement, dated as of September 27, 1999, entered into among the
Corporation, First Security Bank, National Association, and Bank of America,
N.A. (among other parties) with the knowledge and understanding that Morrison &
Foerster LLP will be relying upon the certifications set forth herein in
rendering such opinion.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of the
__ day of October, 1999.
------------------------------------
------------
------------------------------
H-28
Schedule 1
Agreements Restricting Indebtedness
1. Amended, Extended and Restated Credit Agreement, dated as of May 16,
1997, by and among FRANKLIN RESOURCES, INC., a Delaware corporation, BANK OF
AMERICA, N.A. (formerly known as BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, a national banking association), and THE CHASE MANHATTAN BANK, a
New York banking corporation, as co-agents for the Banks thereunder , and THE
CHASE MANHATTAN BANK, as administrative agent for the Banks thereunder, and the
other Banks party thereto, as amended by that certain First Amendment to the
Amended, Extended and Restated Five Year Facility Credit Agreement, dated May
15, 1998, and as further amended by that certain Consent and Amendment, dated as
of September 15, 1999 (the "5-Year Credit Agreement")
2. 364 Day Facility Credit Agreement, dated as of June 14, 1999, by and
among FRANKLIN RESOURCES, INC., a Delaware corporation, BANK OF AMERICA, N.A.
(formerly known as BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a
national banking association), THE BANK OF NEW YORK, a New York banking
corporation, and THE CHASE MANHATTAN BANK, a New York banking corporation, as
co-agents for the Banks thereunder, and THE CHASE MANHATTAN BANK, as
administrative agent for the Banks thereunder, and the other banks thereto, as
amended by that certain Consent and Amendment, dated as of September 15, 1999
(the "364-Day Credit Agreement")
H-29
EXHIBIT B
OFFICER'S CERTIFICATE
(Franklin Templeton Corporate Services, Inc.)
The undersigned hereby certifies that I am the duly appointed
____________________________ [insert title] of Franklin Templeton Corporate
Services, Inc. (the "Corporation"), and that, as such, I am authorized to
execute this Certificate on behalf of the Corporation, and I further certify
that the Corporation is not a party to any agreement which contains restrictions
on the incurrence of indebtedness other than the agreements which are identified
on Schedule 1 attached hereto.
I am duly qualified for, am acting in, and on the date hereof, do hold the
office of ____________________________ and the signature appearing below
opposite my name is my authentic signature.
Name Office Signature
- --------- ------------------ ----------------------
This Certificate is being delivered in connection with the delivery by
Morrison & Foerster LLP of an opinion letter, dated October _, 1999, addressed
to certain Persons including First Security Bank, National Association, and Bank
of America, N.A., in connection with certain matters relating to the
Participation Agreement, dated as of September 27, 1999, entered into among the
Corporation, First Security Bank, National Association, and Bank of America,
N.A. (among other parties) with the knowledge and understanding that Morrison &
Foerster LLP will be relying upon the certifications set forth herein in
rendering such opinion.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of the
__ day of October, 1999.
------------------------------------
------------
------------------------------
H-30
Schedule 1
Agreements Restricting Indebtedness
1. Amended, Extended and Restated Credit Agreement, dated as of May
16, 1997, by and among FRANKLIN RESOURCES, INC., a Delaware corporation, BANK OF
AMERICA, N.A. (formerly known as BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, a national banking association), and THE CHASE MANHATTAN BANK, a
New York banking corporation, as co-agents for the Banks thereunder , and THE
CHASE MANHATTAN BANK, as administrative agent for the Banks thereunder, and the
other Banks party thereto, as amended by that certain First Amendment to the
Amended, Extended and Restated Five Year Facility Credit Agreement, dated May
15, 1998, and as further amended by that certain Consent and Amendment, dated as
of September 15, 1999 (the "5-Year Credit Agreement")
2. 364 Day Facility Credit Agreement, dated as of June 14, 1999, by and
among FRANKLIN RESOURCES, INC., a Delaware corporation, BANK OF AMERICA, N.A.
(formerly known as BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a
national banking association), THE BANK OF NEW YORK, a New York banking
corporation, and THE CHASE MANHATTAN BANK, a New York banking corporation, as
co-agents for the Banks thereunder, and THE CHASE MANHATTAN BANK, as
administrative agent for the Banks thereunder, and the other banks thereto, as
amended by that certain Consent and Amendment, dated as of September 15, 1999
(the "364-Day Credit Agreement")
H-31
EXHIBIT I
FRANKLIN TEMPLETON CORPORATE SERVICES, INC.
OFFICER'S CERTIFICATE
(Pursuant to Section 5.5 of the Participation Agreement)
FRANKLIN TEMPLETON CORPORATE SERVICES, INC., a Delaware corporation (the
"Company"), DOES HEREBY CERTIFY as follows:
1. The address for the subject Property is____________________________________
__________________________________________________________________________.
2. The Completion Date for the construction of Improvements at the Property
occurred on ______________.
3. The aggregate Property Cost for the Property was $___________.
4. Attached hereto as Schedule 1 is the breakdown, by major budgetary
categories, of the Property Cost.
5. All representations and warranties of the Company in each Operative
Agreement and in each certificate delivered pursuant thereto are true and
correct as of the Completion Date.
Capitalized terms used in this Officer's Certificate and not otherwise defined
have the respective meanings ascribed thereto in the Participation Agreement
dated as of September 27, 1999 among the Company, as the Lessee and as the
Construction Agent, Franklin Resources, Inc., as guarantor (the "Guarantor"),
First Security Bank, National Association, as the Owner Trustee, the various
banks and other lending institutions which are parties thereto from time to
time, as holders (the "Holders"), the various banks and other lending
institutions which are parties thereto from time to time, as lenders (the
"Lenders"), and Bank of America, N.A., as the agent for the Lenders and
respecting the Security Documents, as the agent for the Lenders and the Holders,
to the extent of their interests.
[The remainder of this page has been intentionally left blank.]
I-1
IN WITNESS WHEREOF, the Company has caused this Officer's Certificate to be duly
executed and delivered as of this ____ day of ______________, ______.
FRANKLIN TEMPLETON CORPORATE SERVICES,
INC.
By:
-------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
I-2
Schedule I
(Breakdown in Support of Asserted Property Cost)
I-3
EXHIBIT J
[Reserved]
J-1
EXHIBIT K
Description of Material Litigation
(Pursuant to Section 6.2(d) of the Participation Agreement)
No material litigation, other than is described in Guarantor's Annual Report on
Form 10-K for the fiscal year ended September 30, 1998 and Form 10-Q's for the
first three quarters of the fiscal year ending September 30, 1999.
K-1
EXHIBIT L
[States of Incorporation/Formation and Principal Place of Business of
Guarantor]
(Pursuant to Section 6.2(i) of the Participation Agreement)
State of State of Principal
Guarantor Incorporation/Formation Place of Business
--------- ----------------------- -----------------
Franklin Resources, Inc. Delaware California
L-1
- ------------------------------------------------------------------------------
Appendix A
Rules of Usage and Definitions
- ------------------------------------------------------------------------------
I. Rules of Usage
The following rules of usage shall apply to this Appendix A and the Operative
Agreements (and each appendix, schedule, exhibit and annex to the foregoing)
unless otherwise required by the context or unless otherwise defined therein:
(a) Except as otherwise expressly provided, any definitions set forth
herein or in any other document shall be equally applicable to the singular and
plural forms of the terms defined.
(b) Except as otherwise expressly provided, references in any document to
articles, sections, paragraphs, clauses, annexes, appendices, schedules or
exhibits are references to articles, sections, paragraphs, clauses, annexes,
appendices, schedules or exhibits in or to such document.
(c) The headings, subheadings and table of contents used in any document
are solely for convenience of reference and shall not constitute a part of any
such document nor shall they affect the meaning, construction or effect of any
provision thereof.
(d) References to any Person shall include such Person, its successors,
permitted assigns and permitted transferees.
(e) Except as otherwise expressly provided, reference to any agreement
means such agreement as amended, modified, extended, supplemented, restated
and/or replaced from time to time in accordance with the applicable provisions
thereof.
(f) Except as otherwise expressly provided, references to any law include
any amendment or modification to such law and any rules or regulations issued
thereunder or any law enacted in substitution or replacement therefor.
(g) When used in any document, words such as "hereunder", "hereto",
"hereof" and "herein" and other words of like import shall, unless the context
clearly indicates to the contrary, refer to the whole of the applicable document
and not to any particular article, section, subsection, paragraph or clause
thereof.
(h) References to "including" and references to "including without
limitation" mean including without limiting the generality of any description
preceding such term and for purposes hereof the rule of ejusdem generis shall
not be applicable to limit a general statement, followed by or referable to an
Appendix-1
enumeration of specific matters, to matters similar to those specifically
mentioned.
(i) References herein to "attorney's fees", "legal fees", "costs of
counsel" or other such references shall be deemed to include the non-duplicative
allocated cost of in-house counsel.
(j) Each of the parties to the Operative Agreements and their counsel have
reviewed and revised, or requested revisions to, the Operative Agreements, and
the usual rule of construction that any ambiguities are to be resolved against
the drafting party shall be inapplicable in the construction and interpretation
of the Operative Agreements and any amendments or exhibits thereto.
(k) Capitalized terms used in any Operative Agreements which are not
defined in this Appendix A but are defined in another Operative Agreement shall
have the meaning so ascribed to such term in the applicable Operative Agreement.
(l) In the event of any conflict or inconsistency between the terms of the
Participation Agreement and the terms of any other Operative Agreement the terms
of the Participation Agreement shall govern and control.
II. Definitions
"ABR" shall mean, for any day, a rate per annum equal to the greater of (a)
the Prime Lending Rate in effect on such day, and (b) the Federal Funds
Effective Rate in effect on such day plus one-half of one percent (0.5%). For
purposes hereof: "Prime Lending Rate" shall mean the rate which the Agent
announces from time to time as its prime lending rate as in effect from time to
time. The Prime Lending Rate is a reference rate and does not necessarily
represent the lowest or best rate actually charged to any customer. Any Lender
may make commercial loans or other loans at rates of interest at, above or below
the Prime Lending Rate. The Prime Lending Rate shall change automatically and
without notice from time to time as and when the prime lending rate of the Agent
changes. "Federal Funds Effective Rate" shall mean, for any period, a
fluctuating interest rate per annum equal for each day during such period to the
weighted average of the rates on overnight Federal funds transactions with
members or the Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day which is a Business Day, the average of the
quotations for such day on such transactions received by the Agent from three
(3) Federal funds brokers of recognized standing selected by it. Any change in
the ABR due to a change in the Prime Lending Rate or the Federal Funds Effective
Rate shall be effective as of the opening of business on the effective day of
such change in the Prime Lending Rate or the Federal Funds Effective Rate,
respectively.
"ABR Holder Advance" shall mean a Holder Advance bearing a Holder Yield
based on the ABR.
Appendix-2
"ABR Loans" shall mean Loans the rate of interest applicable to which is
based upon the ABR.
"Abandonment" shall mean, regarding any Construction Period Property, the
cessation of construction and development of such Construction Period Property
for a period of thirty (30) days or more for reasons other than a Force Majeure
Event.
"Acceleration" shall have the meaning given to such term in Section 6 of
the Credit Agreement.
"Accounts" shall have the meaning given to such term in Section 1 of the
Security Agreement.
"Acquisition Advance" shall have the meaning given to such term in Section
5.3 of the Participation Agreement.
"Acquisition Loan" shall mean any Loan made in connection with an
Acquisition Advance.
"Additional Properties" shall mean the Properties and the collective
reference to the real and personal property owned, leased or operated by the
Guarantor or any of its Subsidiaries.
"Advance" shall mean a Construction Advance or an Acquisition Advance.
"Advisers Act" shall have the meaning specified in Section 6.2(jj) of the
Participation Agreement.
"Affiliate" shall mean, with respect to any Person, any Person or group
acting in concert in respect of the Person in question that, directly or
indirectly, controls or is controlled by or is under common control with such
Person.
"After Tax Basis" shall mean, with respect to any payment to be received,
the amount of such payment increased so that, after deduction of the amount of
all Taxes required to be paid by the recipient calculated at the then maximum
marginal rates generally applicable to Persons of the same type as the recipient
with respect to the receipt by the recipient of such amounts (less any tax
savings realized (calculated based on the same maximum marginal rates) as a
result of the payment of the indemnified amount), such increased payment (as so
reduced) is equal to the payment otherwise required to be made.
"Agency Agreement" shall mean the Amended, Restated and Replacement Agency
Agreement, dated on or about the Initial Closing Date between the Construction
Agent and the Lessor.
Appendix-3
"Agency Agreement Event of Default" shall mean an "Agency Agreement Event
of Default" as defined in Section 5.1 of the Agency Agreement.
"Agent" shall mean Bank of America, N.A., as agent for the Lenders pursuant
to the Credit Agreement, or any successor agent appointed in accordance with the
terms of the Credit Agreement, and respecting the Security Documents, for the
Lenders and the Holders, to the extent of their interests.
"Applicable Percentage" shall mean for any day, for each Eurodollar Loan,
Eurodollar Holder Advance, Lender Unused Fee or Holder Unused Fee, as
applicable, the rate per annum set forth below opposite the Rating in effect on
such day:
Applicable Applicable Applicable Applicable
Percentage for Percentage for Percentage for Percentage for
Eurodollar Eurodollar Lender Holder
Rating Loans Holder Advances Unused Fees Unused Fees
------ ----- --------------- ----------- -----------
Rating 1 45.0 bps 120.0 bps 8.0 bps 8.0 bps
Rating 2 50.0 bps 125.0 bps 10.0 bps 10.0 bps
Rating 3 62.5 bps 137.5 bps 12.5 bps 12.5 bps
Rating 4 75.0 bps 150.0 bps 15.0 bps 15.0 bps
Rating 5 100.0 bps 175.0 bps 20.0 bps 20.0 bps
"Appraisal" shall mean, with respect to any Property, an appraisal to be
delivered in connection with the Participation Agreement or in accordance with
the terms of the Lease, in each case prepared by a reputable appraiser
reasonably acceptable to the Agent, which in the judgment of counsel to the
Agent complies with all of the provisions of the Financial Institutions Reform,
Recovery and Enforcement Act of 1989, as amended, the rules and regulations
adopted pursuant thereto, and all other applicable Legal Requirements.
"Appraisal Procedure" shall have the meaning given such term in Section
22.4 of the Lease.
"Approved State" shall mean California.
"Appurtenant Rights" shall mean (a) all agreements, easements, rights of
way or use, rights of ingress or egress, privileges, appurtenances, tenements,
hereditaments and other rights and benefits at any time belonging or pertaining
to the Land underlying the Improvements or the Improvements, including without
limitation the use of any streets, ways, alleys, vaults or strips of land
adjoining, abutting, adjacent or contiguous to the Land and (b) all permits,
licenses and rights, whether or not of record, appurtenant to such Land or the
Improvements.
"Asset Disposition" shall mean the sale, sale leaseback, exchange or
similar disposition (including by means of a merger, consolidation or
amalgamation) of any property, business or assets (other than marketable
securities (including "margin stock" within the meaning of Regulation U), liquid
Appendix-4
investments and other financial instruments) of the Guarantor or any of its
Subsidiaries to any Person or Persons other than the Guarantor or any of its
Subsidiaries.
"Assignment and Acceptance" shall mean an Assignment and Acceptance in the
form attached to the Credit Agreement as Exhibit B.
"Available Commitment" shall mean, as to any Lender at any time, an amount
equal to the excess, if any, of (a) the amount of such Lender's Commitment over
(b) the aggregate principal amount of all Loans by such Lender outstanding as of
such date after giving effect to Section 5.2(d) of the Participation Agreement
(but without giving effect to any other repayments or prepayments of any Loans
hereunder).
"Available Holder Commitments" shall mean an amount equal to the excess, if
any, of (a) the aggregate amount of the Holder Commitments over (b) the
aggregate amount of the Holder Advances made on or after the Initial Closing
Date after giving effect to Section 5.2(d) of the Participation Agreement (but
without giving effect to any other repayments or prepayments of any Holder
Advances).
"Bank of America" shall mean Bank of America, N.A.
"Banking Subsidiary" shall mean at any time, Franklin Bank, Franklin Trust
Company or any other Subsidiary of the Guarantor licensed to engage, and
principally engaged, at such time in the banking or trust business or any
Subsidiary of any such Subsidiary.
"Bankruptcy Code" shall mean Title 11 of the U. S. Code entitled
"Bankruptcy," as now or hereafter in effect or any successor thereto.
"Basic Documents" shall mean the following: the Participation Agreement,
the Agency Agreement, the Trust Agreement, the Certificates, the Credit
Agreement, the Notes, the Lease, the Lease Supplements, the Mortgage
Instruments, the Ground Leases and the Security Agreement.
"Basic Rent" shall mean, the sum of (a) the Loan Basic Rent and (b) the
Lessor Basic Rent, calculated as of the applicable date on which Basic Rent is
due.
"Basic Term" shall have the meaning specified in Section 2.2 of the Lease.
"Basic Term Commencement Date" shall have the meaning specified in Section
2.2 of the Lease.
"Basic Term Expiration Date" shall have the meaning specified in Section
2.2 of the Lease.
"Benefitted Lender" shall have the meaning specified in Section 9.10(a) of
the Credit Agreement.
Appendix-5
"Bill of Sale" shall mean a bill of sale regarding Equipment in form and
substance satisfactory to the Agent.
"Board" shall mean the Board of Governors of the Federal Reserve System of
the United States (or any successor).
"Borrower" shall mean the Owner Trustee, not in its individual capacity but
as Borrower under the Credit Agreement.
"Borrowing Date" shall mean any Business Day specified in a notice
delivered pursuant to Section 2.3 of the Credit Agreement as a date on which the
Lessor requests the Lenders to make Loans thereunder.
"Bridge Documents" shall mean that certain (a) Trust Agreement dated as of
July 1, 1999 between Bank of America National Trust and Savings Association and
the Owner Trustee, (b) Ground Lease Agreement dated as of July 1, 1999 between
the Lessee and the Owner Trustee, (c) Agency Agreement dated as of July 1, 1999
between the Lessee and the Owner Trustee and (d) Indemnification Agreement dated
as of July 1, 1999 among the Owner Trustee, the Lessee, the Guarantor and Bank
of America National Trust and Savings Association.
"Budgeted Total Property Cost" shall mean, at any date of determination
with respect to any Construction Period Property, an amount equal to the
aggregate amount which the Construction Agent in good faith expects to be
expended in order to achieve Completion with respect to such Property.
"Business Day" shall mean a day other than a Saturday, Sunday or other day
on which commercial banks in California, Texas, North Carolina, New York or any
other states from which the Agent, any Lender or any Holder funds or engages in
administrative activities with respect to the transactions under the Operative
Agreements are authorized or required by law to close; provided, however, that
when used in connection with a Eurodollar Loan, the term "Business Day" shall
also exclude any day on which banks are not open for dealings in dollar deposits
in the London interbank market.
"Capital Stock" shall mean any nonredeemable capital stock of any Credit
Party or any of its Subsidiaries, whether common or preferred.
"Capitalization Ratio" shall mean at a particular date, the ratio of (a)
Debt of the Guarantor and its Included Subsidiaries at such date to (b) the sum
of (i) Debt of the Guarantor and its Included Subsidiaries at such date and (ii)
the Consolidated Net Worth at such date.
"Capitalized Lease" shall mean, as applied to any Person, any lease of
property (whether real, personal, tangible, intangible or mixed of such Person)
by such Person as the lessee which would be capitalized on a balance sheet of
such Person prepared in accordance with GAAP.
Appendix-6
"Casualty" shall mean any damage or destruction of all or any portion of
the Property as a result of a fire or other casualty.
"CERCLA" shall mean the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, 42 U.S.C.ss.9601 et seq., as amended by the Superfund
Amendments and Reauthorization Act of 1986.
"Certificate" shall mean a Certificate in favor of each Holder regarding
the Holder Commitment of such Holder issued pursuant to the terms and conditions
of the Trust Agreement in favor of each Holder.
"Chattel Paper" shall have the meaning given to such term in Section 1 of
the Security Agreement.
"Claims" shall mean any and all obligations, liabilities, losses, actions,
suits, penalties, claims, demands, costs and expenses (including without
limitation reasonable attorney's fees and expenses) of any nature whatsoever.
"Closing Date" shall mean the Initial Closing Date and each Property
Closing Date.
"Co-Owner Trustee" shall have the meaning specified in Section 9.2 of the
Trust Agreement.
"Code" shall mean the Internal Revenue Code of 1986 together with rules and
regulations promulgated thereunder, as amended from time to time, or any
successor statute thereto.
"Collateral" shall mean all assets of the Lessor, the Construction Agent
and the Lessee, now owned or hereafter acquired, upon which a Lien is purported
to be created by one or more of the Security Documents.
"Commitment" shall mean, as to any Lender, the obligation of such Lender to
initially fund (but not to continue, convert or renew any Loan once funded) the
portion of the Loans to the Borrower in an aggregate principal amount at any
time outstanding not to exceed the aggregate amount set forth opposite such
Lender's name on Schedule 2.1 of the Credit Agreement, as such amount may be
increased or reduced from time to time in accordance with the provisions of the
Operative Agreements.
"Commitment Percentage" shall mean, as to any Lender at any time, the
percentage which such Lender's Commitment then constitutes of the aggregate
Commitments (or, at any time after the Commitments shall have expired or
terminated, the percentage which the aggregate principal amount of such Lender's
Loans then outstanding constitutes of the aggregate principal amount of all of
the Loans then outstanding), and such Commitment Percentage shall take into
account both the Lender's Tranche A Commitment and the Lender's Tranche B
Commitment.
Appendix-7
"Commitment Period" shall mean the period from and including the Initial
Closing Date to and including the Construction Period Termination Date or such
earlier date as the Commitments shall terminate as provided in the Credit
Agreement or the Holder Commitment shall terminate as provided in the Trust
Agreement.
"Commonly Controlled Entity" shall mean an entity, whether or not
incorporated, which is under common control with Franklin Resources, Inc. within
the meaning of Section 4001 of ERISA or is part of a group which includes
Franklin Resources, Inc. and which is treated as a single employer under Section
414 of the Code.
"Company Obligations" shall mean the obligations of Franklin Templeton
Corporate Services, Inc., a Delaware corporation, and its successors and
permitted assigns, and Franklin Resources, Inc., a Delaware corporation, and its
successors and permitted assigns, in any and all capacities under and with
respect to the Operative Agreements and each Property.
"Completion" shall mean, with respect to a Property, as certified by Lessee
in a notice of completion given pursuant to Section 5.5 of the Participation
Agreement, such time as the acquisition, installation, testing and final
completion of the Improvements on such Property have been achieved in accordance
with the Plans and Specifications, the Agency Agreement and/or the Lease, and in
compliance with all Legal Requirements and Insurance Requirements, and a
certificate of occupancy has been issued with respect to such Property by the
appropriate governmental entity (except if non-compliance, individually or in
the aggregate, shall not have and could not reasonably be expected to have a
Material Adverse Effect and except that tenant improvements financed with
Advances and punch list items that cannot be completed on or prior to the
Completion Date using commercially reasonable efforts shall not be required to
be complete for purpose of this definition). If the Lessor purchases a Property
that includes existing Improvements that are to be immediately occupied by the
Lessee without any improvements financed pursuant to the Operative Agreements,
the date of Completion for such Property shall be the Property Closing Date.
"Completion Date" shall mean, with respect to a Property, the earlier of
(a) the date on which Completion for such Property has occurred or (b) the
Construction Period Termination Date.
"Condemnation" shall mean any taking or sale of the use, access, occupancy,
easement rights or title to any Property or any part thereof, wholly or
partially (temporarily or permanently), by or on account of any actual eminent
domain proceeding or other taking of action by any Person having the power of
eminent domain, including without limitation an action by a Governmental
Authority to change the grade of, or widen the streets adjacent to, any Property
or alter the pedestrian or vehicular traffic flow to any Property so as to
result in a change in access to such Property, or by or on account of an
eviction by paramount title or any transfer made in lieu of any such proceeding
or action.
Appendix-8
"Consolidated Current Assets" shall mean at a particular date, all cash and
marketable securities owned by the Guarantor and its Included Subsidiaries and
all liquid investments of such Persons in the Funds as at such date.
"Consolidated Current Liabilities" shall mean at a particular date, all
amounts which would, in conformity with GAAP, be included under current
liabilities on a consolidated balance sheet of the Guarantor and its Included
Subsidiaries as at such date, excluding, however, the current maturities of the
Loans (as such term is defined in the Lessee Credit Agreement).
"Consolidated Interest Expense" shall mean for any period, the aggregate
interest expense of the Guarantor and its Included Subsidiaries for such period,
as determined in accordance with GAAP, including without limitation (a) all
commissions, discounts and other fees and charges owed with respect to letters
of credit allocable to or amortized over such period, (b) net costs under
Interest Rate Agreements allocable to or amortized over such period and (c) the
portion of any amount payable under Financing Leases that is, in accordance with
GAAP, allocable to interest expense.
"Consolidated Net Income" shall mean for any period, the consolidated net
income (or deficit) of the Guarantor and its Included Subsidiaries for such
period (taken as a cumulative whole), determined in accordance with GAAP,
excluding, however:
(a) any gains or losses from the sale or other disposition of assets
(including any such sale or other disposition of marketable securities,
liquid investments or other financial instruments but excluding any such
sale of obsolete or worn-out assets in the ordinary course of business
consistent with past practice) and any other non-cash extraordinary or
non-recurring gains or losses; and
(b) the equity interest of the Guarantor and its Included Subsidiaries
in the net income (or deficit) of any Joint Venture except to the extent of
the actual receipt or payment by the Guarantor and its Subsidiaries thereof
or therefor.
"Consolidated Net Worth" shall mean at a particular date, all amounts which
would be included, under stockholders' equity, on a consolidated balance sheet
of the Guarantor and its Included Subsidiaries determined on a consolidated
basis in accordance with GAAP as at such date.
"Consolidated Subsidiary" shall mean, as to any Person, any Subsidiary of
such Person which under the rules of GAAP consistently applied should have its
financial results consolidated with those of such Person for purposes of
financial accounting statements.
"Consolidated Working Capital" shall mean at a particular date, the excess,
if any, of Consolidated Current Assets over Consolidated Current Liabilities at
such date.
"Construction Advance" shall mean an advance of funds to pay Property Costs
pursuant to Section 5.4 of the Participation Agreement.
Appendix-9
"Construction Agent" shall mean Franklin Templeton Corporate Services,
Inc., a Delaware corporation, as the construction agent under the Agency
Agreement.
"Construction Agent Options" shall have the meaning given to such term in
Section 2.1 of the Agency Agreement.
"Construction Budget" shall mean the cost of acquisition, installation,
testing, constructing and developing any Property (including all costs
referenced in Section 5.1 and all capitalized interest on the Loans and Holder
Yield and including line items for tenant improvements and contingency deemed
appropriate by the Construction Agent) as determined by the Construction Agent
in its reasonable, good faith judgment and the document evidencing the
foregoing.
"Construction Commencement Date" shall mean, with respect to Improvements,
the date on which construction of such Improvements commences pursuant to the
Agency Agreement.
"Construction Contract" shall mean any contract entered into between the
Construction Agent or the Lessee with a Contractor for the construction of
Improvements or any portion thereof on the Property.
"Construction Loan" shall mean any Loan made in connection with a
Construction Advance.
"Construction Loan Property Cost" shall mean with respect to each
Construction Period Property at the date of determination, an amount equal to
(a) the aggregate principal amount of Construction Loans made on or prior to
such date with respect to the Property minus (b) the aggregate principal amount
of prepayments or repayments of the Loans allocated to reduce the Construction
Loan Property Cost of such Property pursuant to Section 2.6(c) of the Credit
Agreement or any other applicable provision of the Operative Agreements.
"Construction Period" shall mean, with respect to a Property, the period
commencing on the Construction Commencement Date for such Property and ending on
the Completion Date for such Property.
"Construction Period Property" means, at any date of determination, any
Property as to which the Rent Commencement Date has not occurred on or prior to
such date.
"Construction Period Termination Date" shall mean (a) the earlier of (i)
the date that the Commitments have been terminated in their entirety in
accordance with the terms of Section 2.5(a) of the Credit Agreement, or (ii) the
second anniversary of the Initial Closing Date or (b) such later date as may be
agreed to by the Majority Secured Parties.
"Contractor" shall mean each entity with whom the Construction Agent or the
Lessee contracts to construct any Improvements or any portion thereof on the
Property.
Appendix-10
"Contractual Obligation" shall mean as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Controlled Group" shall mean all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with any Credit Party, are treated as a single
employer under Section 414 of the Code.
"Credit Agreement" shall mean the Credit Agreement, dated on or about the
Initial Closing Date, among the Lessor, the Agent and the Lenders.
"Credit Agreement Default" shall mean any event or condition which, with
the lapse of time or the giving of notice, or both, would constitute a Credit
Agreement Event of Default.
"Credit Agreement Event of Default" shall mean any event or condition
defined as an "Event of Default" in Section 6 of the Credit Agreement.
"Credit Documents" shall mean the Participation Agreement, the Agency
Agreement, the Credit Agreement, the Notes and the Security Documents.
"Credit Parties" shall mean the Construction Agent, the Lessee and the
Guarantor.
"Debt" shall mean of any Person at any date, without duplication, (a) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services (other than current trade liabilities incurred in
the ordinary course of business and payable in accordance with customary
practices) or which is evidenced by a note, bond, debenture or similar
instrument, (b) all obligations of such Person under Financing Leases, (c) all
obligations of such Person in respect of acceptances issued or created for the
account of such Person, (d) all liabilities secured by any Lien on any property
owned by such Person even though such Person has not assumed or otherwise become
liable for the payment thereof, (e) all obligations of such Person, whether
absolute or contingent, in respect of letters of credit opened for the account
of such Person (other than any such letters of credit opened for the purpose of
facilitating the purchase of goods and services in the ordinary course of
business and having a term of not more than 360 days), and (f) all Guarantee
Obligations of such Person in respect of any indebtedness, obligations or
liabilities of any other Person of the type referred to in clauses (a) through
(e) of this definition.
"Deed" shall mean a warranty deed regarding the Land and/or Improvements in
form and substance satisfactory to the Agent.
"Default" shall mean any event, act or condition which with notice or lapse
of time, or both, would constitute an Event of Default.
Appendix-11
"Defaulting Holder" shall have the meaning given to such term in Section
12.4 of the Participation Agreement.
"Defaulting Lender" shall have the meaning given to such term in Section
12.4 of the Participation Agreement.
"Deficiency Balance" shall have the meaning given in Section 22.1(b) of the
Lease Agreement.
"Development Contracts" shall mean the documents described in Schedule 2 to
the Participation Agreement, as such documents may be modified from time to time
pursuant to the Agency Agreement, and any applications, permits, contracts or
documents concerning the use, development or construction of Improvements that
the Construction Agent or the Lessor (at the request of the Construction Agent)
may hereafter execute pursuant to the Agency Agreement.
"Documents" shall have the meaning given to such term in Section 1 of the
Security Agreement.
"Dollars" and "$" shall mean dollars in lawful currency of the United
States of America.
"Election Notice" shall have the meaning given to such term in Section 20.1
of the Lease.
"Eligible Assignee" shall mean (i) a Lender or a Holder, as the case may
be; (ii) an Affiliate of a Lender or a Holder, as the case may be; and (iii) any
other banks or financial institutions approved by the Agent and, unless a
Default or an Event of Default has occurred and is continuing at the time any
assignment is effected in accordance with the Operative Agreements, the Lessee
or the Construction Agent, such approval not to be unreasonably withheld or
delayed by the Lessee or the Construction Agent; provided, however, that neither
the Lessee or the Construction Agent nor an Affiliate of the Lessee or the
Construction Agent shall qualify as an Eligible Assignee.
"Employee Benefit Plan" shall mean an employee benefit plan (within the
meaning of Section 3(3) of ERISA, including without limitation any Multiemployer
Plan), or any "plan" as defined in Section 4975(e)(1) of the Code and as
interpreted by the Internal Revenue Service and the Department of Labor in
rules, regulations, releases or bulletins in effect on any Closing Date.
"Engagement Letter" shall have the meaning given to such term in Section
7.2 of the Participation Agreement.
"Environmental Claims" shall mean any investigation, notice, violation,
demand, allegation, action, suit, injunction, judgment, order, consent decree,
penalty, fine, lien, proceeding, or claim (whether administrative, judicial, or
private in nature) arising (a) pursuant to, or in connection with, an actual or
alleged violation of, any Environmental Law, (b) in connection with any
Hazardous Substance, (c) from any abatement, removal, remedial, corrective, or
other response action in connection with a Hazardous Substance, Environmental
Appendix-12
Law, or other order of a Tribunal or (d) from any actual or alleged damage,
injury, threat, or harm to health, safety, natural resources, or the
environment.
"Environmental Laws" shall mean any Law, permit, consent, approval,
license, award, or other authorization or requirement of any Tribunal relating
to emissions, discharges, releases, threatened releases of any Hazardous
Substance into ambient air, surface water, ground water, publicly owned
treatment works, septic system, or land, or otherwise relating to the handling,
storage, treatment, generation, use, or disposal of Hazardous Substances,
pollution or to the protection of health or the environment, including without
limitation CERCLA, the Resource Conservation and Recovery Act, 42 U.S.C. ss.
6901, et seq., and state statutes analogous thereto.
"Environmental Violation" shall mean any activity, occurrence or condition
that violates or threatens (if the threat requires remediation under any
Environmental Law and is not remediated during any grace period allowed under
such Environmental Law) to violate or results in or threatens (if the threat
requires remediation under any Environmental Law and is not remediated during
any grace period allowed under such Environmental Law) to result in
noncompliance with any Environmental Law.
"Equipment" shall mean equipment, apparatus, furnishings, fittings and
personal property of every kind and nature whatsoever purchased, leased or
otherwise acquired using the proceeds of the Loans or the Holder Advances by the
Construction Agent, the Lessee or the Lessor and all improvements and
modifications thereto and replacements thereof, whether or not now owned or
hereafter acquired or now or subsequently attached to, contained in or used or
usable in any way in connection with any operation of any Improvements,
including but without limiting the generality of the foregoing, all equipment
described in the Appraisal purchased, leased or otherwise acquired using the
proceeds of the Loans or the Holder Advances by the Construction Agent, the
Lessee or the Lessor including without limitation all heating, electrical, and
mechanical equipment, lighting, switchboards, plumbing, ventilation, air
conditioning and air-cooling apparatus, refrigerating, and incinerating
equipment, escalators, elevators, loading and unloading equipment and systems,
cleaning systems (including without limitation window cleaning apparatus),
telephones, communication systems (including without limitation satellite dishes
and antennae), televisions, computers, sprinkler systems and other fire
prevention and extinguishing apparatus and materials, security systems, motors,
engines, machinery, pipes, pumps, tanks, conduits, appliances, fittings and
fixtures of every kind and description purchased, leased or otherwise acquired
using the proceeds of the Loans or the Holder Advances by the Construction
Agent, the Lessee or the Lessor.
"Equipment Schedule" shall mean (a) each Equipment Schedule attached to the
applicable Requisition and (b) each Equipment Schedule attached to the
applicable Lease Supplement.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.
Appendix-13
"ERISA Affiliate" shall mean each entity required to be aggregated with any
Credit Party pursuant to the requirements of Section 414(b) or (c) of the Code.
"Eurocurrency Reserve Requirements" shall mean for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the maximum rates
(expressed as a decimal) of reserve requirements in effect on such day
(including without limitation basic, supplemental, marginal and emergency
reserves under any regulations of the Board or other Governmental Authority
having jurisdiction with respect thereto) dealing with reserve requirements
prescribed on eurocurrency funding (currently referred to as "Eurocurrency
liabilities" in Regulation D) maintained by a member bank of the Federal Reserve
System.
"Eurodollar Holder Advance" shall mean a Holder Advance bearing a Holder
Yield based on the Eurodollar Rate.
"Eurodollar Loans" shall mean Loans the rate of interest applicable to
which is based upon the Eurodollar Rate.
"Eurodollar Rate" means, for any Eurodollar Loan or Eurodollar Holder
Advance comprising part of the same borrowing or advance (including without
limitation conversions, extensions and renewals), for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) appearing on Telerate Page 3750 (or any successor page) as the
London interbank offered rate for deposits in Dollars at approximately 11:00
a.m. (London time) two Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period. If for any reason such
rate is not available, the term "Eurodollar Rate" shall mean, for any Eurodollar
Loan or Eurodollar Holder Advance for any Interest Period therefor, the rate per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on
Reuters Screen LIBO Page as the London interbank offered rate for deposits in
Dollars at approximately 11:00 a.m. (London time) two Business Days prior to the
first day of such Interest Period for a term comparable to such Interest Period;
provided, however, if more than one rate is specified on Reuters Screen LIBO
Page, the applicable rate shall be the arithmetic mean of all such rates
(rounded upwards, if necessary, to the nearest 1/100 of 1%). As used herein,
"Reuters Screen LIBO Page" means the display designated as page "LIBO" on the
Reuters Monitor Money Rates Service (or such other page as may replace the LIBO
page on that service for the purpose of displaying London interbank offered
rates of major banks) ("RMMRS"). In the event the RMMRS is not then quoting such
offered rates, "Eurodollar Rate" shall mean for the Interest Period for each
Eurodollar Loan or Eurodollar Holder Advance comprising part of the same
borrowing or advance (including without limitation conversions, extensions and
renewals), the average (rounded upward to the nearest one sixteenth (1/16) of
one percent (1%)) per annum rate of interest determined by the Agent (each such
determination to be conclusive and binding) as of two (2) Business Days prior to
the first day of such Interest Period, as the effective rate at which deposits
in immediately available funds in Dollars are being, have been, or would be
offered or quoted by the Agent to major banks in the applicable interbank market
for Eurodollar deposits at any time during the Business Day which is the second
Business Day immediately preceding the first day of such Interest Period, for a
term comparable to such Interest Period and in the amount of the requested
Eurodollar Loan and/or Eurodollar Holder Advance. If no such offers or quotes
are generally available for such amount, then such rate shall be determined in
Appendix-14
accordance with Section 2.9(c) of the Credit Agreement and Section 3.7(c) of the
Trust Agreement.
"Event of Default" shall mean a Lease Event of Default, an Agency Agreement
Event of Default or a Credit Agreement Event of Default.
"Excepted Payments" shall mean:
(a) all indemnity payments (including without limitation indemnity
payments made pursuant to Section 11 of the Participation Agreement) to
which the Owner Trustee, any Holder or any of their respective Affiliates,
agents, officers, directors or employees is entitled;
(b) any amounts (other than Basic Rent or Termination Value) payable
under any Operative Agreement to reimburse the Owner Trustee, any Holder or
any of their respective Affiliates (including without limitation the
reasonable expenses of the Owner Trustee, the Trust Company and the Holders
incurred in connection with any such payment) for performing or complying
with any of the obligations of any Credit Party under and as permitted by
any Operative Agreement;
(c) any amount payable to a Holder by any transferee of such interest
of a Holder as the purchase price of such Holder's interest in the Trust
Estate (or a portion thereof);
(d) any insurance proceeds under policies maintained by the Owner
Trustee or any Holder;
(e) Transaction Expenses or other amounts, fees, disbursements or
expenses paid or payable to or for the benefit of the Owner Trustee;
(f) any payments in respect of interest to the extent attributable to
payments referred to in clauses (a) through (f) above; and
(g) any rights of either the Owner Trustee or the Trust Company to
demand, collect, sue for or otherwise receive and enforce payment of any of
the foregoing amounts, provided that such rights shall not include the
right to terminate the Lease.
"Excess Proceeds" shall mean (as applicable) the excess, if any, of the
aggregate of all awards, compensation or insurance proceeds payable in
connection with a Casualty or Condemnation over (i) the Termination Value paid
by the Lessee (if required pursuant to the Lease) with respect to such Casualty
or Condemnation or (ii) sums paid by the Lessee in connection with the
restoration of the Property in accordance with the Lease.
"Excluded Taxes" shall have the meaning given to such term in Section
11.2(b) of the Participation Agreement.
Appendix-15
"Exculpated Persons" shall mean the Trust Company (except with respect to
the representations and warranties and the other obligations of the Trust
Company pursuant to the Operative Agreements expressly undertaken in its
individual capacity, including without limitation the representations and
warranties of the Trust Company pursuant to Section 6.1 of the Participation
Agreement, the obligations of the Trust Company pursuant to Section 8.2 of the
Participation Agreement and the obligations of the Trust Company pursuant to the
Trust Agreement), the Holders (except with respect to the obligations of the
Holders pursuant to the Participation Agreement and the Trust Agreement
expressly undertaken in their respective individual capacities), their officers,
directors and shareholders.
"Exempt Payments" shall have the meaning specified in Section 11.2(e) of
the Participation Agreement.
"Expiration Date" shall mean either (a) the Basic Term Expiration Date or
(b) subject to Section 5.12 of the Participation Agreement, the last day of the
applicable Renewal Term.
"Fair Market Sales Value" shall mean, with respect to any Property, the
amount, which in any event, shall not be less than zero (0), that would be paid
in cash in an arms-length transaction between an informed and willing purchaser
and an informed and willing seller, neither of whom is under any compulsion to
purchase or sell, respectively, such Property. Fair Market Sales Value of any
Property shall be determined based on the assumption that, except for purposes
of Section 17 of the Lease, such Property is in the condition and state of
repair required under Section 10.1 of the Lease and each Credit Party is in
compliance with the other requirements of the Operative Agreements.
"Federal Funds Effective Rate" shall have the meaning given to such term in
the definition of ABR.
"Finance Subsidiary" shall mean Franklin Capital Corporation.
"Financing Lease" shall mean a Capitalized Lease.
"Financing Parties" shall mean the Lessor, the Owner Trustee, in its trust
capacity, the Agent, the Holders and the Lenders.
"Fixtures" shall mean all fixtures relating to the Improvements, including
without limitation all components thereof, located in or on the Improvements,
together with all replacements, modifications, alterations and additions
thereto.
"Force Majeure Event" shall mean any event beyond the control of the
Construction Agent, including without limitation strikes or lockouts (but only
when the Construction Agent is legally prevented from securing replacement labor
or materials as a result thereof), adverse soil conditions, acts of God, adverse
weather conditions, inability to obtain labor or materials after all possible
efforts have been expended by the Construction Agent, governmental activities,
Appendix-16
civil commotion and enemy action; but excluding any event, cause or condition
that results from the Construction Agent's financial condition.
"Form 1001" shall have the meaning specified in Section 11.2(e) of the
Participation Agreement.
"Form 4224" shall have the meaning specified in Section 11.2(e) of the
Participation Agreement.
"Franklin Advisers" shall mean Franklin Advisers, Inc., a Delaware
corporation.
"Franklin Resources" shall mean Franklin Resources, Inc. a Delaware
corporation.
"FRI Trust 1999-1" shall mean the grantor trust created pursuant to the
terms and conditions of the Trust Agreement.
"Funds" shall mean the collective reference to all investment companies
advised by the Guarantor or any of its Subsidiaries.
"GAAP" shall mean generally accepted accounting principles in the United
States in effect from time to time. If, at any time, GAAP changes in a manner
which will materially affect the calculations determining compliance by any
Credit Party with any of the covenants set forth in Sections 8.3(bb), 8.3(cc),
8.3(gg) or 8.3(jj) of the Participation Agreement, either the Lessee or the
Majority Secured Parties may request an amendment to such covenant (or the
definitions related thereto) and the Majority Secured Parties or the Lessee, as
the case may be, shall negotiate in good faith with the requesting party to
agree upon such amendment to adjust such covenant to give to each of the parties
to the Operative Agreements substantially the same protection and benefits as
were contemplated prior to such changes.
"Governmental Action" shall mean all permits, authorizations,
registrations, consents, approvals, waivers, exceptions, variances, orders,
judgments, written interpretations, decrees, licenses, exemptions, filings,
notices to and declarations of or with, or required by, any Governmental
Authority, or required by any Legal Requirement, and shall include, without
limitation, all environmental and operating permits and licenses that are
required for the full use, occupancy, zoning and operating of the Property.
"Governmental Authority" shall mean any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Ground Lease" shall mean a ground lease (containing a landlord waiver and
a mortgagee waiver) in form and substance satisfactory to the Agent respecting
any Property.
"Ground Lessor" shall have the meaning given to such term in Recital A of
the Lease.
Appendix-17
"Guarantee Obligation" shall mean as to any Person (the "guaranteeing
person"), any obligation of (a) the guaranteeing person or (b) another Person
(including, without limitation, any bank under any letter of credit) to induce
the creation of which the guaranteeing person has issued a reimbursement,
counterindemnity or similar obligation, in either case guaranteeing or in effect
guaranteeing any Indebtedness, leases, dividends or other obligations (the
"primary obligations") of any other third Person (the "primary obligor") in any
manner, whether directly or indirectly, including, without limitation, any
obligation of the guaranteeing person, whether or not contingent, (i) to
purchase any such primary obligation or any property constituting direct or
indirect security therefor, (ii) to advance or supply funds for the purchase or
payment of any such primary obligation or to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (iii) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such primary
obligation or (iv) otherwise to assure or hold harmless the owner of any such
primary obligation against loss in respect thereof; provided, however, that the
term Guarantee Obligation shall not include endorsements of instruments for
deposit or collection in the ordinary course of business. The amount of any
Guarantee Obligation of any guaranteeing person shall be deemed to be the lower
of (a) an amount equal to the stated or determinable amount of the primary
obligation in respect of which such Guarantee Obligation is made and (b) the
maximum amount for which such guaranteeing person may be liable pursuant to the
terms of the instrument embodying such Guarantee Obligation, unless such primary
obligation and the maximum amount for which such guaranteeing person may be
liable are not stated or determinable, in which case the amount of such
Guarantee Obligation shall be such guaranteeing person's maximum reasonably
anticipated liability in respect thereof as determined by the Guarantor in good
faith.
"Guarantor" shall mean Franklin Resource, Inc., a Delaware corporation, as
guarantor of the Construction Agent and the Lessee with respect to the Operative
Agreements and the Properties.
"Hard Costs" shall mean all costs and expenses payable for supplies,
materials, labor and profit with respect to the Improvements under any
Construction Contract, including site preparation costs, demolition costs, costs
of offsite and other public improvements required as conditions of governmental
approvals or under the Purchase and Sale Agreement, payments (including
nonrefundable deposits) to vendors or suppliers for specially fabricated
equipment and materials and cancellation or termination fees or other
compensation payable by the Construction Agent pursuant to any contract with any
general contractor, architect, engineer or other third party because of any
election by the Construction Agent to cancel or terminate such contract, and
costs of repairing any damage to the Improvements by fire or other casualty
prior to the Construction Period Termination Date, to the extent such cost is
not covered by such insurance.
"Hazardous Substance" shall mean any of the following: (a) any petroleum or
petroleum product, explosives, radioactive materials, asbestos, formaldehyde,
polychlorinated biphenyls, lead and radon gas; (b) any substance, material,
product, derivative, compound or mixture, mineral, chemical, waste, gas, medical
waste, or pollutant, in each case whether naturally occurring, man-made or the
by-product of any process, that is toxic, harmful or hazardous to the
Appendix-18
environment or human health or safety as determined in accordance with any
Environmental Law; or (c) any substance, material, product, derivative, compound
or mixture, mineral, chemical, waste, gas, medical waste or pollutant that would
support the assertion of any claim under any Environmental Law, whether or not
defined as hazardous as such under any Environmental Law.
"Holder Advance" shall mean any advance made by any Holder to the Owner
Trustee pursuant to the terms of the Trust Agreement or the Participation
Agreement.
"Holder Amount" shall mean as of any date, the aggregate amount of Holder
Advances made by each Holder to the Trust Estate pursuant to Section 2 of the
Participation Agreement and Section 3.1 of the Trust Agreement less any payments
of any Holder Advances received by the Holders pursuant to Section 3.4 of the
Trust Agreement.
"Holder Commitments" shall mean, the Holder Commitment of each Holder as
set forth in Schedule I to the Trust Agreement as such Schedule I may be amended
and replaced from time to time.
"Holder Construction Property Cost" shall mean, with respect to each
Construction Period Property, at any date of determination, an amount equal to
(a) the aggregate Holder Advances made on or prior to such date with respect
thereto minus (b) the aggregate amount of prepayments or repayments, as the case
may be, of the Holder Advances allocated to reduce the Holder Construction
Property Cost of such Construction Period Property pursuant to Section 3.4(c) of
the Trust Agreement or otherwise pursuant to the Operative Agreements.
"Holder Overdue Rate" shall mean the lesser of (x) the then current rate of
Holder Yield respecting the particular amount in question (if such amount is not
then Holder Yield-bearing, at the then current rate of Holder Yield respecting
Eurodollar Holder Advances having an Interest Period of one month and, if such
Eurodollar Holder Advances are not then available, at the ABR plus seventy-five
one hundredths of one percent (.75%)), as the case may be) plus two percent (2%)
and (y) the highest rate permitted by applicable law.
"Holder Property Cost" shall mean with respect to a Property, at any date
of determination, an amount equal to (a) the aggregate Holder Advances made on
or prior to such date with respect thereto minus (b) the aggregate amount of
prepayments or repayments, as the case may be, of the Holder Advances allocated
to reduce the Holder Property Cost of such Property pursuant to Section 3.4(c)
of the Trust Agreement or otherwise pursuant to the Operative Agreements.
"Holder Unused Fee" shall have the meaning given to such term in Section
7.4 of the Participation Agreement.
"Holder Yield" shall mean with respect to Holder Advances from time to time
either (i) the Eurodollar Rate plus the Applicable Percentage or (ii) the ABR
plus seventy-five one hundredths of one percent (.75%) as elected by the Owner
Trustee from time to time with respect to such Holder Advances in accordance
Appendix-19
with the terms of the Trust Agreement (subject to Section 9.2 of the
Participation Agreement); provided, however, (a) upon delivery of the notice
described in Section 3.7(c) of the Trust Agreement, the outstanding Holder
Advances of each Holder shall bear a yield at the ABR plus seventy-five one
hundredths of one percent (.75%) applicable from time to time from and after the
dates and during the periods specified in Section 3.7(c) of the Trust Agreement,
and (b) upon the delivery by a Holder of the notice described in Section 11.3(f)
of the Participation Agreement, the Holder Advances of such Holder shall bear a
yield at the ABR plus seventy-five one hundredths of one percent (.75%)
applicable from time to time after the dates and during the periods specified in
Section 11.3(f) of the Participation Agreement.
"Holders" shall mean the banks and financial institutions which may be from
time to time holders of Certificates in connection with the FRI Trust 1999-1.
"Impositions" shall mean any and all liabilities, losses, expenses, costs,
charges and Liens of any kind whatsoever for fees, taxes, levies, imposts,
duties, charges, assessments or withholdings ("Taxes") including but not limited
to (i) real and personal property taxes, including without limitation personal
property taxes on any property covered by the Lease that is classified by
Governmental Authorities as personal property, and real estate or ad valorem
taxes in the nature of property taxes; (ii) sales taxes, use taxes and other
similar taxes (including rent taxes and intangibles taxes); (iii) excise taxes;
(iv) real estate transfer taxes, conveyance taxes, stamp taxes and documentary
recording taxes and fees; (v) taxes that are or are in the nature of franchise,
income, value added, privilege and doing business taxes, license and
registration fees; (vi) assessments on any Property, including without
limitation all assessments for public improvements or benefits, whether or not
such improvements are commenced or completed within the Term; and (vii) taxes,
Liens, assessments or charges asserted, imposed or assessed by the PBGC or any
Governmental Authority succeeding to or performing functions similar to, the
PBGC; and in each case all interest, additions to tax and penalties thereon,
which at any time prior to, during or with respect to the Term or in respect of
any period for which the Lessee shall be obligated to pay Supplemental Rent may
be levied, assessed or imposed by any Governmental Authority upon or with
respect to (a) any Property or any part thereof or interest therein; (b) the
leasing, financing, refinancing, demolition, construction, substitution,
subleasing, assignment, control, condition, occupancy, servicing, maintenance,
repair, ownership, possession, activity conducted on, delivery, insuring, use,
operation, improvement, sale, transfer of title, return or other disposition of
such Property or any part thereof or interest therein; (c) the Notes, other
indebtedness with respect to any Property, or the Certificates, or any part
thereof or interest therein; (d) the rentals, receipts or earnings arising from
any Property or any part thereof or interest therein; (e) the Operative
Agreements, the performance thereof, or any payment made or accrued pursuant
thereto; (f) the income or other proceeds received with respect to any Property
or any part thereof or interest therein upon the sale or disposition thereof;
(g) any contract (including the Agency Agreement) relating to the construction,
acquisition or delivery of the Improvements or any part thereof or interest
therein; (h) the issuance of the Notes or the Certificates; (i) the Owner
Trustee, the Trust or the Trust Estate; or (j) otherwise in connection with the
transactions contemplated by the Operative Agreements.
Appendix-20
"Improvements" shall mean, with respect to the construction, renovations
and/or Modifications on any Land, all buildings, structures, Fixtures, and other
improvements (including any tenant improvements) of every kind existing at any
time and from time to time on or under the Land purchased or otherwise acquired
using the proceeds of the Loans or the Holder Advances or which is subject to a
Ground Lease, together with any and all appurtenances to such buildings,
structures or improvements, including without limitation sidewalks, utility
pipes, conduits and lines, parking areas and roadways, and including without
limitation all Modifications and other additions to or changes in the
Improvements at any time, including without limitation (a) any Improvements
existing as of the Property Closing Date as such Improvements may be referenced
on the applicable Requisition and (b) any Improvements made subsequent to such
Property Closing Date.
"Included Subsidiary" shall mean any Subsidiary of the Guarantor other than
any Banking Subsidiary, Finance Subsidiary, Insurance Subsidiary or Real Estate
Subsidiary.
"Indebtedness" shall mean Debt.
"Indemnified Person" shall mean the Lessor, the Owner Trustee, in its
individual and its trust capacity, the Trust, the Trust Company, the Agent, the
Holders, the Lenders, Banc of America Securities LLC, as the sole lead arranger
and as the sole book manager, The Bank of New York, as a co-syndication agent,
The Chase Manhattan Bank, as a co-syndication agent, and their respective
successors, assigns, directors, shareholders, partners, officers, employees,
agents and Affiliates.
"Indemnity Provider" shall mean the Lessee.
"Initial Closing Date" shall mean October 13, 1999.
"Initial Construction Advance" shall mean any initial Advance to pay for
Property Costs for construction of any Improvements.
"Insolvency" shall mean, with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section 4245 of
ERISA.
"Instruments" shall have the meaning given to such term in Section 1 of the
Security Agreement.
"Insurance Requirements" shall mean all terms and conditions of any
insurance policy either required by the Lease to be maintained by the Lessee or
required by the Agency Agreement to be maintained by the Construction Agent, and
all requirements of the issuer of any such policy and, regarding self insurance,
any other requirements of the Lessee.
"Insurance Subsidiary" shall mean at any time, ILA Financial Services,
Inc., or any other Subsidiary of the Guarantor licensed to engage, and
principally engaged, at such time in the insurance business or any Subsidiary of
such Subsidiary.
Appendix-21
"Intellectual Property" shall have the meaning specified for such term in
Section 6.2(ee).
"Interest Period" shall mean during the Commitment Period and thereafter as
to any Eurodollar Loan or Eurodollar Holder Advance (i) with respect to the
initial Interest Period, the period beginning on the date of the first
Eurodollar Loan and Eurodollar Holder Advance and ending one (1) month, two (2)
months, three (3) months or (to the extent available to all Lenders and all
Holders) six (6) months thereafter, as selected by the Lessor (in the case of a
Eurodollar Loan) or the Owner Trustee (in the case of a Eurodollar Holder
Advance) in its applicable notice given with respect thereto (subject to
Sections 9.1 and 9.2 of the Participation Agreement, respectively) and (ii)
thereafter, each period commencing on the last day of the next preceding
Interest Period applicable to such Eurodollar Loan or Eurodollar Holder Advance
and ending one (1) month, two (2) months, three (3) months or (to the extent
available to all Lenders and all Holders) six (6) months thereafter, as selected
by the Lessor by notice to the Agent (in the case of a Eurodollar Loan) or by
the Owner Trustee (in the case of a Eurodollar Holder Advance) (subject to
Sections 9.1 and 9.2 of the Participation Agreement, respectively) in each case
not less than three (3) Business Days prior to the last day of the then current
Interest Period with respect thereto; provided, however, that all of the
foregoing provisions relating to Interest Periods are subject to the following:
(A) if any Interest Period would end on a day which is not a Business Day, such
Interest Period shall be extended to the next succeeding Business Day (except
that where the next succeeding Business Day falls in the next succeeding
calendar month, then on the next preceding Business Day), (B) no Interest Period
shall extend beyond the Maturity Date or the Expiration Date, as the case may
be, (C) where an Interest Period begins on a day for which there is no
numerically corresponding day in the calendar month in which the Interest Period
is to end, such Interest Period shall end on the last Business Day of such
calendar month and (D) there shall not be more than four (4) Interest Periods
outstanding at any one (1) time.
"Interest Rate Agreement" shall mean any interest rate protection
agreement, interest rate future, interest rate option, interest rate swap,
interest rate cap or other interest rate hedge or arrangement under which the
Guarantor or any of its Subsidiaries is a party or a beneficiary.
"Investment Company Act" shall have the meaning specified for such term in
Section 6.2(ii) of the Participation Agreement.
"Joint Venture" shall mean any corporation, partnership or other entity
(other than a Subsidiary of the Guarantor) as to which the Guarantor, directly
or indirectly, owns thirty-three percent (33%) or more of the shares of any
class of its capital stock or of its other ownership interests, whether voting
or non-voting, and as to which the Guarantor (or any relevant Subsidiary of the
Guarantor) is not simply a passive investor.
"Land" shall mean, subject to Section 8.8(b) of the Participation
Agreement, a parcel of real property described on (a) the Requisition issued by
the Construction Agent on the Property Closing Date relating to such parcel and
(b) the schedules to each applicable Lease Supplement executed and delivered in
accordance with the requirements of Section 2.4 of the Lease.
Appendix-22
"Law" shall mean any statute, law, ordinance, regulation, rule, directive,
order, writ, injunction or decree of any Tribunal.
"Lease" or "Lease Agreement" shall mean the Lease Agreement dated on or
about the Initial Closing Date, between the Lessor and the Lessee, together with
any Lease Supplements thereto.
"Lease Default" shall mean any event or condition which, with the lapse of
time or the giving of notice, or both, would constitute a Lease Event of
Default.
"Lease Event of Default" shall have the meaning specified in Section 17.1
of the Lease.
"Lease Supplement" shall mean each Lease Supplement substantially in the
form of Exhibit A to the Lease, together with all attachments and schedules
thereto.
"Leased Parcel" shall have the meaning given to such term in Section 8.8(b)
of the Participation Agreement.
"Legal Requirements" shall mean all foreign, federal, state, county,
municipal and other governmental statutes, laws, rules, orders, regulations,
ordinances, judgments, decrees and injunctions affecting the Owner Trustee, any
Holder, the Lessor, any Credit Party, the Agent, any Lender or any Property,
Land, Improvement, Equipment or the taxation, demolition, construction, use or
alteration of such Improvements, whether now or hereafter enacted and in force,
including without limitation any that require repairs, modifications or
alterations in or to any Property or in any way limit the use and enjoyment
thereof (including without limitation all building, zoning and fire codes and
the Americans with Disabilities Act of 1990, 42 U.S.C. ss. 12101 et. seq., and
any other similar federal, state or local laws or ordinances and the regulations
promulgated thereunder) and any that may relate to environmental requirements
(including without limitation all Environmental Laws), and all permits,
certificates of occupancy, licenses, authorizations and regulations relating
thereto, and all covenants, agreements, restrictions and encumbrances contained
in any instruments which are either of record or known to any Credit Party
affecting any Property or the Appurtenant Rights.
"Lender Commitment" shall mean the Commitment of each Lender.
"Lender Financing Statements" shall mean UCC financing statements and
fixture filings appropriately completed and executed for filing in the
applicable jurisdiction in order to perfect a security interest in favor of the
Agent in the Collateral subject to the Security Documents.
"Lender Unused Fee" shall have the meaning given to such term in Section
7.4 of the Participation Agreement.
"Lenders" shall mean the banks and financial institutions which may be from
time to time party to the Participation Agreement and the Credit Agreement.
Appendix-23
"Lessee" shall have the meaning set forth in the Lease.
"Lessee Credit Agreement" shall mean that certain Amended, Extended and
Restated Five Year Facility Credit Agreement dated as of May 16, 1997, as
amended by that certain First Amendment to the Amended, Extended and Restated
Five Year Facility Credit Agreement dated May 15, 1998, as further amended by
that certain Consent and Amendment to Credit Agreement dated as of September 15,
1999, each among Franklin Resources, Inc., the banks parties thereto, Bank of
America, N.A. (successor to Bank of America National Trust and Savings
Association), as a Co-Agent, The Chase Manhattan Bank, as a Co-Agent, and The
Chase Manhattan Bank, as Administrative Agent, and any replacement credit
facility.
"Lessee Credit Agreement Event of Default" shall mean an Event of Default
as defined in Section 7 of the Lessee Credit Agreement.
"Lessor" shall mean the Owner Trustee, not in its individual capacity, but
as the Lessor under the Lease.
"Lessor Basic Rent" shall mean the scheduled Holder Yield due on the Holder
Advances on any Scheduled Interest Payment Date pursuant to the Trust Agreement
(but not including (a) any such scheduled Holder Yield due on the Holder
Advances prior to the Rent Commencement Date or (b) interest on overdue amounts
under the Trust Agreement or otherwise).
"Lessor Financing Statements" shall mean UCC financing statements and
fixture filings appropriately completed and executed for filing in the
applicable jurisdictions in order to protect the Lessor's interest under the
Lease to the extent the Lease is a security agreement or a mortgage.
"Lessor Lien" shall mean, with respect to any Property, any Lien, true
lease or sublease or disposition of title arising as a result of (a) any claim
against the Lessor or the Trust Company, in its individual capacity, or any
Affiliate thereof not resulting from the transactions contemplated by the
Operative Agreements, (b) any act or omission of the Lessor or the Trust
Company, in its individual capacity, or any Affiliate thereof which is not
required by the Operative Agreements or is in violation of any of the terms of
the Operative Agreements, (c) any claim against the Lessor or the Trust Company,
in its individual capacity, or any Affiliate thereof with respect to Taxes or
Transaction Expenses against which the Lessee is not required to indemnify the
Lessor or the Trust Company, in its individual capacity, pursuant to Section 11
of the Participation Agreement or (d) any claim against the Lessor arising out
of any transfer, sale, assignment, encumbrance or other disposition by the
Lessor of all or any portion of the interest of the Lessor in the Properties,
the Trust Estate or the Operative Agreements other than the transfer of title to
or possession of any Properties by the Lessor pursuant to and in accordance with
the Lease, the Credit Agreement, the Security Agreement or the Participation
Agreement or pursuant to the exercise of the remedies set forth in Article XVII
of the Lease.
Appendix-24
"Lien" shall mean any mortgage, pledge, security interest, encumbrance,
lien, option or charge of any kind.
"Limited Recourse Amount" shall mean with respect to all the Properties on
an aggregate basis, an amount equal to the sum of the Termination Values with
respect to all the Properties on an aggregate basis on each Payment Date, less
the Maximum Residual Guarantee Amount as of such date with respect to all the
Properties on an aggregate basis.
"Loan Basic Rent" shall mean the scheduled interest due on the Loans on any
Scheduled Interest Payment Date pursuant to the Credit Agreement (but not
including interest on (a) any such Loan due prior to the Rent Commencement Date
or (b) any overdue amounts under Section 2.8(b) of the Credit Agreement or
otherwise).
"Loan Property Cost" shall mean, with respect to each Property at any date
of determination, an amount equal to (a) the aggregate principal amount all
Loans (including without limitation all Acquisition Loans and Construction
Loans) made on or prior to such date with respect to such Property minus (b) the
aggregate amount of prepayments or repayments, as the case may be, of the Loans
allocated to reduce the Loan Property Cost of such Property pursuant to Section
2.6(c) of the Credit Agreement or otherwise pursuant to the Operative
Agreements.
"Loans" shall mean the loans extended pursuant to the Credit Agreement and
shall include both the Tranche A Loans and the Tranche B Loans.
"Majority Holders" shall mean at any time, Holders (a) whose Holder
Advances outstanding represent more than fifty percent (50%) of the aggregate
Holder Advances outstanding or (b) to the extent there are no Holder Advances
outstanding, whose Holder Commitments represent more than fifty percent (50%) of
the aggregate Holder Commitments.
"Majority Lenders" shall mean at any time, Lenders (a) whose Loans
outstanding represent more than fifty percent (50%) of the aggregate Loans
outstanding or (b) to the extent there are no Loans outstanding, whose Lender
Commitments represent more than fifty percent (50%) of the aggregate of the
Lender Commitments.
"Majority Secured Parties" shall mean at any time, Lenders and Holders (a)
whose Loans and Holder Advances outstanding represent more than fifty percent
(50%) of the aggregate Advances outstanding or (b) to the extent there are no
Advances outstanding, whose Lender Commitments and Holder Commitments represent
more than fifty percent (50%) of the sum of the aggregate Holder Commitments
plus the aggregate Lender Commitments.
"Marketing Period" shall mean, if the Lessee has given a Sale Notice in
accordance with Section 20.1 of the Lease, the period commencing on the date
such Sale Notice is given and ending on the Expiration Date.
Appendix-25
"Material Adverse Effect" shall, mean a material adverse effect on (a) the
business, assets, properties, financial condition, operations, prospects or
rights or interests of the Credit Parties, on a consolidated basis, which
individually or in the aggregate has caused directly or indirectly Net Income
for any fiscal quarter to be less than zero, (b) the ability of any Credit Party
to perform its respective obligations under any Operative Agreement to which it
is a party, (c) the validity or enforceability of any Operative Agreement or the
rights and remedies of the Agent, the Lenders, the Holders, or the Lessor
thereunder, (d) the validity, priority or enforceability of any Lien on any
Property created by any of the Operative Agreements, or (e) the value, utility
or useful life of any Property.
"Maturity Date" shall mean the Expiration Date.
"Maximum Amount" shall mean (a) one hundred percent (100%) of that portion
of the Termination Value equal to the Advances made for ground rent during the
Construction Period pursuant to a Ground Lease (collectively, the "Land Cost"),
plus (b) the product of eighty-nine and nine tenths percent (89.9%) multiplied
by the following: (the aggregate Termination Value for all, but not less than
all, the Properties, minus the Land Cost, minus all structuring fees, up front
fees, arrangement fees, syndication fees, and legal and accounting costs related
to the transaction evidenced by the Operative Agreements, minus accrued, unpaid
Holder Yield respecting any and all Construction Period Properties) minus (c)
the accreted value (calculated at a rate of 5.93875% per annum) of any payments
previously made by the Construction Agent, the Lessee or the Guarantor regarding
any and all Construction Period Properties and not reimbursed.
"Maximum Residual Guarantee Amount" shall mean an amount equal to the
product of the aggregate Property Cost for all of Properties times eighty-five
percent (85%).
"Modifications" shall have the meaning specified in Section 11.1(a) of the
Lease.
"Moody's" shall mean Moody's Investors Service, Inc., and any successor
thereto.
"Mortgage Instrument" shall mean any mortgage, deed of trust or any other
instrument executed by the Owner Trustee or the Lessee (or regarding any
property subject to a Ground Lease, the applicable Affiliate of the Lessee) in
favor of the Agent (for the benefit of the Lenders and the Holders) and
evidencing a Lien on the Property, in form and substance reasonably acceptable
to the Agent.
"Multiemployer Plan" shall mean any plan described in Section 4001(a)(3) of
ERISA.
"Multiple Employer Plan" shall mean a plan to which any Credit Party or any
ERISA Affiliate and at least one (1) other employer other than an ERISA
Affiliate is making or accruing an obligation to make, or has made or accrued an
obligation to make, contributions.
"Net Income" shall mean for any period, the net income after taxes for such
period of the Credit Parties and their Consolidated Subsidiaries on a
consolidated basis, as determined in accordance with GAAP.
Appendix-26
"Non-Integral Equipment" shall mean Equipment which (a) is personal
property that is readily removable without causing material damage to the
applicable Property and (b) is not integral or necessary, respecting the
applicable Property, for compliance with Section 8.3 of the Lease or otherwise
to the structure thereof, the mechanical operation thereof, the electrical
systems thereof or otherwise with respect to any aspect of the physical plant
thereof.
"Non-Material Subsidiary" shall mean, as to any Person at any time of
determination, a Subsidiary (direct or indirect) of such Person in which such
Person and its other Subsidiaries (direct or indirect) have such an aggregate
investment of not more than $2,000,000.
"Notes" shall mean those notes issued to the Lenders pursuant to the Credit
Agreement and shall include both the Tranche A Notes and the Tranche B Notes.
"Obligations" shall have the meaning given to such term in Section 1 of the
Security Agreement.
"Officer's Certificate" with respect to any Person shall mean a certificate
executed on behalf of such Person by a Responsible Officer who has made or
caused to be made such examination or investigation as is necessary to enable
such Responsible Officer to express an informed opinion with respect to the
subject matter of such Officer's Certificate. No individual shall have any
personal liability under the Operative Agreements or otherwise on account of his
or her execution or delivery of Officer's Certificates.
"Operative Agreements" shall mean the following: the Participation
Agreement, the Agency Agreement, the Trust Agreement, the Certificates, the
Credit Agreement, the Notes, the Lease, the Lease Supplements (and memoranda of
the Lease and each Lease Supplement in a form reasonably acceptable to the
Agent), the Security Agreement, the Mortgage Instruments, the other Security
Documents, the Ground Leases, the Deeds and the Bills of Sale and, for purposes
of Sections 11.1 through 11.9 of the Participation Agreement, the Bridge
Documents and any and all other agreements, documents and instruments executed
in connection with any of the foregoing.
"Original Executed Counterpart" shall have the meaning given to such term
in Section 5 of Exhibit A to the Lease.
"Overdue Interest" shall mean any interest payable pursuant to Section
2.8(b) of the Credit Agreement.
"Overdue Rate" shall mean (a) with respect to the Loan Basic Rent, and any
other amount owed under or with respect to the Credit Agreement or the Security
Documents, the rate specified in Section 2.8(b) of the Credit Agreement, (b)
with respect to the Lessor Basic Rent, the Holder Yield and any other amount
owed under or with respect to the Trust Agreement, the Holder Overdue Rate, and
(c) with respect to any other amount, the amount referred to in clause (y) of
Section 2.8(b) of the Credit Agreement.
Appendix-27
"Owner Trustee," "Borrower" and "Lessor" shall mean First Security Bank,
National Association, not individually, except as expressly stated in the
various Operative Agreements, but solely as the Owner Trustee under the FRI
Trust 1999-1, and any successor, replacement and/or additional Owner Trustee
expressly permitted under the Operative Agreements.
"Parcel Map" shall have the meaning given to such term in Section 8.8(b) of
the Participation Agreement.
"Parcel Map Recordation" shall have the meaning given to such term in
Section 8.8(b) of the Participation Agreement.
"Participant" shall have the meaning given to such term in Section 9.7 of
the Credit Agreement.
"Participation Agreement" shall mean the Participation Agreement dated on
or about the Initial Closing Date, among the Lessee, the Guarantor, the Owner
Trustee, not in its individual capacity except as expressly stated therein, the
Holders, the Lenders and the Agent.
"Payment Date" shall mean any Scheduled Interest Payment Date and any date
on which interest or Holder Yield in connection with a prepayment of principal
on the Loans or of the Holder Advances is due under the Credit Agreement or the
Trust Agreement.
"PBGC" shall mean the Pension Benefit Guaranty Corporation created by
Section 4002(a) of ERISA or any successor thereto.
"Pension Plan" shall mean a "pension plan", as such term is defined in
section 3(2) of ERISA, which is subject to title IV of ERISA (other than a
Multiemployer Plan), and to which any Credit Party or any ERISA Affiliate may
have any liability, including without limitation any liability by reason of
having been a substantial employer within the meaning of section 4063 of ERISA
at any time during the preceding five (5) years, or by reason of being deemed to
be a contributing sponsor under section 4069 of ERISA.
"Permitted Facility" shall mean a to-be-constructed office building complex
totaling approximately 560,000 square feet comprised of four (4) office
buildings with two (2) parking structures on a parcel ground leased from the
Lessee to the Lessor in San Mateo, California.
"Permitted Liens" shall mean, respecting each Property, any Liens of the
following type:
(a) the respective rights and interests of the parties to the
Operative Agreements as provided in the Operative Agreements, including,
without limitation, the Purchase Option and the Sale Option;
(b) the rights of any sublessee or assignee under a sublease or an
assignment expressly permitted by the terms of the Lease;
Appendix-28
(c) Liens for Taxes that either are not yet delinquent or are being
contested in accordance with the provisions of Section 13.1 of the Lease;
(d) Liens arising by operation of law, materialmen's, mechanics',
workmen's, repairmen's, employees', carriers', warehousemen's and other
like Liens relating to the construction of the Improvements or in
connection with any Modifications or arising in the ordinary course of
business for amounts that either are not more than thirty (30) days past
due or are being diligently contested in good faith by appropriate
proceedings, so long as such proceedings satisfy the conditions for the
continuation of proceedings to contest Taxes set forth in Section 13.1 of
the Lease;
(e) Liens of any of the types referred to in clause (d) above that
have been bonded for not less than the full amount in dispute (or as to
which other security arrangements satisfactory to the Lessor and the Agent
have been made), which bonding (or arrangements) shall comply with
applicable Legal Requirements, and shall have effectively stayed any
execution or enforcement of such Liens;
(f) Liens arising out of judgments or awards with respect to which
appeals or other proceedings for review are being prosecuted in good faith
and for the payment of which adequate reserves have been provided as
required by GAAP or other appropriate provisions have been made, so long as
such proceedings have the effect of staying the execution of such judgments
or awards and satisfy the conditions for the continuation of proceedings to
contest Taxes set forth in Section 13.1 of the Lease; and
(g) Liens in favor of municipalities to secure on-site or off-site
improvements or other dedications as approved by the Construction Agent and
the Agent (such approval by the Agent not to be unreasonably withheld or
delayed);
(h) Liens described in Schedule 3 attached to the Participation
Agreement;
(i) easements, rights-of-way, restrictions and zoning regulations,
including any easement agreement or other document affecting title to the
Property executed by the Owner Trustee (with the consent of the Agent, not
to be unreasonably withheld or delayed) at the request of or with the
consent of Lessee;
(j) Lessor Liens;
(k) all mitigation requirements and conditions applicable to the
Property under any zoning, subdivision map and other entitlement and land
use approvals now or hereafter granted for the development of the
Improvements or subdivision of the Land;
(l) the Ground Lease; and
Appendix-29
(m) minor defects or irregularities in title and other similar charges
or encumbrances not interfering in any material respect with the value,
ordinary operation, use or enjoyment of or ability to construct such
Property as approved by the Agent (such approval by the Agent not to be
unreasonably withheld or delayed).
"Person" shall mean any individual, corporation, partnership, limited
liability company, joint venture, association, joint stock company, trust,
unincorporated organization, governmental authority or any other entity.
"Plan" shall mean an Employee Benefit Plan.
"Plans and Specifications" shall mean, with respect to Improvements, the
plans and specifications for such Improvements to be constructed or already
existing, as such Plans and Specifications may be amended, modified or
supplemented from time to time in accordance with the terms of the Operative
Agreements.
"Potential Presumptive Event" shall have the meaning given to such term in
Section 8.10(c)(iii) of the Participation Agreement.
"Presumptive Default" shall have the meaning given to such term in Section
8.10(c)(ii) of the Participation Agreement.
"Presumptive Event of Default" shall have the meaning given to such term in
Section 8.10(c)(i) of the Participation Agreement.
"Prime Lending Rate" shall have the meaning given to such term in the
definition of ABR.
"Prior Liens" shall mean, for each Property, (a) as of the Property Closing
Date for such Property, the Permitted Liens referenced in clauses (a), (c), (d),
(h), (i) and (l) of the definition of Permitted Liens and (b) after the Property
Closing Date for such Property, (i) the Permitted Liens referenced in clauses in
(a), (b), (c), (g), (h), (i), (j), (k), (l) and (m) of the definition of
Permitted Liens and (ii) such other Permitted Liens which arise after the
perfection of the lien in favor of the applicable Financing Party evidenced by
the Security Documents but, nevertheless under applicable law, have priority
over such lien in favor of such Financing Party.
"Property" shall mean, with respect to each Permitted Facility that is (or
is to be) acquired, constructed and/or renovated pursuant to the terms of the
Operative Agreements, the Lessor's interest in the Land and each item of
Equipment and the various Improvements, in each case located on such Land,
including without limitation each Construction Period Property, each Property
subject to a Ground Lease and each Property for which the Basic Term has
commenced.
"Property Acquisition Cost" shall mean the cost to the Lessor to purchase
or enter into a Ground Lease for a Property on a Property Closing Date.
Appendix-30
"Property Closing Date" shall mean the date on which the Lessor purchases a
Property or, with respect to the first Advance, the date on which the Lessor
seeks reimbursement for Property previously purchased by the Lessor.
"Property Cost" shall mean with respect to a Property the aggregate amount
(and/or the various items and occurrences giving rise to such amounts) of the
Loan Property Cost plus the Holder Property Cost for such Property (as such
amounts shall be increased equally among all Properties respecting the Holder
Advances and the Loans extended from time to time to pay for the Transaction
Expenses, fees, expenses and other disbursements referenced in Sections 7.1(a)
and 7.1(b) and indemnity payments pursuant to Section 11.8, in each case of the
Participation Agreement and any additional amount pursuant to Section 18.1 of
the Lease).
"Purchase and Sale Agreement" shall mean that certain Amended, Restated and
Superseding Agreement of Purchase and Sale and Joint Escrow Instructions, dated
as of May 29, 1999, between the Seller and Franklin Resources, together with all
documents and instruments delivered or to be delivered thereunder.
"Purchase Option" shall have the meaning given to such term in Section 20.1
of the Lease.
"Rating" shall mean, at any date, the lower of the ratings then assigned by
S&P or Moody's to the unsecured, senior long-term debt of Franklin Resources,
Inc. (including any medium-term notes of Franklin Resources, Inc.). A Rating is
one of the following Ratings based upon the applicable rating from S&P or
Moody's:
Rating S&P Moody's
------ --- -------
Rating 1 AA- or above Aa3 or above
Rating 2 A+, A, A- A1, A2, A3
Rating 3 BBB+ Baa1
Rating 4 BBB Baa2
Rating 5 below BBB below Baa2
If any Rating shall be changed by Moody's or S&P, such change shall be effective
as of the date on which it is first announced by the applicable rating agency.
Any change in the Applicable Percentage due to a change in Rating shall apply
during the effective date of such change and end on the date immediately
preceding the effective date of the next such change. If at any time Franklin
Resources, Inc. is not rated, Rating 5 will apply.
"Real Estate Subsidiary" shall mean at any time, Franklin Properties, Inc.
or any other Subsidiary of the Guarantor principally engaged at such time in the
real estate investment and property management business or any Subsidiary of any
such Subsidiary.
"Refinancing Date" shall have the meaning given to such term in Section
8.9(b) of the Participation Agreement.
Appendix-31
"Register" shall have the meaning given to such term in Section 9.9 of the
Credit Agreement.
"Regulation D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System (or any successor), as the same may be modified and
supplemented and in effect from time to time.
"Regulation U" shall mean Regulation U of the Board of Governors of the
Federal Reserve System (or any successor), as the same may be modified and
supplemented and in effect from time to time.
"Regulation X" shall mean Regulation X of the Board of Governors of the
Federal Reserve System (or any successor), as the same may be modified and
supplemented and in effect from time to time.
"Release" shall mean any release, pumping, pouring, emptying, injecting,
escaping, leaching, dumping, seepage, spill, leak, flow, discharge, disposal or
emission of a Hazardous Substance.
"Renewal Term" shall have the meaning specified in Section 2.2 of the
Lease.
"Rent" shall mean, collectively, the Basic Rent and the Supplemental Rent,
in each case payable under the Lease.
"Rent Commencement Date" shall mean, regarding each Property, the
Completion Date.
"Reorganization" shall mean with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of Section 4241
of ERISA.
"Reportable Event" shall mean any of the events set forth in Section
4043(b) of ERISA, other than those events as to which the thirty day notice
period is waived under subsections .13, .14, .16, .18, .19 or .20 of PBGC Reg.
ss.2615.
"Requested Funds" shall mean any funds requested by the Lessee or the
Construction Agent, as applicable, in accordance with Section 5 of the
Participation Agreement.
"Requirement of Law" shall mean all Legal Requirements.
"Requisition" shall have the meaning specified in Section 4.2 of the
Participation Agreement.
"Responsible Officer" shall mean the Chairman or Vice Chairman of the Board
of Directors, the Chairman or Vice Chairman of the Executive Committee of the
Board of Directors, the President, any Senior Vice President or Executive Vice
Appendix-32
President, any Vice President, the Secretary, any Assistant Secretary, the
Treasurer, or any Assistant Treasurer, except that when used with respect to the
Trust Company or the Owner Trustee, "Responsible Officer" shall also include the
Cashier, any Assistant Cashier, any Trust Officer or Assistant Trust Officer,
the Controller and any Assistant Controller or any other officer of the Trust
Company or the Owner Trustee customarily performing functions similar to those
performed by any of the above designated officers and also means, with respect
to a particular corporate trust matter, any other officer to whom such matter is
referred because of his knowledge of and familiarity with the particular
subject.
"S&P" shall mean Standard and Poor's Ratings Services, a division of The
McGraw Hill Companies, Inc., and any successor thereto.
"Sale Date" shall have the meaning given to such term in Section 22.1(a) of
the Lease.
"Sale Notice" shall mean a notice given to the Lessor in connection with
the election by the Lessee of its Sale Option.
"Sale Option" shall have the meaning given to such term in Section 20.1 of
the Lease.
"Sale Proceeds Shortfall" shall mean the amount by which the proceeds of a
sale described in Section 22.1 of the Lease are less than the Limited Recourse
Amount with respect to the Properties to the extent it has been determined (in
accordance with the Appraisal Procedure) that the Fair Market Sales Value of the
Properties at the expiration of the term of the Lease has been reduced below the
Limited Recourse Amount as a result of a violation of Lessee's maintenance
obligations set forth in Sections 10.1(a) and (c) of the Lease.
"Scheduled Interest Payment Date" shall mean (a) as to any Eurodollar Loan
or Eurodollar Holder Advance, the last day of the Interest Period applicable to
such Eurodollar Loan or Eurodollar Holder Advance (and, in the case of any
Eurodollar Loan or Eurodollar Holder Advance having an Interest Period of six
(6) months, the three (3) month anniversary of the first day of such Interest
Period), (b) as to any ABR Loan or any ABR Holder Advance, the fifteenth day of
each month, unless such day is not a Business Day and in such case on the next
occurring Business Day and (c) as to all Loans and Holder Advances, the date of
any voluntary or involuntary payment, prepayment, return or redemption, and the
Maturity Date or the Expiration Date, as the case may be.
"Secured Parties" shall have the meaning given to such term in the Security
Agreement.
"Securities Act" shall mean the Securities Act of 1933, as amended,
together with the rules and regulations promulgated thereunder.
"Security Agreement" shall mean the Security Agreement dated on or about
the Initial Closing Date between the Borrower and the Agent, for the benefit of
the Secured Parties, and accepted and agreed to by the Lessee.
Appendix-33
"Security Documents" shall mean the collective reference to the Security
Agreement, the Mortgage Instruments, (to the extent the Lease is construed as a
security instrument) the Lease, the UCC Financing Statements and all other
security documents hereafter delivered to the Agent granting a lien on any asset
or assets of any Person to secure the obligations and liabilities of the
Borrower under the Credit Agreement and/or under any of the other Credit
Documents or to secure any guarantee of any such obligations and liabilities.
"Seller" shall mean PW Acquisitions IV, LLC, a Delaware limited liability
company.
"Short-Term Facility" shall mean the 364 Day Facility Credit Agreement
dated as of June 14, 1999 among the Guarantor, the several banks and other
financial institutions from time to time parties thereto, The Bank of New York,
Bank of America, N.A. (formerly Bank of America National Trust and Savings
Association) and The Chase Manhattan Bank, as co-agents for the lenders
thereunder and The Chase Manhattan Bank, as administrative agent for the lenders
thereunder and any replacement credit facility.
"Single Employer Plan" shall mean any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan.
"Soft Costs" shall mean all costs which are reasonably incurred in relation
to the acquisition, development, installation, construction, improvement and
testing of the Properties other than Hard Costs, including without limitation
the following (whether incurred by Lessee, Lessor or Agent): arrangement fees,
structuring fees, administrative fees, legal fees, upfront fees, fees and
expenses related to appraisals, title examinations, title insurance, document
recordation, surveys, environmental site assessments, geotechnical soil
investigations and similar costs and professional fees customarily associated
with a real estate closing, the Lender Unused Fee, the Holder Unused Fee, fees
and expenses of the Owner Trustee payable or reimbursable under the Operative
Agreements and costs and expenses incurred pursuant to Sections 7.1(a), 7.1(b),
7.3(a) and 7.3(b) of the Participation Agreement, architectural fees, design
fees, engineering fees and fees and costs paid in connection with obtaining
project permits and approvals required by Governmental Authorities.
"Subsidiary" shall mean, as to any Person, at any time of determination, a
corporation, partnership or other entity (other than any Fund or any other
investment company or similar investment entity existing under foreign law
substantially equivalently to an investment company) of which shares of stock or
other ownership interests having ordinary voting power (other than stock or such
other ownership interests having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other managers of
such corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries or Subsidiaries, or both, by such Person.
"Supplemental Amounts" shall have the meaning given to such term in Section
9.18 of the Credit Agreement.
Appendix-34
"Supplemental Rent" shall mean all amounts, liabilities and obligations
(other than Basic Rent) which the Lessee assumes or agrees to pay to the Lessor,
the Trust Company, the Holders, the Agent, the Lenders or any other Person under
the Lease or under any of the other Operative Agreements including without
limitation payments of the Termination Value and the Maximum Residual Guarantee
Amount and all indemnification amounts, liabilities and obligations.
"Surplus Land" shall have the meaning given to such term in Section 8.8(b)
of the Participation Agreement.
"Taxes" shall have the meaning specified in the definition of
"Impositions".
"Term" shall mean the Basic Term and each Renewal Term, if any.
"Termination Date" shall have the meaning specified in Section 16.2(a) of
the Lease.
"Termination Event" shall mean (a) with respect to any Pension Plan, the
occurrence of a Reportable Event or an event described in Section 4062(e) of
ERISA, (b) the withdrawal of any Credit Party or any ERISA Affiliate from a
Multiple Employer Plan during a plan year in which it was a substantial employer
(as such term is defined in Section 4001(a)(2) of ERISA), or the termination of
a Multiple Employer Plan, (c) the distribution of a notice of intent to
terminate a Plan or Multiemployer Plan pursuant to Section 4041(a)(2) or 4041A
of ERISA, (d) the institution of proceedings to terminate a Plan or
Multiemployer Plan by the PBGC under Section 4042 of ERISA, (e) any other event
or condition which might constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan or
Multiemployer Plan, or (f) the complete or partial withdrawal of any Credit
Party or any ERISA Affiliate from a Multiemployer Plan.
"Termination Notice" shall have the meaning specified in Section 16.1 of
the Lease.
"Termination Value" shall mean the sum of (a) either (i) with respect to
all Properties, an amount equal to the aggregate outstanding Property Cost for
all the Properties, in each case as of the last occurring Payment Date, or (ii)
with respect to a particular Property, an amount equal to the Property Cost
allocable to such Property, plus (b) respecting the amounts described in each of
the foregoing subclause (i) or (ii), as applicable, any and all accrued but
unpaid interest on the Loans and any and all Holder Yield on the Holder Advances
related to the applicable Property Cost, plus (c) to the extent the same is not
duplicative of the amounts payable under clause (b) above, all other Rent and
other amounts then due and payable or accrued under the Agency Agreement, Lease
and/or under any other Operative Agreement (including without limitation amounts
under Sections 11.1 and 11.2 of the Participation Agreement and all costs and
expenses referred to in clause FIRST of Section 22.2 of the Lease).
"Tranche A Commitments" shall mean the several obligations of the Tranche A
Lenders to make the Tranche A Loans to the Borrower in an aggregate principal
amount at any one (1) time outstanding not to exceed the aggregate of the
amounts set forth opposite each Tranche A Lender's name on Schedule 2.1 to the
Credit Agreement, as such amounts may be increased or reduced from time to time
Appendix-35
in accordance with the provisions of the Operative Agreements; provided, no
Tranche A Lender shall be obligated to make Tranche A Loans in excess of such
Tranche A Lender's share of the Tranche A Commitments as set forth adjacent to
such Tranche A Lender's name on Schedule 2.1 to the Credit Agreement.
"Tranche A Lenders" shall mean the several banks and other financial
institutions from time to time party to the Credit Agreement that commit to make
the Tranche A Loans.
"Tranche A Loans" shall mean the Loans made pursuant to the Tranche A
Commitments.
"Tranche A Note" shall have the meaning given to it in Section 2.2 of the
Credit Agreement.
"Tranche B Commitments" shall mean the several obligations of the Tranche B
Lenders to make the Tranche B Loans to the Borrower in an aggregate principal
amount at any one (1) time outstanding not to exceed the aggregate of the
amounts set forth opposite each Tranche B Lender's name on Schedule 2.1 to the
Credit Agreement, as such amounts may be increased or reduced from time to time
in accordance with the provisions of the Operative Agreements; provided, no
Tranche B Lender shall be obligated to make Tranche B Loans in excess of such
Tranche B Lender's share of the Tranche B Commitments as set forth adjacent to
such Tranche B Lender's name on Schedule 2.1 to the Credit Agreement.
"Tranche B Lenders" shall mean the several banks and other financial
institutions from time to time party to the Credit Agreement that commit to make
the Tranche B Loans.
"Tranche B Loan" shall mean the Loans made pursuant to the Tranche B
Commitments.
"Tranche B Note" shall have the meaning given to it in Section 2.2 of the
Credit Agreement.
"Transaction Expenses" shall mean all Soft Costs and all other costs and
expenses incurred (whether by Lessee, Lessor, the Agent and, to the extent
expressly contemplated pursuant to any applicable provision of the Operative
Agreements, one of the other Financing Parties) in connection with the
preparation, execution and delivery of the Operative Agreements and the
transactions contemplated by the Operative Agreements including without
limitation all costs and expenses described in Section 7.1 of the Participation
Agreement and the following:
(a) the reasonable fees, out-of-pocket expenses and disbursements of
counsel in negotiating the terms of the Operative Agreements and the other
transaction documents, preparing for the closings under, and rendering
opinions in connection with, such transactions and in rendering other
services customary for counsel representing parties to transactions of the
types involved in the transactions contemplated by the Operative
Agreements;
Appendix-36
(b) the reasonable fees, out-of-pocket expenses and disbursements of
accountants for any Credit Party in connection with the transaction
contemplated by the Operative Agreements;
(c) any and all other reasonable fees, charges or other amounts
payable to the Lenders, the Agent, the Holders, the Owner Trustee or any
broker which arise under any of the Operative Agreements;
(d) any other reasonable fee, out-of-pocket expenses, disbursement or
cost of any party to the Operative Agreements or any of the other
transaction documents; and
(e) any and all Taxes and fees incurred in recording or filing any
Operative Agreement or any other transaction document, any deed,
declaration, mortgage, security agreement, notice or financing statement
with any public office, registry or governmental agency in connection with
the transactions contemplated by the Operative Agreements.
"Tribunal" shall mean any state, commonwealth, federal, foreign,
territorial, or other court or government body, subdivision agency, department,
commission, board, bureau or instrumentality of a governmental body.
"Trust" shall mean the FRI Trust 1999-1.
"Trust Agreement" shall mean the Amended, Restated and Replacement Trust
Agreement dated on or about the Initial Closing Date between the Holders and the
Owner Trustee.
"Trust Company" shall mean First Security Bank, National Association, in
its individual capacity, and any successor owner trustee under the Trust
Agreement in its individual capacity.
"Trust Estate" shall have the meaning specified in Section 2.2(a) of the
Trust Agreement.
"Type" shall mean, as to any Loan, whether it is an ABR Loan or a
Eurodollar Loan.
"U.S. Person" shall have the meaning specified in Section 11.2(e) of the
Participation Agreement.
"U.S. Taxes" shall have the meaning specified in Section 11.2(e) of the
Participation Agreement.
"UCC Financing Statements" shall mean collectively the Lender Financing
Statements and the Lessor Financing Statements.
"Unanimous Vote Matters" shall have the meaning given it in Section 12.4 of
the Participation Agreement.
Appendix-37
"Unfunded Liability" shall mean, with respect to any Plan, at any time, the
amount (if any) by which (a) the present value of all benefits under such Plan
exceeds (b) the fair market value of all Plan assets allocable to such benefits,
all determined as of the then most recent valuation date for such Plan, but only
to the extent that such excess represents a potential liability of the Company
or any member of the Controlled Group to the PBGC or such Plan under Title IV of
ERISA.
"Uniform Commercial Code" and "UCC" shall mean the Uniform Commercial Code
as in effect in any applicable jurisdiction.
"United States Bankruptcy Code" shall mean the Bankruptcy Code.
"Unqualified Lessee Obligation" shall have the meaning given to such term
in Section 8.10(c)(iv) of the Participation Agreement.
"Unused Fees" shall mean, collectively, the Holder Unused Fee and the
Lender Unused Fee.
"Unused Fee Payment Date" shall mean December 31, 1999 and thereafter the
last Business Day of each March, June, September and December and the last
Business Day of the Commitment Period, or such earlier date as the Commitments
shall terminate as provided in the Credit Agreement or the Holder Commitments
shall terminate as provided in the Trust Agreement.
"Wholly-Owned Entity" shall mean a Person all of the shares of capital
stock or other ownership interest of which are owned by Franklin Resources, Inc.
and/or one of its wholly-owned Subsidiaries or other wholly-owned entities.
"Withholdings" shall have the meaning specified in Section 11.2(e) of the
Participation Agreement.
"Work" shall mean the furnishing of labor, materials, components,
furniture, furnishings, fixtures, appliances, machinery, equipment, tools,
power, water, fuel, lubricants, supplies, goods and/or services with respect to
any Property.
Appendix-38
- --------------------------------------------------------------------------------
AMENDED, RESTATED AND REPLACEMENT TRUST AGREEMENT
Dated as of
September 27, 1999
between
The Several Holders
from Time to Time Parties Hereto,
as the Holders,
and
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
as the Owner Trustee
- --------------------------------------------------------------------------------
FRI TRUST 1999-1
TABLE OF CONTENTS
Page
ARTICLE IA AMENDED, RESTATED AND REPLACEMENT TRUST AGREEMENT.................1
ARTICLE I DEFINITIONS........................................................2
SECTION 1.1 Definitions................................................2
SECTION 1.2 Interpretation.............................................2
ARTICLE II AUTHORITY TO EXECUTE AND PERFORM VARIOUS DOCUMENTS; DECLARATION
OF TRUST BY TRUST COMPANY.........................................2
SECTION 2.1 Authority To Execute and Perform Various Documents.........2
SECTION 2.2 Declaration of Trust by Trust Company......................3
ARTICLE III CONTRIBUTIONS AND PAYMENTS.......................................3
SECTION 3.1 Procedure for Holder Advances; Certificates................3
SECTION 3.2 Holder Yield...............................................5
SECTION 3.3 Scheduled Return of Holder Advances........................5
SECTION 3.4 Early Return of Advances...................................5
SECTION 3.5 Payments from Trust Estate Only............................6
SECTION 3.6 Method of Payment..........................................6
SECTION 3.7 Computation of Yield.......................................7
SECTION 3.8 Conversion and Continuation Options........................7
SECTION 3.9 Notice of Amounts Payable..................................8
ARTICLE IV COLLECTIONS AND DISTRIBUTIONS.....................................9
SECTION 4.1 Collections and Remittances by the Owner Trustee...........9
SECTION 4.2 Priority of Distributions..................................9
SECTION 4.3 Excepted Payments.........................................10
SECTION 4.4 Distributions after Default...............................10
ARTICLE V DUTIES OF THE OWNER TRUSTEE.......................................10
SECTION 5.1 Notice of Certain Events..................................10
SECTION 5.2 Action Upon Instructions..................................10
SECTION 5.3 Indemnification...........................................11
SECTION 5.4 No Duties Except as Specified In Trust Agreement or
Instructions..............................................11
SECTION 5.5 No Action Except Under Specified Documents or
Instructions..............................................11
SECTION 5.6 Absence of Duties.........................................12
ARTICLE VI THE OWNER TRUSTEE................................................12
SECTION 6.1 Acceptance of Trust and Duties............................12
SECTION 6.2 Furnishing of Documents...................................13
SECTION 6.3 No Representations or Warranties as to the Properties
or Operative Agreements...................................13
SECTION 6.4 No Segregation of Moneys; No Interest.....................13
SECTION 6.5 Reliance; Advice of Counsel...............................14
SECTION 6.6 Liability With Respect to Documents.......................14
SECTION 6.7 Not Acting In Individual Capacity.........................14
SECTION 6.8 Books and Records; Tax Returns............................15
ARTICLE VII INDEMNIFICATION OF THE OWNER TRUSTEE............................15
SECTION 7.1 Indemnification Generally.................................15
SECTION 7.2 Compensation and Expenses.................................16
ARTICLE VIII TERMINATION OF TRUST AGREEMENT.................................16
i
SECTION 8.1 Termination of Trust Agreement............................16
SECTION 8.2 Termination at Option of the Holders......................16
SECTION 8.3 Termination at Option of the Owner Trustee................17
SECTION 8.4 Actions by the Owner Trustee Upon Termination.............17
ARTICLE IX SUCCESSOR OWNER TRUSTEES, CO-OWNER TRUSTEES AND SEPARATE
OWNER TRUSTEES...................................................17
SECTION 9.1 Resignation of the Owner Trustee; Appointment of
Successor.................................................17
SECTION 9.2 Co-Trustees and Separate Trustees.........................18
SECTION 9.3 Notice....................................................21
ARTICLE X AMENDMENTS........................................................22
SECTION 10.1 Amendments...........................................22
SECTION 10.2 Limitation on Amendments.............................22
ARTICLE XI MISCELLANEOUS....................................................22
SECTION 11.1 No Legal Title to Trust Estate in the Holders........22
SECTION 11.2 Sale of a Property by the Owner Trustee is Binding...22
SECTION 11.3 Limitations on Rights of Others......................22
SECTION 11.4 Notices..............................................23
SECTION 11.5 Severability.........................................23
SECTION 11.6 Limitation on the Holders' Liability.................23
SECTION 11.7 Separate Counterparts................................23
SECTION 11.8 Successors and Assigns...............................23
SECTION 11.9 Headings.............................................25
SECTION 11.10 Governing Law........................................25
SECTION 11.11 Performance by the Holders...........................25
SECTION 11.12 Conflict with Operative Agreements...................25
SECTION 11.13 No Implied Waiver....................................25
SECTION 11.14 Submission to Jurisdiction; Venue....................26
SECTION 11.15 Waivers of Jury Trial................................26
Schedule I - Holder Commitments
EXHIBIT A - Form of Holder Certificate
EXHIBIT B - Form of Assignment and Acceptance
ii
AMENDED, RESTATED AND REPLACEMENT TRUST AGREEMENT
THIS AMENDED, RESTATED AND REPLACEMENT TRUST AGREEMENT, dated as of
September 27, 1999 (as amended, modified, extended, supplemented, restated
and/or replaced from time to time, the "Trust Agreement"), is among the several
banks and other financial institutions from time to time parties to this Trust
Agreement (individually, each of the foregoing may be referred to as a "Holder,"
and collectively, the foregoing together with such other persons and entities
that become holders hereunder, the "Holders"), and FIRST SECURITY BANK, NATIONAL
ASSOCIATION, in its individual capacity ("Trust Company"), and in its capacity
as owner trustee hereunder, together with its successors and assigns (the "Owner
Trustee").
WHEREAS, the parties hereto intend with this Trust Agreement to amend,
restate and replace that certain Trust Agreement dated as of July 1, 1999 (the
"Original Trust Agreement") between Bank of America National Trust and Savings
Association and First Security Bank, National Association.
WHEREAS, in order to provide a portion of the funds for carrying out the
other transactions contemplated by the Operative Agreements, each Holder will
make its respective Holder Advances pursuant to this Trust Agreement and the
Participation Agreement (as defined below);
WHEREAS, the Holders desire to provide for the Trust to exist for the
purpose of (a) developing, acquiring, installing, constructing and testing
various Properties and leasing such Properties to Lessee, (b) carrying out
certain transactions contemplated by the Operative Agreements and (c) such other
purposes as are provided for herein; and
WHEREAS, Trust Company is willing to act as trustee hereunder and to accept
the trust created hereby (the "Trust").
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained and of other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE IA
AMENDED, RESTATED AND REPLACEMENT TRUST AGREEMENT
This Trust Agreement amends, restates, replaces, cancels and supersedes the
Original Trust Agreement. Bank of America, N.A., as successor to Bank of America
National Trust and Savings Association, hereby agrees to transfer and convey to
each Holder (on a ratable basis determined with respect to the Holder
Commitments of each such Holder) all the right, title and interest of Bank of
America, N.A., as successor to Bank of America National Trust and Savings
Association, in and to the Trust Estate and otherwise pursuant to the Original
Trust Agreement, and each Holder accepts and assumes the above-referenced
transfer and conveyance.
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions.
For purposes of this Trust Agreement (including without limitation the
"WHEREAS" clauses set forth above), capitalized terms used in this Trust
Agreement and not otherwise defined herein shall have the meanings assigned to
them in Appendix A to that certain Participation Agreement dated as of September
27, 1999 (as amended, modified, extended, supplemented, restated and/or replaced
from time to time in accordance with the applicable provisions thereof, the
"Participation Agreement") among Franklin Templeton Corporate Services, Inc.,
Franklin Resources, Inc., as the Guarantor, the Owner Trustee, the various banks
and other lending institutions which are parties thereto from time to time, as
the Holders, the various banks and other lending institutions which are parties
thereto from time to time, as the Lenders, and Bank of America, N.A., as agent
for the Lenders and respecting the Security Documents, as the agent for the
Lenders and the Holders, to the extent of their interests. Unless otherwise
indicated, references in this Trust Agreement to articles, sections, paragraphs,
clauses, appendices, schedules and exhibits are to the same contained in this
Trust Agreement.
SECTION 1.2 Interpretation.
The rules of usage set forth in Appendix A to the Participation Agreement
shall apply to this Trust Agreement.
ARTICLE II
AUTHORITY TO EXECUTE AND PERFORM VARIOUS DOCUMENTS;
DECLARATION OF TRUST BY TRUST COMPANY
SECTION 2.1 Authority To Execute and Perform Various Documents.
Each Holder hereby authorizes and directs the Owner Trustee (a) to execute
and deliver, as trustee for and on behalf of each such Holder, each Operative
Agreement to which the Owner Trustee is a party and any other agreements,
instruments, certificates or documents related to the transactions contemplated
hereby to which the Owner Trustee is a party, (b) to take whatever action shall
be required to be taken by the Owner Trustee by the terms of, and exercise its
rights and perform its duties under, each of the documents, agreements,
instruments and certificates referred to in clause (a) above as set forth in
such documents, agreements and certificates, and (c) subject to the terms of
this Trust Agreement, to take such other action in connection with the foregoing
as the Holders may from time to time direct.
2
SECTION 2.2 Declaration of Trust by Trust Company.
(a) Trust Company hereby declares that it will hold all estate, right,
title and interest of the Owner Trustee in, to and under each Property,
each Holder Advance, the Operative Agreements, any other property
contributed by any Holder and any and all other property or assets from
time to time of the Trust, including without limitation all amounts of
Rent, insurance proceeds and condemnation awards, indemnity or other
payments of any kind (collectively, the "Trust Estate") as the Owner
Trustee upon the trusts set forth herein and for the use and benefit of
each Holder, subject, however, to the provisions of the Credit Agreement
and the Security Documents. The name of the Trust shall be "FRI Trust
1999-1"
(b) The purpose of the Trust is to hold title to the Trust Estate for
the benefit of the Holders and to engage in activities ancillary and
incidental thereto as the Holders shall determine to be desirable,
including the acquisition and/or development of assets other than the
Property if determined to be appropriate by the decision of all the Holders
and consented to by all the Lenders. Except in connection with the
foregoing, the Owner Trustee shall not (i) engage in any business activity,
(ii) have any property, rights or interest, whether real or personal,
tangible or intangible, (iii) incur any legal liability or obligation,
whether fixed or contingent, matured or unmatured, other than in the normal
course of the administration of the Trust or (iv) subject any of its
property or assets to any mortgage, Lien, security interest or other claim
or encumbrance, other than in favor of the Lenders or the Holders pursuant
to the provisions of the Operative Agreements and this Trust Agreement.
THIS TRUST IS NOT A BUSINESS TRUST. THE SOLE PURPOSE OF THE TRUST IS TO
ACQUIRE AND HOLD TITLE TO THE TRUST ESTATE, SUBJECT TO THE RIGHTS OF THE
LENDERS, FOR THE BENEFIT OF THE HOLDERS. THE OWNER TRUSTEE MAY NOT TRANSACT
BUSINESS OF ANY KIND WITH RESPECT TO ANY PROPERTY COMPRISING THE TRUST
ESTATE NOR SHALL THIS AGREEMENT BE DEEMED TO BE, OR CREATE OR EVIDENCE THE
EXISTENCE OF, A CORPORATION DE FACTO OR DE JURE, OR A MASSACHUSETTS TRUST,
OR ANY OTHER TYPE OF BUSINESS TRUST, ASSOCIATION OR JOINT VENTURE BETWEEN
THE OWNER TRUSTEE, THE HOLDERS, THE AGENT AND THE LENDERS.
ARTICLE III
CONTRIBUTIONS AND PAYMENTS
SECTION 3.1 Procedure for Holder Advances; Certificates.
(a) Upon receipt from the Construction Agent by the Agent of a
Requisition, and subject to the terms and conditions of the Participation
Agreement, the Agent shall request from each Holder its pro rata share of
any Advance and each Holder shall make its pro rata share of any Advance
under the Holder Commitment of such Holder, as set forth on Schedule 1
hereto, on each date Advances are made pursuant to Section 5 of the
Participation Agreement. The Agent may request an Advance under the Holder
3
Commitments during the Commitment Period on any date that an Advance may be
requested pursuant to the terms of Section 5.2(a) of the Participation
Agreement, provided, that the Agent shall give each Holder irrevocable
notice (which notice must be received by such Holder no less than three (3)
Business Days prior to the requested date of the Holder Advance) specifying
(i) the amount to be advanced by such Holder (which on any date shall not
be in excess of the then Available Holder Commitment of such Holder), (ii)
the requested date of advance, (iii) whether the Holder Advance is to be a
Eurodollar Holder Advance or an ABR Holder Advance or a combination
thereof, (iv) if the Holder Advance is to be a combination of Eurodollar
Holder Advances and ABR Holder Advances, the respective amounts of each
type of Holder Advance and (v) the Interest Period applicable to any
Eurodollar Holder Advances.
(b) Upon receipt of any such notice delivered pursuant to Section
3.1(a), each Holder shall make the amount of its Advance available to the
Agent for the account of the Owner Trustee at the office of the Agent
referred to in Section 12.2 of the Participation Agreement (or at such
other address as may be identified by the Agent from time to time) prior to
12:00 Noon, New York City time on the date requested by the Construction
Agent in funds immediately available to the Owner Trustee.
(c) Holder Yield accruing on each Holder Advance during the
Construction Period with respect to any Property shall, subject to the
limitations set forth in Section 5.1(b) of the Participation Agreement, be
added to the amount of the Holder Advance on the relevant Scheduled
Interest Payment Date. On such Scheduled Interest Payment Date, the Holder
Property Cost and Holder Construction Property Cost shall be increased by
the amount of Holder Yield added to the Holder Advance.
(d) The Holder Advances made by each Holder to the Trust Estate shall
be evidenced by a Certificate of the Owner Trustee, substantially in the
form of Exhibit A hereto, issued in the name of the Holder and in an amount
equal to the Holder Commitment of such Holder. Each Certificate shall (i)
be dated on or about the Initial Closing Date, (ii) be stated to mature on
the Maturity Date and (iii) bear a yield on the unpaid Holder Amount
thereof from time to time outstanding at the Holder Yield.
(e) To the extent that the Owner Trustee, in its capacity as Borrower
under the Credit Agreement, shall have elected to terminate or reduce the
amount of the Commitments pursuant to Section 2.5(a) of the Credit
Agreement in compliance with Sections 9.1 and 9.2 of the Participation
Agreement, a pro rata election shall be deemed to have been made with
respect to the Holder Commitments. The Holder Commitments respecting any
particular Property shall automatically be reduced to zero (0) upon the
occurrence of the Rent Commencement Date respecting such Property. On any
date on which the Loans shall be declared due and payable as a result of a
Credit Agreement Event of Default, the Holder Commitments shall
automatically be reduced to zero (0) and the Owner Trustee shall prepay the
Certificates in full for the outstanding Holder Amount, together with
accrued but unpaid Holder Yield thereon and all other amounts owing under
the Certificates.
4
SECTION 3.2 Holder Yield.
(a) Holder Advances shall bear yield payable by the Owner Trustee and
calculated at the rate of Holder Yield applicable from time to time. The
Owner Trustee shall pay to each Holder, from the Trust Estate, its pro rata
portion of Holder Yield on Holder Advances made hereunder. Payment of
Holder Yield to each Holder shall be made in arrears on each Scheduled
Interest Payment Date occurring after the Rent Commencement Date or as
otherwise provided herein or in Section 2.6 of the Credit Agreement or
Section 8.7 of the Participation Agreement.
(b) If (i) all or a portion of Holder Yield shall not be received by
the Holders when due (whether at the stated maturity, by acceleration or
otherwise) or (ii) (A) a replacement Construction Agent is hired in
accordance with the provisions of the Agency Agreement, (B) Completion of
all Properties has not occurred on prior to the Construction Period
Termination Date except as a result of a Force Majeure Event or (C) the
cost of any Property exceeds the original Construction Budget therefor (or
the applicable Construction Budget modified in accordance with the
Operative Agreements) in each case as previously delivered to the Agent,
such overdue amount (in the case of Section 3.2(b)(i)) or all Holder
Advances, Holder Yield and all other amounts payable hereunder (in the case
of Section 3.2(b)(ii)) shall, without limiting the rights of the Holders
hereunder or under any Operative Agreement, bear interest at the Holder
Overdue Rate, in each case from the date of nonpayment until (x) paid
(whether after or before judgment) (in the case of Section 3.2(b)(i)), (y)
Completion of all Properties (in the case of Section 3.2(b)(ii)) or (z) all
sums due and all obligations to be performed, in each case on account of
the Company Obligations, are paid and performed in full (in the case of
Sections 3.2(b)(i) and 3.2(b)(ii)). All such amounts referenced in this
Section 3.2(b) shall be paid upon demand.
SECTION 3.3 Scheduled Return of Holder Advances.
The outstanding Holder Amount shall be due in full on the Expiration Date.
On the Expiration Date, subject to the terms of the Participation Agreement, the
Owner Trustee shall pay to each Holder its portion of the aggregate Holder
Amount then due, together with all accrued but unpaid Holder Yield and all other
amounts due to such Holder from the Owner Trustee hereunder or under the
Operative Agreements.
SECTION 3.4 Early Return of Advances.
(a) Subject to Sections 9.2, 11.2(e), 11.3 and 11.4 of the
Participation Agreement, the Owner Trustee may at any time and from time to
time prepay the Certificates, in whole or in part, without premium or
penalty, upon at least three (3) Business Days' irrevocable notice to the
Agent, on behalf of the Holders, specifying the date and amount of
prepayment and whether the prepayment is of ABR Holder Advances or
Eurodollar Holder Advances or a combination thereof, and, if a combination
thereof, the amount allocable to each. Upon receipt of such notice, the
Agent shall promptly notify the Holders thereof. If such notice is given,
the amount specified in such notice shall be due and payable on the date
5
specified therein. Amounts prepaid shall not be readvanced, except as set
forth in Section 5.2(d) of the Participation Agreement.
(b) If on any date the Agent or the Owner Trustee shall receive any
payment in respect of (i) any Casualty, Condemnation or Environmental
Violation pursuant to Sections 15.1(a) or 15.1(g) or Article XVI of the
Lease (excluding any payments in respect thereof which are payable to
Lessee in accordance with the Lease), or (ii) the Termination Value of any
Property in connection with the delivery of a Termination Notice pursuant
to Article XVI of the Lease, or (iii) the Termination Value of any Property
or such other applicable amount in connection with the exercise of a
Purchase Option or Sale Option under Articles XX and XXII of the Lease or
the exercise of the option of the Owner Trustee to transfer the Properties
to the Lessee pursuant to Section 20.3 of the Lease or (iv) any payment
required to be made or elected to be made by the Construction Agent to the
Owner Trustee pursuant to the Agency Agreement, then in each case, the
Holders shall receive proceeds in accordance with Section 8.7(b) of the
Participation Agreement.
(c) Each prepayment of the Certificates pursuant to Section 3.4(a)
shall be allocated to reduce the respective Holder Property Costs of all
Properties pro rata according to the Holder Property Costs of such
Properties immediately before giving effect to such prepayment. Each
prepayment of the Certificates pursuant to Section 3.4(b) shall be
allocated to reduce the Holder Property Cost of the Property or Properties
subject to the respective Casualty, Condemnation, Environmental Violation,
termination, purchase, transfer or other circumstance giving rise to such
prepayment.
SECTION 3.5 Payments from Trust Estate Only.
All payments to be made by the Owner Trustee under this Trust Agreement
(including without limitation any payments pursuant to Section 11.4 of the
Participation Agreement) shall be made only from the income and proceeds from
the Trust Estate and only to the extent that the Owner Trustee shall have
received income or proceeds from the Trust Estate to make such payments in
accordance with the terms hereof, except as specifically provided in Section
6.1. Each Holder agrees that it will look solely to the income and proceeds from
the Trust Estate to the extent available for payment as herein provided and
that, except as specifically provided in any Operative Agreement, Trust Company
shall not be liable to any Holder for any amounts payable under this Trust
Agreement Nothing contained in this Section 3.5 shall be interpreted so as to
limit the provisions of Section 12.9 of the Participation Agreement.
SECTION 3.6 Method of Payment.
All amounts payable to a Holder pursuant to this Trust Agreement shall be
paid or caused to be paid by the Owner Trustee to, or for the account of, such
Holder, or its nominee, by transferring such amount in immediately available
funds to a bank institution or banking institutions with bank wire transfer
facilities for the account of such Holder or as otherwise instructed in writing
from time to time by such Holder.
6
SECTION 3.7 Computation of Yield.
(a) Whenever it is calculated on the basis of the ABR, Holder Yield
shall be calculated on the basis of a year of three hundred sixty-five
(365) days (or three hundred sixty-six (366) days, as the case may be) for
the actual days elapsed; and, otherwise, Holder Yield shall be calculated
on the basis of a year of three hundred sixty (360) days for the actual
days elapsed. Any change in the Holder Yield resulting from a change in the
ABR or the Eurocurrency Reserve Requirements shall become effective as of
the opening of business on the day on which such change becomes effective.
(b) Pursuant to Section 12.12 of the Participation Agreement, the
calculation of Holder Yield under this Section 3.7 shall be made by the
Agent. Each determination of an interest rate by the Agent shall be
conclusive and binding on the Owner Trustee and the Holders in the absence
of manifest error.
(c) If the Eurodollar Rate cannot be determined by the Agent in the
manner specified in the definition of the term "Eurodollar Rate", the Owner
Trustee shall give or cause to be given telecopy or telephonic notice
thereof to the Holders as soon as practicable after receipt of same from
the Agent. Commencing on the Scheduled Interest Payment Date next occurring
after the delivery of such notice and continuing until such time as the
Eurodollar Rate can be determined by the Agent in the manner specified in
the definition of such term, all outstanding Holder Advances shall bear a
yield based on the ABR. Until such time as the Eurodollar Rate can be
determined by the Agent in the manner specified in the definition of such
term, no further Eurodollar Holder Advances shall be made or shall be
continued as such at the end of the then current Interest Period nor shall
the Owner Trustee have the right to convert ABR Holder Advances to
Eurodollar Holder Advances.
SECTION 3.8 Conversion and Continuation Options.
(a) Subject to Section 9.2 of the Participation Agreement, the Owner
Trustee may elect from time to time to convert Eurodollar Holder Advances
to ABR Holder Advances by giving the Agent (on behalf of the Holders) at
least three (3) Business Days' prior irrevocable notice of such election,
provided, that any such conversion of Eurodollar Holder Advances may only
be made on the last day of an Interest Period with respect thereto, and
provided, further, to the extent an Event of Default has occurred and is
continuing on the last day of any such Interest Period, the applicable
Eurodollar Holder Advance shall automatically be converted to an ABR Holder
Advance. The Owner Trustee may elect from time to time to convert ABR
Holder Advances to Eurodollar Holder Advances by giving the Agent (on
behalf of the Holders) at least three (3) Business Days' prior irrevocable
notice of such election. Any such notice of conversion to Eurodollar Holder
Advances shall specify the length of the initial Interest Period or
Interest Periods therefor. Upon receipt of any such notice, the Agent (on
behalf of the Holders) shall promptly notify each Holder thereof. All or
any part of outstanding Eurodollar Holder Advances or ABR Holder Advances
may be converted as provided herein, provided, that (i) no ABR Holder
Advance may be converted into a Eurodollar Holder Advance after the date
7
that is one (1) month prior to the Maturity Date and (ii) such notice of
conversion shall contain an election by the Owner Trustee of an Interest
Period for such Eurodollar Holder Advance to be created by such conversion
and such Interest Period shall be in accordance with the terms of the
definition of the term "Interest Period" including without limitation
subparagraphs (A) through (D) thereof.
(b) Any Eurodollar Holder Advance may be continued as such upon the
expiration of the then current Interest Period with respect thereto by the
Owner Trustee giving irrevocable notice to the Agent (on behalf of the
Holders) in accordance with the notice provisions for the conversion of ABR
Holder Advances to Eurodollar Holder Advances set forth herein and the
applicable provisions of the term "Interest Period" of the length of the
next Interest Period to be applicable to such Eurodollar Holder Advance,
provided, that no Eurodollar Holder Advance may be continued as such after
the date that is one (1) month prior to the Maturity Date, provided,
further, no Eurodollar Holder Advance may be continued as such if an Event
of Default has occurred and is continuing as of the last day of the
Interest Period for such Eurodollar Holder Advance, and provided, further,
that if the Owner Trustee shall fail to give any required notice as
described above or if such continuation is not permitted pursuant to the
preceding proviso or otherwise, such Advance shall automatically be
converted to an ABR Advance on the last day of such then expiring Interest
Period.
SECTION 3.9 Notice of Amounts Payable.
(a) In the event that any Holder becomes aware that any amounts are or
will be owed to it pursuant to Sections 11.2(e) or 11.3 of the
Participation Agreement or that it is unable to make Holder Advances which
bear a yield based on the Eurodollar Rate plus the Applicable Percentage
for Eurodollar Holder Advances, then it shall promptly notify the Owner
Trustee thereof and, as soon as possible thereafter, such Holder shall
submit to the Owner Trustee a certificate indicating the amount owing to it
and the calculation thereof. The amounts set forth in such certificate
shall be prima facie evidence of the obligations of the Owner Trustee
hereunder.
(b) In the event that any Holder delivers to the Owner Trustee a
certificate in accordance with Section 3.9(a), or any Holder is required to
make Holder Advances with Holder Yields calculated at the ABR in accordance
with Section 11.3(f) of the Participation Agreement, subject to Section 9.2
of the Participation Agreement, the Owner Trustee may, at the expense of
Lessee, (i) require such Holder to transfer or assign, in whole or (with
such Holder's consent) in part, without recourse (in accordance with
Section 11.8), all or (with such Holder's consent) part of its interests,
rights (except for rights to be indemnified for actions taken while a party
hereunder) and obligations under this Agreement to a replacement bank or
institution if the Owner Trustee (subject to Section 9.2 of the
Participation Agreement and with the full cooperation of such Holder) can
identify a Person who is ready, willing and able to be such replacement
bank or institution with respect thereto and such replacement bank or
institution (which may be another Holder) shall assume such assigned
obligations, or (ii) during such time as no Default or Event of Default has
occurred and is continuing, terminate the Holder Commitment of such Holder
8
and prepay the outstanding Holder Advances of such Holder, provided,
however, that (x) subject to Section 9.2 of the Participation Agreement,
the Owner Trustee or such replacement bank or institution, as the case may
be, shall have paid to such Holder in immediately available funds the
amount of the Holder Advances and Holder Yield accrued to the date of such
payment on the Holder Advances made by it hereunder and all other amounts
owed to it hereunder (and, if such Holder is also a Lender, the principal
and interest on all Loans accrued and unpaid thereon) and (y) such
assignment or termination of the Holder Commitment of the Holder and
prepayment of the Holder Advances do not conflict with any law, rule or
regulation or order of any court or Governmental Authority.
ARTICLE IV
COLLECTIONS AND DISTRIBUTIONS
SECTION 4.1 Collections and Remittances by the Owner Trustee.
The Owner Trustee agrees that, subject to the provisions of this Trust
Agreement and the other Operative Agreements, it will during the term of this
Trust administer the Trust Estate and, at the direction of the Holders, take
steps to collect all Rent and other sums payable to the Owner Trustee by Lessee
under the Lease. The Owner Trustee agrees to distribute, or cause to be
distributed, all proceeds received from the Trust Estate in accordance with
Article III and Sections 4.2 and 4.3. The Owner Trustee shall make, or cause to
be made, such distribution promptly upon receipt of such proceeds (provided,
such proceeds are available for distribution) by the Agent (on behalf of the
Owner Trustee), it being understood and agreed that the Owner Trustee shall not
be obligated to make, or to cause to be made, such distribution until the funds
for such distribution have been received by the Agent (on behalf of the Owner
Trustee) in cash or its equivalent reasonably acceptable to the Owner Trustee.
SECTION 4.2 Priority of Distributions.
Subject to the terms and requirements of the Operative Agreements, all
payments and amounts received by Trust Company as the Owner Trustee or on its
behalf shall be distributed to the Agent for allocation by the Agent in
accordance with the terms of Section 8.7 of the Participation Agreement or, if
such payments or amounts are received by the Owner Trustee from the Agent, then
they shall be distributed forthwith upon receipt in the following order of
priority: first, in accordance with the Holder Yield protection provisions set
forth in Section 11.3 of the Participation Agreement; and, second, the balance,
if any, of such payment or amount remaining thereafter shall be distributed to
the Holders pro rata (based on the ratio of the individual Holder's Holder
Commitment to the aggregate of all the Holders' Holder Commitments).
9
SECTION 4.3 Excepted Payments.
Anything in this Article IV or elsewhere in this Trust Agreement to the
contrary notwithstanding, any Excepted Payment received at any time by the Owner
Trustee shall be distributed promptly to the Person entitled to receive such
Excepted Payment.
SECTION 4.4 Distributions after Default.
Subject to the terms of Section 5.1, the proceeds received by the Owner
Trustee from the exercise of any remedy under the Lease shall be distributed
pursuant to Section 4.2 above. This Trust shall cease and terminate in
accordance with the terms set forth in Section 8.1 and upon the final
disposition by the Owner Trustee of all of the Trust Estate pursuant to this
Section 4.4.
ARTICLE V
DUTIES OF THE OWNER TRUSTEE
SECTION 5.1 Notice of Certain Events.
In the event the Owner Trustee shall have knowledge of any Default or Event
of Default, the Owner Trustee shall give written notice thereof within five (5)
Business Days to each Holder, Lessee and the Agent unless such Default or Event
of Default no longer exists before the giving of such notice. Subject to the
provisions of Section 5.3 of this Trust Agreement and Sections 8.5 and 9.2 of
the Participation Agreement, the Owner Trustee shall take or refrain from taking
such action as the Agent shall direct until such time as the Loans are paid in
full (and as more specifically provided in Sections 8.2(h) and 8.6 of the
Participation Agreement) and thereafter as the Majority Holders shall direct, in
each case by written instructions to the Owner Trustee. If the Owner Trustee
shall have given the Agent and the Holders (and respecting Sections 8.5 and 9.2
of the Participation Agreement, the Lessee) notice of any event and shall not
have received written instructions as above provided within thirty (30) days
after mailing notice of such event to the Agent and the Holders (and respecting
Sections 8.5 and 9.2 of the Participation Agreement, the Lessee), the Owner
Trustee may, but shall be under no duty to, and shall have no liability for its
failure or refusal to, take or refrain from taking any action with respect
thereto, not inconsistent with the provisions of the Operative Agreements, as
the Owner Trustee shall deem advisable and in the best interests of the Lenders
and the Holders. For all purposes of this Trust Agreement, in the absence of
actual knowledge of a Responsible Officer in the Corporate Trust Department of
Trust Company, the Owner Trustee shall be deemed not to have knowledge of any
Default or Event of Default unless a Responsible Officer of the Corporate Trust
Department of Trust Company receives notice thereof given by or on behalf of a
Holder, Lessee or the Agent.
SECTION 5.2 Action Upon Instructions.
Subject to the provisions of Sections 5.1 and 5.3, upon the written
instructions of the Agent or the Majority Holders (as applicable), the Owner
Trustee will take or refrain from taking such action or actions as may be
specified in such instructions.
10
SECTION 5.3 Indemnification.
The Owner Trustee shall not be required to take or refrain from taking any
action under this Trust Agreement or any other Operative Agreement (other than
the actions specified in the first sentence of Section 5.1 and in the last
sentence of Section 5.4) unless Trust Company shall have been indemnified by
Lessee or, at their election, by the Holders and the Lenders against any
liability, fee, cost or expense (including without limitation reasonable
attorneys' fees and expenses) that may be incurred or charged in connection
therewith, other than such as may result from claims of the Owner Trustee
excluded from Lessee's indemnification obligations in favor of the Owner Trustee
in Section 11.1 or 11.2 of the Participation Agreement. The Owner Trustee shall
not be required to take any action under any Operative Agreement if the Owner
Trustee shall reasonably determine, or shall have been advised by counsel, that
such action is likely to result in personal liability for which the Owner
Trustee has not been and will not be adequately indemnified or is contrary to
the terms hereof or of any Operative Agreement to which the Owner Trustee is a
party or is otherwise contrary to law. The Owner Trustee shall be under no
liability with respect to any action taken or omitted to be taken by the Owner
Trustee in accordance with instructions of the Agent or the Majority Holders
pursuant to Section 5.2.
SECTION 5.4 No Duties Except as Specified In Trust Agreement or
Instructions.
The Owner Trustee shall not have any duty or obligation to manage, control,
use, make any payment in respect of, register, record, insure, inspect, sell,
dispose of or otherwise deal with any Property or any other part of the Trust
Estate, or to otherwise take or refrain from taking any action under or in
connection with any Operative Agreement to which the Owner Trustee is a party,
except as expressly provided by the terms of this Trust Agreement or any other
Operative Agreement or in written instructions from the Agent and/or the
Majority Holders, as applicable, received pursuant to Sections 5.1, 5.2 or 8.4
of this Trust Agreement or Sections 8.2(h) or 8.6 of the Participation Agreement
or from the Lessee pursuant to Sections 8.5 or 9.2 of the Participation
Agreement; and no implied duties or obligations shall be read into this Trust
Agreement against the Owner Trustee. The Owner Trustee shall have no duty or
obligation to supervise or monitor the performance of the Construction Agent
pursuant to the Agency Agreement which for all purposes shall be an independent
contractor. The Owner Trustee nevertheless agrees that it will (in its
individual capacity and at its own cost and expense), promptly take all action
as may be necessary to discharge any Lessor Liens on any part of the Trust
Estate in compliance with Section 8.2(a) of the Participation Agreement.
SECTION 5.5 No Action Except Under Specified Documents or Instructions.
The Owner Trustee agrees that it will not manage, control, use, sell,
dispose of or otherwise deal with any Property or any other part of the Trust
Estate except (a) as required by the terms of the Operative Agreements, (b) in
accordance with the powers granted to, or the authority conferred upon, it
pursuant to this Trust Agreement, (c) in accordance with the express terms
hereof or with written instructions from the Agent and/or the Majority Holders,
as applicable, pursuant to Sections 5.1, 5.2 or 8.4 or (d) from the Lessee
11
pursuant to Sections 8.5 or 9.2 of the Participation Agreement. Without limiting
the foregoing, the Owner Trustee shall execute and deliver such documents and
instruments as may be required to evidence the release from the trusts created
herein for the Surplus Land described in Section 8.8(b) of the Participation
Agreement.
SECTION 5.6 Absence of Duties.
(a) Except in accordance with written instructions furnished pursuant
to Sections 5.1, 5.2 or 8.4, and without limitation of the generality of
Section 5.4, the Owner Trustee shall not have any duty to (i) file, record
or deposit any Operative Agreement or any other document, or to maintain
any such filing, recording or deposit or to refile, rerecord or redeposit
any such document; (ii) obtain insurance on any Property or effect or
maintain any such insurance, other than to receive and forward to each
Holder and the Agent any notices, policies, certificates or binders
furnished to the Owner Trustee pursuant to the Lease; (iii) maintain any
Property; (iv) pay or discharge any Tax or any Lien owing with respect to
or assessed or levied against any part of the Trust Estate, except as
provided in the last sentence of Section 5.4, other than to forward notice
of such Tax or Lien received by the Owner Trustee to each Holder and the
Agent; (v) confirm, verify, investigate or inquire into the failure to
receive any reports or financial statements of Lessee or any other Person;
(vi) inspect any Property any time or ascertain or inquire as to the
performance or observance of any of the covenants of Lessee or any other
Person under any Operative Agreement with respect to any Property; or (vii)
manage, control, use, sell, dispose of or otherwise deal with any Property
or any part thereof or any other part of the Trust Estate, except as
provided in Section 5.5.
(b) The Owner Trustee, in the exercise or administration of the trusts
and powers hereunder, including without limitation its obligations under
Section 5.2, may, at the expense of Lessee, employ agents, attorneys,
accountants, and auditors and enter into agreements with any of them and
the Owner Trustee shall not be liable, either in its individual capacity or
in its capacity as the Owner Trustee, for the default or misconduct of any
such agents, attorneys, accountants or auditors if such agents, attorneys,
accountants or auditors shall have been selected by it in good faith.
ARTICLE VI
THE OWNER TRUSTEE
SECTION 6.1 Acceptance of Trust and Duties.
The Owner Trustee accepts the trust and duties hereby created and agrees to
perform the same, but only upon the terms of this Trust Agreement. The Owner
Trustee agrees to receive, manage and disburse all moneys constituting part of
the Trust Estate actually received by it as the Owner Trustee in accordance with
the terms of this Trust Agreement. In its individual capacity, the Owner Trustee
shall not be answerable or accountable under any circumstances, except for (i)
its own willful misconduct or gross negligence, (ii) the inaccuracy of any of
its representations or warranties contained in Section 6.3 of this Trust
12
Agreement or Section 6.1 of the Participation Agreement, (iii) its failure to
perform obligations expressly undertaken by it in the last sentence of Section
5.4 of this Trust Agreement or in Section 8.2(a) of the Participation Agreement,
(iv) Taxes based on or measured by any fees, commissions or compensation
received by it for acting as the Owner Trustee in connection with any of the
transactions contemplated by the Operative Agreements, or (v) its failure to use
ordinary care to receive, manage and disburse moneys actually received by it in
accordance with the terms of the Operative Agreements.
SECTION 6.2 Furnishing of Documents.
The Owner Trustee will furnish to each Holder and to the Agent, promptly
upon receipt thereof, duplicates or copies of all reports, notices, requests,
demands, opinions, certificates, financial statements and any other instruments
or writings furnished to the Owner Trustee hereunder or under the other
Operative Agreements, unless by the express terms of any Operative Agreement a
copy of the same is required to be furnished by some other Person directly to
the Holders and/or the Agent, or the Owner Trustee shall have determined that
the same has already been furnished to the Holders and the Agent.
SECTION 6.3 No Representations or Warranties as to the Properties or
Operative Agreements.
THE OWNER TRUSTEE MAKES (i) NO REPRESENTATION OR WARRANTY, EITHER EXPRESS
OR IMPLIED, AS TO THE TITLE, VALUE, USE, CONDITION, DESIGN, OPERATION,
MERCHANTABILITY OR FITNESS FOR USE OF ANY PROPERTY (OR ANY PART THEREOF), OR ANY
OTHER REPRESENTATION, WARRANTY OR COVENANT WHATSOEVER, EXPRESS OR IMPLIED, WITH
RESPECT TO ANY PROPERTY (OR ANY PART THEREOF) AND THE OWNER TRUSTEE SHALL NOT BE
LIABLE FOR ANY LATENT, HIDDEN, OR PATENT DEFECT THEREIN OR THE FAILURE OF ANY
PROPERTY, OR ANY PART THEREOF, TO COMPLY WITH ANY LEGAL REQUIREMENT except that
the Owner Trustee hereby represents, warrants and covenants to each Holder that
it will comply with the last sentence of Section 5.4, and (ii) no representation
or warranty as to the validity or enforceability of any Operative Agreement or
as to the correctness of any statement made by a Person other than the Owner
Trustee or the Trust Company contained in any thereof, except that the Owner
Trustee represents, warrants and covenants to each Holder that this Trust
Agreement has been and each of the other Operative Agreements which contemplates
execution thereof by the Owner Trustee has been or will be executed and
delivered by its officers who are, or will be, duly authorized to execute and
deliver documents on its behalf.
SECTION 6.4 No Segregation of Moneys; No Interest.
Except as otherwise provided herein or in any of the other Operative
Agreements, moneys received by the Owner Trustee hereunder need not be
segregated in any manner except to the extent required by law and may be
deposited under such general conditions as may be prescribed by law, and neither
Trust Company nor the Owner Trustee shall be liable for any interest thereon,
13
except as may be agreed to in writing by the Owner Trustee or the Trust Company.
SECTION 6.5 Reliance; Advice of Counsel.
The Owner Trustee shall not incur any liability to any Person in acting
upon any signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond or other document or paper believed by it to
be genuine and believed by it in good faith to be signed by the proper party or
parties. The Owner Trustee may accept and rely upon a certified copy of a
resolution of the board of directors or other governing body of any corporate
party as conclusive evidence that such resolution has been duly adopted by such
body and that the same is in full force and effect. As to any fact or matter the
manner of ascertainment of which is not specifically prescribed herein, the
Owner Trustee may for all purposes hereof rely on an Officer's Certificate of
the relevant party as to such fact or matter, and such certificate shall
constitute full protection to the Owner Trustee for any action taken or omitted
to be taken by it in good faith in reliance thereon. In the administration of
the trusts hereunder, the Owner Trustee may execute any of the trusts or powers
hereof and perform its powers and duties hereunder directly or through agents or
attorneys and may consult with counsel, accountants and other skilled Persons to
be selected and employed by it, and the Owner Trustee shall not be liable for
anything done, suffered or omitted in good faith by it in accordance with the
advice or opinion of any such counsel, accountants or other skilled Persons and
not contrary to this Trust Agreement.
SECTION 6.6 Liability With Respect to Documents.
The Owner Trustee, in either its trust or individual capacity, shall not
incur any liability to any Person for or in respect of the recitals herein, the
validity or sufficiency of this Trust Agreement or for the due execution hereof
by each Holder or for the form, character, genuineness, sufficiency, value or
validity of any Property or for or in respect of the validity or sufficiency of
any of the Operative Agreements and the Owner Trustee, in either its trust or
individual capacity, shall in no event assume or incur any liability, duty or
obligation to any Person or to any Holder, other than as expressly provided for
herein or in any of the other Operative Agreements.
SECTION 6.7 Not Acting In Individual Capacity.
All Persons having any claim against the Owner Trustee by reason of the
transactions contemplated by the Operative Agreements shall look only to the
Trust Estate (or a part thereof, as the case may be) for payment or satisfaction
thereof, except as specifically provided in this Article VI and except to the
extent that the Owner Trustee shall otherwise expressly agree in any Operative
Agreement to which it is a party, including without limitation Section 6.1
hereof and Sections 8.2(a) and 12.9 of the Participation Agreement and the last
sentence of Section 5.4 hereof.
14
SECTION 6.8 Books and Records; Tax Returns.
(a) The Owner Trustee shall be responsible for the keeping of all
appropriate books and records relating to the receipt and disbursement of
all moneys that it may receive hereunder or under any other Operative
Agreement. The Owner Trustee shall, at the expense of Lessee (without
limiting Lessee's rights to request Advances therefor in accordance with
the Participation Agreement), file an application with the Internal Revenue
Service for a taxpayer identification number with respect to the trust
created hereby. The Owner Trustee shall, at the expense of Lessee, prepare
or cause to be prepared and the Owner Trustee shall sign and/or file the
federal fiduciary tax return with respect to Taxes due and payable by the
trust created hereby in connection with the transactions contemplated
hereby and by any other Operative Agreement. Each Holder shall furnish the
Owner Trustee with all such information as may be reasonably required from
such Holder (as such is requested in writing by the Owner Trustee) in
connection with the preparation of such tax returns. The Owner Trustee
shall keep copies of all returns delivered to or filed by it.
(b) The Owner Trustee, in either its trust or individual capacity,
shall be under no obligation to appear in, prosecute or defend any action,
which in its opinion may require it to incur any out-of-pocket expense or
any liability unless the Owner Trustee shall be furnished with such
reasonable security and indemnity from Lessee or, at the election of the
Majority Secured Parties, from the Holders and the Lenders against such
expense or liability as the Owner Trustee may require (except to the extent
such action relates to claims excluded from Lessee's indemnification
obligations in Section 11.1 or 11.2 of the Participation Agreement). The
Owner Trustee may, but shall be under no duty to, undertake such action as
it may deem necessary at any and all times, without any further action by
the Agent or any Holder to protect one (1) or more of the Properties and
the rights and interests of the Holders pursuant to the terms of this Trust
Agreement; provided, however, that the Owner Trustee may obtain
reimbursement for the out-of-pocket expenses and costs of such actions,
undertakings or proceedings from Lessee or, at the election of the Majority
Secured Parties, from the Holders and the Lenders (except to the extent
such action relates to claims excluded from Lessee's indemnification
obligations in Section 11.1 or 11.2 of the Participation Agreement).
ARTICLE VII
INDEMNIFICATION OF THE OWNER TRUSTEE
SECTION 7.1 Indemnification Generally.
The Owner Trustee is indemnified for matters related to the transactions
described herein by Lessee pursuant to Section 11 of the Participation
Agreement. Except as may be specifically provided from time to time hereafter in
writing by the Holders, the Owner Trustee shall not have any right of
indemnification from any Holder with respect to the transactions described
herein or in any of the other Operative Agreements.
15
SECTION 7.2 Compensation and Expenses.
Lessee has agreed to pay the fees and expenses of the Owner Trustee and the
Holder Unused Fees as provided in Sections 7.3 and 7.4, respectively, of the
Participation Agreement.
ARTICLE VIII
TERMINATION OF TRUST AGREEMENT
SECTION 8.1 Termination of Trust Agreement.
This Trust Agreement and the trusts created hereby shall terminate and the
Trust Estate shall, subject to the provisions of the Participation Agreement,
the other Operative Agreements and Article IV of this Trust Agreement, be
distributed pro rata to the Holders, and this Trust Agreement shall be of no
further force or effect, upon the earlier of (a) the joint written request of
the Majority Holders following the sale or other final disposition by the Owner
Trustee of all property constituting part of the Trust Estate and the final
distribution by the Owner Trustee of all moneys or other property or proceeds
constituting part of the Trust Estate in accordance with the terms hereof;
provided, however, that (except as provided for in the Operative Agreements) the
Trust Estate shall not be subject to sale or other final disposition by the
Owner Trustee prior to the payment in full and discharge of the Loans and all
other indebtedness secured by the Credit Documents and the release of the Credit
Documents and the Liens granted thereby and the payment in full of the Holder
Amount and Holder Yield thereon and all other amounts owing to the Holders under
any of the Operative Agreements and (b) fifty (50) years after the date hereof.
SECTION 8.2 Termination at Option of the Holders.
Notwithstanding Section 8.1, this Trust Agreement and the trusts created
hereby shall terminate and the Trust Estate shall be distributed pro rata to the
Holders, and this Trust Agreement shall be of no further force and effect, upon
the joint election of the Holders by notice to the Owner Trustee, if such notice
shall be accompanied by the written agreement of each Holder assuming all the
obligations of the Owner Trustee under or contemplated by the Operative
Agreements and all other obligations of the Owner Trustee incurred by it as
trustee hereunder; provided, however, that each Holder agrees, for the express
benefit of the Agent and the Lenders, that without the consent of the Majority
Lenders, no such election shall be effective until the Liens and security
interests of the Security Documents on the Collateral shall have been released
and until full payment of the principal of, and interest on the Loans and all
other sums due to the Lenders (or, if earlier, payment and performance in full
of the Company Obligations) shall have been made. Such written agreement shall
be reasonably satisfactory in form and substance to the Owner Trustee and shall
release the Owner Trustee from all further obligations of the Owner Trustee
hereunder and under the agreements and other instruments mentioned in the
preceding sentence.
16
SECTION 8.3 Termination at Option of the Owner Trustee.
At any time that the Lease shall no longer be in full force and effect and
the Agent shall have confirmed in writing to the Owner Trustee that the Company
Obligations have been paid and performed in full or the Lenders have received
payment in full of the principal of and interest on the Loans and that all other
sums due to the Agent and the Lenders under the Operative Agreements shall have
been made, then the Holders hereby authorize the Owner Trustee to: (a) terminate
this Trust Agreement and the trusts created hereby and (b) distribute and convey
the Trust Estate pro rata to the Holders by executing the necessary transfer
documents as contemplated by Section 8.4. The exercise of such option by the
Owner Trustee shall cause this Trust Agreement to be of no further force and
effect and shall release the Owner Trustee from all further obligations of the
Owner Trustee hereunder and under the agreements and other instruments mentioned
in the preceding sentence.
SECTION 8.4 Actions by the Owner Trustee Upon Termination.
Upon termination of this Trust Agreement and the trusts created hereby
pursuant to Sections 8.1, 8.2 or 8.3, the Owner Trustee shall upon notice of
such event take such action as may be necessary or as may be requested by the
Majority Holders to transfer the Trust Estate pro rata to the Holders, including
without limitation the execution of instruments of transfer or assignment with
respect to any of the Operative Agreements to which the Owner Trustee is a
party.
ARTICLE IX
SUCCESSOR OWNER TRUSTEES, CO-OWNER TRUSTEES
AND SEPARATE OWNER TRUSTEES
SECTION 9.1 Resignation of the Owner Trustee; Appointment of Successor.
(a) The Owner Trustee may resign at any time without cause by giving
at least thirty (30) days' prior written notice to each Holder, the Agent
and Lessee; provided, however, that such resignation shall not be effective
until the acceptance of appointment by a successor Owner Trustee under
Section 9.1(b). The Owner Trustee may be removed with or without cause at
any time by the Majority Holders upon consent to such removal by the Agent
and with sixty (60) days' prior written notice to the Owner Trustee (unless
a Credit Agreement Default or Credit Agreement Event of Default shall be
continuing, in which case only three (3) days notice need be provided), a
copy of which notice shall be concurrently delivered by the Majority
Holders to the Agent and Lessee. Any such removal shall be effective upon
the acceptance of appointment by a successor Owner Trustee under Section
9.1(b). In case of the resignation or removal of the Owner Trustee, the
Holders may appoint a successor Owner Trustee by an instrument signed by
the Majority Holders; provided, however, that such successor Owner Trustee
must be approved by the Agent. In the event the Owner Trustee shall be an
individual, his death or incapacity, or termination of employment (whether
voluntary or involuntary) with First Security Bank, National Association
(or a successor corporate Owner Trustee) shall be treated as a resignation
17
hereunder and shall be effective immediately. If a successor Owner Trustee
shall not have been appointed within thirty (30) days after the giving of
written notice of such resignation or the delivery of the written
instrument with respect to such removal, the Owner Trustee or any Holder
may apply to any court of competent jurisdiction to appoint a successor
Owner Trustee to act until such time, if any, as a successor shall have
been appointed and shall have accepted its appointment as above provided.
Any successor Owner Trustee so appointed by such court shall immediately
and without further act be superseded by any successor Owner Trustee
appointed as above provided within one (1) year from the date of the
appointment by such court.
(b) Any successor Owner Trustee, however appointed, shall execute and
deliver to the predecessor Owner Trustee an instrument accepting such
appointment, and thereupon such successor Owner Trustee, without further
act shall become vested with all the estates, properties, rights, powers,
duties and trusts of the predecessor Owner Trustee in the trusts hereunder
with like effect as if originally named an Owner Trustee herein; but
nevertheless, upon the written request of such successor Owner Trustee such
predecessor Owner Trustee shall execute and deliver an instrument
transferring to such successor Owner Trustee, upon the trusts herein
expressed, all the estates, properties, rights, powers, duties and trusts
of such predecessor Owner Trustee, and such predecessor Owner Trustee shall
duly assign, transfer, deliver and pay over to such successor Owner Trustee
all moneys or other property then held by such predecessor Owner Trustee
upon the trusts herein expressed.
(c) Any successor Owner Trustee, however appointed, shall be a bank or
trust company incorporated and doing business within the United States of
America and having a combined capital and surplus of at least $250,000,000,
if there be such an institution willing, able and legally qualified to
perform the duties of the Owner Trustee hereunder upon reasonable or
customary terms.
(d) Any corporation into which the Owner Trustee may be merged or
converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Owner
Trustee shall be a party, or any corporation to which substantially all the
corporate trust business of the Owner Trustee may be transferred, shall,
subject to the terms of Section 9.1(c), be the Owner Trustee under this
Trust Agreement without further act.
SECTION 9.2 Co-Trustees and Separate Trustees.
Whenever (a) the Owner Trustee or the Majority Holders shall deem it
necessary or prudent in order to conform to any law of any jurisdiction in which
all or any part of the Trust Estate shall be situated or to which it may be
subject or to make any claim or bring any suit with respect to the Trust Estate
or any Operative Agreement, (b) the Owner Trustee or the Majority Holders shall
be advised by counsel satisfactory to it or them that it is so necessary or
prudent as referenced in Section 9.2(a), or (c) the Owner Trustee shall have
been directed to do so by the Majority Holders and the Agent, the Owner Trustee
and the Holders shall execute and deliver an agreement supplemental hereto and
18
all other instruments and agreements, and shall take all other action, necessary
or proper to constitute one (1) or more Persons who, unless such Persons are
Affiliates of the Owner Trustee, officers of the Owner Trustee or Officers of an
Affiliate of the Owner Trustee, must meet the requirements of Section 9.1(c)
(and the Owner Trustee may appoint one (1) or more of its officers) and who, so
long as no Lease Event of Default has occurred and be continuing and to the
extent such Person is not an Affiliate or an officer of the Owner Trustee, be
subject to the consent of Lessee (which consent shall not be unreasonably
withheld or delayed) either as co-trustee or co-trustees (the "Co-Owner
Trustee"), jointly with the Owner Trustee, of all or any part of the Trust
Estate, or as separate trustee or separate trustees of all or any part of the
Trust Estate, and to vest in such Persons, in such capacity, such title to the
Trust Estate or any part thereof and such rights or duties as may be necessary
or desirable, all for such period and under such terms and conditions as are
satisfactory to the Owner Trustee and the Holders. To the extent any Affiliate
of the Owner Trustee, any officer of the Owner Trustee or any officer of an
Affiliate of the Owner Trustee serves as a Co-Owner Trustee and the Agent, the
Majority Secured Parties or the Lessee so requests, either the Owner Trustee (in
its individual capacity) or its ultimate parent company or parent holding
company shall give a written guarantee (in favor of the Financing Parties and
the Credit Parties and on terms and conditions reasonably satisfactory to the
Agent, the Majority Secured Parties and the Lessee) of performance of any and
all obligations of the Co-Owner Trustee in connection with the Properties and
pursuant to the Operative Agreements. In such guarantee, the guarantor shall
represent and warrant to the beneficiaries thereof that the guarantor satisfies
the requirements of Section 9.1(c) or is a corporation organized and existing
under the laws of a state in the United States and has net worth of at least
$250,000,000. In accordance with the foregoing:
(i) The Owner Trustee shall appoint a Co-Owner Trustee hereunder in
part so that if, under any present or future law of any state where any
Property is located or of any jurisdiction in which it may be necessary to
perform any act in carrying out the trusts herein created, the Owner
Trustee or any of its successors may be incompetent or unqualified or
incapacitated or unwilling to perform certain acts as such Owner Trustee,
then upon the written request of the Owner Trustee or any of its successors
received by any Co-Owner Trustee, all of such acts required to be performed
in such jurisdiction in the execution of the trusts hereby created shall
and will be performed by any Co-Owner Trustee, or any of his or its
successors, in trust acting alone, as if he or it or such successor had
been specifically authorized so to do or had been the sole Owner Trustee
hereunder. Any Co-Owner Trustee shall continue to perform such acts until
otherwise directed in writing by the Owner Trustee or any of its
successors. Any request in writing by the Owner Trustee or any of its
successors to the Co-Owner Trustee shall be sufficient warrant for him or
it to take such action as may be so requested.
(ii) Except as it may be deemed necessary for any Co-Owner Trustee or
any of his or its successors solely or jointly to execute the trusts herein
created, the Owner Trustee or any of its successors shall solely have and
exercise the powers, and shall be solely charged with the performance of
the duties, hereinbefore declared on the part of the Owner Trustee to be
had, exercised and performed; and any Co-Owner Trustee shall not be liable
therefor. Any Co-Owner Trustee or any successor to him or it may delegate
19
to the Owner Trustee or its successor hereunder the exercise of any power,
discretion or otherwise, conferred by any provision of this Trust
Agreement.
(iii) Any act of the Owner Trustee herein required or authorized shall
and will be jointly or separately performed by the Owner Trustee or its
successors hereunder and by any Co-Owner Trustee or any of his or its
successors appointed hereunder, if such joint performance or separate
performance shall be necessary to the legality of such act and when so
acting all references herein to "First Security Bank, National Association"
shall be deemed to be references to such Co-Owner Trustee in his or its
individual capacity and all references to "Owner Trustee" shall be deemed
to be references to any Co-Owner Trustee, and such Co-Owner Trustee shall
be entitled to all the protection, indemnification, immunity and
compensation herein provided to the Owner Trustee acting singly in
reference to such acts (subject to the limitations to such a protection,
indemnification, immunity and compensation set forth herein).
(iv) The Owner Trustee or its successor in trust shall have and is
hereby given the power at any time by an instrument in writing duly
executed by a Vice President of the Trust Company, to remove any Co-Owner
Trustee or his or its successor, from his or its position as Co-Owner
Trustee hereunder. In the case of death, resignation, removal, incapacity
or inability to act hereunder of the Co-Owner Trustee, or his or its
successor as Co-Owner Trustee, any adult citizen of the United States of
America may be appointed Co-Owner Trustee hereunder by the person who shall
at the time be a Vice President of the Person then acting as the Owner
Trustee hereunder by an instrument in writing duly executed, and under its
seal, and, subject to its right to revoke such appointment or to appoint
another Person, the Owner Trustee shall appoint a successor Co-Owner
Trustee, such appointment to be immediately effective in case of the death,
resignation, removal or inability or incapacity to act hereunder of the
Co-Owner Trustee. In the event a vacancy occurs in the office of the
Co-Owner Trustee, either by reason of resignation, removal, incapacity or
inability to act and no successor is appointed pursuant to the foregoing
provisions within thirty (30) days after such vacancy occurs, the Holders
and the Agent may jointly appoint a successor to the Co-Owner Trustee in
the same manner as is provided for the appointment of a successor to the
Co-Owner Trustee hereunder.
(v) At any time or times, for the purposes of meeting the legal
requirements of any jurisdiction in which any part of the Trust Estate
hereunder may at the time be located, or to avoid any violation of law or
imposition of Taxes not otherwise imposed on the Owner Trustee, or if the
Owner Trustee shall deem it desirable for its own protection, the Owner
Trustee shall have power to appoint one (1) or more Persons (who may be
officers of the Owner Trustee) either to act as an additional co-trustee,
jointly with the Owner Trustee of all or any part of the Trust Estate
hereunder, or of any property constituting part thereof, or to act as
separate trustee of any part of the Trust Estate, in either case with such
powers as may be provided in the instrument of appointment and are
consistent with the terms hereof, and to vest in such Person or Persons in
the capacity as aforesaid, any property, title, right or power deemed
necessary or desirable, subject to the remaining provisions of this Section
9.2.
20
(vi) Notwithstanding any provision of this Trust Agreement to the
contrary, any additional co-trustee shall act upon and be subject to the
following terms and conditions:
All rights, powers, duties and obligations conferred or imposed
upon the Owner Trustee shall be conferred or imposed solely upon and
solely exercised and performed by the Owner Trustee except to the
extent that under any Law of any jurisdiction in which any particular
act or acts are to be performed the Owner Trustee or the Trust Company
shall be incompetent or unqualified to perform such act or acts or to
avoid any violation of Law or imposition of Taxes not otherwise
imposed on the Owner Trustee, or if the Owner Trustee shall deem it
desirable for its own protection, in which event such rights, powers,
duties and obligations shall be exercised and performed by such
co-trustee or Co-Owner Trustee.
(vii) No power granted by this Trust Agreement to, or which this Trust
Agreement provides may be exercised by, the Owner Trustee in respect of the
custody, control and management of moneys may be exercised by any Co-Owner
Trustee or any subsequently appointed co-trustee except jointly with, or
with the consent in writing of, the Owner Trustee for disbursement or
application in accordance with the terms hereof.
(viii) All moneys which may be received or collected by any Co-Owner
Trustee or such subsequently appointed co-trustees shall be paid over to
the Owner Trustee to be distributed in accordance with this Trust Agreement
and the other Operative Agreements.
(ix) Any Co-Owner Trustee, or any subsequently appointed co-trustee to
the extent permitted by Law, does hereby constitute the Owner Trustee or
its successors hereunder his or its agent or attorney in fact, with full
power and authority to do any and all acts and things and exercise any and
all discretion authorized or permitted by the Co-Owner Trustee or such
subsequently appointed co-trustee, in his or its behalf or in his or its
name.
(x) No trustee hereunder shall be personally liable by reason of any
act or omission of any other trustee hereunder.
SECTION 9.3 Notice.
At all times that a successor Owner Trustee is appointed pursuant to
Section 9.1, an Owner Trustee resigns pursuant to Section 9.1 or a Co-Owner
Trustee, a co-trustee or separate trustee, is appointed pursuant to Section 9.2,
the Holders shall give joint notice of such fact within thirty (30) days of its
occurrence to (x) Lessee, if the Lease is then in effect and (y) the Agent, if
the Credit Agreement is in effect.
21
ARTICLE X
AMENDMENTS
SECTION 10.1 Amendments.
This Trust Agreement may be terminated, amended, supplemented, waived or
modified in accordance with Section 12.4 of the Participation Agreement.
SECTION 10.2 Limitation on Amendments.
Notwithstanding Section 10.1, the Owner Trustee shall not, without the
consent of the Agent, execute any amendment that might result in the trusts
created hereunder being terminated prior to the satisfaction and discharge of
the Lien and security interest of the Security Documents on the Collateral or
prior to the payment in full of the principal of, and interest on, the Loans and
other than in accordance with the terms of the Credit Agreement.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 No Legal Title to Trust Estate in the Holders.
The Holders shall not have legal title to any part of the Trust Estate;
provided, however, that each Holder has a pro rata beneficial interest in the
Trust Estate. No transfer, by operation of law or otherwise, of any right, title
or interest of a Holder in and to the Trust Estate or hereunder shall operate to
terminate this Trust Agreement or the Trust or the trusts hereunder or entitle
any successor or transferee to an accounting or to the transfer to it of legal
title to any part of the Trust Estate.
SECTION 11.2 Sale of a Property by the Owner Trustee is Binding.
Any sale, transfer, or other conveyance of any Property or any part thereof
by the Owner Trustee made pursuant to the terms of this Trust Agreement or any
other Operative Agreement shall bind the Holders and shall be effective to sell,
transfer and convey all right, title and interest of the Owner Trustee and the
Holders in and to such Property or any part thereof. No purchaser or other
grantee shall be required to inquire as to the authorization, necessity,
expediency or regularity of such sale or conveyance or as to the application of
any sale or other proceeds with respect thereto by the Owner Trustee.
SECTION 11.3 Limitations on Rights of Others.
Except as otherwise expressly set forth herein, nothing in this Trust
Agreement, whether express or implied, shall be construed to give to any Person,
other than the Owner Trustee and each Holder, any legal or equitable right,
remedy or claim under or in respect of this Trust Agreement, any covenants,
conditions or provisions contained herein or in the Trust Estate, but this Trust
Agreement shall be held for the sole and exclusive benefit of the Owner Trustee
22
and the Holders. The Agent shall have the right to enforce the provisions of
Sections 5.1, 5.2, 5.3, 5.4, 6.2, 6.8, 8.1, 8.2, 8.3, 9.1, 9.2, 9.3, 10.1 and
10.2 prior to the payment in full of the principal of and interest on the Loans
and such other amounts due and payable to the Lenders or the Agent under the
Operative Agreements. The rights of the Owner Trustee are subject to the rights
of the Lessee set forth in Section 9.2 of the Participation Agreement. The
Lessee is a third party beneficiary of those provisions of this Agreement (or
which are incorporated or referred to herein) which refer to Lessee and such
provisions may not be amended without the Lessee's consent.
SECTION 11.4 Notices.
Unless otherwise expressly specified or permitted by the terms hereof, all
notices hereunder shall be given as provided in Section 12.2 of the
Participation Agreement.
SECTION 11.5 Severability.
Any provision of this Trust Agreement that may be determined by competent
authority to be 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.
SECTION 11.6 Limitation on the Holders' Liability.
No Holder shall have any liability for the performance of this Trust
Agreement except as expressly set forth herein.
SECTION 11.7 Separate Counterparts.
This Trust Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute but one (1) and the same
instrument.
SECTION 11.8 Successors and Assigns.
(a) All covenants and agreements contained herein shall be binding
upon, and inure to the benefit of, Trust Company, the Owner Trustee and its
successors and assigns and each Holder and its successors and assigns, all
as herein provided. Any request, notice, direction, consent, waiver or
other instrument or action by a Holder shall bind the successors and
assigns of such Holder.
(b) Any Holder may transfer or assign all or any portion of its right,
title and interest in the Trust Estate, this Trust Agreement and the
Certificate of such Holder in accordance with the requirements of Section
10.1 of the Participation Agreement, in compliance with the provisions of
Section 11.8(c) and pursuant to an assignment agreement in substantially
the form of Exhibit B, which assignment agreement shall provide, without
23
limitation, that the assignee undertakes and assumes all obligations and
covenants of a Holder under this Trust Agreement and the other Operative
Agreements. The Holder proposing the transfer or assignment shall notify
the Owner Trustee, the Agent and Lessee in writing of the effective date of
the transfer or assignment, which effective date shall be at least three
(3) Business Days after the date of such notification. For itself and as
agent for the Lessee and the Agent, the Owner Trustee shall maintain a
register showing the Holders and their respective interests in the Trust
Estate and, upon the occurrence of a permitted assignment pursuant to this
Section 11.8(b), shall issue a Certificate to the assignee and, if the
assigning Holder is maintaining an interest hereunder, a new Certificate to
such assigning Holder representing its revised interest in the Trust
Estate. The entries in such register shall be conclusive and binding for
all purposes, absent manifest error, and the Lessee, the Owner Trustee, the
Agent and the Holders may treat each Person whose name is recorded in such
register as a Holder hereunder for all purposes of this Trust Agreement.
Such register shall be available for inspection by the Lessee, the Owner
Trustee, the Agent or any Holder at any reasonable time and from time to
time upon reasonable prior notice. The Owner Trustee shall not recognize
any purported assignment or transfer by a Holder that does not comply with
the terms of this Section 11.8 and any such attempted transfer or
assignment by a Holder in violation of the terms of this Section 11.8 shall
be null and void and of no effect.
(c) Subject to and in accordance with Section 11.8(b), each Holder may
assign to one or more Eligible Assignees all or a portion of its rights and
obligations under the Operative Agreements (including, without limitation,
all or a portion of its Holder Advances, its Certificate and its Holder
Commitment); provided, however, that
(i) each such assignment shall be to an Eligible Assignee;
(ii) except in the case of an assignment to another Holder or an
assignment of all of a Holder's rights and obligations under the
Operative Agreements, any such partial assignment shall be in an
amount at least equal to $5,000 or an integral multiple of $1,000 in
excess thereof; and
(iii) the parties to such assignment shall execute and deliver to
the Agent for processing the Certificate subject to such assignment
and a processing fee of $3,500.
Upon execution, delivery and acceptance of the assignment and acceptance (in
substantially the form attached hereto as Exhibit B), the assignee thereunder
shall be a party hereto and, to the extent of such assignment, have (in addition
to any such obligations, rights and benefits theretofore held by it) the
obligations, rights and benefits of a Holder under the Operative Agreements and
the assigning Holder shall, to the extent of such assignment, relinquish its
rights and be released from its obligations under the Operative Agreements. Upon
the consummation of any assignment pursuant to this Section, the assignor and
the Owner Trustee shall make appropriate arrangements so that, if required, new
Certificates are issued to the assignor and the assignee. If the assignee is not
incorporated under the laws of the United States of America or a state thereof,
it shall deliver to the Owner Trustee, the Lessee and the Agent certification as
24
to exemption from deduction or withholding of Taxes in accordance with Section
11.2(e) of the Participation Agreement.
SECTION 11.9 Headings.
The headings of the various articles and sections herein are for
convenience of reference only and shall not define or limit any of the terms or
provisions hereof.
SECTION 11.10 Governing Law.
THIS TRUST AGREEMENT SHALL BE INTERPRETED AND ENFORCED AND THE RIGHTS AND
LIABILITIES OF THE PARTIES HERETO DETERMINED, INTERPRETED AND ENFORCED IN
ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF LAW PROVISIONS)
AND DECISIONS OF THE STATE OF UTAH. WHENEVER POSSIBLE EACH PROVISION OF THIS
TRUST AGREEMENT SHALL BE INTERPRETED IN SUCH MANNER AS TO BE EFFECTIVE AND VALID
UNDER APPLICABLE LAW, BUT IF ANY PROVISION OF THIS TRUST AGREEMENT SHALL BE
PROHIBITED BY OR INVALID UNDER APPLICABLE LAW, SUCH PROVISION SHALL BE
INEFFECTIVE TO THE EXTENT OF SUCH PROHIBITION OR INVALIDITY, WITHOUT
INVALIDATING THE REMAINDER OF SUCH PROVISION OR THE REMAINING PROVISIONS OF THIS
TRUST AGREEMENT.
SECTION 11.11 Performance by the Holders.
Any obligation of the Owner Trustee hereunder or under any Operative
Agreement or other document contemplated herein may be performed by the Holders
(or by one (1) of them with the written consent of the others) and any such
performance shall not be construed as a revocation of the trusts created hereby.
SECTION 11.12 Conflict with Operative Agreements.
If this Trust Agreement (or any instructions given by a Holder pursuant
hereto) shall require that any action be taken with respect to any matter and
any other Operative Agreement (or any instructions duly given in accordance with
the terms thereof) shall require that a different action be taken with respect
to such matter, and such actions shall be mutually exclusive, the provisions of
such other Operative Agreement, in respect thereof, shall control.
SECTION 11.13 No Implied Waiver.
No term or provision of this Trust Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in writing entered
into as provided in Section 10.1; and any such waiver of the term hereof shall
be effective only in the specific instance and for the specific purpose given.
25
SECTION 11.14 SUBMISSION TO JURISDICTION; VENUE.
THE PROVISIONS OF THE PARTICIPATION AGREEMENT RELATING TO SUBMISSION TO
JURISDICTION AND VENUE ARE HEREBY INCORPORATED BY REFERENCE HEREIN, MUTATIS
MUTANDIS.
SECTION 11.15.....WAIVERS OF JURY TRIAL.
EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY, TO THE FULLEST
EXTENT ALLOWED BY APPLICABLE LAW, WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS TRUST AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.
[signature pages follow]
26
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to
be duly executed by their respective officers hereunto duly authorized, as of
the date set forth above.
HOLDERS:
BANK OF AMERICA, N.A.,
as a Holder
By: /s/ John G. Hayes
--------------------------------------
Name: John G. Hayes
------------------------------------
Title: Principal
-----------------------------------
CSL LEASING, INC.,
as a Holder
By: /s/ Michael P. Handago
--------------------------------
Name: Michael P. Handago
------------------------------------
Title: Vice President
-----------------------------------
[signature pages continued]
THE BANK OF NEW YORK,
as a Holder
By: /s/ Scott Buitekant
--------------------------------
Name: Scott Buitekant
------------------------------------
Title: V.P.
-----------------------------------
[signature pages continued]
ROYAL BANK OF CANADA,
as a Holder
By: /s/ Y. J. Bernard
--------------------------------
Name: Y. J. Bernard
------------------------------------
Title: Manager
-----------------------------------
[signature pages continued]
BANQUE NATIONALE DE PARIS,
as a Holder
By: /s/ Laurent Vaderzyppe
--------------------------------
Name: Laurent Vaderzyppe
------------------------------------
Title: Vice President
-----------------------------------
By: /s/ Marguerite L. Lebon
--------------------------------
Name: Marguerite L. Lebon
------------------------------------
Title: Assistant Vice President
-----------------------------------
[signature pages continued]
BANK OF MONTREAL,
as a Holder
By: /s/ Bruce A. Pietka
--------------------------------
Name: Bruce A. Pietka
------------------------------------
Title: Director
-----------------------------------
[signature pages continued]
FIRST UNION NATIONAL BANK,
as a Holder
By: /s/ Austin Rodgers
--------------------------------
Name: Austin Rodgers
------------------------------------
Title: Senior Vice President
-----------------------------------
[signature pages continued]
OWNER TRUSTEE:
FIRST SECURITY BANK, NATIONAL ASSOCIATION
By: /s/ C. Scott Nielsen
--------------------------------------
Name: C. Scott Nielsen
------------------------------------
Title: Vice President
-----------------------------------
(FRI Trust 1999-1)
[signature pages end]
SCHEDULE I
HOLDER COMMITMENTS
Name and Address of Holder Holder Commitment
Amount Percentage
Bank of America, N.A. $1,400,000.00 27.45098040%
231 South LaSalle Street
10th Floor
Chicago, IL 60697
Attention: John Hayes
Telephone: 312-828-1632
Telecopy: 312-828-3359
CSL Leasing, Inc. $750,000.00 14.70588235%
1201 Market Street, 8th Floor
Wilmington, Delaware 19801
Attention: Mike Handago
Telephone: 302-428-3311
Telecopy: 302-984-4944
The Bank of New York $750,000.00 14.70588235%
One Wall Street
New York, NY 10286
Attention: Scott Buitekant
Telephone: 212-635-6958
Telecopy: 212-635-6348
Bank of Montreal $650,000.00 12.74509804%
115 South LaSalle Street
12th Floor West
Chicago, IL 60603
Attention: Bruce Pietka
Telephone: 312-750-6958
Telecopy: 312-750-6057
I-1
Royal Bank of Canada $650,000.00 12.74509804%
Grand Cayman (North America
No. 1 Branch)
c/o New York Branch
1 Liberty Plaza, 4th Floor
New York, NY 10006-1404
Attention: Aurora Lanteigne
Telephone: 212-428-6338
Telecopy: 212-428-2372
with a copy to:
Royal Bank of Canada
1 Liberty Plaza, 4th Floor
New York, NY 10006-1404
Attention: Vivian Abdelmessih
Telephone: 212-428-6318
Telecopy: 212-428-6201
Banque Nationale de Paris $450,000.00 8.82352941%
499 Park Avenue
New York, NY 10022
Attention: Laurent Vanderzyppe
Telephone: 212-415-9406
Telecopy: 212-415-9707
First Union National Bank $450,000.00 8.82352941%
1339 Chestnut Street
Philadelphia, PA 19101
Attention: Brian Haley
Telephone: 215-973-2372
Telecopy: 215-786-4114
TOTAL $5,100,000.00 100.00000000%
I-2
EXHIBIT A
FORM OF HOLDER CERTIFICATE
THIS CERTIFICATE IS REGISTERED AS TO BOTH PRINCIPAL AND HOLDER YIELD WITH THE
OWNER TRUSTEE AND TRANSFER MAY BE EFFECTED ONLY IF SUCH TRANSFER IS RECORDED IN
THE REGISTER MAINTAINED BY THE OWNER TRUSTEE PURSUANT TO SECTION 11.8(b) OF THE
TRUST AGREEMENT REFERRED TO BELOW.
FIRST SECURITY BANK, NATIONAL ASSOCIATION
TRUSTEE UNDER
TRUST AGREEMENT DATED AS OF SEPTEMBER 27, 1999
HOLDER CERTIFICATE
FRI TRUST 1999-1
THE HOLDER, AS REFERENCED BELOW, UNDERSTANDS THAT ANY SUBSEQUENT TRANSFER OF
THIS CERTIFICATE IS SUBJECT TO CERTAIN RESTRICTIONS AND CONDITIONS SET FORTH IN
THE OPERATIVE AGREEMENTS AND AGREES TO BE BOUND BY, AND NOT TO RESELL, PLEDGE OR
OTHERWISE TRANSFER ANY CERTIFICATE EXCEPT IN COMPLIANCE WITH, SUCH RESTRICTIONS
AND CONDITIONS AND THE SECURITIES ACT OF 1933, AS AMENDED, TOGETHER WITH THE
RULES AND REGULATIONS PROMULGATED THEREUNDER.
-----------
First Security Bank, National Association, as trustee (herein in such
capacity called the "Owner Trustee") under that certain Trust Agreement dated as
of September 27, 1999 (as amended, modified, supplemented, restated and/or
replaced from time to time, herein called the "Trust Agreement", the defined
terms therein not otherwise defined herein being used herein with the same
meanings), among the several banks and other financial institutions from time to
time parties to the Trust Agreement as the Holders and the Owner Trustee, hereby
certifies for the benefit of [HOLDER] (the "Holder") as follows: (i) this Holder
Certificate is a Holder Certificate referred to in Section 3.1(d) of the Trust
Agreement, which Holder Certificate has been issued by the Owner Trustee
pursuant to the Trust Agreement in such Holder Commitment amount as is indicated
for the Holder in Schedule I to the Trust Agreement, as such Schedule I may be
amended, modified, supplemented, restated and/or replaced from time to time, and
(ii) subject to the prior payment of Notes to the extent provided for in Section
8.7 of the Participation Agreement, and to the assignment, pledge or mortgage of
A-1
the Trust Estate to secure the Notes as set forth in the applicable Operative
Agreements, the holder of this Holder Certificate has an undivided beneficial
interest in properties of the Owner Trustee constituting part of the Trust
Estate and is entitled to receive, as provided in the Trust Agreement, a portion
of the Rent received or to be received by the Owner Trustee for the Properties,
as well as a portion of certain other payments which may be received by the
Owner Trustee pursuant to the terms of the Operative Agreements as more
particularly set forth therein.
All amounts payable hereunder and under the Trust Agreement shall be paid
only from the income and proceeds from the Trust Estate and only to the extent
that the Owner Trustee (or the Agent on behalf of the Owner Trustee) shall have
received sufficient income or proceeds from the Trust Estate to make such
payments in accordance with the terms of the Trust Agreement, except as
specifically provided in Section 6.1 of the Trust Agreement; and the holder
hereof, by its acceptance of this Holder Certificate, agrees that it will look
solely to the income and proceeds from the Trust Estate to the extent available
for distribution to the holder hereof as provided in the Trust Agreement and
that, except as specifically provided in the Trust Agreement, the Owner Trustee
is not personally liable to the holder hereof for any amount payable under this
Holder Certificate or the Trust Agreement.
The amounts payable to the holder hereof pursuant to the Trust Agreement
shall be paid or caused to be paid by the Owner Trustee to, or for the account
of, such Holder, or its nominee, by transferring such amount in immediately
available funds to a bank institution or banking institutions with bank wire
transfer facilities for the account of such Holder or as otherwise instructed in
writing from time to time by such Holder.
This Holder Certificate shall mature, and all amounts payable to the holder
hereof pursuant to the Trust Agreement shall be due and payable, on the Maturity
Date.
This Holder Certificate shall bear a yield on the unpaid amount hereof from
time to time outstanding hereunder and under the Trust Agreement at the Holder
Yield as provided in the Trust Agreement. The Holder Yield on this Holder
Certificate shall be computed as provided in the Trust Agreement and shall be
payable at the rates, at the times and from the dates specified in the Trust
Agreement.
From and after the execution of the Participation Agreement, the rights of
the holder of this Holder Certificate under the Trust Agreement as well as the
beneficial interest of the holder of this Holder Certificate in and to the
properties of the Owner Trustee constituting part of the Trust Estate, are
subject and subordinate to the rights of the holders of the Notes to the extent
provided in the applicable Operative Agreements. The Trust Estate has been or
will be assigned, pledged and mortgaged to the Agent, on behalf of the Lenders
and the Holders, as security for the Notes and the Holder Certificates.
Reference is hereby made to the Trust Agreement, the Participation Agreement,
the Credit Agreement, the Security Agreement and the Notes for statements of the
rights of the holder of this Holder Certificate and of the rights of the holders
of, and the nature and extent of the security for, the Notes, as well as for a
statement of the terms and conditions of the trust created by the Trust
Agreement, to all of which terms and conditions the holder hereof agrees by its
acceptance of this Holder Certificate. Reference is further made to the rights
of the Lessee provided for in the Operative Agreements.
A-2
The holder hereof, by its acceptance of this Holder Certificate, agrees not
to transfer this Holder Certificate except in accordance with the terms of the
Trust Agreement and the other Operative Agreements.
THIS HOLDER CERTIFICATE SHALL BE INTERPRETED AND ENFORCED AND THE RIGHTS
AND LIABILITIES OF THE PARTIES HERETO DETERMINED, INTERPRETED AND ENFORCED IN
ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF LAW PROVISIONS)
AND DECISIONS OF THE STATE OF UTAH. WHENEVER POSSIBLE EACH PROVISION OF THIS
HOLDER CERTIFICATE SHALL BE INTERPRETED IN SUCH MANNER AS TO BE EFFECTIVE AND
VALID UNDER APPLICABLE LAW, BUT IF ANY PROVISION OF THIS HOLDER CERTIFICATE
SHALL BE PROHIBITED BY OR INVALID UNDER APPLICABLE LAW, SUCH PROVISION SHALL BE
INEFFECTIVE TO THE EXTENT OF SUCH PROHIBITION OR INVALIDITY, WITHOUT
INVALIDATING THE REMAINDER OF SUCH PROVISION OR THE REMAINING PROVISIONS OF THIS
HOLDER CERTIFICATE.
[The remainder of this page has been intentionally left blank.]
A-3
IN WITNESS WHEREOF, the undersigned authorized officer of the Owner Trustee
has executed this Holder Certificate as of the date first set forth above.
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not individually, except as expressly set
forth herein, but solely as the Owner
Trustee under the FRI Trust 1999-1
By:
--------------------------------------
Name:
------------------------------------
Title:
------------------------------------
A-4
EXHIBIT B
FORM OF ASSIGNMENT AND ACCEPTANCE
THIS ASSIGNMENT AND ACCEPTANCE dated as of ____________ (as amended,
modified, supplemented, restated and/or replaced from time to time, the
"Assignment and Acceptance") is between [____________________] (the "Assignor")
and [_______________] (the "Assignee").
Reference is made to the Trust Agreement, dated as of September 27, 1999
(as amended, modified, extended, supplemented, restated and/or replaced from
time to time, the "Trust Agreement"), among FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not in its individual capacity except as stated therein, but solely
as the Owner Trustee under the FRI Trust 1999-1 (the "Owner Trustee" or the
"Owner Trustee"), and the Holders named therein. Unless otherwise defined
herein, terms defined in the Trust Agreement (or pursuant to Section 1 of the
Trust Agreement, defined in other agreements) and used herein shall have the
meanings given to them in or pursuant to the Trust Agreement.
The Assignor and the Assignee agree as follows:
1. The Assignor hereby irrevocably sells and assigns to the Assignee
without recourse to the Assignor, and the Assignee hereby irrevocably purchases
and assumes from the Assignor without recourse to the Assignor, as of the
Effective Date (as defined below), a [___%] interest (the "Assigned Interest")
in and to the Assignor's rights and obligations under the Trust Agreement and
Participation Agreement with respect to the facility contained in the Trust
Agreement and Participation Agreement as are set forth on Schedule 1 hereto (the
"Assigned Facility"), in a principal amount for the Assigned Facility as set
forth on Schedule 1.
2. The Assignor (a) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Trust Agreement or any other Operative
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Trust Agreement, any other Operative Agreement or
any other instrument or document furnished pursuant thereto, other than that it
has not created any adverse claim upon the interest being assigned by it
hereunder and that such interest is free and clear of any such adverse claim;
(b) makes no representation or warranty and assumes no responsibility with
respect to the financial condition of the Owner Trustee or any other obligor or
the performance or observance by the Owner Trustee, or any other obligor of any
of their respective obligations under the Trust Agreement or any other Operative
Agreement or any other instrument or document furnished pursuant hereto or
thereto; and (c) attaches the Certificate held by it evidencing the Assigned
Facility and requests that the Owner Trustee exchange such Certificate for a new
Certificate payable to the Assignee and (if the Assignor has retained any
interest in the Assigned Facility) a new Certificate payable to the Assignor in
the respective amounts which reflect the assignment being made hereby (and after
giving effect to any other assignments which have become effective on the
Effective Date).
B-1
3. The Assignee (a) represents and warrants that it is legally authorized
to enter into this Assignment and Acceptance; (b) confirms that it has received
copies of the Basic Documents (other than individual Notes and Certificates),
and such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into this Assignment and
Acceptance; (c) agrees that it will, independently and without reliance upon the
Assignor, the Agent, any other Holder or the Owner Trustee and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Trust
Agreement, the other Operative Agreements or any other instrument or document
furnished pursuant hereto or thereto; (d) appoints and authorizes the Agent and
the Owner Trustee, respectively, to take such action as agent on its behalf and
to exercise such powers and discretion under the Trust Agreement, the other
Operative Agreements or any other instrument or document furnished pursuant
hereto or thereto as are delegated to the Agent and the Owner Trustee,
respectively, by the terms thereof, together with such powers as are incidental
thereto; and (e) agrees that it will be bound by the provisions of the Trust
Agreement and the other Operative Agreements to which Assignee is a party and
will perform in accordance herewith all the obligations which by the terms of
the Trust Agreement and the other Operative Agreements to which Assignee is a
party are required to be performed by it as a Holder including without
limitation, if it is organized under the laws of a jurisdiction outside the
U.S., its obligation pursuant to Section 11.2(e) of the Participation Agreement.
In addition, the Assignee represents and warrants that all matters set forth in
Section 6.3 of the Participation Agreement are true and correct as to it (as if
it were an "initial Holder" referred to therein) as of the date of this
Assignment and Acceptance, and the provisions of such Section 6.3 are hereby
incorporated herein as if restated herein in their entirety.
4. The effective date of this Assignment and Acceptance shall be [________]
(the "Effective Date"). Following the execution of this Assignment and
Acceptance, it will be delivered to the Owner Trustee for acceptance by it and
recording by the Owner Trustee pursuant to Section 11.8(b) of the Trust
Agreement, effective as of the Effective Date (which shall not, unless otherwise
agreed to by the Owner Trustee, be earlier than three (3) Business Days after
the date of notification of such assignment from the Assignor to Owner Trustee).
5. Upon such acceptance and recording, from and after the Effective Date,
the Owner Trustee shall make, or cause to be made, all payments in respect of
the Assigned Interest (including without limitation payments of Holder Advance,
Holder Yield, fees and other amounts) to the Assignee whether such amounts have
accrued prior to the Effective Date or accrue subsequent to the Effective Date.
The Assignor and the Assignee shall make all appropriate adjustments in payments
by the Owner Trustee for periods prior to the Effective Date or with respect to
the making of this assignment directly between themselves.
6. From and after the Effective Date, (a) the Assignee shall be a party to
the Trust Agreement and, to the extent provided in this Assignment and
Acceptance, have (in addition to any such rights and obligations theretofore
held by it) the rights and obligations of a Holder thereunder and under the
other Operative Agreements and shall be bound by the provisions thereof and (b)
the Assignor shall, to the extent provided in this Assignment and Acceptance,
B-2
relinquish its rights and be released from its obligations under the Trust
Agreement and the other Operative Agreements.
7. This Assignment and Acceptance shall be governed by, and construed,
INTERPRETED AND ENFORCED in accordance with, the laws of the State of UTAH.
B-3
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be executed as of the date first above written by their respective
duly authorized officers on Schedule 1 hereto.
[ ]
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
[ ]
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
Consented To:
FRANKLIN TEMPLETON CORPORATE SERVICES, INC.,
as the Construction Agent and as the Lessee
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
BANK OF AMERICA, N.A., as the Agent
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not individually, but solely as the Owner
Trustee under the FRI Trust 1999-1
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
B-4
SCHEDULE 1
TO ASSIGNMENT AND ACCEPTANCE
RELATING TO THE TRUST AGREEMENT,
DATED AS OF SEPTEMBER 27, 1999, (THE "TRUST AGREEMENT")
AMONG
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
NOT INDIVIDUALLY EXCEPT AS STATED THEREIN,
BUT SOLELY AS THE OWNER TRUSTEE,
AND
THE HOLDERS PARTIES THERETO
Name of Assignor: [_______________]
Name of Assignee: [_______________]
Effective Date of Assignment: [_______________]
Trust Agreement Holder Advance Commitment
Facility Assigned Amount Assigned Percentage Assigned
Holder Commitment Amount [$____________] [_______%] of the
pursuant to aggregate Holder
above-referenced Trust Commitment (which is
Agreement [_____%] of the
Assignor's Holder
Commitment)
[Name of Assignor]
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------------
[Name of Assignee]
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------------
B-5
- --------------------------------------------------------------------------------
CREDIT AGREEMENT
Dated as of
September 27, 1999
among
First Security Bank, National Association,
not individually, except as
expressly stated herein,
but solely as the Owner Trustee
under the FRI Trust 1999-1,
as the Borrower,
The Several Lenders
from Time to Time Parties Hereto,
and
BANK OF AMERICA, N.A.,
as the Agent
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS......................................................1
1.1 Definitions......................................................1
1.2 Interpretation...................................................1
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS..................................1
2.1 Commitments......................................................1
2.2 Notes............................................................2
2.3 Procedure for Borrowing..........................................2
2.4 Lender Unused Fees...............................................3
2.5 Termination or Reduction of Commitments..........................3
2.6 Prepayments and Payments.........................................4
2.7 Conversion and Continuation Options..............................5
2.8 Interest Rates and Payment Dates.................................5
2.9 Computation of Interest..........................................6
2.10 Pro Rata Treatment and Payments..................................7
2.11 Notice of Amounts Payable; Mandatory Assignment..................8
SECTION 3. REPRESENTATIONS AND WARRANTIES...................................8
SECTION 4. CONDITIONS PRECEDENT.............................................9
4.1 Conditions to Effectiveness......................................9
4.2 Conditions to Each Loan..........................................9
SECTION 5. COVENANTS........................................................9
5.1 Other Activities.................................................9
5.2 Ownership of Properties, Indebtedness............................9
5.3 Disposition of Assets...........................................10
5.4 Compliance with Operative Agreements............................10
5.5 Further Assurances..............................................10
5.6 Notices.........................................................10
5.7 Discharge of Liens..............................................10
5.8 Trust Agreement.................................................10
SECTION 6. EVENTS OF DEFAULT...............................................11
SECTION 7. THE AGENT.......................................................13
7.1 Appointment.....................................................13
7.2 Delegation of Duties............................................14
7.3 Exculpatory Provisions..........................................14
7.4 Reliance by the Agent...........................................14
7.5 Notice of Default...............................................15
7.6 Non-Reliance on the Agent and Other Lenders.....................15
7.7 Indemnification.................................................16
i
7.8 The Agent in Its Individual Capacity............................16
7.9 Successor Agent.................................................16
7.10 Actions of the Agent on Behalf of Holders.......................17
7.11 The Agent's Duty of Care........................................17
SECTION 8. MATTERS RELATING TO PAYMENT AND COLLATERAL......................18
8.1 Collection and Allocation of Payments and Other Amounts.........18
8.2 Certain Remedial Matters........................................18
8.3 Excepted Payments...............................................18
SECTION 9. MISCELLANEOUS...................................................18
9.1 Amendments and Waivers..........................................18
9.2 Notices.........................................................18
9.3 No Waiver; Cumulative Remedies..................................19
9.4 Survival of Representations and Warranties......................19
9.5 Payment of Expenses and Taxes...................................19
9.6 Successors and Assigns..........................................19
9.7 Participations..................................................20
9.8 Assignments.....................................................20
9.9 The Register....................................................21
9.10 Adjustments; Set-off............................................22
9.11 Counterparts....................................................22
9.12 Severability....................................................23
9.13 Integration.....................................................23
9.14 Governing Law...................................................23
9.15 Submission to Jurisdiction; Venue...............................23
9.16 Acknowledgments.................................................23
9.17 Waivers of Jury Trial...........................................24
9.18 Nonrecourse.....................................................24
9.19 Usury Savings Provision.........................................24
SCHEDULES
Schedule 2.1 Commitments and Addresses of Lenders
EXHIBITS
Exhibit A-1 Form of Tranche A Note
Exhibit A-2 Form of Tranche B Note
Exhibit B Form of Assignment and Acceptance
ii
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of September 27, 1999 (as amended,
modified, extended, supplemented, restated and/or replaced from time to time,
the "Agreement") is among FIRST SECURITY BANK, NATIONAL ASSOCIATION, not
individually, except as expressly stated herein, but solely as the Owner Trustee
under the FRI Trust 1999-1 (the "Owner Trustee" or the "Borrower"), the several
banks and other financial institutions from time to time parties to this
Agreement (the "Lenders") and BANK OF AMERICA, N.A., a national banking
association, as a Lender and as the agent for the Lenders (the "Agent").
The parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Definitions.
For purposes of this Agreement, capitalized terms used in this Agreement
and not otherwise defined herein shall have the meanings assigned to them in
Appendix A to that certain Participation Agreement dated as of September 27,
1999 (as amended, modified, extended, supplemented, restated and/or replaced
from time to time in accordance with the applicable provisions thereof, the
"Participation Agreement") among Franklin Templeton Corporate Services, Inc.,
Franklin Resources, Inc., as the Guarantor, the Borrower, the various banks and
other lending institutions which are parties thereto from time to time, as the
Holders, the various banks and other lending institutions which are parties
thereto from time to time, as the Lenders, and Bank of America, N.A., as agent
for the Lenders and respecting the Security Documents, as the agent for the
Lenders and the Holders, to the extent of their interests. Unless otherwise
indicated, references in this Agreement to articles, sections, paragraphs,
clauses, appendices, schedules and exhibits are to the same contained in this
Agreement.
1.2 Interpretation.
The rules of usage set forth in Appendix A to the Participation Agreement
shall apply to this Agreement.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 Commitments.
(a) Subject to the terms and conditions hereof, each of the Lenders
severally agrees to make Tranche A Loans and the Tranche B Loans to the Borrower
(subject to the provisions of the last sentence of Section 5.2(c) of the
Participation Agreement) from time to time during the Commitment Period in an
amount up to such Lender's aggregate Commitment as is set forth adjacent to such
Lender's name in Schedule 2.1 hereto for the purpose of enabling the Borrower to
purchase the Properties (or acquire a ground leasehold interest therein) and to
pay Property Acquisition Costs, Property Costs and Transaction Expenses,
provided, that the aggregate principal amount at any one (1) time outstanding
with respect to the Tranche A Loans and the Tranche B Loans shall not exceed the
amount of the Tranche A Commitments and the Tranche B Commitments respectively.
Any prepayments of the Loans, whether mandatory or at the Borrower's election,
shall not be subject to reborrowing except as set forth in Section 5.2(d) of the
Participation Agreement.
(b) The Loans may from time to time be (i) Eurodollar Loans, (ii) ABR
Loans, or (iii) a combination thereof, as determined by the Borrower and
notified to the Agent in accordance with Sections 2.3 and 2.7. In the event the
Borrower fails to provide notice pursuant to Section 2.3, the Loan shall be an
ABR Loan. Further, any Loans by the Lenders on a given date in an aggregate
amount less than $100,000 shall be ABR Loans, unless the remaining Available
Commitment for the Lenders in the aggregate is less than $100,000, in which case
the Borrower may elect a Eurodollar Loan for such remaining amount.
(c) The Commitment of each Lender to make Tranche A Loans and Tranche B
Loans shall be pro rata among the Lenders.
2.2 Notes.
The Loans made by each Lender shall be evidenced by promissory notes of the
Borrower, substantially in the form of Exhibit A-1 in the case of the Tranche A
Loans (each, a "Tranche A Note") or Exhibit A-2 in the case of the Tranche B
Loans (each, a "Tranche B Note," and with the Tranche A Notes, the "Notes"),
with appropriate insertions as to payee and date, payable to the order of such
Lender and in a principal amount up to the Tranche A Commitment or Tranche B
Commitment, as the case may be, of such Lender. Each Lender is hereby authorized
to record the date, Type and amount of each Loan made by such Lender, each
continuation thereof, each conversion of all or a portion thereof to another
Type, and the date and amount of each payment or prepayment of principal thereof
on the schedule annexed to and constituting a part of its Note, and any such
recordation shall constitute prima facie evidence of the accuracy of the
information so recorded, provided, that the failure to make any such recordation
or any error in such recordation shall not affect the Borrower's obligations
hereunder or under such Note. Each Note shall (i) be dated the Initial Closing
Date, (ii) be stated to mature on the Maturity Date and (iii) provide for the
payment of principal in accordance with Section 2.6(d) and the payment of
interest in accordance with Section 2.8.
2.3 Procedure for Borrowing.
(a) The Borrower may borrow under the Commitments during the Commitment
Period on any Business Day that an Advance may be requested pursuant to the
terms of Section 5.2 of the Participation Agreement, provided, that the Borrower
shall give the Agent irrevocable notice (which must be received by the Agent
prior to 12:00 Noon, New York City time, at least three (3) Business Days prior
to the requested Borrowing Date specifying (i) the amount to be borrowed (which
on any date shall not be in excess of the then Available Commitments), (ii) the
requested Borrowing Date, (iii) whether the borrowing is to be of Eurodollar
2
Loans, ABR Loans or a combination thereof, (iv) if the borrowing is to be a
combination of Eurodollar Loans and ABR Loans, the respective amounts of each
Type of Loan and (v) the Interest Period applicable to each Eurodollar Loan.
Pursuant to the terms of the Participation Agreement, the Borrower shall be
deemed to have delivered such notice upon the delivery of a notice by the
Construction Agent or the Lessee containing such required information. Upon
receipt of any such notice from the Borrower, the Agent shall promptly notify
each Lender thereof. Each Lender will make the amount of its pro rata share of
each borrowing (and in accordance with the percentages of Loans allocated to
Tranche A Loans and Tranche B Loans as set forth in Section 5.2(c) of the
Participation Agreement) available to the Agent for the account of the Borrower
at the office of the Agent specified in Section 9.2 prior to 12:00 Noon, New
York City time, on the Borrowing Date requested by the Borrower in funds
immediately available to the Agent. Such borrowing will then be made available
to the Borrower by the Agent crediting an account designated, subject to Section
9.1 of the Participation Agreement, by the Borrower on the books of such office
with the aggregate of the amounts made available to the Agent by the Lenders and
in like funds as received by the Agent. No amount of any Loan which is repaid or
prepaid by the Borrower may be reborrowed hereunder, except as set forth in
Section 5.2(d) of the Participation Agreement.
(b) Interest accruing on each Loan during the Construction Period with
respect to any Property shall, subject to the limitations set forth in Section
5.1(b) of the Participation Agreement, be added to the principal amount of such
Loan on the relevant Scheduled Interest Payment Date. On each such Scheduled
Interest Payment Date, the Loan Property Cost and Construction Loan Property
Cost shall be increased by the amount of interest added to the Loans.
2.4 Lender Unused Fees.
Promptly after receipt of the payment of the Lender Unused Fee payable
pursuant to Section 7.4 of the Participation Agreement, the Agent shall
distribute such payments to the Lenders pro rata in accordance with their
respective Commitments.
2.5 Termination or Reduction of Commitments.
(a) Subject to Section 9.1 of the Participation Agreement, the Borrower
shall have the right, upon not less than three (3) Business Days' written notice
to the Agent, to terminate the Commitments or, from time to time, to reduce the
amount of the Commitments, provided, that (i) after giving effect to such
reduction, the aggregate outstanding principal amount of the Loans shall not
exceed the aggregate Commitments and (ii) such notice shall be accompanied by a
certificate of the Construction Agent stating that the amount not less than
ninety-seven percent (97%) of aggregate Budgeted Total Property Costs as of the
date of such reduction does not exceed the aggregate amount of Available
Commitments as of such date after giving effect to such reduction. Any such
reduction (A) shall be in an amount equal to the lesser of (1) $1,000,000 (or an
even multiple thereof) or (2) the remaining Available Commitments, (B) shall
reduce permanently the Commitments then in effect and (C) shall be pro rata for
the Commitments of all Lenders and pro rata between the Tranche A Commitments
and the Tranche B Commitments.
3
(b) The Commitments respecting any particular Property shall automatically
be reduced to zero (0) upon the occurrence of the Rent Commencement Date
respecting such Property. On any date on which the Commitments shall
automatically be reduced to zero (0) pursuant to Section 6, the Borrower shall
prepay all outstanding Loans, together with accrued unpaid interest thereon and
all other amounts owing under the Operative Agreements.
2.6 Prepayments and Payments.
(a) Subject to Sections 9.1, 11.2(e), 11.3 and 11.4 of the Participation
Agreement, the Borrower may at any time and from time to time prepay the Loans,
in whole or in part, without premium or penalty and without setoff, deduction or
counterclaim, upon at least three (3) Business Days' irrevocable notice to the
Agent, specifying the date and amount of prepayment and whether the prepayment
is of Eurodollar Loans, ABR Loans or a combination thereof, and, if a
combination thereof, the amount allocable to each. Upon receipt of any such
notice the Agent shall promptly notify each Lender thereof. If any such notice
is given, the amount specified in such notice shall be due and payable on the
date specified therein. Amounts prepaid may not be reborrowed, and shall reduce
the Commitments and the Available Commitments, except in each case as set forth
in Section 5.2(d) of the Participation Agreement.
(b) If on any date the Borrower or the Agent on behalf of the Borrower
shall receive any payment in respect of (i) any Casualty, Condemnation or
Environmental Violation pursuant to Sections 15.1(a) or 15.1(g) or Article XVI
of the Lease (excluding any payments in respect thereof which are payable to the
Lessee in accordance with the Lease), or (ii) the Termination Value of any
Property in connection with the delivery of a Termination Notice pursuant to
Article XVI of the Lease, or (iii) the Termination Value of any Property in
connection with the exercise of the Purchase Option or Sale Option under
Articles XX and XXII of the Lease or the exercise of the option of the Lessor to
transfer the Properties to the Lessee pursuant to Section 20.3 of the Lease, or
(iv) any payment required to be made or elected to be made by the Construction
Agent to the Lessor pursuant to the terms of the Agency Agreement, then in each
case, the Borrower shall pay such amounts to the Agent and the Agent shall be
required to apply and pay such amounts in accordance with the provisions of
Section 8.7(b)(ii) of the Participation Agreement.
(c) Each prepayment of the Loans pursuant to Section 2.6(a) shall be
allocated to reduce the respective Loan Property Costs of all Properties pro
rata according to the Loan Property Costs of such Properties immediately before
giving effect to such prepayment. Each prepayment of the Loans pursuant to
Section 2.6(b) shall be allocated to reduce the Loan Property Cost of the
Property or Properties subject to the respective Casualty, Condemnation,
Environmental Violation, termination, purchase, transfer or other circumstance
giving rise to such prepayment. Any amounts applied to reduce the Loan Property
Cost of any Construction Period Property pursuant to this paragraph (c) shall
also be applied to reduce the Construction Loan Property Cost of such Property
until such Construction Loan Property Cost has been reduced to zero (0).
4
(d) The outstanding principal balance of the Loans and all other amounts
then due and owing under this Agreement or otherwise with respect to the Loans
shall be due and payable in full on the Maturity Date.
2.7 Conversion and Continuation Options.
(a) Subject to Section 9.1 of the Participation Agreement, the Borrower may
elect from time to time to convert Eurodollar Loans to ABR Loans by giving the
Agent at least three (3) Business Days' prior irrevocable notice of such
election, provided, that any such conversion of Eurodollar Loans may only be
made on the last day of an Interest Period with respect thereto, and provided,
further, to the extent a Credit Agreement Event of Default has occurred and is
continuing on the last day of any such Interest Period, the applicable
Eurodollar Loan shall automatically be converted to an ABR Loan. The Borrower
may elect from time to time to convert ABR Loans to Eurodollar Loans by giving
the Agent at least three (3) Business Days' prior irrevocable notice of such
election. Upon receipt of any such notice, the Agent shall promptly notify each
Lender thereof. All or any part of outstanding Eurodollar Loans or ABR Loans may
be converted as provided herein, provided, that (i) no ABR Loan may be converted
into a Eurodollar Loan after the date that is one (1) month prior to the
Maturity Date and (ii) such notice of conversion regarding any Eurodollar Loan
shall contain an election by the Borrower of an Interest Period for such
Eurodollar Loan to be created by such conversion and such Interest Period shall
be in accordance with the terms of the definition of the term "Interest Period"
including without limitation subparagraphs (A) through (D) thereof.
(b) Any Eurodollar Loan may be continued as such upon the expiration of the
current Interest Period with respect thereto by the Borrower giving irrevocable
notice to the Agent, in accordance with the applicable notice provision for the
conversion of ABR Loans to Eurodollar Loans set forth herein, of the length of
the next Interest Period to be applicable to such Loan, provided, that no
Eurodollar Loan may be continued as such after the date that is one (1) month
prior to the Maturity Date, provided, further, no Eurodollar Loan may be
continued as such if a Credit Agreement Event of Default has occurred and is
continuing as of the last day of the Interest Period for such Eurodollar Loan,
and provided, further, that if the Borrower shall fail to give any required
notice as described above or otherwise herein, or if such continuation is not
permitted pursuant to the proceeding proviso, such Loan shall automatically be
converted to an ABR Loan on the last day of such then expiring Interest Period.
2.8 Interest Rates and Payment Dates.
(a) The Loans outstanding hereunder from time to time shall bear interest
at a rate per annum equal to either (i) with respect to a Eurodollar Loan, the
Eurodollar Rate determined for the applicable Interest Period plus the
Applicable Percentage or (ii) with respect to an ABR Loan, the ABR, as selected
by the Borrower in accordance with the provisions hereof; provided, however, (A)
upon delivery by the Agent of the notice described in Section 2.9(c), the Loans
of each of the Lenders shall bear interest at the ABR applicable from time to
time from and after the dates and during the periods specified in Section
2.9(c), (B) upon the delivery by a Lender of the notice described in Section
11.3(f) of the Participation Agreement, the Loans of such Lender shall bear
interest at the ABR applicable from time to time from and after the dates and
5
during the periods specified in Section 11.3(f) of the Participation Agreement
and (C) in such other circumstances as expressly provided herein, the Loans
shall bear interest at the ABR.
(b) If (i) all or a portion of (A) the principal amount of any Loan, (B)
any interest payable thereon or (C) any other amount payable hereunder shall not
be paid when due (whether at the stated maturity, by acceleration or otherwise)
or (ii) (A) a replacement Construction Agent is hired in accordance with the
provisions of the Agency Agreement, (B) Completion of all Properties has not
occurred on or prior to the Construction Period Termination Date or (C) the cost
of any Property exceeds the original Construction Budget therefor (or the
applicable Construction Budget modified in accordance with the Operative
Agreements) in each case as previously delivered to the Agent, such overdue
amount (in the case of Section 2.8(b)(i)) or all Loans, including without
limitation principal and interest, and all other amounts payable hereunder (in
the case of Section 2.8(b)(ii)) shall bear interest at a rate per annum which is
the lesser of (x) the then current rate of interest respecting such payment or
other amount (or, if such amount is not then interest-bearing, at the then
current rate of interest respecting Eurodollar Loans having an Interest Period
of one month and, if such Eurodollar Loans are not then available, at the ABR),
as the case may be, plus two percent (2%) and (y) the highest interest rate
permitted by applicable law, in each case from the date of such non-payment
until such payment is paid in full (whether after or before judgment) (in the
case of Section 2.8(b)(i)), Completion of all Properties (in the case of Section
2.8(b)(ii)) or all sums due and all obligations to be performed in each case on
account of the Company Obligations are paid and performed in full (in the case
of Sections 2.8(b)(i) and 2.8(b)(ii)). All such amounts referenced in this
Section 2.8(b) shall be paid upon demand.
(c) Interest shall be payable in arrears on the applicable Scheduled
Interest Payment Date, provided, that (i) interest accruing pursuant to
paragraph (b) of this Section 2.8 shall be payable from time to time on demand
and (ii) each prepayment of the Loans shall be accompanied by accrued interest
to the date of such prepayment on the amount prepaid.
2.9 Computation of Interest.
(a) Whenever it is calculated on the basis of the ABR, interest shall be
calculated on the basis of a year of three hundred sixty-five (365) days (or
three hundred sixty-six (366) days, as the case may be) for the actual days
elapsed; and, otherwise, interest shall be calculated on the basis of a year of
three hundred sixty (360) days for the actual days elapsed. The Agent shall as
soon as practicable notify the Borrower and the Lenders of each determination of
a Eurodollar Rate. Any change in the interest rate on a Loan resulting from a
change in the ABR or the Eurocurrency Reserve Requirements shall become
effective as of the day on which such change becomes effective. The Agent shall
as soon as practicable notify the Borrower and the Lenders of the effective date
and the amount of each such change in interest rate.
(b) Each determination of an interest rate by the Agent pursuant to any
provision of this Agreement shall be conclusive and binding on the Borrower and
the Lenders in the absence of manifest error.
6
(c) If the Eurodollar Rate cannot be determined by the Agent in the manner
specified in the definition of the term "Eurodollar Rate", the Agent shall give
telecopy or telephonic notice thereof to the Borrower and the Lenders as soon as
practicable thereafter. Until such time as the Eurodollar Rate can be determined
by the Agent in the manner specified in the definition of such term, no further
Eurodollar Loans shall be made or shall be continued as such at the end of the
then current Interest Period nor shall the Borrower have the right to convert
ABR Loans to Eurodollar Loans.
2.10 Pro Rata Treatment and Payments.
(a) Each borrowing by the Borrower from the Lenders hereunder and any
reduction of the Commitments of the Lenders shall be made pro rata according to
their respective Commitments. Subject to the provisions of Section 8.7 of the
Participation Agreement and Section 2.11(b) hereof, each payment (including
without limitation each prepayment) by the Borrower on account of principal of
and interest on the Loans shall be made pro rata according to the respective
outstanding principal amounts on the Loans then held by the Lenders. All
payments (including without limitation prepayments) to be made by the Borrower
hereunder and under the Notes, whether on account of principal, interest or
otherwise, shall be made without setoff or counterclaim and shall be made prior
to 12:00 Noon, New York City time, on the due date thereof to the Agent, for the
account of the Lenders, at the Agent's office specified in Section 9.2, in
Dollars and in immediately available funds. The Agent shall distribute such
payments to the Lenders promptly upon receipt in like funds as received. If any
payment hereunder becomes due and payable on a day other than a Business Day,
such payment shall be extended to the next succeeding Business Day; provided,
however, if such payment includes an amount of interest calculated with
reference to the Eurodollar Rate and the result of such extension would be to
extend such payment into another calendar month, then such payment shall be made
on the immediately preceding Business Day. In the case of any extension of any
payment of principal pursuant to the preceding two (2) sentences, interest
thereon shall be payable at the then applicable rate during such extension.
(b) Unless the Agent shall have been notified in writing by any Lender
prior to a borrowing that such Lender will not make its share of such borrowing
available to the Agent, the Agent may assume that such Lender is making such
amount available to the Agent, and the Agent may, in reliance upon such
assumption, make available to the Borrower a corresponding amount. If such
amount is not made available to the Agent by the required time on the Borrowing
Date therefor, such Lender shall pay to the Agent, on demand, such amount with
interest thereon at a rate equal to the daily average Federal Funds Effective
Rate for the period until such Lender makes such amount immediately available to
the Agent. A certificate of the Agent submitted to any Lender with respect to
any amounts owing under this Section 2.10(b) shall be conclusive in the absence
of manifest error. If such Lender's share of such borrowing is not made
available to the Agent by such Lender within three (3) Business Days of such
Borrowing Date, the Agent shall also be entitled to recover such amount with
interest thereon at the rate as set forth above in this Section 2.10(b) on
demand from the Borrower.
7
2.11 Notice of Amounts Payable; Mandatory Assignment.
(a) In the event that any Lender becomes aware that any amounts are or will
be owed to it pursuant to Sections 11.2(e), 11.3 or 11.4 of the Participation
Agreement or that it is unable to make Eurodollar Loans, then it shall promptly
notify the Borrower, the Lessee and the Agent thereof and, as soon as possible
thereafter, such Lender shall submit to the Borrower (with a copy to the Agent)
a certificate indicating the amount owing to it and the calculation thereof. The
amounts set forth in such certificate shall be prima facie evidence of the
obligations of the Borrower hereunder.
(b) In the event that any Lender delivers to the Borrower a certificate in
accordance with Section 2.11(a) in connection with amounts payable pursuant to
Sections 11.2(e) or 11.3 of the Participation Agreement or such Lender is
required to make Loans as ABR Loans in accordance with Section 11.3(f) of the
Participation Agreement then, subject to Section 9.1 of the Participation
Agreement, the Borrower may, at its own expense (provided, such amounts shall be
reimbursed or paid entirely (as elected by the Borrower) by the Lessee, as
Supplemental Rent) and in the discretion of the Borrower, (i) require such
Lender to transfer or assign, in whole or (with such Lender's consent) in part,
without recourse (in accordance with Section 9.8), all or (with such Lender's
consent) part of its interests, rights (except for rights to be indemnified for
actions taken while a party hereunder) and obligations under this Agreement to a
replacement bank or institution if the Borrower (subject to Section 9.1 of the
Participation Agreement), with the full cooperation of the Agent and such
Lender, can identify a Person who is ready, willing and able to be such
replacement bank or institution with respect thereto and such replacement bank
or institution (which may be another Lender) shall assume such assigned
obligations, or (ii) during such time as no Credit Agreement Default or Credit
Agreement Event of Default has occurred and is continuing, terminate the
Commitment of such Lender and prepay all outstanding Loans of such Lender;
provided, however, that (x) subject to Section 9.1 of the Participation
Agreement, the Borrower or such replacement bank or institution, as the case may
be, shall have paid to such Lender in immediately available funds the principal
of and interest accrued to the date of such payment on the Loans made by it
hereunder and all other amounts owed to it hereunder (and, if such Lender is
also a Holder, all Holder Advances and Holder Yield accrued and unpaid thereon),
(y) any termination of Commitments shall be subject to the terms of the first
sentence of Section 2.5(a) and shall be pro rata between the Tranche A
Commitment and the Tranche B Commitment of such Lender and (z) such assignment
or termination of the Commitment of such Lender and prepayment of Loans does not
conflict with any law, rule or regulation or order of any court or other
Governmental Authority.
SECTION 3. REPRESENTATIONS AND WARRANTIES
To induce the Agent and the Lenders to enter into this Agreement and to
make the Loans, each of the Trust Company and the Owner Trustee hereby makes and
affirms the representations and warranties set forth in Section 6.1 of the
Participation Agreement to the same extent as if such representations and
warranties were set forth in this Agreement in their entirety.
8
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions to Effectiveness.
The effectiveness of this Agreement (except with respect to Section
9.5(a)(i) of this Agreement) is subject to the satisfaction of all conditions
precedent set forth in Section 5.3 of the Participation Agreement required by
said Section to be satisfied on or prior to the Initial Closing Date.
4.2 Conditions to Each Loan.
The agreement of each Lender to make any Loan requested to be made by it on
any date is subject to the satisfaction of all conditions precedent set forth in
Section 5.3 and 5.4 of the Participation Agreement required by said Sections to
be satisfied on or prior to the date of the applicable Loan.
Each borrowing by the Borrower hereunder shall constitute a representation and
warranty by the Borrower as of the date of such Loan that the conditions
contained in this Section 4.2 have been satisfied.
SECTION 5. COVENANTS
So long as any Loan or Note remains outstanding and unpaid or any other
amount is owing to any Lender or the Agent hereunder:
5.1 Other Activities.
Except as unanimously authorized by the Holders pursuant to Section 2.2 of
the Trust Agreement and unanimously consented to by the Lenders, the Borrower
shall not conduct, transact or otherwise engage in, or commit to transact,
conduct or otherwise engage in, any business or operations other than the entry
into, and exercise of rights and performance of obligations in respect of, the
Operative Agreements and other activities incidental or related to the
foregoing.
5.2 Ownership of Properties, Indebtedness.
Except as unanimously authorized by the Holders pursuant to Section 2.2 of
the Trust Agreement and unanimously consented to by the Lenders, the Borrower
shall not own, lease, manage or otherwise operate any properties or assets other
than in connection with the activities described in Section 5.1, or incur,
create, assume or suffer to exist any Indebtedness or other consensual
liabilities or financial obligations other than as may be incurred, created or
assumed or as may exist in connection with the activities described in Section
5.1 (including without limitation the Loans and other obligations incurred by
the Borrower hereunder).
9
5.3 Disposition of Assets.
The Borrower shall not convey, sell, lease, assign, transfer or otherwise
dispose of (a) any of the Properties, whether now owned or hereafter acquired,
except to the extent expressly contemplated by the Operative Agreements or (b)
any other property, business or asset without the prior written unanimous
consent of the Holders.
5.4 Compliance with Operative Agreements.
The Borrower shall at all times (a) observe and perform all of the
covenants, conditions and obligations required to be performed by it (whether in
its capacity as the Lessor, the Owner Trustee or otherwise) under each Operative
Agreement to which it is a party and (b) observe and perform, or cause to be
observed and performed, all of the covenants, conditions and obligations of the
Lessor under the Lease, even in the event that the Lease is terminated at stated
expiration following a Lease Event of Default or otherwise.
5.5 Further Assurances.
At any time and from time to time, upon the written request of the Agent,
and at the expense of the Borrower (provided, that without limiting Lessee's
right to request Advances in accordance with the provisions of the Participation
Agreement, such amounts shall be reimbursed or paid entirely (as elected by the
Borrower) by the Lessee, as Supplemental Rent), the Borrower will promptly and
duly execute and deliver such further instruments and documents and take such
further action as the Agent or the Majority Lenders may reasonably request for
the purpose of obtaining or preserving the full benefits of this Agreement and
the other Operative Agreements and of the rights and powers herein or therein
granted.
5.6 Notices.
If on any date, a Responsible Officer of the Borrower shall obtain actual
knowledge of the occurrence of a Credit Agreement Default or Credit Agreement
Event of Default, the Borrower will give written notice thereof to the Agent
within five (5) Business Days after such date.
5.7 Discharge of Liens.
The Borrower and Trust Company shall at all times comply with the
provisions of Section 8.2 of the Participation Agreement.
5.8 Trust Agreement.
Without prejudice to any right under the Trust Agreement of the Owner
Trustee to resign, the Owner Trustee in its individual and trust capacities (a)
agrees not to terminate or revoke the trust created by the Trust Agreement
except as permitted by Article VIII of the Trust Agreement, (b) agrees not to
amend, supplement, terminate, revoke or otherwise modify any provision of the
Trust Agreement in any manner which could reasonably be expected to have an
10
adverse effect on the rights or interests of the Agent or the Lenders hereunder
or under the other Operative Agreements and (c) agrees to comply with all of the
terms of the Trust Agreement.
SECTION 6. EVENTS OF DEFAULT
Upon the occurrence of any of the following specified events (each a
"Credit Agreement Event of Default"):
(a) Except as provided in Section 6(c), the Borrower shall default in the
payment when due of any principal on the Loans or default in the payment when
due of any interest on the Loans and, in either such case, such default shall
continue for three (3) or more days; or
(b) Subject to Section 8.10 of the Participation Agreement and except as
provided in Sections 6(a) and 6(c), the Borrower shall default, and such default
shall continue for five (5) or more days, in the payment of any amount owing
under any Credit Document (unless Lessee shall be obligated to pay any such
amount as Supplemental Rent in which case the five (5) day period referenced in
this Section 6(b) shall not commence until the expiration of the thirty (30) day
grace period applicable to the payment of Supplemental Rent as referenced in
Section 3.3 of the Lease and Section 8.3(d) of the Participation Agreement); or
(c) (i) The Borrower shall default in the payment of any amount due on the
Maturity Date owing under any Credit Document or (ii) the Borrower shall default
in the payment when due of any principal or interest on the Loans or any other
amount payable with regard to any obligation of Lessee to pay Termination Value
or Maximum Amount when due or to pay Basic Rent or Supplemental Rent at such
time as any Termination Value or Maximum Amount is due; or
(d) Subject to Section 8.10 of the Participation Agreement, the Borrower
shall default in the due performance or observance by it of any term, covenant
or agreement contained in any Credit Document to which it is a party (other than
those referred to in paragraphs (a), (b) and (c) above), provided, that in the
case of any such default under Sections 5.4, 5.5 or 5.8(c), such default shall
have continued unremedied for a period of at least thirty (30) days after notice
to the Borrower and the Lessee by the Agent or the Majority Lenders; or
(e) Subject to Section 8.10 of the Participation Agreement, any
representation, warranty or statement made or deemed made by the Borrower herein
or in any other Credit Document or by the Borrower in the Participation
Agreement, or in any statement or certificate delivered or required to be
delivered pursuant hereto or thereto, shall prove to be untrue in any material
respect on the date as of which made or deemed made; or
(f) Subject to Section 8.10 of the Participation Agreement, (i) any Lease
Event of Default shall have occurred and be continuing, or (ii) the Owner
Trustee shall default in the due performance or observance by it of any term,
covenant or agreement contained in the Participation Agreement or in the Trust
Agreement to or for the benefit of the Agent or a Lender, provided, that in the
case of this clause (ii) such default shall have continued unremedied for a
11
period of at least thirty (30) days after notice to the Owner Trustee and Lessee
by the Agent or the Majority Lenders; or
(g) The Borrower shall commence a voluntary case concerning itself under
the Bankruptcy Code or an involuntary case is commenced against the Borrower and
the petition is not contravened within ten (10) days after commencement of the
case or an involuntary case is commenced against the Borrower and the petition
is not dismissed within sixty (60) days after commencement of the case; or a
custodian (as defined in the Bankruptcy Code) is appointed for, or takes charge
of, all or substantially all of the property of the Borrower; or the Borrower
commences any other proceeding under any reorganization, arrangement, adjustment
of debt, relief of debtors, dissolution, insolvency or liquidation or similar
law of any jurisdiction whether now or hereafter in effect relating to the
Borrower, or there is commenced against the Borrower any such proceeding which
remains undismissed for a period of sixty (60) days; or the Borrower is
adjudicated insolvent or bankrupt, or any order of relief or other order
approving any such case or proceeding is entered; or the Borrower suffers any
appointment of any custodian or the like for it or any substantial part of its
property to continue undischarged or unstayed for a period of sixty (60) days;
or the Borrower makes a general assignment for the benefit of creditors; or any
corporate, trust or partnership action is taken by the Borrower for the purpose
of effecting any of the foregoing; or
(h) Any Security Document shall cease to be in full force and effect, or
shall cease to give the Agent the Liens, rights, powers and privileges purported
to be created thereby (including without limitation a first priority perfected
security interest in, and Lien on, all of the Properties), in favor of the Agent
on behalf of the Lenders and the Holders, superior to and prior to the rights of
all third Persons and subject to no other Liens (except in each case to the
extent expressly permitted herein or in any Operative Agreement) other than
Prior Liens; or
(i) The Lease shall cease to be enforceable against the Lessee; or
(j) One (1) or more judgments or decrees shall be entered against the
Borrower involving a liability of $100,000 or more in the aggregate for all such
judgments and decrees for the Borrower and any such judgment or decree shall not
have been vacated, discharged or stayed or bonded pending appeal within sixty
(60) days from the entry thereof,
then, and in any such event, (A) if such event is a Credit Agreement Event of
Default specified in paragraph (g) above with respect to the Borrower,
automatically the Commitments shall immediately terminate and the Loans
hereunder (with accrued interest thereon) and all other amounts owing under this
Agreement and the Notes shall immediately become due and payable, and (B) if
such event is any other Credit Agreement Event of Default, either or both of the
following actions may be taken: (i) with the consent of the Majority Lenders,
the Agent may, or, upon the request of the Majority Lenders, the Agent shall, by
notice to the Borrower declare the Commitments to be terminated forthwith,
whereupon the Commitments shall immediately terminate; and (ii) with the consent
of the Majority Lenders, the Agent may, or, upon the request of the Majority
Lenders, the Agent shall, by notice to the Borrower, declare the Loans hereunder
(with accrued interest thereon) and all other amounts owing under this Agreement
and the Notes to be due and payable forthwith, whereupon the same shall
12
immediately become due and payable (any of the foregoing occurrences or actions
referred to in clause (A) or (B) above, an "Acceleration"); provided, however,
that unless Acceleration occurs as a result of a Credit Agreement Event of
Default described in Sections 6(f)(i) or 6(i), Acceleration shall not entitle
Owner Trustee, Agent, Lenders or Holders to accelerate the Termination Date or
Expiration Date of the Lease, to require Lessee to exercise the Purchase Option
or Sale Option or otherwise to purchase the Property or permit the accelerated
exercise of any rights or remedies against the Lessee (or to exercise rights
under any assignment of the Lease given by Borrower as security for the Loans).
Except as expressly provided above in this Section 6, presentment, demand,
protest and all other notices of any kind are hereby expressly waived.
Upon the occurrence of any Credit Agreement Event of Default and at any
time thereafter so long as any Credit Agreement Event of Default shall be
continuing, the Agent shall, upon the written instructions of the Majority
Secured Parties, exercise any or all of the rights and powers and pursue any and
all of the remedies available to it hereunder and (subject to the terms thereof)
under the other Credit Documents, the Lease and the other Operative Agreements
and shall have any and all rights and remedies available under the Uniform
Commercial Code or any provision of law.
Upon the occurrence of any Credit Agreement Event of Default and at any
time thereafter so long as any Credit Agreement Event of Default shall be
continuing, the Agent may, and upon request of the Majority Secured Parties
shall, proceed to protect and enforce this Agreement, the Notes, the other
Credit Documents and the Lease by suit or suits or proceedings in equity, at law
or in bankruptcy, and whether for the specific performance of any covenant or
agreement herein contained or in execution or aid of any power herein granted,
or for foreclosure hereunder, or for the appointment of a receiver or receivers
for the Property or for the recovery of judgment for the indebtedness secured
thereby or for the enforcement of any other proper, legal or equitable remedy
available under applicable laws.
The Borrower shall be liable for any and all accrued and unpaid amounts due
hereunder before, after or during the exercise of any of the foregoing remedies,
including without limitation all reasonable legal fees and other reasonable
costs and expenses incurred by the Agent or any Lender by reason of the
occurrence of any Credit Agreement Event of Default or the exercise of remedies
with respect thereto.
SECTION 7. THE AGENT
7.1 Appointment.
Each Lender hereby irrevocably designates and appoints the Agent as the
agent of such Lender under this Agreement and the other Operative Agreements,
and each such Lender irrevocably authorizes the Agent, in such capacity, to
execute the Operative Agreements as agent for and on behalf of such Lender, to
take such action on behalf of such Lender under the provisions of this Agreement
and the other Operative Agreements and to exercise such powers and perform such
duties as are expressly delegated to the Agent by the terms of this Agreement
and other Operative Agreements, together with such other powers as are
13
reasonably incidental thereto. Without limiting the generality of the foregoing,
each of the Lenders hereby specifically acknowledges the terms and provisions of
the Participation Agreement and directs the Agent to exercise such powers, make
such decisions and otherwise perform such duties as are delegated to the Agent
thereunder without being required to obtain any specific consent with respect
thereto from any Lender, unless the matter under consideration is a Unanimous
Vote Matter or otherwise requires the consent of the Majority Lenders and/or the
Majority Secured Parties. Notwithstanding any provision to the contrary
elsewhere in this Agreement, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Operative Agreement or otherwise exist against the Agent.
7.2 Delegation of Duties.
The Agent may execute any of its duties under this Agreement and the other
Operative Agreements by or through agents or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining to such duties.
The Agent shall not be responsible for the negligence or misconduct of any
agents or attorneys-in-fact selected by it with reasonable care.
7.3 Exculpatory Provisions.
Neither the Agent nor any of its officers, directors, employees, agents,
attorneys-in-fact or Affiliates shall be (a) liable for any action lawfully
taken or omitted to be taken by it or such Person under or in connection with
this Agreement or any other Operative Agreement (except for its or such Person's
own gross negligence or willful misconduct) or (b) responsible in any manner to
any of the Lenders for any recitals, statements, representations or warranties
made by the Borrower or any Credit Party or any officer thereof contained in
this Agreement or any other Operative Agreement or in any certificate, report,
statement or other document referred to or provided for in, or received by the
Agent under or in connection with, this Agreement or any other Operative
Agreement or for the value, validity, effectiveness, genuineness, enforceability
or sufficiency of this Agreement or any other Operative Agreement or for any
failure of the Borrower or any Credit Party to perform its obligations hereunder
or thereunder. The Agent shall not be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Operative
Agreement, or to inspect the properties, books or records of the Borrower or any
Credit Party.
7.4 Reliance by the Agent.
The Agent shall be entitled to rely, and shall be fully protected in
relying, upon any Note, writing, resolution, notice, consent, certificate,
affidavit, letter, telecopy, telex or teletype message, statement, order or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons and upon advice
and statements of legal counsel (including without limitation counsel to the
Borrower or the Lessee), independent accountants and other experts selected by
the Agent. The Agent may deem and treat the payee of any Note as the owner
thereof for all purposes unless a written notice of assignment, negotiation or
14
transfer thereof shall have been filed with the Agent. The Agent shall be fully
justified in failing or refusing to take any action under this Agreement or any
other Operative Agreement unless it shall first receive such advice or
concurrence of the Majority Lenders, the Majority Secured Parties or all Secured
Parties, as the case may be, as it deems appropriate or it shall first be
indemnified to its satisfaction by the Lenders against any and all liability and
expense which may be incurred by it by reason of taking or continuing to take
any such action. The Agent shall in all cases be fully protected in acting, or
in refraining from acting, under this Agreement and the other Operative
Agreements in accordance with a request of the Majority Lenders, the Majority
Secured Parties or all Secured Parties, as the case may be, and such and any
action taken or failure to act pursuant thereto shall be binding upon all the
Lenders and all future holders of the Notes (or all Secured Parties, as the case
may be).
7.5 Notice of Default.
The Agent shall not be deemed to have knowledge or notice of the occurrence
of any Credit Agreement Default or Credit Agreement Event of Default hereunder,
except with respect to defaults in the payment of principal, interest and fees
required to be paid to the Agent for the account of the Lenders, unless the
Agent has received written notice from a Lender or the Borrower referring to
this Agreement, describing such Credit Agreement Default or Credit Agreement
Event of Default and stating that such notice is a "notice of default". In the
event that the Agent receives such a notice, the Agent shall give notice thereof
to the Lenders. The Agent shall take such action with respect to such Credit
Agreement Default or Credit Agreement Event of Default as shall be reasonably
directed by the Majority Secured Parties; provided, that unless and until the
Agent shall have received such directions, the Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Credit Agreement Default or Credit Agreement Event of Default as it
shall deem advisable in the best interests of the Secured Parties; provided,
further, the foregoing shall not limit (a) the rights of the Majority Secured
Parties to elect remedies as set forth in Section 6 and/or (b) the rights of the
Majority Secured Parties or all Secured Parties, as the case may be, as
described in the Participation Agreement (including without limitation Sections
8.2(h) and 8.6 of the Participation Agreement).
7.6 Non-Reliance on the Agent and Other Lenders.
Each Lender expressly acknowledges that neither the Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates has made
any representations or warranties to it and that no act by the Agent hereafter
taken, including without limitation any review of the affairs of the Borrower or
the Lessee, shall be deemed to constitute any representation or warranty by the
Agent to any Lender. Each Lender represents to the Agent that it has,
independently and without reliance upon the Agent or any other Lender, and based
on such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Borrower and the
Lessee and made its own decision to make its Loans hereunder and enter into this
Agreement. Each Lender also represents that it will, independently and without
reliance upon the Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
15
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Operative Agreements, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Borrower and the Credit Parties. Except for notices, reports and other documents
expressly required to be furnished to the Lenders by the Agent hereunder or
under any other Operative Agreement, the Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of the Borrower or the Lessee which
may come into the possession of the Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates.
7.7 Indemnification.
The Lenders agree to indemnify the Agent, in its capacity as such (to the
extent not reimbursed by the Borrower and without limiting the obligation of the
Borrower to do so), ratably according to their respective Commitment Percentages
in effect on the date on which indemnification is sought under this Section 7.7
(or, if indemnification is sought after the date upon which the Commitments
shall have terminated and the Loans shall have been paid in full, ratably in
accordance with their Commitment Percentages immediately prior to such date),
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind whatsoever which may at any time (including without limitation at any time
following the payment of the Notes) be imposed on, incurred by or asserted
against any of them in any way relating to or arising out of, the Commitments,
this Agreement, any of the other Operative Agreements or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by any of them
under or in connection with any of the foregoing; provided, that no Lender shall
be liable for the payment of any portion of such liabilities, obligations,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the gross negligence or willful misconduct of the Agent. The
agreements in this Section 7.7 shall survive the payment of the Notes and all
other amounts payable hereunder.
7.8 The Agent in Its Individual Capacity.
The Agent and its Affiliates may make loans to, accept deposits from and
generally engage in any kind of business with the Borrower or the Lessee as
though the Agent were not the Agent hereunder and under the other Operative
Agreements. With respect to its Loans made or renewed by it and any Note issued
to it, the Agent shall have the same rights and powers under this Agreement and
the other Operative Agreements as any Lender and may exercise the same as though
it were not the Agent, and the terms "Lender" and "Lenders" shall include the
Agent in its individual capacity.
7.9 Successor Agent.
The Agent may, and at the request of the Majority Lenders shall, resign at
any time as the Agent upon thirty (30) days' notice to the Lenders, the Borrower
and, so long as no Lease Event of Default shall have occurred and be continuing,
the Lessee. If the Agent shall resign as the Agent under this Agreement, the
16
Majority Lenders shall appoint from among the Lenders a successor Agent which
successor Agent shall be subject to the approval of the Borrower and, so long as
no Lease Event of Default shall have occurred and be continuing, the Lessee,
such approval not to be unreasonably withheld or delayed. If no successor Agent
is appointed prior to the effective date of the resignation of the resigning
Agent, the Agent may appoint, after consulting with the Lenders and subject to
the approval of the Borrower and, so long as no Lease Event of Default shall
have occurred and be continuing, the Lessee, such approval not to be
unreasonably withheld or delayed, a successor Agent from among the Lenders (or
such other Person as shall be acceptable to the Majority Lenders). If no
successor Agent has accepted appointment as the Agent by the date which is
thirty (30) days following a retiring Agent's notice of resignation, the
retiring Agent's notice of resignation shall nevertheless thereupon become
effective and the Lenders shall perform all of the duties of the Agent until
such time, if any, as the Majority Lenders appoint a successor Agent, as
provided for above. Upon the effective date of such resignation, only such
successor Agent shall succeed to all the rights, powers and duties of the
retiring Agent and the term "Agent" shall mean such successor agent and the
retiring Agent's rights, powers and duties in such capacity shall be terminated.
After any retiring Agent resigns hereunder as the Agent, the provisions of this
Article VII and Section 9.5 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was the Agent under this Agreement.
7.10 Actions of the Agent on Behalf of Holders.
The parties hereto specifically acknowledge and consent to the Agent's
acting on behalf of the Holders as provided in the Participation Agreement, and,
in any such case, the Lenders acknowledge that the Holders shall be entitled to
vote as "Secured Parties" hereunder to the extent required or permitted by the
Operative Agreements (including without limitation Sections 8.2(h) and 8.6 of
the Participation Agreement).
7.11 The Agent's Duty of Care.
Other than the exercise of reasonable care to assure the safe custody of
the Collateral while being held by the Agent hereunder or under any other
Operative Agreement, the Agent shall have no duty or liability to preserve
rights pertaining thereto, it being understood and agreed that the Lessee shall
be responsible for preservation of all rights in the Collateral, and the Agent
shall be relieved of all responsibility for the Collateral upon surrendering it
or tendering the surrender of it to the Lessee. The Agent shall be deemed to
have exercised reasonable care in the custody and preservation of the Collateral
in its possession if the Collateral is accorded treatment substantially equal to
that which the Agent accords its own property, which shall be no less than the
treatment employed by a reasonable and prudent agent in the industry, it being
understood that the Agent shall not have responsibility for taking any necessary
steps to preserve rights against any parties with respect to any of the
Collateral.
17
SECTION 8. MATTERS RELATING TO PAYMENT AND COLLATERAL
8.1 Collection and Allocation of Payments and Other Amounts.
The Lessee, the Construction Agent, the Agent, the Lenders, the Holders and
the Borrower have agreed pursuant to the terms of Section 8.7 of the
Participation Agreement to a procedure for the allocation and distribution of
certain payments and distributions, including without limitation the proceeds of
Collateral.
8.2 Certain Remedial Matters.
Notwithstanding any other provision of this Agreement or any other Credit
Document:
(a) the Borrower shall at all times retain, to the exclusion of all other
parties, all rights to Excepted Payments payable to it and to demand, collect or
commence an action at law to obtain such payments and to enforce any judgment
with respect thereto; and
(b) the Borrower and each Holder shall at all times retain the right, but
not to the exclusion of the Agent, (i) to retain all rights with respect to
insurance that Article XIV of the Lease specifically confers upon the "Lessor",
(ii) to provide such insurance as the Lessee shall have failed to maintain or as
the Borrower or any Holder may desire, and (iii) to bring an action to enforce
compliance by the Lessee with the provisions of Articles VIII, IX, X, XI, XIV
and XVII of the Lease.
8.3 Excepted Payments.
Notwithstanding any other provision of this Agreement or the Security
Documents, any Excepted Payment received at any time by the Agent shall be
distributed promptly to the Person entitled to receive such Excepted Payment.
SECTION 9. MISCELLANEOUS
9.1 Amendments and Waivers.
None of the terms or provisions of this Agreement may be terminated,
amended, supplemented, waived or modified except in accordance with the terms of
Section 12.4 of the Participation Agreement and subject to Section 9.6.
9.2 Notices.
All notices required or permitted to be given under this Agreement shall be
given in accordance with Section 12.2 of the Participation Agreement.
18
9.3 No Waiver; Cumulative Remedies.
No failure to exercise and no delay in exercising, on the part of the Agent
or any Lender, any right, remedy, power or privilege hereunder or under the
other Credit Documents shall operate as a waiver thereof; nor shall any single
or partial exercise of any right, remedy, power or privilege hereunder preclude
any other or future exercise thereof or the exercise of any other right, remedy,
power or privilege. The rights, remedies, powers and privileges herein provided
are cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
9.4 Survival of Representations and Warranties.
All representations and warranties made by the Borrower under the Operative
Agreements shall survive the execution and delivery of this Agreement and the
Notes and the making of the Loans hereunder.
9.5 Payment of Expenses and Taxes.
The Borrower agrees to (with funds provided by the Lessee as Supplemental
Rent except to the extent that any claim for the following would be expressly
excluded from Lessee's indemnification obligation under Section 11.1 or 11.2 of
the Participation Agreement and without limiting Lessee's right to request
Advances in accordance with the provisions of the Participation Agreement): (a)
pay all reasonable out-of-pocket costs and expenses of (i) the Agent whether or
not the transactions herein contemplated are consummated, in connection with the
negotiation, preparation, execution and delivery of the Operative Agreements and
the documents and instruments referred to therein (including without limitation
the reasonable fees and disbursements of Moore & Van Allen, PLLC) and any
amendment, waiver or consent relating thereto (including without limitation the
reasonable fees and disbursements of counsel to the Agent) and (ii) the Agent
and each of the Lenders in connection with the enforcement of the Operative
Agreements and the documents and instruments referred to therein (including
without limitation the reasonable fees and disbursements of counsel for the
Agent and for each of the Lenders) and (b) pay and hold each of the Lenders
harmless from and against any and all present and future stamp and other similar
taxes with respect to the foregoing matters and save each of the Lenders
harmless from and against any and all liabilities with respect to or resulting
from any delay or omission (other than to the extent attributable to such
Lender) to pay such taxes.
9.6 Successors and Assigns.
This Agreement shall be binding upon and inure to the benefit of the
Borrower, the Lenders, the Agent, all future holders of the Notes and their
respective successors and permitted assigns, except that the Borrower may not
assign or transfer any of its rights or obligations under this Agreement without
the prior written consent of each Lender. The Lessee is an intended third party
beneficiary of those provisions of this Agreement (or incorporated or referred
to herein) which refer to Lessee, and such provisions may not be modified or
waived without Lessee's consent.
19
9.7 Participations.
Subject to and in accordance with Section 10.1 of the Participation
Agreement, each Lender may sell participations to one or more Persons (each, a
"Participant") in all or a portion of its rights, obligations or rights and
obligations under the Operative Agreements (including all or a portion of its
Commitment or its Loans); provided, however, that (a) such Lender's obligations
under the Operative Agreements shall remain unchanged, (b) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations, (c) the Participant shall be entitled to the benefit of the
yield protection provisions contained in Sections 11.2(e), 11.3 and 11.4 of the
Participation Agreement (provided, that no Participant shall be entitled to
receive any greater amount pursuant to such subsections than the transferor
Lender would have been entitled to receive in respect of the amount of the
participation transferred by such transferor Lender to such Participant had no
such transfer occurred) and the right of set-off contained in Section 9.10(b) of
this Agreement and in Section 12.15 of the Participation Agreement (provided,
that such Participant shall only be entitled to such right of set-off if it
shall have agreed in the agreement pursuant to which it shall have acquired its
participating interest to share with the Lenders the proceeds thereof as
provided in Section 9.10) and (d) the Borrower shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under the Operative Agreements, and such Lender shall retain the
sole right to enforce the obligations of the Borrower relating to its Loans and
its Notes and to approve any amendment, modification, or waiver of any provision
of the Operative Agreements (other than amendments, modifications, or waivers
decreasing the amount of principal of or the rate at which interest is payable
on such Loans or Notes, extending any scheduled principal payment date or date
fixed for the payment of interest on such Loans or Notes, or extending its
Commitment).
Any Lender may furnish any information concerning the Borrower, the
Guarantor, the Lessee or any Subsidiaries of the Lessee in the possession of
such Lender from time to time to participants (including prospective
participants), subject, however, to the provisions of Section 12.13 of the
Participation Agreement.
9.8 Assignments.
(a) Subject to and in accordance with Section 10.1 of the Participation
Agreement, each Lender may assign to one or more Eligible Assignees all or a
portion of its rights and obligations under the Operative Agreements (including,
without limitation, all or a portion of its Loans, its Notes, and its
Commitment); provided, however, that
(i) each such assignment shall be to an Eligible Assignee;
(ii) except in the case of an assignment to another Lender or an
assignment of all of a Lender's rights and obligations under the Operative
Agreements, any such partial assignment shall be in an amount at least
equal to $5,000,000 or an integral multiple of $1,000,000 in excess
thereof;
20
(iii) each such assignment by a Lender shall be of a constant, and not
varying, percentage of all of its rights and obligations under the
Operative Agreements and the Notes; and
(iv) the parties to such assignment shall execute and deliver to the
Agent for its acceptance an Assignment and Acceptance substantially in the
form of Exhibit B hereto, together with any Notes subject to such
assignment and a processing fee of $3,500.
Upon execution, delivery, and acceptance of such Assignment and Acceptance, the
assignee thereunder shall be a party hereto and, to the extent of such
assignment, have (in addition to any such obligations, rights and benefits
theretofore held by it) the obligations, rights and benefits of a Lender under
the Operative Agreements and the assigning Lender shall, to the extent of such
assignment, relinquish its rights and benefits and be released from its
obligations under the Operative Agreements. Upon the consummation of any
assignment pursuant to this Section, the assignor, the Agent and the Borrower
shall make appropriate arrangements so that, if required, new Notes are issued
to the assignor and the assignee. If the assignee is not incorporated under the
laws of the United States of America or a state thereof, it shall deliver to the
Borrower, the Agent and the Lessee certification as to exemption from deduction
or withholding of Taxes in accordance with Section 11.2(e) of the Participation
Agreement.
(b) Upon its receipt of an Assignment and Acceptance executed by the
parties thereto, together with any Note subject to such assignment and payment
of the processing fee, the Agent shall, if such Assignment and Acceptance has
been completed and is in substantially the form of Exhibit B hereto, (i) accept
such Assignment and Acceptance, (ii) record the information contained therein in
the Register and (iii) give prompt notice thereof to the parties thereto.
(c) Notwithstanding any other provision set forth in any Operative
Agreement, any Lender may at any time assign and pledge all or any portion of
its Loans and its Notes to any Federal Reserve Bank as collateral security
pursuant to Regulation A and any Operating Circular issued by such Federal
Reserve Bank. No such assignment shall release the assigning Lender from its
obligations hereunder.
(d) Any Lender may furnish any information concerning the Borrower, the
Guarantor, the Lessee or any Subsidiaries of the Lessee in the possession of
such Lender from time to time to assignees (including prospective assignees),
subject, however, to the provisions of Section 12.13 of the Participation
Agreement.
9.9 The Register.
As agent for the Lessee and the Borrower, the Agent shall maintain at its
address referred to in Section 12.2 of the Participation Agreement a copy of
each Assignment and Acceptance delivered to and accepted by it and a register
for the recordation of the names and addresses of the Lenders and the Commitment
of, and principal amount of the Loans owing to, each Lender from time to time
(the "Register"). The entries in the Register shall be conclusive and binding
for all purposes, absent manifest error, and the Lessee, the Borrower, the Agent
21
and the Lenders may treat each Person whose name is recorded in the Register as
a Lender hereunder for all purposes of this Agreement. The Register shall be
available for inspection by the Lessee, the Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
9.10 Adjustments; Set-off.
(a) Except as otherwise expressly provided in Sections 2.11(b) or 8.1
hereof and Section 8.7 of the Participation Agreement where, and to the extent,
one (1) Lender is entitled to payments prior to other Lenders, if any Lender (a
"Benefitted Lender") shall at any time receive any payment of all or part of its
Loans, or interest thereon, or receive any collateral in respect thereof
(whether voluntarily or involuntarily, by set-off, pursuant to events or
proceedings of the nature referred to in Section 6(g), or otherwise), in a
greater proportion than any such payment to or collateral received by any other
Lender, if any, in respect of such other Lender's Loans, or interest thereon,
such Benefitted Lender shall purchase for cash from the other Lenders a
participating interest in such portion of each such other Lender's Loans, or
shall provide such other Lenders with the benefits of any such collateral, or
the proceeds thereof, as shall be necessary to cause such Benefitted Lender to
share the excess payment or benefits of such collateral or proceeds ratably with
each of the Lenders; provided, however, that if all or any portion of such
excess payment or benefits is thereafter recovered from such Benefitted Lender,
such purchase shall be rescinded, and the purchase price and benefits returned,
to the event of such recovery, but without interest.
(b) In addition to any rights now or hereafter granted under applicable law
or otherwise, and not by way of limitation of any such rights, upon the
occurrence of a Credit Agreement Event of Default, the Agent and each Lender is
hereby authorized at any time or from time to time, without presentment, demand,
protest or other notice of any kind to the Borrower or to any other Person, any
such notice being hereby expressly waived, to set off and to appropriate and
apply any and all deposits (general or special) and any other Indebtedness at
any time held or owing by the Agent or such Lender (including without limitation
by branches and agencies of the Agent or such Lender wherever located) to or for
the credit or the account of the Borrower against and on account of the
obligations and liabilities of the Borrower to the Agent or such Lender under
this Agreement or under any of the other Operative Agreements, including without
limitation all interests in obligations of the Borrower purchased by any such
Lender pursuant to Section 9.10(a), and all other claims of any nature or
description arising out of or connected with this Agreement or any other
Operative Agreement, irrespective or whether or not the Agent or such Lender
shall have made any demand and although said obligations, liabilities or claims,
or any of them, shall be contingent or unmatured.
9.11 Counterparts.
This Agreement may be executed by one (1) or more of the parties to this
Agreement on any number of separate counterparts (including without limitation
by telecopy), and all of said counterparts taken together shall be deemed to
constitute one (1) and the same instrument. A set of the copies of this
Agreement signed by all the parties shall be lodged with the Borrower and the
Agent.
22
9.12 Severability.
Any provision of this Agreement which 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.
9.13 Integration.
This Agreement and the other Operative Agreements represent the agreement
of the Borrower, the Agent, and the Lenders with respect to the subject matter
hereof and thereof, and there are no promises, undertakings, representations or
warranties by the Agent or any Lender relative to subject matter hereof not
expressly set forth or referred to herein or in the other Operative Agreements.
9.14 GOVERNING LAW.
THIS AGREEMENT AND THE NOTES AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
UNDER THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED,
INTERPRETED AND ENFORCED IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA.
9.15 SUBMISSION TO JURISDICTION; VENUE.
THE PROVISIONS OF THE PARTICIPATION AGREEMENT RELATING TO SUBMISSION TO
JURISDICTION AND VENUE ARE HEREBY INCORPORATED BY REFERENCE HEREIN, MUTATIS
MUTANDIS.
9.16 Acknowledgments.
The Borrower hereby acknowledges that:
(a) neither the Agent nor any Lender has any fiduciary relationship with or
duty to the Borrower arising out of or in connection with this Agreement or any
of the other Credit Documents, and the relationship between the Agent (and the
Lenders) and the Borrower, in connection herewith or therewith is solely that of
debtor and creditor;
(b) no joint venture is created hereby or by the other Credit Documents or
otherwise exists by virtue of the transactions contemplated hereby among the
Lenders or among the Borrower and the Lenders; and
(c) its rights hereunder are subject to Lessee's rights in Section 9.1 of
the Participation Agreement.
23
9.17 WAIVERS OF JURY TRIAL.
THE BORROWER, THE AGENT AND THE LENDERS HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE, TO THE FULLEST EXTENT ALLOWED BY APPLICABLE LAW, TRIAL BY
JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER
CREDIT DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
9.18 Nonrecourse.
Section 12.9 of the Participation Agreement is hereby incorporated herein
by this reference. The Agent and the Lenders further agree that the Borrower
shall not be responsible for the payment of any amounts owing hereunder
(excluding principal and interest (other than Overdue Interest) in respect of
the Loans) (such non-excluded amounts, "Supplemental Amounts") except to the
extent that payments of Supplemental Rent designated by the Lessee for
application to such Supplemental Amounts shall have been paid by the Lessee
pursuant to the Lease (it being understood that the failure by the Lessee for
any reason to pay any Supplemental Rent in respect of such Supplemental Amounts
shall nevertheless be deemed to constitute a default by the Borrower for the
purposes of Section 6). Notwithstanding the foregoing provisions of this Section
9.18, nothing in this Agreement or any other Operative Agreement shall (a)
constitute a waiver, release or discharge of any obligation evidenced or secured
by this Agreement or any other Credit Document, (b) limit the right of the Agent
or any Lender to name the Borrower as a party defendant in any action or suit
for judicial foreclosure and sale under any Security Document, or (c) affect in
any way the validity or enforceability of any guaranty (whether of payment
and/or performance) given to the Lessor, the Agent or the Lenders, or of any
indemnity agreement given by the Borrower, in connection with the Loans made
hereunder.
9.19 USURY SAVINGS PROVISION.
IT IS THE INTENT OF THE PARTIES HERETO TO CONFORM TO AND CONTRACT IN STRICT
COMPLIANCE WITH APPLICABLE USURY LAW FROM TIME TO TIME IN EFFECT. ANY PAYMENTS
CHARACTERIZED AS INTEREST MAY BE REFERRED TO HEREIN AS "INTEREST." ALL
AGREEMENTS AMONG THE PARTIES HERETO ARE HEREBY LIMITED BY THE PROVISIONS OF THIS
PARAGRAPH WHICH SHALL OVERRIDE AND CONTROL ALL SUCH AGREEMENTS, WHETHER NOW
EXISTING OR HEREAFTER ARISING AND WHETHER WRITTEN OR ORAL. IN NO WAY, NOR IN ANY
EVENT OR CONTINGENCY (INCLUDING WITHOUT LIMITATION PREPAYMENT OR ACCELERATION OF
THE MATURITY OF ANY OBLIGATION), SHALL ANY INTEREST TAKEN, RESERVED, CONTRACTED
FOR, CHARGED, OR RECEIVED UNDER THIS AGREEMENT OR OTHERWISE EXCEED THE MAXIMUM
NONUSURIOUS AMOUNT PERMISSIBLE UNDER APPLICABLE LAW. IF, FROM ANY POSSIBLE
CONSTRUCTION OF ANY OF THE OPERATIVE AGREEMENTS OR ANY OTHER DOCUMENT OR
AGREEMENT, INTEREST WOULD OTHERWISE BE PAYABLE IN EXCESS OF THE MAXIMUM
NONUSURIOUS AMOUNT, ANY SUCH CONSTRUCTION SHALL BE SUBJECT TO THE PROVISIONS OF
THIS PARAGRAPH AND SUCH AMOUNTS UNDER SUCH DOCUMENTS OR AGREEMENTS SHALL BE
24
AUTOMATICALLY REDUCED TO THE MAXIMUM NONUSURIOUS AMOUNT PERMITTED UNDER
APPLICABLE LAW, WITHOUT THE NECESSITY OF EXECUTION OF ANY AMENDMENT OR NEW
DOCUMENT OR AGREEMENT. IF THE AGENT OR ANY LENDER SHALL EVER RECEIVE ANYTHING OF
VALUE WHICH IS CHARACTERIZED AS INTEREST WITH RESPECT TO THE OBLIGATIONS OWED
HEREUNDER OR UNDER APPLICABLE LAW AND WHICH WOULD, APART FROM THIS PROVISION, BE
IN EXCESS OF THE MAXIMUM LAWFUL AMOUNT, AN AMOUNT EQUAL TO THE AMOUNT WHICH
WOULD HAVE BEEN EXCESSIVE INTEREST SHALL, WITHOUT PENALTY, BE APPLIED TO THE
REDUCTION OF THE COMPONENT OF PAYMENTS DEEMED TO BE PRINCIPAL AND NOT TO THE
PAYMENT OF INTEREST, OR REFUNDED TO THE BORROWER OR ANY OTHER PAYOR THEREOF, IF
AND TO THE EXTENT SUCH AMOUNT WHICH WOULD HAVE BEEN EXCESSIVE EXCEEDS THE
COMPONENT OF PAYMENTS DEEMED TO BE PRINCIPAL. THE RIGHT TO DEMAND PAYMENT OF ANY
AMOUNTS EVIDENCED BY ANY OF THE OPERATIVE AGREEMENTS DOES NOT INCLUDE THE RIGHT
TO RECEIVE ANY INTEREST WHICH HAS NOT OTHERWISE ACCRUED ON THE DATE OF SUCH
DEMAND, AND NEITHER THE AGENT NOR ANY LENDER INTENDS TO CHARGE OR RECEIVE ANY
UNEARNED INTEREST IN THE EVENT OF SUCH DEMAND. ALL INTEREST PAID OR AGREED TO BE
PAID TO THE AGENT OR ANY LENDER SHALL, TO THE EXTENT PERMITTED BY APPLICABLE
LAW, BE AMORTIZED, PRORATED, ALLOCATED, AND SPREAD THROUGHOUT THE FULL STATED
TERM (INCLUDING WITHOUT LIMITATION ANY RENEWAL OR EXTENSION) OF THIS AGREEMENT
SO THAT THE AMOUNT OF INTEREST ON ACCOUNT OF SUCH PAYMENTS DOES NOT EXCEED THE
MAXIMUM NONUSURIOUS AMOUNT PERMITTED BY APPLICABLE LAW.
[signature pages to follow]
25
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not individually, except as
expressly stated herein, but solely as
the Owner Trustee under the FRI Trust
1999-1
By: /s/ C. Scott Nielsen
------------------------------------
Name: C. Scott Nielsen
------------------------------------
Title: Vice President
------------------------------------
BANK OF AMERICA, N.A.,
as the Agent and a Lender
By: /s/ John G. Hayes
------------------------------------
Name: John G. Hayes
------------------------------------
Title: Principal
------------------------------------
[signature pages continued]
THE CHASE MANHATTAN BANK,
as a Lender
By: /s/ Gail Weiss
------------------------------------
Name: Gail Weiss
-----------------------------------
Title: Vice President
-----------------------------------
[signature pages continued]
THE BANK OF NEW YORK,
as a Lender
By: /s/ Scott H. Buitekant
------------------------------------
Name: Scott H. Buitekant
------------------------------------
Title: Vice President
-----------------------------------
[signature pages continued]
ROYAL BANK OF CANADA,
as a Lender
By: /s/ Y. J. Bernard
------------------------------------
Name: Y. J. Bernard
------------------------------------
Title: Manager
-----------------------------------
[signature pages continued]
CITICORP USA, INC.,
as a Lender
By: /s/ Alexander F. Duka
------------------------------------
Name: Alexander F. Duka
------------------------------------
Title: Vice President
-----------------------------------
[signature pages continued]
BANQUE NATIONALE DE PARIS,
as a Lender
By: /s/ Laurent Vanderzyppe
------------------------------------
Name: Laurent Vanderzyppe
------------------------------------
Title: Vice President
-----------------------------------
By: /s/ Marguerite L. Lebon
------------------------------------
Name: Marguerite L. Lebon
------------------------------------
Title: Assistant Vice President
-----------------------------------
[signature pages continued]
BANK OF MONTREAL,
as a Lender
By: /s/ Bruce A. Pietka
------------------------------------
Name: Bruce A. Pietka
------------------------------------
Title: Director
-----------------------------------
[signature pages continued]
FIRST UNION NATIONAL BANK,
as a Lender
By: /s/ Austin Rodgers
------------------------------------
Name: Austin Rodgers
------------------------------------
Title: Senior Vice President
-----------------------------------
[signature pages end]
Schedule 2.1
Tranche A Tranche B
Commitment Commitment
---------- ----------
Name and Address of Lenders Amount Percentage Amount Percentage
- --------------------------- ------ ---------- ------ ----------
Bank of America, N.A. $20,680,412.38 14.31170407 $2,919,587.63 14.31170407%
231 South LaSalle Street
10th Floor
Chicago, IL 60697
Attention: John Hayes
Telephone: 312-828-1632
Telecopy: 312-828-3359
The Chase Manhattan Bank $21,250,000.00 14.70588235% $3,000,000.00 14.70588235%
270 Park Avenue
New York, NY 10017
Attention: Gail Weiss
Telephone: 212-270-5049
Telecopy: 212-270-1789
The Bank of New York $21,250,000.00 14.70588235% $3,000,000.00 14.70588235%
One Wall Street
New York, NY 10286
Attention: Scott Buitekant
Telephone: 212-635-6958
Telecopy: 212-635-6348
Bank of Montreal $18,416,666.66 12.74509804% $2,600,000.00 12.74509804%
115 South LaSalle Street
12th Floor West
Chicago, IL 60603
Attention: Bruce Pietka
Telephone: 312-750-6958
Telecopy: 312-750-6057
Citicorp USA, Inc. $18,986,254.30 13.13927633% $2,680,412.37 13.13927633%
399 Park Avenue
12th Floor - Zone 11
New York, NY 10043
Attention: Alex Duka
Telephone: 212-559-4480
Telecopy: 212-371-6309
Royal Bank of Canada $18,416,666.66 12.74509804% $2,600,000.00 12.74509804%
Grand Cayman (North America
No. 1) Branch
c/o New York Branch
1 Liberty Plaza, 4th Floor
New York, NY 10006-1404
Attention: Aurora Lanteigne
Telephone: 212-428-6338
Telecopy: 212-428-2372
with a copy to:
Royal Bank of Canada
1 Liberty Plaza, 4th Floor
New York, NY 10006-1404
Attention: Vivian Abdelmessih
Telephone: 212-428-6318
Telecopy: 212-428-6201
Banque Nationale de Paris $12,750,000.00 8.82352941% $1,800,000.00 8.82352941%
499 Park Avenue
New York, NY 10022
Attention: Laurent Vanderzyppe
Telephone: 212-415-9406
Telecopy: 212-415-9707
First Union National Bank $12,750,000.00 8.82352941% $1,800,000.00 8.82352941%
1339 Chestnut Street
Philadelphia, PA 19101
Attention: Brian Haley
Telephone: 215-973-2372
Telecopy: 215-786-4114
TOTAL $144,500,000.00 1516.85870293% $20,400,000.00 100.00000000%
Exhibit A-1
THIS TRANCHE A NOTE IS REGISTERED AS TO BOTH PRINCIPAL AND INTEREST WITH THE
AGENT AND TRANSFER MAY BE EFFECTED ONLY IF SUCH TRANSFER IS RECORDED IN THE
REGISTER MAINTAINED BY THE AGENT PURSUANT TO SECTION 9.9 OF THE CREDIT AGREEMENT
REFERRED TO BELOW.
TRANCHE A NOTE
(FRI Trust 1999-1)
[___________, 199__]
FOR VALUE RECEIVED, the undersigned, FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not in its individual capacity, but solely as the Owner Trustee
under the FRI Trust 1999-1 (the "Borrower"), hereby unconditionally promises to
pay to the order of [Lender] (the "Lender"), at the office of Bank of America,
N.A., located at [__________] or at such other address as may be specified by
Bank of America, N.A., in lawful money of the United States of America and in
immediately available funds, on the Maturity Date, the aggregate unpaid
principal amount of all Tranche A Loans made by the Lender to the Borrower
pursuant to Section 2.1 of the Credit Agreement (as defined below). The Borrower
agrees to pay interest in like money at such office on the unpaid principal
amount hereof from time to time outstanding at the rates and on the dates
specified in Section 2.8 of such Credit Agreement.
The holder of this Note is authorized to endorse on the schedules annexed
hereto and made a part hereof or on a continuation thereof which shall be
attached hereto and made a part hereof the date, Type and amount of each Tranche
A Loan made by the Lender pursuant to the Credit Agreement and the date and
amount of each payment or prepayment of principal thereof, each continuation
thereof and each conversion of all or a portion thereof to another Type. Each
such endorsement shall constitute prima facie evidence of the accuracy of the
information endorsed. The failure to make any such endorsement or any error in
such endorsement shall not affect the obligations of the Borrower in respect of
such Loan.
This Note (a) is one (1) of the Notes referred to in the Credit Agreement
dated as of September 27, 1999 (as amended, modified, extended, supplemented,
restated and/or replaced from time to time, the "Credit Agreement"), among the
Borrower, the Lender, the other banks and financial institutions from time to
time parties thereto and Bank of America, N.A., as the Agent, (b) is subject to
the provisions of the Credit Agreement (including without limitation Section
9.18 thereof) and (c) is subject to optional and mandatory prepayment in whole
or in part as provided in the Credit Agreement. Reference is hereby made to the
Credit Documents for a description of the properties and assets in which a
security interest has been granted, the nature and extent of the security and
the guarantees, the terms and conditions upon which the security interests and
each guarantee were granted and the rights of the holder of this Note in respect
thereof.
A1-1
Upon the occurrence of any one (1) or more of the Credit Agreement Events
of Default, all amounts then remaining unpaid on this Note shall become, or may
be declared to be, immediately due and payable, all as provided in the Credit
Agreement.
All parties now and hereafter liable with respect to this Note, whether
maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest and all other notices of any kind.
Unless otherwise defined herein, terms defined in the Credit Agreement and
used herein shall have the meanings given to them in the Credit Agreement.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED, INTERPRETED AND ENFORCED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA.
[The remainder of this page has been left blank intentionally.]
A1-2
IN WITNESS WHEREOF, the undersigned authorized officer of the borrower has
executed this note as of the date first set forth above.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not individually, but solely
as the Owner Trustee under the FRI Trust
1999-1
By:
------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
A1-3
Exhibit A-2
THIS TRANCHE B NOTE IS REGISTERED AS TO BOTH PRINCIPAL AND INTEREST WITH THE
AGENT AND TRANSFER MAY BE EFFECTED ONLY IF SUCH TRANSFER IS RECORDED IN THE
REGISTER MAINTAINED BY THE AGENT PURSUANT TO SECTION 9.9 OF THE CREDIT AGREEMENT
REFERRED TO BELOW.
TRANCHE B NOTE
(FRI Trust 1999-1)
[_________, 199__]
FOR VALUE RECEIVED, the undersigned, FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not in its individual capacity, but solely as the Owner Trustee
under the FRI Trust 1999-1 (the "Borrower"), hereby unconditionally promises to
pay to the order of [Lender] (the "Lender") at the office of Bank of America,
N.A., located at [__________] or at such other address as may be specified by
Bank of America, N.A., in lawful money of the United States of America and in
immediately available funds, on the Maturity Date, the aggregate unpaid
principal amount of all Tranche B Loans made by the Lender to the Borrower
pursuant to Section 2.1 of the Credit Agreement (as defined below). The Borrower
agrees to pay interest in like money at such office on the unpaid principal
amount hereof from time to time outstanding at the rates and on the dates
specified in Section 2.8 of such Credit Agreement.
The holder of this Note is authorized to endorse on the schedules annexed
hereto and made a part hereof or on a continuation thereof which shall be
attached hereto and made a part hereof the date, Type and amount of each Tranche
B Loan made by the Lender pursuant to the Credit Agreement and the date and
amount of each payment or prepayment of principal thereof, each continuation
thereof and each conversion of all or a portion thereof to another Type. Each
such endorsement shall constitute prima facie evidence of the accuracy of the
information endorsed. The failure to make any such endorsement or any error in
such endorsement shall not affect the obligations of the Borrower in respect of
such Loan.
This Note (a) is one (1) of the Notes referred to in the Credit Agreement
dated as of September 27, 1999 (as amended, modified, extended, supplemented,
restated and/or replaced from time to time, the "Credit Agreement"), among the
Borrower, the Lender, the other banks and financial institutions from time to
time parties thereto and Bank of America, N.A., as the Agent, (b) is subject to
the provisions of the Credit Agreement (including without limitation Section
9.18 thereof) and (c) is subject to optional and mandatory prepayment in whole
or in part as provided in the Credit Agreement. Reference is hereby made to the
Credit Documents for a description of the properties and assets in which a
security interest has been granted, the nature and extent of the security and
the guarantees, the terms and conditions upon which the security interests and
each guarantee were granted and the rights of the holder of this Note in respect
thereof.
B-1
Upon the occurrence of any one (1) or more of the Credit Agreement Events
of Default, all amounts then remaining unpaid on this Note shall become, or may
be declared to be, immediately due and payable, all as provided in the Credit
Agreement.
All parties now and hereafter liable with respect to this Note, whether
maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest and all other notices of any kind.
Unless otherwise defined herein, terms defined in the Credit Agreement and
used herein shall have the meanings given to them in the Credit Agreement.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED, INTERPRETED AND ENFORCED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA.
[The remainder of this page has been left blank intentionally.]
B-2
IN WITNESS WHEREOF, the undersigned authorized officer of the borrower has
executed this note as of the date first set forth above.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not individually, but solely
as the Owner Trustee under the FRI Trust
1999-1
By:
-------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
B-3
Exhibit B
ASSIGNMENT AND ACCEPTANCE
THIS ASSIGNMENT AND ACCEPTANCE dated as of ____________, (as amended,
modified, supplemented, restated and/or replaced from time to time, the
"Assignment and Acceptance") is between [____________________] (the "Assignor")
and [_______________] (the "Assignee").
Reference is made to the Credit Agreement, dated as of September 27, 1999
(as amended, modified, extended, supplemented, restated and/or replaced from
time to time, the "Credit Agreement"), among FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not in its individual capacity, but solely as the Owner Trustee
under the FRI Trust 1999-1 (the "Owner Trustee" or the "Borrower"), the Lenders
parties thereto and BANK OF AMERICA, N.A., as the Agent. Unless otherwise
defined herein, terms defined in the Credit Agreement (or pursuant to Section 1
of the Credit Agreement, defined in other agreements) and used herein shall have
the meanings given to them in or pursuant to the Credit Agreement.
The Assignor and the Assignee agree as follows:
1. The Assignor hereby irrevocably sells and assigns to the Assignee
without recourse to the Assignor, and the Assignee hereby irrevocably purchases
and assumes from the Assignor without recourse to the Assignor, as of the
Effective Date (as defined below), a [___%] interest (the "Assigned Interest")
in and to the Assignor's rights and obligations under the Credit Agreement and
the Participation Agreement with respect to the credit facilities contained in
the Credit Agreement and the Participation Agreement as are set forth on
Schedule 1 hereto (the "Assigned Facility"), in a principal amount for the
Assigned Facility as set forth on Schedule 1.
2. The Assignor (a) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or any other Operative
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Credit Agreement, any other Operative Agreement or
any other instrument or document furnished pursuant thereto, other than that it
has not created any adverse claim upon the interest being assigned by it
hereunder and that such interest is free and clear of any such adverse claim;
(b) makes no representation or warranty and assumes no responsibility with
respect to the financial condition of the Borrower, or any other obligor or the
performance or observance by the Borrower, or any other obligor, of any of their
respective obligations under the Credit Agreement or any other Operative
Agreement or any other instrument or document furnished pursuant hereto or
thereto; and (c) attaches the Notes held by it evidencing the Assigned Facility
and requests that the Agent exchange such Notes for new Notes payable to the
Assignee and (if the Assignor has retained any interest in the Assigned
Facility) new Notes payable to the Assignor in the respective amounts which
reflect the assignment being made hereby (and after giving effect to any other
assignments which have become effective on the Effective Date).
B-1
3. The Assignee (a) represents and warrants that it is legally authorized
to enter into this Assignment and Acceptance; (b) confirms that it has received
copies of the Basic Documents (other than individual Notes and Certificates),
and such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into this Assignment and
Acceptance; (c) agrees that it will, independently and without reliance upon the
Assignor, the Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Credit Agreement, the
other Operative Agreements or any other instrument or document furnished
pursuant hereto or thereto; (d) appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers and discretion under
the Credit Agreement, the other Operative Agreements or any other instrument or
document furnished pursuant hereto or thereto as are delegated to the Agent by
the terms thereof, together with such powers as are incidental thereto; and (e)
agrees that it will be bound by the provisions of the Credit Agreement and the
other Operative Agreements to which Assignee is a party and will perform in
accordance herewith all the obligations which by the terms of the Credit
Agreement and the other Operative Agreements to which Assignee is a party are
required to be performed by it as a Lender including without limitation, if it
is organized under the laws of a jurisdiction outside the U.S., its obligation
pursuant to Section 11.2(e) of the Participation Agreement.
4. The effective date of this Assignment and Acceptance shall be
[___________] (the "Effective Date"). Following the execution of this Assignment
and Acceptance, it will be delivered to the Agent for acceptance by it and
recording by the Agent pursuant to Section 9.9 of the Credit Agreement,
effective as of the Effective Date (which shall not, unless otherwise agreed to
by the Agent, be earlier than five (5) Business Days after the date of such
acceptance and recording by the Agent).
5. Upon such acceptance and recording, from and after the Effective Date,
the Agent shall make all payments in respect of the Assigned Interest (including
without limitation payments of principal, interest, fees and other amounts) to
the Assignee whether such amounts have accrued prior to the Effective Date or
accrue subsequent to the Effective Date. The Assignor and the Assignee shall
make all appropriate adjustments in payments by the Agent for periods prior to
the Effective Date or with respect to the making of this assignment directly
between themselves.
6. From and after the Effective Date, (a) the Assignee shall be a party to
the Credit Agreement and, to the extent provided in this Assignment and
Acceptance, have (in addition to any such rights and obligations theretofore
held by it) the rights and obligations of a Lender thereunder and under the
other Operative Agreements and shall be bound by the provisions thereof and (b)
the Assignor shall, to the extent provided in this Assignment and Acceptance,
relinquish its rights and be released from its obligations under the Credit
Agreement and the other Operative Agreements.
7. This Assignment and Acceptance shall be governed by, and construed,
INTERPRETED AND ENFORCED in accordance with, the laws of the State of
CALIFORNIA.
B-2
B-3
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be executed as of the date first above written by their respective
duly authorized officers on Schedule 1 hereto.
[Name of Assignor]
By:
------------------------------------
Name:
------------------------------------
Title:
------------------------------------
[Name of Assignee]
By:
------------------------------------
Name:
------------------------------------
Title:
------------------------------------
Consented To:
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not individually, but solely
as the Owner Trustee under the FRI Trust
1999-1
By:
------------------------------------
Name:
------------------------------------
Title:
------------------------------------
BANK OF AMERICA, N.A., as the Agent
By:
------------------------------------
Name:
------------------------------------
Title:
------------------------------------
[consents required only to the extent expressly provided in Section 9.8 of
the Credit Agreement]
B-4
SCHEDULE 1
TO ASSIGNMENT AND ACCEPTANCE
RELATING TO THE CREDIT AGREEMENT,
DATED AS OF SEPTEMBER 27, 1999
AMONG
FIRST SECURITY BANK, NATIONAL ASSOCIATION
NOT INDIVIDUALLY,
BUT SOLELY AS THE OWNER TRUSTEE,
THE LENDERS PARTIES THERETO
AND
BANK OF AMERICA, N.A., AS THE AGENT
FOR THE LENDERS (IN SUCH CAPACITY, THE "AGENT")
Name of Assignor:
------------------------------
Name of Assignee:
------------------------------
Effective Date of Assignment:
------------------
Credit Principal Commitment
Facility Assigned Amount Assigned Percentage Assigned
Tranche A Commitment $_____________ ________________%
Tranche A Loans $_____________ ________________%
Tranche B Commitment $_____________ ________________%
Tranche B Loans $_____________ ________________%
[Name of Assignor]
By:
--------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
[Name of Assignee]
By:
--------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
- --------------------------------------------------------------------------------
LEASE AGREEMENT
Dated as of September 27, 1999
between
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not individually,
but solely as the Owner Trustee
under the FRI Trust 1999-1,
as Lessor
and
FRANKLIN TEMPLETON CORPORATE SERVICES, INC.,
as Lessee
- --------------------------------------------------------------------------------
This Lease Agreement is subject to a security interest in favor of Bank of
America, N.A., as the agent for the Lenders and respecting the Security
Documents, as the agent for the Lenders and the Holders, to the extent of their
interests (the "Agent"), under a Security Agreement dated as of September 27,
1999, between First Security Bank, National Association, not individually, but
solely as the Owner Trustee under the FRI Trust 1999-1 and the Agent, as
amended, modified, extended, supplemented, restated and/or replaced from time to
time in accordance with the applicable provisions thereof. This Lease Agreement
has been executed in several counterparts. To the extent, if any, that this
Lease Agreement constitutes chattel paper (as such term is defined in the
Uniform Commercial Code as in effect in any applicable jurisdiction), no
security interest in this Lease Agreement may be created through the transfer or
possession of any counterpart other than the original counterpart containing the
receipt therefor executed by the Agent on the signature page hereof.
TABLE OF CONTENTS
ARTICLE I....................................................................1
1.1 Definitions............................................................1
1.2 Interpretation.........................................................2
ARTICLE II...................................................................2
2.1 Property...............................................................2
2.2 Lease Term.............................................................2
2.3 Title..................................................................3
2.4 Lease Supplements......................................................3
ARTICLE III..................................................................3
3.1 Rent...................................................................3
3.2 Payment of Basic Rent..................................................3
3.3 Supplemental Rent......................................................4
3.4 Performance on a Non-Business Day......................................5
3.5 Rent Payment Provisions................................................5
ARTICLE IV...................................................................5
4.1 Taxes; Utility Charges.................................................5
ARTICLE V....................................................................6
5.1 Quiet Enjoyment........................................................6
ARTICLE VI...................................................................6
6.1 Net Lease..............................................................6
6.2 No Termination or Abatement............................................7
ARTICLE VII..................................................................7
7.1 Ownership of the Properties............................................7
ARTICLE VIII.................................................................9
8.1 Condition of the Properties............................................9
8.2 Possession and Use of the Properties..................................10
8.3 Integrated Properties.................................................11
ARTICLE IX..................................................................11
9.1 Compliance With Legal Requirements, Insurance Requirements and
Manufacturer's Specifications and Standards...........................11
ARTICLE X...................................................................12
10.1 Maintenance and Repair; Return......................................12
10.2 Environmental Inspection............................................13
ARTICLE XI..................................................................13
11.1 Modifications.......................................................13
i
ARTICLE XII.................................................................14
12.1 Warranty of Title...................................................14
ARTICLE XIII................................................................15
13.1 Permitted Contests Other Than in Respect of Indemnities.............15
13.2 Impositions, Utility Charges, Other Matters; Compliance with
Legal Requirements..................................................16
ARTICLE XIV.................................................................16
14.1 Public Liability and Workers' Compensation Insurance................16
14.2 Permanent Hazard and Other Insurance................................17
14.3 Coverage............................................................17
14.4 Additional Insurance Requirements...................................18
ARTICLE XV..................................................................19
15.1 Casualty and Condemnation...........................................19
15.2 Environmental Matters...............................................21
15.3 Notice of Environmental Matters.....................................22
ARTICLE XVI.................................................................22
16.1 Termination Upon Certain Events.....................................22
16.2 Procedures..........................................................22
ARTICLE XVII................................................................23
17.1 Lease Events of Default.............................................23
17.2 Surrender of Possession.............................................26
17.3 Reletting...........................................................26
17.4 Damages.............................................................27
17.5 Power of Sale.......................................................27
17.6 Final Liquidated Damages............................................27
17.7 Environmental Costs.................................................28
17.8 Waiver of Certain Rights............................................28
17.9 Assignment of Rights Under Contracts................................29
17.10 Remedies Cumulative.................................................29
ARTICLE XVIII...............................................................29
18.1 Lessor's Right to Cure Lessee's Lease Defaults......................29
ARTICLE XIX.................................................................30
19.1 Provisions Relating to Lessee's Exercise of its Purchase Option.....30
19.2 No Purchase or Termination With Respect to Less than All of
a Property..........................................................30
ARTICLE XX..................................................................30
20.1 Purchase Option or Sale Option-General Provisions...................30
20.2 Lessee Purchase Option..............................................31
20.3 Third Party Sale Option.............................................32
ARTICLE XXI.................................................................33
ii
21.1 [Intentionally Omitted.]............................................33
ARTICLE XXII................................................................33
22.1 Sale Procedure......................................................33
22.2 Application of Proceeds of Sale.....................................36
22.3 Indemnity for Excessive Wear........................................36
22.4 Appraisal Procedure.................................................36
22.5 Certain Obligations Continue........................................37
22.6 Effect of Sale......................................................37
ARTICLE XXIII...............................................................37
23.1 Holding Over........................................................37
ARTICLE XXIV................................................................38
24.1 Risk of Loss........................................................38
ARTICLE XXV.................................................................38
25.1 Assignment..........................................................38
25.2 Subleases...........................................................39
ARTICLE XXVI................................................................39
26.1 No Waiver...........................................................39
ARTICLE XXVII...............................................................39
27.1 Acceptance of Surrender.............................................39
27.2 No Merger of Title..................................................40
ARTICLE XXVIII..............................................................40
[Intentionally Omitted]...................................................40
ARTICLE XXIX................................................................40
29.1 Notices.............................................................40
ARTICLE XXX.................................................................40
30.1 Miscellaneous.......................................................40
30.2 Amendments and Modifications........................................40
30.3 Successors and Assigns..............................................40
30.4 Headings and Table of Contents......................................41
30.5 Counterparts........................................................41
30.6 Governing Law.......................................................41
30.7 Calculation of Rent.................................................41
30.8 Memoranda of Lease and Lease Supplements............................41
30.9 Allocations of Payments.............................................41
30.10 Limitations on Recourse.............................................42
30.11 Waivers of Jury Trial...............................................42
30.12 Exercise of Lessor Rights...........................................42
30.13 Submission to Jurisdiction; Venue...................................42
30.14 Usury Savings Provision.............................................42
iii
EXHIBITS
EXHIBIT A - Lease Supplement No. ____
EXHIBIT B - Memorandum of Lease and Lease Supplement No. ____
iv
LEASE AGREEMENT
THIS LEASE AGREEMENT dated as of September 27, 1999 (as amended, modified,
extended, supplemented, restated and/or replaced from time to time, this
"Lease") is between FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national
banking association, having its principal office at 79 South Main Street, Salt
Lake City, Utah 84111, not individually, but solely as the Owner Trustee under
the FRI Trust 1999-1, as lessor (the "Lessor"), and, FRANKLIN TEMPLETON
CORPORATE SERVICES, INC., a Delaware corporation, having its principal place of
business at 777 Mariners Island Boulevard, San Mateo, California 94404, as
lessee (the "Lessee").
W I T N E S S E T H:
- - - - - - - - - -
A. WHEREAS, subject to the terms and conditions of the Participation
Agreement and the Agency Agreement, Lessor will (i) ground lease various parcels
of real property, some of which will (or may) have existing Improvements
thereon, from Lessee as ground lessor (in such capacity, "Ground Lessor") and
(ii) fund the acquisition, installation, testing, use, development,
construction, operation, maintenance, repair, refurbishment and restoration of
the Properties by the Construction Agent; and
B. WHEREAS, the Basic Term shall commence with respect to each Property
upon the Property Closing Date with respect thereto; provided, Basic Rent with
respect thereto shall not be payable until the applicable Rent Commencement
Date; and
C. WHEREAS, Lessor desires to lease to Lessee, and Lessee desires to lease
from Lessor, each Property;
NOW, THEREFORE, in consideration of the foregoing, and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
1.1 Definitions.
For purposes of this Lease, capitalized terms used in this Lease and not
otherwise defined herein shall have the meanings assigned to them in Appendix A
to that certain Participation Agreement dated as of September 27, 1999 (as
amended, modified, extended, supplemented, restated and/or replaced from time to
time in accordance with the applicable provisions thereof, the "Participation
Agreement") among Lessee, Franklin Resources, Inc., as the Guarantor, Lessor,
the various banks and other lending institutions which are parties thereto from
time to time, as the Holders, the various banks and other lending institutions
which are parties thereto from time to time, as the Lenders, and Bank of
America, N.A., as agent for the Lenders and respecting the Security Documents,
as the agent for the Lenders and the Holders, to the extent of their interests.
Unless otherwise indicated, references in this Lease to articles, sections,
paragraphs, clauses, appendices, schedules and exhibits are to the same
contained in this Lease.
1.2 Interpretation.
The rules of usage set forth in Appendix A to the Participation Agreement
shall apply to this Lease.
ARTICLE II
2.1 Property.
Subject to the terms and conditions hereinafter set forth and contained in
the respective Lease Supplement relating to each Property, Lessor hereby leases
to Lessee and Lessee hereby leases from Lessor, each Property. Notwithstanding
anything to the contrary contained in this Lease, immediately upon Parcel Map
Recordation (as defined in Section 8.8(b) of the Participation Agreement),
without payment of any release price or other consideration, and without further
action or the execution of any documents by any Person, the "Land", for all
purposes of this Lease, shall exclusively mean the Leased Parcel (as defined in
Section 8.8(b) of the Participation Agreement). The provisions of Section 8.8 of
the Participation Agreement are hereby incorporated herein by this reference.
2.2 Lease Term.
The basic term of this Lease with respect to each Property (the "Basic
Term") shall begin upon the Property Closing Date for such Property (in each
case the "Basic Term Commencement Date") and shall end on the fifth annual
anniversary of the Initial Closing Date (the "Basic Term Expiration Date"),
unless the Basic Term is earlier terminated or the term of this Lease is renewed
(as described below) in accordance with the provisions of this Lease.
Notwithstanding the foregoing, Lessee shall not be obligated to pay Basic Rent
until the Rent Commencement Date with respect to such Property.
To the extent no Default or Event of Default has occurred and is
continuing, Lessee may request (by written notice to each Financing Party
delivered in each case at least one hundred twenty (120) days prior to the first
day of such requested renewal term) the renewal of the term of this Lease for
all, but not less than all, the Properties for up to three (3) additional terms,
the first of two (2) years' duration from the Basic Term Expiration Date, the
second of three (3) years' duration from the expiration date of the first such
renewal term and the third of five (5) years' duration from the expiration of
the second such renewal term (each, a "Renewal Term"); provided, no such Renewal
Term shall be permitted unless Lessor has obtained sufficient financing for such
Renewal Term.
2
2.3 Title.
Except as provided in Article V of this Lease, each Property is leased to
Lessee without any representation or warranty, express or implied, by Lessor and
subject to the rights of parties in possession (if any), the existing state of
title (including without limitation the Permitted Liens) and all applicable
Legal Requirements. Lessee shall in no event have any recourse against Lessor
for any defect in Lessor's title to any Property or any interest of Lessee
therein other than for Lessor Liens.
2.4 Lease Supplements.
On or prior to each Basic Term Commencement Date, Lessee and Lessor shall
each execute and deliver a Lease Supplement for the Property to be leased
effective as of such Basic Term Commencement Date in substantially the form of
Exhibit A hereto.
ARTICLE III
3.1 Rent.
(a) Lessee shall pay Basic Rent in arrears on each Payment Date, and
on any date on which this Lease shall terminate with respect to any or all
Properties during the Term; provided, however, with respect to each
individual Property Lessee shall have no obligation to pay Basic Rent with
respect to such Property until the Rent Commencement Date with respect to
such Property (notwithstanding that Basic Rent for such Property shall
accrue from and including the Scheduled Interest Payment Date immediately
preceding such Rent Commencement Date).
(b) Basic Rent shall be due and payable in lawful money of the United
States and shall be paid by wire transfer of immediately available funds on
the due date therefor (or within the applicable grace period) to such
account or accounts at such bank or banks as Lessor shall from time to time
direct.
(c) Lessee's inability or failure to take possession of all or any
portion of any Property when delivered by Lessor, whether or not
attributable to any act or omission of Lessor, the Construction Agent,
Lessee or any other Person or for any other reason whatsoever, shall not
delay or otherwise affect Lessee's obligation to pay Rent for such Property
in accordance with the terms of this Lease.
(d) Lessee shall make all payments of Rent prior to 12:00 Noon, New
York City time, on the applicable date for payment of such amount.
3.2 Payment of Basic Rent.
Basic Rent shall be paid absolutely net to Lessor or its designee, so that
this Lease shall yield to Lessor the full amount thereof, without setoff,
deduction or reduction.
3
3.3 Supplemental Rent.
Lessee shall pay to the Person entitled thereto any and all Supplemental
Rent when and as the same shall become due and payable. All such payments of
Supplemental Rent shall be in the full amount thereof, without setoff, deduction
or reduction. Lessee shall pay to the appropriate Person, as Supplemental Rent
due and owing to such Person, among other things, within thirty (30) days after
demand (unless such payment of Supplemental Rent is due on the due date of any
payment of Termination Value in which case such payment of Supplemental Rent
shall be due on the due date for such payment of Termination Value and provided,
to the extent any such payment of Supplemental Rent is reimbursement for amounts
paid by one or more Financing Parties on behalf of any Credit Party pursuant to
the Operative Agreements then the Lessee shall also pay interest on such
Supplemental Rent calculated at the Overdue Rate from the date any Credit Party
has knowledge of the applicable payment from any such Financing Party until such
payment of Supplement Rent plus such interest is paid by one of the Credit
Parties to the Agent for the account of each such Financing Party), (a) any and
all payment obligations (except for amounts payable as Basic Rent, certain
Transaction Expenses funded by Advances pursuant to the Operative Agreements,
payments of Supplemental Rent to the extent such payments have been previously
paid in full by Lessee in accordance with the provisions of the Operative
Agreements, principal, interest and yield due and owing under the Notes and the
Certificates, respectively, amounts expressly excluded from indemnification
pursuant to Sections 11.1, 11.2, 11.7 and 11.8 of the Participation Agreement,
amounts due and owing (between the buyer and the seller thereof) as a result of
any voluntary sale of an assignment or participation interest by any Lender or
Holder under the Operative Agreements and any interest calculated at a rate
equal to the daily average Federal Funds Effective Rate payable by any Lender to
the Agent pursuant to Section 2.10(b) of the Credit Agreement) owing from time
to time under the Operative Agreements by Lessor or the Trust Company to the
Agent, any Lender, any Holder or any other Person, (b) interest at the
applicable Overdue Rate on any installment of Basic Rent not paid when due
(subject to the applicable grace period) for the period for which the same shall
be overdue and on any payment of Supplemental Rent not paid when due or demanded
by the appropriate Person (subject to any applicable grace period) for the
period from the due date or the date of any such demand, as the case may be,
until the same shall be paid and (c) amounts referenced as Supplemental Rent
obligations pursuant to Section 8.3 of the Participation Agreement. Upon
Lessee's payment of any such obligations of Lessor, Lessee shall have the same
subrogation rights as against Lessor with respect thereto as are provided in
respect of Claims set forth in Section 11.9 of the Participation Agreement, but
such rights of subrogation shall be subject and subordinate in all respects to
any and all obligations and/or amounts due and owing from time to time by Lessor
to any Financing Party. It shall be an additional Supplemental Rent obligation
of Lessee to pay to the appropriate Person all rent and other amounts when such
become due and owing from time to time under each Ground Lease and without the
necessity of any notice from Lessor with regard thereto. The expiration or other
termination of Lessee's obligations to pay Basic Rent hereunder shall not limit
or modify the obligations of Lessee with respect to Supplemental Rent. Unless
expressly provided otherwise in this Lease, in the event of any failure on the
part of Lessee to pay and discharge any Supplemental Rent as and when due,
Lessee shall also promptly pay and discharge any fine, penalty, interest or cost
4
which may be assessed or added for nonpayment or late payment of such
Supplemental Rent, all of which shall also constitute Supplemental Rent.
3.4 Performance on a Non-Business Day.
If any Basic Rent is required hereunder on a day that is not a Business
Day, then such Basic Rent shall be due on the corresponding Scheduled Interest
Payment Date. If any Supplemental Rent is required hereunder on a day that is
not a Business Day, then such Supplemental Rent shall be due on the next
succeeding Business Day.
3.5 Rent Payment Provisions.
Lessee shall make payment of all Basic Rent and Supplemental Rent when due
(subject to the applicable grace periods) regardless of whether any of the
Operative Agreements pursuant to which same is calculated and is owing shall
have been rejected, avoided or disavowed in any bankruptcy or insolvency
proceeding involving any of the parties to any of the Operative Agreements. Such
provisions of such Operative Agreements and their related definitions are
incorporated herein by reference and shall survive any termination, amendment or
rejection of any such Operative Agreements.
ARTICLE IV
4.1 Taxes; Utility Charges.
Without limiting Lessee's rights to request Advances with respect to any
Construction Period Property in accordance with the provisions of the
Participation Agreement prior to the Rent Commencement Date, Lessee shall pay or
cause to be paid all Impositions with respect to the Properties (except for
those expressly excluded from Lessee's indemnification obligation in Section
11.2 of the Participation Agreement) and/or the use, occupancy, operation,
repair, access, maintenance or operation thereof and all charges for
electricity, power, gas, oil, water, telephone, sanitary sewer service and all
other rents, utilities and operating expenses of any kind or type used in or on
any Property and related real property during the Term. Upon Lessor's request,
Lessee shall provide from time to time Lessor with evidence of all such payments
referenced in the foregoing sentence. Lessee shall be entitled to receive any
credit or refund with respect to any Imposition or utility charge paid by
Lessee. Unless an Event of Default shall have occurred and be continuing, the
amount of any credit or refund received by Lessor on account of any Imposition
or utility charge paid by Lessee, net of the costs and expenses incurred by
Lessor in obtaining such credit or refund, shall be promptly paid over to
Lessee; if an Event of Default has occurred such credit or refund shall be
applied to the unpaid obligations due and owing to the Financing Parties as
determined by the Agent. All charges for Impositions or utilities imposed with
respect to any Property for a period during which this Lease expires or
terminates shall be adjusted and prorated on a daily basis between Lessor and
Lessee, and each party shall pay or reimburse the other for such party's pro
rata share thereof.
5
ARTICLE V
5.1 Quiet Enjoyment.
Subject to the rights of Lessor contained in Sections 17.2, 17.3 and 20.3
and the other terms of this Lease and the other Operative Agreements and so
long as no Event of Default shall have occurred and be continuing, Lessee
shall peaceably and quietly have, hold and enjoy each Property for the
applicable Term, free of any claim or other action by Lessor or anyone
rightfully claiming by, through or under Lessor (other than Lessee) with
respect to any matters arising from and after the applicable Basic Term
Commencement Date.
ARTICLE VI
6.1 Net Lease.
This Lease shall constitute a net lease, and the obligations of Lessee
hereunder are absolute and unconditional. Without limiting Lessee's rights to
request Advances with respect to each Construction Period Property in accordance
with the provisions of the Participation Agreement prior to the Rent
Commencement Date, Lessee shall pay all operating expenses arising out of the
use, operation and/or occupancy of each Property. Any present or future law to
the contrary notwithstanding, this Lease shall not terminate, nor shall Lessee
be entitled to any abatement, suspension, deferment, reduction, setoff,
counterclaim, or defense with respect to the Rent, nor shall the obligations of
Lessee hereunder be affected (except as expressly herein permitted and by
performance of the obligations in connection therewith) for any reason
whatsoever, including without limitation by reason of: (a) any damage to or
destruction of any Property or any part thereof; (b) any taking of any Property
or any part thereof or interest therein by Condemnation or otherwise; (c) any
prohibition, limitation, restriction or prevention of Lessee's use, occupancy or
enjoyment of any Property or any part thereof, or any interference with such
use, occupancy or enjoyment by any Person or for any other reason; (d) any title
defect, Lien or any matter affecting title to any Property; (e) any eviction by
paramount title or otherwise; (f) any default by Lessor hereunder; (g) any
action for bankruptcy, insolvency, reorganization, liquidation, dissolution or
other proceeding relating to or affecting the Agent, any Lender, Lessor, Lessee,
any Holder or any Governmental Authority; (h) the impossibility or illegality of
performance by Lessor, Lessee or both; (i) any action of any Governmental
Authority or any other Person; (j) Lessee's acquisition of ownership of all or
part of any Property; (k) breach of any warranty or representation with respect
to any Property or any Operative Agreement; (l) any defect in the condition,
quality or fitness for use of any Property or any part thereof; or (m) any other
cause or circumstance whether similar or dissimilar to the foregoing and whether
or not Lessee shall have notice or knowledge of any of the foregoing. The
parties intend that the obligations of Lessee hereunder shall be covenants,
agreements and obligations that are separate and independent from any
obligations of Lessor hereunder and shall continue unaffected unless such
covenants, agreements and obligations shall have been modified or terminated in
accordance with an express provision of this Lease. Nothing in this Section 6.1
or any other provision of this Lease shall constitute a waiver by Lessee of its
right to bring an independent cause of action for damages, injunctive relief or
6
declaratory judgment against Lessor for any default or breach by Lessor under
this Lease or under any other Operative Agreement; provided, however, that no
such cause of action shall under any circumstances entitle Lessee to off-set,
abate, deduct from or defer the payment of Basic Rent, Supplemental Rent or such
other sums as are payable by Lessee under the Operative Agreements, and any such
action shall be subject to Section 12.9 of the Participation Agreement. Lessor
and Lessee acknowledge and agree that the provisions of this Section 6.1 have
been specifically reviewed and subjected to negotiation.
6.2 No Termination or Abatement.
Lessee shall remain obligated under this Lease in accordance with its terms
and shall not take any action to terminate, rescind or avoid this Lease,
notwithstanding any action for bankruptcy, insolvency, reorganization,
liquidation, dissolution, or other proceeding affecting any Person or any
Governmental Authority, or any action with respect to this Lease or any
Operative Agreement which may be taken by any trustee, receiver or liquidator of
any Person or any Governmental Authority or by any court with respect to any
Person, or any Governmental Authority. Lessee hereby waives all right (a) to
terminate or surrender this Lease (except as permitted under the terms of the
Operative Agreements) or (b) to avail itself of any abatement, suspension,
deferment, reduction, setoff, counterclaim or defense with respect to any Rent.
Lessee shall remain obligated under this Lease in accordance with its terms and
Lessee hereby waives any and all rights now or hereafter conferred by statute or
otherwise to modify or to avoid strict compliance with its obligations under
this Lease. Notwithstanding any such statute or otherwise, Lessee shall be bound
by all of the terms and conditions contained in this Lease.
ARTICLE VII
7.1 Ownership of the Properties.
(a) Lessor and Lessee intend that for federal and all state and local
income taxes, franchise taxes, any other taxes measured by net income and
for property, sales, use and transfer taxes, bankruptcy purposes,
regulatory purposes, commercial law and real estate purposes and all other
purposes (other than for accounting purposes) (A) this Lease will be
treated as a financing arrangement and conditional sale of the Properties
and (B) Lessee will be treated as the owner of the Properties and will be
entitled to all tax benefits ordinarily available to owners of property
similar to the Properties for such tax purposes. Except as otherwise
required by applicable Law, specifically, without limiting the generality
of Sections 7.1(a) and (b), the parties hereto intend and agree that, for
purposes of filing federal, state and local returns, reports and other
statements relating to income or franchise taxes (including any withholding
taxes), or any other taxes imposed upon or measured by income, (i) the
transactions contemplated by the Operative Agreements shall be treated as a
conditional sale or a financing and the Lessee shall be entitled to take
any deduction, credit, allowance or other reporting position consistent
with such treatment; and (ii) neither the Lessor, nor any Lender, nor any
Holder (subject to the following proviso) shall take any position on its
federal, state and local returns, reports and other statements relating to
income or franchise taxes that is inconsistent with such treatment or claim
7
any federal or state tax attributes or benefits (including depreciation or
cost recovery) relating to the Property; provided, however, that if an
appropriate taxing authority shall require the Lessor, any Lender or any
Holder to claim any such federal or state tax attributes or benefits, such
Person may do so and shall promptly notify the Lessee thereof and shall
permit the Lessee to contest such requirement in a manner similar to the
contest rights provided in Section 11.2 of the Participation Agreement.
Notwithstanding the foregoing, neither party hereto has made, or shall be
deemed to have made, any representation or warranty as to the availability
of any of the foregoing treatments under applicable accounting rules, tax,
bankruptcy, regulatory, commercial or real estate law or under any other
set of rules. Lessee shall claim the cost recovery deductions associated
with each Property, and Lessor shall not, to the extent not prohibited by
Law, take on its tax return a position inconsistent with Lessee's claim of
such deductions.
(b) For all purposes described in Section 7.1(a), Lessor and Lessee
intend this Lease to constitute a finance lease and not a true lease. In
order to secure the obligations of Lessee now existing or hereafter arising
under any and all Operative Agreements, Lessee hereby conveys, grants,
assigns, transfers, hypothecates, mortgages and sets over to Lessor, for
the benefit of all Financing Parties, a first priority security interest
(but subject to the security interest in the assets granted by Lessee in
favor of the Agent in accordance with the Security Agreement) in and lien
on all right, title and interest of Lessee (now owned or hereafter
acquired) in and to all Properties to the extent such is personal property
and irrevocably grants and conveys a lien, deed of trust and mortgage on
all right, title and interest of Lessee (now owned or hereafter acquired)
in and to all Properties to the extent such is a real property. Lessor and
Lessee further intend and agree that, for the purpose of securing the
obligations of Lessee and/or the Construction Agent now existing or
hereafter arising under the Operative Agreements, (i) this Lease shall be a
security agreement and financing statement within the meaning of Article 9
of the Uniform Commercial Code respecting each of the Properties and all
proceeds (including without limitation insurance proceeds thereof) to the
extent such is personal property and an irrevocable grant and conveyance of
a lien, deed of trust and mortgage on each of the Properties and all
proceeds (including without limitation insurance proceeds thereof) to the
extent such is real property; (ii) the acquisition of title by Lessor (or
to the extent applicable, a leasehold interest pursuant to a Ground Lease)
in each Property referenced in Article II constitutes a grant by Lessee to
Lessor of a security interest, lien, deed of trust and mortgage in all of
Lessee's right, title and interest in and to each Property and all proceeds
(including without limitation insurance proceeds thereof) 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, and an assignment of all rents,
profits and income produced by each Property; and (iii) notifications to
Persons holding such property, and acknowledgments, receipts or
confirmations from financial intermediaries, bankers or agents (as
applicable) of Lessee shall be deemed to have been given for the purpose of
perfecting such lien, security interest, mortgage lien and deed of trust
under applicable law. Lessee shall promptly take such actions as necessary
(including without limitation the filing of Uniform Commercial Code
financing statements, Uniform Commercial Code fixture filings and memoranda
8
(or short forms) of this Lease and the various Lease Supplements) to ensure
that the lien, security interest, mortgage and deed of trust in each
Property and the other items referenced above will be deemed to be a
perfected lien, security interest, mortgage lien and deed of trust of first
priority under applicable law and will be maintained as such throughout the
Term.
ARTICLE VIII
8.1 Condition of the Properties.
LESSEE ACKNOWLEDGES AND AGREES THAT IT IS LEASING EACH PROPERTY "AS-IS
WHERE-IS" WITHOUT REPRESENTATION, WARRANTY OR COVENANT (EXPRESS OR IMPLIED) BY
LESSOR (EXCEPT THAT LESSOR SHALL KEEP EACH PROPERTY FREE AND CLEAR OF LESSOR
LIENS) AND IN EACH CASE SUBJECT TO (A) THE EXISTING STATE OF TITLE, (B) THE
RIGHTS OF ANY PARTIES IN POSSESSION THEREOF (IF ANY), (C) ANY STATE OF FACTS
REGARDING ITS PHYSICAL CONDITION OR WHICH AN ACCURATE SURVEY MIGHT SHOW, (D) ALL
APPLICABLE LEGAL REQUIREMENTS AND (E) VIOLATIONS OF LEGAL REQUIREMENTS WHICH MAY
EXIST ON THE DATE HEREOF AND/OR THE DATE OF THE APPLICABLE LEASE SUPPLEMENT.
NEITHER LESSOR NOR THE AGENT NOR ANY LENDER NOR ANY HOLDER HAS MADE OR SHALL BE
DEEMED TO HAVE MADE ANY REPRESENTATION, WARRANTY OR COVENANT (EXPRESS OR
IMPLIED) (EXCEPT THAT LESSOR SHALL KEEP EACH PROPERTY FREE AND CLEAR OF LESSOR
LIENS) OR SHALL BE DEEMED TO HAVE ANY LIABILITY WHATSOEVER AS TO THE TITLE,
VALUE, HABITABILITY, USE, CONDITION, DESIGN, OPERATION, MERCHANTABILITY OR
FITNESS FOR USE OF ANY PROPERTY (OR ANY PART THEREOF), OR ANY OTHER
REPRESENTATION, WARRANTY OR COVENANT WHATSOEVER, EXPRESS OR IMPLIED (EXCEPT THAT
LESSOR SHALL KEEP EACH PROPERTY FREE AND CLEAR OF LESSOR LIENS), WITH RESPECT TO
ANY PROPERTY (OR ANY PART THEREOF), AND NEITHER LESSOR NOR THE AGENT NOR ANY
LENDER NOR ANY HOLDER SHALL BE LIABLE FOR ANY LATENT, HIDDEN, OR PATENT DEFECT
THEREON OR THE FAILURE OF ANY PROPERTY, OR ANY PART THEREOF, TO COMPLY WITH ANY
LEGAL REQUIREMENT. LESSEE HAS OR PRIOR TO THE BASIC TERM COMMENCEMENT DATE WILL
HAVE BEEN AFFORDED FULL OPPORTUNITY TO INSPECT EACH PROPERTY AND THE
IMPROVEMENTS THEREON (IF ANY), IS OR WILL BE (INSOFAR AS LESSOR, THE AGENT, EACH
LENDER AND EACH HOLDER ARE CONCERNED) SATISFIED WITH THE RESULTS OF ITS
INSPECTIONS AND IS ENTERING INTO THIS LEASE SOLELY ON THE BASIS OF THE RESULTS
OF ITS OWN INSPECTIONS, AND ALL RISKS INCIDENT TO THE MATTERS DESCRIBED IN THE
PRECEDING SENTENCE, AS BETWEEN LESSOR, THE AGENT, THE LENDERS AND THE HOLDERS,
ON THE ONE HAND, AND LESSEE, ON THE OTHER HAND, ARE TO BE BORNE BY LESSEE.
9
8.2 Possession and Use of the Properties.
(a) At all times during the Term with respect to each Property, such
Property shall be a Permitted Facility and shall be used by Lessee in the
ordinary course of its business. Lessee shall pay, or cause to be paid, all
charges and costs required in connection with the use of the Properties as
contemplated by this Lease. Lessee shall not commit or permit any waste of
the Properties or any part thereof.
(b) The address stated in Section 29.1 of this Lease is the principal
place of business and chief executive office of Lessee (as such terms are
used in Section 9-103(3) of the Uniform Commercial Code of any applicable
jurisdiction), and Lessee will provide Lessor with prior written notice of
any change of location of its principal place of business or chief
executive office. Regarding a particular Property, each Lease Supplement
correctly identifies the initial location of the related Equipment (if any)
and Improvements (if any) and contains an accurate legal description for
the related parcel of Land or a copy of the Ground Lease (if any). The
Equipment and Improvements respecting each particular Property will be
located only at the location identified in the applicable Lease Supplement.
(c) Lessee will not attach or incorporate any item of Equipment to or
in any other item of equipment or personal property or to or in any real
property in a manner that could give rise to the assertion of a claim that
such item of Equipment is subject to a Lien in favor of a third party that
is prior to the Liens thereon created by the Operative Agreements.
(d) On the Basic Term Commencement Date for each Property, Lessor and
Lessee shall execute a Lease Supplement in regard to such Property which
shall contain an Equipment Schedule that has a general description of the
Equipment which shall comprise the Property, an Improvement Schedule that
has a general description of the Improvements which shall comprise the
Property and a legal description of the Land to be leased hereunder (or in
the case of any Property subject to a Ground Lease to be subleased
hereunder) as of such date. Each Property subject to a Ground Lease shall
be deemed to be ground subleased from Lessor to Lessee as of the Basic Term
Commencement Date, and such ground sublease shall be in effect until this
Lease is terminated or expires, in each case in accordance with the terms
and provisions hereof. Lessee shall satisfy and perform all obligations
imposed on Lessor under each Ground Lease. Simultaneously with the
execution and delivery of each Lease Supplement, such Equipment,
Improvements, Land, ground subleasehold interest, all additional Equipment
and all additional Improvements which are financed under the Operative
Agreements after the Basic Term Commencement Date and the remainder of such
Property shall be deemed to have been accepted by Lessee for all purposes
of this Lease and to be subject to this Lease without limiting any claims
of Lessee against third parties (other than Financing Parties) on account
thereof.
(e) At all times during the Term with respect to each Property, Lessee
will comply with all obligations applicable to such Property under and (to
10
the extent no Event of Default exists and provided that such exercise will
not impair the value, utility or remaining useful life of such Property)
shall be permitted to exercise all rights and remedies under, all operation
and easement agreements and related or similar agreements applicable to
such Property and to retain the benefits thereof.
8.3 Integrated Properties.
On the Rent Commencement Date for each Property, Lessee shall, at its sole
cost and expense, cause such Property and the applicable property subject to a
Ground Lease to constitute (and for the duration of the Term shall continue to
constitute) all of the equipment, facilities, rights, other personal property
and other real property necessary or appropriate to operate, utilize, maintain
control a Permitted Facility in a commercially reasonable manner, other than
Lessee's tenant improvements and equipment and personal property used in the
operation of Lessee's business which were not financed with Advances which are
not integral to the operation of the Improvements as a real estate project or
any of the basic infrastructure systems thereof.
ARTICLE IX
9.1 Compliance With Legal Requirements, Insurance Requirements and
Manufacturer's Specifications and Standards.
Subject to the terms of Article XIII relating to permitted contests,
Lessee, at its sole cost and expense (without limiting Lessee's rights to
request Advances with respect to each Construction Period Property in accordance
with the provisions of the Participation Agreement prior to the Rent
Commencement Date), shall (a) comply with all applicable Legal Requirements
(including without limitation all Environmental Laws) and all Insurance
Requirements relating to the Properties, (b) procure, maintain and comply with
all licenses, permits, orders, approvals, consents and other authorizations
required for the acquisition, installation, testing, use, development,
construction, operation, maintenance, repair, refurbishment and restoration of
the Properties and (c) comply with all manufacturer's specifications and
standards, including without limitation the acquisition, installation, testing,
use, development, construction, operation, maintenance, repair, refurbishment
and restoration of the Properties, whether or not compliance therewith shall
require structural or extraordinary changes in any Property or interfere with
the use and enjoyment of any Property, unless the failure to procure, maintain
and comply with such items identified in subparagraphs (b) and (c), individually
or in the aggregate, shall not have and could not reasonably be expected to have
a Material Adverse Effect. Lessor agrees to take such actions as may be
reasonably requested by Lessee in connection with the compliance by Lessee of
its obligations under this Section 9.1.
11
ARTICLE X
10.1 Maintenance and Repair; Return.
(a) Lessee, at its sole cost and expense (without limiting Lessee's
rights to request Advances with respect to each Construction Period
Property in accordance with the provisions of the Participation Agreement
prior to the Rent Commencement Date), shall maintain each Property in good
condition, repair and working order (ordinary wear and tear excepted) and
make all necessary repairs thereto and replacements thereof, of every kind
and nature whatsoever, whether interior or exterior, ordinary or
extraordinary, structural or nonstructural or foreseen or unforeseen, in
each case as required by Section 9.1 and on a basis consistent with the
operation and maintenance of properties or equipment comparable in type and
function to the applicable Property, such that such Property is capable of
being immediately utilized by a third party and in compliance with standard
industry practice subject, however, to the provisions of Article XV with
respect to Casualty and Condemnation.
(b) Lessee shall not use or locate any component of any Property
outside of the Approved State therefor. Lessee shall not move or relocate
any component of any Property beyond the boundaries of the Land (comprising
part of such Property) described in the applicable Lease Supplement, except
for the temporary removal of Equipment and other personal property for
repair or replacement.
(c) If any component of any Property becomes worn out, lost,
destroyed, damaged beyond repair or otherwise permanently rendered unfit
for use, Lessee, at its own expense (without limiting Lessee's rights to
request Advances with respect to each Construction Period Property in
accordance with the provisions of the Participation Agreement prior to the
Rent Commencement Date), will within a reasonable time replace such
component with a replacement component which is free and clear of all Liens
(other than Permitted Liens) and has a value, utility and useful life at
least equal to the component replaced (assuming the component replaced had
been maintained and repaired in accordance with the requirements of this
Lease). All components which are financed by Advances or added to any
Property in accordance with this Section 10.1(c) shall immediately become
the property of (and title thereto shall vest in) Lessor and shall be
deemed incorporated in such Property and subject to the terms of this Lease
as if originally leased hereunder.
(d) Subject to Section 12.13 of the Participation Agreement, upon
reasonable advance notice, Lessor and its agents shall have the right to
inspect each Property and all maintenance records with respect thereto at
any reasonable time during normal business hours but shall not, in the
absence of an Event of Default, materially disrupt the business of Lessee.
(e) [Intentionally Omitted.]
12
(f) Lessor shall under no circumstances be required to build any
improvements or install any equipment on any Property, make any repairs,
replacements, alterations or renewals of any nature or description to any
Property, make any expenditure (except such expenditures which are Advances
as provided for in the Participation Agreement) whatsoever in connection
with this Lease or maintain any Property in any way. Lessor shall not be
required to maintain, repair or rebuild all or any part of any Property,
and Lessee waives the right to (i) require Lessor to maintain, repair, or
rebuild all or any part of any Property, or (ii) make repairs at the
expense of Lessor pursuant to any Legal Requirement, Insurance Requirement,
contract, agreement, covenant, condition or restriction at any time in
effect.
(g) Lessee shall, upon the expiration or earlier termination of this
Lease with respect to a Property, if Lessee shall not have exercised its
Purchase Option with respect to such Property and caused such Property to
be purchased, surrender such Property (i) pursuant to the exercise of the
applicable remedies upon the occurrence of a Lease Event of Default, to
Lessor or (ii) pursuant to the second paragraph of Section 22.1(a) hereof,
to Lessor or the third party purchaser, as the case may be, subject to
Lessee's obligations under this Lease (including without limitation the
obligations of Lessee at the time of such surrender under Sections 9.1,
10.1(a) through (f), 10.2, 11.1, 12.1, 22.1 and 23.1).
10.2 Environmental Inspection.
If Lessee has elected the Sale Option on the Expiration Date pursuant
to Section 20.1 or for whatever reason Lessee does not purchase or cause to
be purchased a Property in accordance with the terms of this Lease, then
not more than one hundred twenty (120) days nor less than sixty (60) days
prior to the Expiration Date, Lessee shall cause to be delivered to Lessor
a Phase I environmental site assessment recently prepared (no more than
sixty (60) days prior to the date of delivery) by an independent recognized
professional reasonably acceptable to Lessor, and in form, scope and
content reasonably satisfactory to Lessor. The cost incurred respecting
such Phase I environmental site assessment shall be paid for in accordance
with the provisions set forth in Section 20.3(b).
ARTICLE XI
11.1 Modifications.
(a) Lessee at its sole cost and expense (without limiting Lessee's
rights to request Advances with respect to each Construction Period
Property in accordance with the provisions of the Participation Agreement
prior to the Rent Commencement Date), at any time and from time to time
without the consent of Lessor may make modifications, alterations,
renovations, improvements and additions to any Property or any part thereof
and substitutions and replacements therefor (collectively,
"Modifications"), and Lessee shall make any and all Modifications required
to be made pursuant to all Legal Requirements, Insurance Requirements and
13
manufacturer's specifications and standards; provided, that: (i) no
Modification shall materially impair the value, utility or useful life of
any Property from that which existed immediately prior to such
Modification; (ii) each Modification shall be done expeditiously and in a
good and workmanlike manner; (iii) no Modification shall adversely affect
the structural integrity of any Property; (iv) to the extent required by
Section 14.2(a), Lessee shall (without limiting Lessee's rights to request
Advances with respect to each Construction Period Property in accordance
with the provisions of the Participation Agreement prior to the Rent
Commencement Date) maintain builders' risk insurance at all times when a
Modification is in progress; (v) subject to the terms of Article XIII
relating to permitted contests, Lessee shall (without limiting Lessee's
rights to request Advances with respect to each Construction Period
Property in accordance with the provisions of the Participation Agreement
prior to the Rent Commencement Date) pay all costs and expenses and
discharge any Liens (other than Permitted Liens) arising with respect to
any Modification; (vi) each Modification shall comply with the requirements
of this Lease (including without limitation Sections 8.2 and 10.1); and
(vii) no Improvement shall be demolished or otherwise rendered unfit for
use unless Lessee shall finance the proposed replacement Modification
outside of this lease facility; provided, further, Lessee shall not make
any Modification (unless required by any Legal Requirement) to the extent
any such Modification, individually or in the aggregate, shall have or
could reasonably be expected to have a Material Adverse Effect. All
Modifications required pursuant to Legal Requirements, Insurance
Requirements and/or manufacturer's specifications and standards and all
other Modifications that are not severable from the applicable Property
without material damage or other material loss of value shall immediately
and without further action upon their incorporation into the applicable
Property (1) become property of Lessor, (2) be subject to this Lease and
(3) be titled in the name of Lessor. Title to all other Modifications shall
vest with Lessee; provided, if Lessee fails to remove any such Modification
prior to the Expiration Date or earlier termination of this Lease, title to
such Modifications shall revert to Lessor. Lessee, at its sole cost and
expense, shall repair any damage to any Property relating to the removal of
any Modification, titled to Lessee. Lessee shall not remove or attempt to
remove any Modification titled to Lessor from any Property. Each Ground
Lease for a Property shall expressly provide for the provisions of the
foregoing sentence. Lessee, at its own cost and expense, will pay for the
repairs of any damage to any Property caused by the removal or attempted
removal of any Modification.
(b) The construction process provided for in the Agency Agreement is
acknowledged by Lessor to be consistent with and in compliance with the
terms and provisions of this Article XI.
ARTICLE XII
12.1 Warranty of Title.
(a) Lessee hereby acknowledges and shall cause title in each Property
(including without limitation all Equipment, all Improvements, all
replacement components to each Property and all Modifications, subject to
14
Section 11.1) immediately and without further action to vest in and become
the property of Lessor and to be subject to the terms of this Lease
(provided, respecting each Property subject to a Ground Lease, Lessor's
interest therein is acknowledged to be a leasehold interest pursuant to
such Ground Lease) from and after the date hereof or such date of
incorporation into any Property. Lessee agrees that, subject to the terms
of Article XIII relating to permitted contests, Lessee shall not directly
or indirectly create or allow to remain, and shall promptly discharge at
its sole cost and expense, any Lien, defect, attachment, levy, title
retention agreement or claim upon any Property, any component thereof or
any Modifications or any Lien, attachment, levy or claim with respect to
the Rent or with respect to any amounts held by Lessor, the Agent, any
Lender or any Holder pursuant to any Operative Agreement, other than
Permitted Liens. Lessee shall promptly notify Lessor in the event it
receives actual knowledge that a Lien other than a Permitted Lien has
occurred with respect to a Property, the Rent or any other such amounts,
and Lessee represents and warrants to, and covenants with, Lessor that the
Liens in favor of Lessor and/or the Agent created by the Operative
Agreements are (and until the Company Obligations have been paid in full
shall remain) first priority perfected Liens subject only to Prior Liens.
At all times subsequent to the Basic Term Commencement Date respecting a
Property, Lessee shall (i) cause a valid, perfected, first priority Lien on
each applicable Property to be in place in favor of the Agent (for the
benefit of the Lenders and the Holders) subject only to Prior Liens and
(ii) file, or cause to be filed, all necessary documents under the
applicable real property law and Article 9 of the Uniform Commercial Code
to perfect such title and Liens.
(b) Nothing contained in this Lease shall be construed as constituting
the consent or request of Lessor, expressed or implied, to or for the
performance by any contractor, mechanic, laborer, materialman, supplier or
vendor of any labor or services or for the furnishing of any materials for
any construction, alteration, addition, repair or demolition of or to any
Property or any part thereof. NOTICE IS HEREBY GIVEN THAT LESSOR IS NOT AND
SHALL NOT BE LIABLE FOR ANY LABOR, SERVICES OR MATERIALS FURNISHED OR TO BE
FURNISHED TO LESSEE, OR TO ANYONE HOLDING A PROPERTY OR ANY PART THEREOF
THROUGH OR UNDER LESSEE, AND THAT NO MECHANIC'S OR OTHER LIENS FOR ANY SUCH
LABOR, SERVICES OR MATERIALS SHALL ATTACH TO OR AFFECT THE INTEREST OF
LESSOR IN AND TO ANY PROPERTY.
ARTICLE XIII
13.1 Permitted Contests Other Than in Respect of Indemnities.
Except to the extent otherwise provided for in Section 11 of the
Participation Agreement, Lessee, on its own or on Lessor's behalf but at
Lessee's sole cost and expense, may contest, by appropriate administrative or
judicial proceedings conducted in good faith and with due diligence, the amount,
validity or application, in whole or in part, of any Legal Requirement,
Imposition or utility charge payable pursuant to Section 4.1 or any Lien,
attachment, levy, encumbrance or encroachment, and Lessor agrees not to pay,
15
settle or otherwise compromise any such item, provided, that (a) the
commencement and continuation of such proceedings shall suspend the collection
of any such contested amount from, and suspend the enforcement thereof against,
the applicable Properties, Lessor, each Holder, the Agent and each Lender; (b)
there shall not be imposed a Lien (other than Permitted Liens) on any Property
and no part of any Property nor any Rent would be in any danger of being sold,
forfeited, lost or deferred; (c) at no time during the permitted contest shall
there be a risk of the imposition of criminal liability or material civil
liability on Lessor, any Holder, the Agent or any Lender for failure to comply
therewith; and (d) in the event that, at any time, there shall be a material
risk of extending the application of such item beyond the end of the Term, then
Lessee shall deliver to Lessor an Officer's Certificate certifying as to the
matters set forth in clauses (a), (b) and (c) of this Section 13.1. Lessor, at
Lessee's sole cost and expense, shall execute and deliver to Lessee such
authorizations and other documents as may reasonably be required in connection
with any such contest and, if reasonably requested by Lessee, shall join as a
party therein at Lessee's sole cost and expense.
13.2 Impositions, Utility Charges, Other Matters; Compliance with Legal
Requirements.
Except with respect to Impositions, Legal Requirements, utility charges and
such other matters referenced in Section 13.1 which are the subject of ongoing
proceedings contesting the same in a manner consistent with the requirements of
Section 13.1, Lessee shall cause (a) all Impositions, utility charges and such
other matters to be timely paid, settled or compromised, as appropriate, with
respect to each Property and (b) each Property to comply with all applicable
Legal Requirements. Nothing contained herein shall limit Lessee's right, if any,
to seek refunds (from parties other than Financing Parties) of Impositions or
other charges paid by Lessee pursuant to this Lease.
ARTICLE XIV
14.1 Public Liability and Workers' Compensation Insurance.
During the Term for each Property, Lessee shall procure and carry, at
Lessee's sole cost and expense, commercial general liability and umbrella
liability insurance for claims for injuries or death sustained by persons or
damage to property while on such Property or respecting the Equipment and such
other public liability coverages as are then customarily carried by similarly
situated companies conducting business similar to that conducted by Lessee. Such
insurance shall be on terms and in amounts that are no less favorable than
insurance maintained by Lessee with respect to similar properties and equipment
that it owns and are then carried by similarly situated companies conducting
business similar to that conducted by Lessee, and in no event shall have a
minimum combined single limit per occurrence coverage (i) for commercial general
liability of less than $1,000,000 and (ii) for umbrella liability of less than
$15,000,000. The policies shall name Lessee as the insured and shall be endorsed
to name Lessor, the Holders, the Agent and the Lenders as additional insureds.
The policies shall also specifically provide that such policies shall be
considered primary insurance which shall apply to any loss or claim before any
16
contribution by any insurance which Lessor, any Holder, the Agent or any Lender
may have in force.
14.2 Permanent Hazard and Other Insurance.
(a) During the Term for each Property, Lessee shall keep such Property
insured against all risk of physical loss or damage by fire and other risks
and shall maintain builders' risk insurance during construction of any
Improvements or Modifications in each case in amounts no less than the then
current replacement value of such Property (assuming that such Property was
in the condition required by the terms of this Lease immediately prior to
such loss) and on terms that (i) are no less favorable than insurance
covering other similar properties owned by Lessee and (ii) are then carried
by similarly situated companies conducting business similar to that
conducted by Lessee; provided, Lessee shall have no obligation to maintain
earthquake insurance. The policies shall name Lessee as the insured and
shall be endorsed to name Lessor and the Agent (on behalf of the Lenders
and the Holders) as a named additional insured and loss payee, to the
extent of their respective interests; provided, so long as no Event of
Default exists, any loss payable under the insurance policies required by
this Section for losses up to $5,000,000 will be paid to Lessee.
(b) If, during the Term with respect to a Property the area in which
such Property is located is designated a "flood-prone" area pursuant to the
Flood Disaster Protection Act of 1973, or any amendments or supplements
thereto or is in a zone designated A or V, then Lessee shall comply with
the National Flood Insurance Program as set forth in the Flood Disaster
Protection Act of 1973. In addition, Lessee will fully comply with the
requirements of the National Flood Insurance Act of 1968 and the Flood
Disaster Protection Act of 1973, as each may be amended from time to time,
and with any other Legal Requirement, concerning flood insurance to the
extent that it applies to any such Property. During the Term, Lessee shall,
in the operation and use of each Property, maintain workers' compensation
insurance consistent with that carried by similarly situated companies
conducting business similar to that conducted by Lessee and containing
minimum liability limits of no less than $100,000. In the operation of each
Property, Lessee shall comply with workers' compensation laws applicable to
Lessee, and protect Lessor, each Holder, the Agent and each Lender against
any liability under such laws.
14.3 Coverage.
(a) As of the date of this Lease and annually thereafter during the
Term, Lessee shall furnish the Agent (on behalf of Lessor and the other
beneficiaries of such insurance coverage) with certificates prepared by the
insurers or insurance broker of Lessee showing the insurance required under
Sections 14.1 and 14.2 to be in effect, naming (to the extent of their
respective interests) Lessor, the Holders, the Agent and the Lenders as
additional insureds and loss payees and evidencing the other requirements
of this Article XIV. All such insurance shall be at the cost and expense of
Lessee and provided by nationally recognized, financially sound insurance
17
companies having an A or better rating by A.M. Best's Key Rating Guide.
Lessee shall cause such certificates to include a provision for thirty (30)
days' advance written notice (ten (10) days in the case of non-payment of
premium) by the insurer to the Agent (on behalf of Lessor and the other
beneficiaries of such insurance coverage) in the event of cancellation or
material alteration of such insurance. If an Event of Default has occurred
and is continuing and the Agent (on behalf of Lessor and the other
beneficiaries of such insurance coverage) so requests, Lessee shall deliver
to the Agent (on behalf of Lessor and the other beneficiaries of such
insurance coverage) copies of all insurance policies required by Sections
14.1 and 14.2.
(b) Lessee agrees that the insurance policy or policies required by
Sections 14.1, 14.2(a) and 14.2(b) shall include an appropriate clause
pursuant to which any such policy shall provide that it will not be
invalidated should Lessee or any Contractor, as the case may be, waive, at
any time, any or all rights of recovery against any party for losses
covered by such policy or due to any breach of warranty, fraud, action,
inaction or misrepresentation by Lessee or any Person acting on behalf of
Lessee. Lessee hereby waives any and all such rights against Lessor, the
Holders, the Agent and the Lenders to the extent of payments made to any
such Person under any such policy.
(c) Neither Lessor nor Lessee shall carry separate insurance
concurrent in kind or form or contributing in the event of loss with any
insurance required under this Article XIV, except that Lessor may carry
separate liability insurance at Lessor's sole cost so long as (i) Lessee's
insurance is designated as primary and in no event excess or contributory
to any insurance Lessor may have in force which would apply to a loss
covered under Lessee's policy and (ii) each such insurance policy will not
cause Lessee's insurance required under this Article XIV to be subject to a
coinsurance exception of any kind.
(d) Lessee shall pay as they become due all premiums for the insurance
required by Section 14.1 and Section 14.2, shall renew or replace each
policy prior to the expiration date thereof or otherwise maintain the
coverage required by such Sections without any lapse in coverage.
(e) The property insurance required under Section 14.2 may be provided
through blanket insurance policies covering the Properties and other
properties owned or leased by Lessee, Guarantor or their Affiliates, so
long as such blanket policies include an agreed amount endorsement
eliminating the effects of co-insurance and is provided on a replacement
cost basis.
14.4 Additional Insurance Requirements.
Not in limitation of any provision of the Operative Agreements but in
addition thereto, Lessee shall obtain any and all additional insurance policies
(including without limitation with respect to Condemnation) with regard to the
Properties or otherwise with respect to the transactions contemplated by the
Operative Agreements as reasonably requested from time to time by Lessor
provided such insurance is then carried by similarly situated companies
18
regarding properties similar to the Properties or otherwise conducting business
similar to that conducted by Lessee (but in no event shall Lessor be entitled to
request earthquake insurance).
ARTICLE XV
15.1 Casualty and Condemnation.
(a) Subject to the provisions of the Agency Agreement and this Article
XV and Article XVI (in the event Lessee delivers, or is obligated to
deliver or is deemed to have delivered, a Termination Notice), and prior to
the occurrence and continuation of a Default or an Event of Default, Lessee
shall be entitled to receive (and Lessor hereby irrevocably assigns to
Lessee all of Lessor's right, title and interest in) any condemnation
proceeds, award, compensation or insurance proceeds under Sections 14.2(a)
or 14.2(b) hereof to which Lessee or Lessor may become entitled by reason
of their respective interests in a Property (i) if all or a portion of such
Property is damaged or destroyed in whole or in part by a Casualty or (ii)
if the use, access, occupancy, easement rights or title to such Property or
any part thereof is the subject of a Condemnation; provided, however, if a
Default or an Event of Default shall have occurred and be continuing or if
such award, compensation or insurance proceeds shall exceed $5,000,000,
then such award, compensation or insurance proceeds shall be paid directly
to Lessor or, if received by Lessee, shall be held in trust for Lessor, and
shall be paid over by Lessee to Lessor and held in accordance with the
terms of this Article XV. All amounts held by Lessor hereunder on account
of any award, compensation or insurance proceeds either paid directly to
Lessor or turned over to Lessor shall be held as security for the
performance of Lessee's obligations hereunder and under the other Operative
Agreements and (i) to the extent no Default or Event of Default shall have
occurred and be continuing at such time, Lessor shall pay such amounts so
held by Lessor (A) from time to time as Lessee either restores and repairs
such Property pursuant to Section 15.1(e) and gives Lessor reasonable
evidence of such restoration and repair work with any Excess Proceeds after
completion of such restoration or repair to be paid to Lessee or (B)
promptly to Lessee upon the Lessee's payment in full of the Termination
Value for such Property pursuant to Article XVI or (ii) to the extent a
Default or Event of Default shall have occurred and be continuing at such
time, all amounts so held by Lessor shall be paid over to Lessee when all
such obligations of Lessee with respect to such matters (and all other
obligations of Lessee which should have been satisfied pursuant to the
Operative Agreements as of such date) have been satisfied and no Default or
Event of Default is then continuing.
(b) Lessee may appear in any proceeding or action to negotiate,
prosecute, adjust or appeal any claim for any award, compensation or
insurance payment on account of any such Casualty or Condemnation and shall
pay all expenses thereof. At Lessee's reasonable request, and at Lessee's
sole cost and expense, Lessor and the Agent shall participate in any such
proceeding, action, negotiation, prosecution or adjustment. Lessor and
Lessee agree that this Lease shall control the rights of Lessor and Lessee
in and to any such award, compensation or insurance payment.
19
(c) If Lessee shall receive notice of a Casualty or a Condemnation of
a Property or any interest therein where damage to the affected Property is
estimated to equal or exceed $5,000,000, Lessee shall give notice thereof
to Lessor promptly after Lessee's receipt of such notice. The Agent, in its
discretion, may implement such additional conditions precedent
(substantially similar to those contained in Sections 5.1 through 5.7 of
the Participation Agreement) for the reimbursement of Lessee. In the event
such a Casualty or Condemnation occurs (regardless of whether Lessee gives
notice thereof), then Lessee shall be deemed to have delivered a
Termination Notice to Lessor and the provisions of Sections 16.1 and 16.2
shall apply.
(d) In the event of a Casualty or a Condemnation (regardless of
whether notice thereof must be given pursuant to paragraph (c)), this Lease
shall terminate with respect to the applicable Property in accordance with
Section 16.1 if Lessee, within thirty (30) days after such occurrence,
delivers to Lessor a notice to such effect.
(e) If pursuant to this Section 15.1 this Lease shall continue in full
force and effect following a Casualty or Condemnation with respect to the
affected Property, Lessee shall, at its sole cost and expense (subject to
reimbursement in accordance with Section 15.1(a)) promptly and diligently
repair any damage to the applicable Property caused by such Casualty or
Condemnation in conformity with the requirements of Sections 10.1 and 11.1,
using the as-built Plans and Specifications or manufacturer's
specifications for the applicable Improvements, Equipment or other
components of the applicable Property (as modified to give effect to any
subsequent Modifications, any Condemnation affecting the applicable
Property and all applicable Legal Requirements), so as to restore the
applicable Property to the same or a greater remaining economic value,
useful life, utility, condition, operation and function as existed
immediately prior to such Casualty or Condemnation (assuming all
maintenance and repair standards have been satisfied). In such event, title
to the applicable Property shall remain with Lessor.
(f) In no event shall a Casualty or Condemnation affect Lessee's
obligations to pay Rent pursuant to Article III.
(g) Notwithstanding anything to the contrary set forth in Section
15.1(a) or Section 15.1(e), if during the Term with respect to a Property a
Casualty occurs with respect to such Property or Lessee receives notice of
a Condemnation with respect to such Property and, following such Casualty
or Condemnation, the applicable Property cannot reasonably be restored,
repaired or replaced both on or before the day one hundred twenty (120)
days prior to the Expiration Date and by the date (fifteen (15) months
after the occurrence of such Casualty or Condemnation (if such Casualty or
Condemnation occurs during the Term) to the same or a greater remaining
value, useful life, utility, condition, operation and function as existed
immediately prior to such Casualty or Condemnation (assuming all
maintenance and repair standards have been satisfied) or on or before such
day such Property is not in fact so restored, repaired or replaced, then
Lessee shall be required to exercise its Purchase Option for such Property
on the next Payment Date (notwithstanding the limits on such exercise
contained in Section 20.2) and pay Lessor the Termination Value for such
Property; provided, if any Default or Event of Default has occurred and is
20
continuing, Lessee shall also promptly (and in any event within three (3)
Business Days) pay Lessor any award, compensation or insurance proceeds
received on account of any Casualty or Condemnation with respect to any
Property; provided, further, that if no Default or Event of Default has
occurred and is continuing, any Excess Proceeds shall be paid to Lessee. If
a Default or an Event of Default has occurred and is continuing and any
Loans, Holder Advances or other amounts are owing with respect thereto,
then any Excess Proceeds (to the extent of any such Loans, Holder Advances
or other amounts owing with respect thereto) shall be paid to Lessor, held
as security for the performance of Lessee's obligations hereunder and under
the other Operative Agreements and applied to such obligations upon the
exercise of remedies in connection with the occurrence of an Event of
Default, with the remainder of such Excess Proceeds in excess of such
Loans, Holder Advances and other amounts owing with respect thereto being
distributed to the Lessee.
(h) The provisions of Sections 15.1(a) through 15.1(g) shall not apply
to any Property until after the Construction Period Termination Date
applicable to such Property.
15.2 Environmental Matters.
Promptly upon Lessee's actual knowledge of the presence of Hazardous
Substances in any portion of any Property or Properties in concentrations and
conditions that constitute an Environmental Violation and which, in the
reasonable opinion of Lessee, the cost to undertake any legally required
response, clean up, remedial or other action will or might result in a cost to
Lessee of more than $100,000, Lessee shall notify Lessor in writing of such
condition. In the event of any Environmental Violation (regardless of whether
notice thereof must be given), Lessee shall, not later than thirty (30) days
after Lessee has actual knowledge of such Environmental Violation, either
deliver to Lessor a Termination Notice with respect to the applicable Property
or Properties pursuant to Section 16.1, if applicable, or, at Lessee's sole cost
and expense, promptly and diligently commence to undertake and diligently
thereafter complete any response, clean up, remedial or other action (including
without limitation the pursuit by Lessee of appropriate action against any
off-site or third party source of contamination) necessary to remove, cleanup or
remediate the Environmental Violation in accordance with all Environmental Laws.
Any such undertaking shall be timely completed in accordance with prudent
industry standards. If Lessee does not deliver a Termination Notice with respect
to such Property pursuant to Section 16.1, Lessee shall, upon completion of
remedial action by Lessee, cause to be prepared by a reputable environmental
consultant acceptable to Lessor a report describing the Environmental Violation
and the actions taken by Lessee (or its agents) in response to such
Environmental Violation, and a statement by the consultant that the
Environmental Violation has been remedied in full compliance with applicable
Environmental Law. Not less than sixty (60) days and not more than one hundred
twenty (120) days prior to any time that Lessee elects to cease operations with
respect to any Property pursuant to Section 20.1 hereof or any other provision
of any Operative Agreement, Lessee at its expense shall cause to be delivered to
Lessor a Phase I environmental site assessment respecting such Property recently
prepared (no more than sixty (60) days prior to the date of delivery) by an
independent recognized professional acceptable to Lessor in its reasonable
21
discretion and in form, scope and content satisfactory to Lessor in its
reasonable discretion. Notwithstanding any other provision of any Operative
Agreement, if Lessee fails to comply with the foregoing or its obligation
described in Section 10.2 regarding the Phase I environmental site assessment,
Lessee shall be obligated to purchase or cause a third party to purchase such
Property for its Termination Value and shall not be permitted to exercise (and
Lessor shall have no obligation to honor any such exercise) any rights under any
Operative Agreement regarding any other sale of such Property.
15.3 Notice of Environmental Matters.
Promptly, but in any event within five (5) Business Days from the date a
Responsible Officer of Lessee has actual knowledge thereof, Lessee shall provide
to Lessor written notice of any pending claim, action or proceeding involving
any Environmental Law or any Release on or in connection with any Property or
Properties. All such notices shall describe in reasonable detail the nature of
the claim, action or proceeding and Lessee's proposed response thereto. In
addition, Lessee shall provide to Lessor, within five (5) Business Days of
receipt, copies of all material written communications with any Governmental
Authority relating to any Environmental Law in connection with any Property.
Lessee shall also promptly provide such detailed reports of any such material
environmental claims as may reasonably be requested by Lessor.
ARTICLE XVI
16.1 Termination Upon Certain Events.
If Lessee has delivered, or is deemed to have delivered, written notice of
a termination of this Lease with respect to the applicable Property to Lessor in
the form described in Section 16.2(a) (a "Termination Notice") pursuant to the
provisions of this Lease, then following the applicable Casualty, Condemnation
or Environmental Violation, this Lease shall terminate with respect to the
affected Property on the applicable Termination Date.
16.2 Procedures.
(a) A Termination Notice shall contain: (i) notice of termination of
this Lease with respect to the affected Property on a Payment Date not more
than sixty (60) days after Lessor's receipt of such Termination Notice (the
"Termination Date"); and (ii) a binding and irrevocable agreement of Lessee
to purchase or cause a third party to purchase the Property for a price
equal to the Termination Value on such Termination Date.
(b) On each Termination Date, Lessee shall purchase or cause a third
party to purchase the Property for a price equal to the Termination Value
for the applicable Property, and Lessor shall convey such Property or the
remaining portion thereof, if any, to Lessee (or Lessee's designee), all in
accordance with Section 20.2.
22
ARTICLE XVII
17.1 Lease Events of Default.
If any one (1) or more of the following events (each a "Lease Event of
Default") shall occur:
(a) Lessee shall fail to make payment of (i) any Basic Rent (except as
set forth in clause (ii)) within five (5) days after the same has become
due and payable or (ii) any Termination Value or Maximum Amount, on the
date any such payment is due and payable, or any payment of Basic Rent or
Supplemental Rent due on the due date of any such payment of Termination
Value or Maximum Amount, or any amount due on the Expiration Date;
(b) Subject to Section 8.10 of the Participation Agreement, Lessee
shall fail to make payment of any Supplemental Rent (other than
Supplemental Rent referred to in Section 17.1(a)(ii)) within thirty (30)
days after receipt of notice that such payment is due (which thirty (30)
day period shall run concurrently with the thirty (30) day period
referenced in Section 3.3) or any other Credit Party shall fail to make any
payment of any amount under any Operative Agreement (other than any such
amount payable by any Credit Party referred to in Section 17.1(a)(ii)),
which has become due and payable within thirty (30) days after receipt of
notice that such payment is due;
(c) Lessee shall fail to maintain insurance as required by Article XIV
of this Lease;
(d) Subject to Section 8.10 of the Participation Agreement, (i) Lessee
shall fail to observe or perform any term, covenant, obligation or
condition of Lessee under this Lease or any other Operative Agreement to
which Lessee is a party other than those set forth in Sections 17.1(a), (b)
or (c) hereof, or any other Credit Party shall fail to observe or perform
any term, covenant, obligation or condition of such Credit Party under any
Operative Agreement other than those set forth in Section 17.1(b) hereof
and such failure shall continue for thirty (30) days after notice thereof
to the Lessee or such Credit Party, or (ii) any representation or warranty
made by Lessee or any other Credit Party set forth in this Lease or in any
other Operative Agreement or in any document entered into in connection
herewith or therewith or in any document, certificate or financial or other
statement delivered in connection herewith or therewith shall be false or
inaccurate in any material way when made;
(e) Subject to Section 8.10 of the Participation Agreement, an Agency
Agreement Event of Default shall have occurred and be continuing;
(f) Lessee, the Guarantor or any of their Subsidiaries shall (i)
default in any payment of principal of or interest, regardless of the
amount, due in respect of any Indebtedness (other than the Notes and
Certificates), including all of the Indebtedness issued under the same
23
indenture or other agreement, of $25,000,000 or greater or in the payment
of any Guarantee Obligation with respect to an amount of $25,000,000 or
greater, beyond the period of grace, if any, provided in the instrument or
agreement under which such Indebtedness or Guarantee Obligation was
created; or (ii) default in the observance or performance of any other
agreement or condition relating to any such Indebtedness or Guarantee
Obligation or contained in any instrument or agreement evidencing, securing
or relating thereto, or any other event shall occur or condition exist, the
effect of which default or other event or condition is to cause, or to
permit the holder or holders of such Indebtedness or beneficiary or
beneficiaries of such Guarantee Obligation (or a trustee or agent on behalf
of such holder or holders or beneficiary or beneficiaries) to cause, with
the giving of notice if required, such Indebtedness to become due prior to
its stated maturity or such Guarantee Obligation to become payable; or
(g) Lessee, the Guarantor or any of their Subsidiaries, except for
Non-Material Subsidiaries, shall commence any case, proceeding or other
action (A) under any existing or future law of any jurisdiction, domestic
or foreign, relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking to have an order for relief entered with respect to it, or
seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts,
or (B) seeking appointment of a receiver, trustee, custodian or other
similar official for it or for all or any substantial part of its assets,
or Lessee, the Guarantor or any of their Subsidiaries, except for
Non-Material Subsidiaries, shall make a general assignment for the benefit
of its creditors; or (ii) there shall be commenced against Lessee, the
Guarantor or any of their Subsidiaries, except for Non-Material
Subsidiaries, any case, proceeding or other action of a nature referred to
in clause (i) above which (A) results in the entry of an order for relief
or any such adjudication or appointment or (B) remains undismissed,
undischarged or unbonded for a period of 60 days; or (iii) there shall be
commenced against Lessee, the Guarantor or any of their Subsidiaries except
for Non-Material Subsidiaries, any case, proceeding or other action seeking
issuance of a warrant of attachment, execution, distraint or similar
process against all or any substantial part of its assets which results in
the entry of an order for any such relief which shall not have been
vacated, discharged, or stayed or bonded pending appeal within 60 days from
the entry thereof; or (iv) Lessee, the Guarantor or any of their
Subsidiaries, except for Non-Material Subsidiaries, shall take any action
in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i), (ii), or (iii)
above; or (v) Lessee, the Guarantor or any of their respective
Subsidiaries, except for Non-Material Subsidiaries, shall generally not, or
shall be unable to, or shall admit in writing its inability to, pay its
debts as they become due; or
(h) [Intentionally Omitted.];
(i) [Intentionally Omitted.];
(j) [Intentionally Omitted.];
24
(k) Subject to Section 8.10 of the Participation Agreement, any
report, certificate, financial statement or other instrument delivered to
Lessor by or on behalf of any Credit Party pursuant to the terms of this
Lease or any other Operative Agreement is false or misleading in any
material respect when made or delivered;
(l) Any Lessee Credit Agreement Event of Default shall have occurred
and be continuing and shall not have been waived;
(m) One or more judgments or decrees shall be entered against the
Lessee, the Guarantor or any of their respective Subsidiaries involving in
the aggregate a liability (not paid or fully covered by insurance) of
$25,000,000 or more and all such judgments or decrees shall not have been
vacated, discharged, stayed or bonded pending appeal within 60 days from
the entry thereof; or
(n) (i) Any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302
of ERISA), whether or not waived, shall exist with respect to any Plan,
(iii) a Reportable Event shall occur with respect to, or proceedings shall
commence to have a trustee appointed, or a trustee shall be appointed, to
administer or to terminate, any Single Employer Plan, which Reportable
Event or commencement of proceedings or appointment of a trustee is, in the
reasonable opinion of the Majority Secured Parties, likely to result in the
termination of such Plan for purposes of Title IV of ERISA, (iv) any Single
Employer Plan shall terminate for purposes of Title IV of ERISA, (v) the
Lessee or the Guarantor or any Commonly Controlled Entity shall, or in the
reasonable opinion of the Majority Secured Parties is likely to, incur any
liability in connection with a withdrawal from, or the Insolvency or
Reorganization of, a Multiemployer Plan or (vi) any other event or
condition shall occur or exist, with respect to a Plan; and in each case in
clauses (i) through (vi) above, such event or condition, together with all
other such events or conditions, if any, could subject the Lessee, the
Guarantor or any of their respective Subsidiaries to any tax, penalty or
other liabilities in the aggregate material in relation to the business,
operations, property or financial or other condition of the Lessee, the
Guarantor or any of their respective Subsidiaries taken as a whole;
(o) Franklin Resources, Inc. shall cease to own directly or indirectly
of record and beneficially free and clear of Liens at least 80% of the
shares of the issued and outstanding capital stock of Franklin Advisers and
Templeton Global Advisors Ltd. (formerly known as Templeton, Galbraith &
Hansberger Ltd.);
(p) Any Operative Agreement shall cease to be in full force and
effect; or
(q) The guaranty given by the Guarantor under the Participation
Agreement or any material provision thereof shall cease to be in full force
and effect, or the Guarantor shall deny or disaffirm the Guarantor's
obligations under such guaranty, or (subject to Section 8.10 of the
Participation Agreement) the Guarantor shall default in the due performance
or observance of any term, covenant or agreement on its part to be
25
performed or observed pursuant to any guaranty after the periods for cure
as are granted to the Credit Parties (other than Lessee) under Sections
17.1 (b) and (d) above have expired;
then, in any such event, Lessor may, in addition to the other rights and
remedies provided for in this Article XVII and in Section 18.1, terminate this
Lease by giving Lessee five (5) days' notice of such termination (provided,
notwithstanding the foregoing, this Lease shall be deemed to be automatically
terminated without the giving of notice upon the occurrence of a Lease Event of
Default under Sections 17.1(g), (h) or (i) and provided, further, the exercise
by Lessee of the purchase option described in Section 17.11 shall stay Lessor's
right to terminate this Lease until such date specified for such termination
pursuant to Sections 20.1 and 20.2), and this Lease shall terminate, and all
rights of Lessee under this Lease shall cease except for the rights of Lessee
regarding the purchase option described in Section 17.11 in accordance with the
express terms thereof following such Lease Event of Default. Lessee shall, to
the fullest extent permitted by law, pay as Supplemental Rent all costs and
expenses incurred by or on behalf of Lessor or any other Financing Party,
including without limitation reasonable fees and expenses of counsel, as a
result of any Lease Event of Default hereunder.
A POWER OF SALE HAS BEEN GRANTED IN THIS LEASE. A POWER OF SALE MAY ALLOW
LESSOR TO TAKE THE PROPERTIES AND SELL THE PROPERTIES WITHOUT GOING TO COURT IN
A FORECLOSURE ACTION UPON THE OCCURRENCE OF A LEASE EVENT OF DEFAULT.
17.2 Surrender of Possession.
If a Lease Event of Default shall have occurred and be continuing, and
whether or not this Lease shall have been terminated pursuant to Section 17.1,
Lessee shall, upon thirty (30) days' written notice, surrender to Lessor
possession of the Properties. Lessor may enter upon and repossess the Properties
by such means as are available at Law or in equity and may remove Lessee and all
other Persons and any and all personal property and Lessee's equipment and
personalty and severable Modifications from the Properties. Lessor shall have no
liability by reason of any such entry, repossession or removal performed in
accordance with applicable law. Upon the written demand of Lessor, Lessee shall
return the Properties promptly to Lessor in the manner and condition required
by, and otherwise in accordance with the provisions of, Section 22.1(c) hereof.
17.3 Reletting.
If a Lease Event of Default shall have occurred and be continuing, and
whether or not this Lease shall have been terminated pursuant to Section 17.1,
Lessor may, but shall be under no obligation to, relet any or all of the
Properties, for the account of Lessee or otherwise, for such term or terms
(which may be greater or less than the period which would otherwise have
constituted the balance of the Term) and on such conditions (which may include
concessions or free rent) and for such purposes as Lessor may determine, and
Lessor may collect, receive and retain the rents resulting from such reletting.
Lessor shall not be liable to Lessee for any failure to relet any Property or
for any failure to collect any rent due upon such reletting.
26
17.4 Damages.
Neither (a) the termination of this Lease as to all or any of the
Properties pursuant to Section 17.1; (b) the repossession of all or any of the
Properties; nor (c) the failure of Lessor to relet all or any of the Properties,
the reletting of all or any portion thereof, nor the failure of Lessor to
collect or receive any rentals due upon any such reletting, shall relieve Lessee
of its liabilities and obligations hereunder, all of which shall survive any
such termination, repossession or reletting. If any Lease Event of Default shall
have occurred and be continuing and notwithstanding any termination of this
Lease pursuant to Section 17.1, Lessee shall forthwith pay to Lessor all Rent
and other sums due and payable hereunder to and including without limitation the
date of such termination. Thereafter, on the days on which the Basic Rent or
Supplemental Rent, as applicable, is payable under this Lease or would have been
payable under this Lease if the same had not been terminated pursuant to Section
17.1 and until the end of the Term hereof or what would have been the Term in
the absence of such termination, Lessee shall pay Lessor, as current liquidated
damages (it being agreed that it would be impossible accurately to determine
actual damages) an amount equal to the Basic Rent and Supplemental Rent that are
payable under this Lease or would have been payable by Lessee hereunder if this
Lease had not been terminated pursuant to Section 17.1, less the net proceeds,
if any, which are actually received by Lessor with respect to the period in
question of any reletting of any Property or any portion thereof; provided, that
Lessee's obligation to make payments of Basic Rent and Supplemental Rent under
this Section 17.4 shall continue only so long as Lessor shall not have received
the amounts specified in Section 17.6. In calculating the amount of such net
proceeds from reletting, there shall be deducted all of Lessor's, any Holder's,
the Agent's and any Lender's reasonable expenses in connection therewith,
including without limitation repossession costs, brokerage or sales commissions,
fees and expenses for counsel and any necessary repair or alteration costs and
expenses incurred in preparation for such reletting. To the extent Lessor
receives any damages pursuant to this Section 17.4, such amounts shall be
regarded as amounts paid on account of Rent. Lessee specifically acknowledges
and agrees that its obligations under this Section 17.4 shall be absolute and
unconditional under any and all circumstances and shall be paid and/or
performed, as the case may be, without notice or demand and without any
abatement, reduction, diminution, setoff, defense, counterclaim or recoupment
whatsoever.
17.5 Power of Sale.
Without limiting any other remedies set forth in this Lease, Lessor and
Lessee agree that Lessee has granted, pursuant to Section 7.1(b) hereof and each
Lease Supplement, a Lien against the Properties WITH POWER OF SALE, and that,
upon the occurrence and during the continuance of any Lease Event of Default,
Lessor shall have the power and authority, to the extent provided by Law, after
prior notice and lapse of such time as may be required by Law, to foreclose its
interest (or cause such interest to be foreclosed) in all or any part of the
Properties.
17.6 Final Liquidated Damages.
If a Lease Event of Default shall have occurred and be continuing, whether
or not this Lease shall have been terminated pursuant to Section 17.1 and
whether or not Lessor shall have collected any current liquidated damages
27
pursuant to Section 17.4, Lessor shall have the right to recover, by demand to
Lessee and at Lessor's election, and Lessee shall pay to Lessor, as and for
final liquidated damages, but exclusive of the indemnities payable under Section
11 of the Participation Agreement (which, if requested, shall be paid
concurrently), and in lieu of all current liquidated damages beyond the date of
such demand (it being agreed that it would be impossible accurately to determine
actual damages), the Termination Value. Upon payment of the amount specified
pursuant to the first sentence of this Section 17.6, Lessee shall be entitled to
receive from Lessor, either at Lessee's request or upon Lessor's election, in
either case at Lessee's cost, an assignment of Lessor's entire right, title and
interest in and to the Properties, Improvements, Fixtures, Modifications,
Equipment and all components thereof, in each case in recordable form and
otherwise in conformity with local custom and free and clear of the Lien of this
Lease and the rights of the Financing Parties pursuant to any other Operative
Agreement or Security Document (including without limitation the release of any
memoranda of Lease and/or the Lease Supplement recorded in connection therewith)
and any Lessor Liens. The Properties shall be conveyed to Lessee "AS-IS,
WHERE-IS" and in their then present physical condition. If any statute or rule
of law shall limit the amount of such final liquidated damages to less than the
amount agreed upon, Lessor shall be entitled to the maximum amount allowable
under such statute or rule of law; provided, however, Lessee shall not be
entitled to receive an assignment of Lessor's interest in the Properties, the
Improvements, Fixtures, Modifications, Equipment or the components thereof
unless Lessee shall have paid in full the Termination Value. Lessee specifically
acknowledges and agrees that its obligations under this Section 17.6 shall be
absolute and unconditional under any and all circumstances and shall be paid
and/or performed, as the case may be, without notice or demand and without any
abatement, reduction, diminution, setoff, defense, counterclaim or recoupment
whatsoever.
17.7 Environmental Costs.
If a Lease Event of Default shall have occurred and be continuing, and
whether or not this Lease shall have been terminated pursuant to Section 17.1,
Lessee shall pay directly to any third party (or at Lessor's election, reimburse
Lessor) for the cost of any environmental testing and/or remediation work
undertaken respecting any Property, as such testing or work is deemed
appropriate in the reasonable judgment of Lessor, and shall indemnify and hold
harmless Lessor and each other Indemnified Person therefrom. Lessee shall pay
all amounts referenced in the immediately preceding sentence within ten (10)
days of any request by Lessor for such payment. The provisions of this Section
17.7 shall not limit the obligations of Lessee under any Operative Agreement
regarding indemnification obligations, environmental testing, remediation and/or
work.
17.8 Waiver of Certain Rights.
If this Lease shall be terminated pursuant to Section 17.1, Lessee waives,
to the fullest extent permitted by Law, (a) any notice of re-entry or the
institution of legal proceedings to obtain re-entry or possession; (b) any right
of redemption, re-entry or possession; (c) the benefit of any laws now or
hereafter in force exempting property from liability for rent or for debt; and
(d) any other rights which might otherwise limit or modify any of Lessor's
rights or remedies under this Article XVII.
28
17.9 Assignment of Rights Under Contracts.
If a Lease Event of Default shall have occurred and be continuing, and
whether or not this Lease shall have been terminated pursuant to Section 17.1,
Lessee shall upon Lessor's demand immediately assign, transfer and set over to
Lessor all of Lessee's right, title and interest in and to each agreement
executed by Lessee in connection with the acquisition, installation, testing,
use, development, construction, operation, maintenance, repair, refurbishment
and restoration of the Properties (including without limitation all right, title
and interest of Lessee with respect to all warranty, performance, service and
indemnity provisions), as and to the extent that the same relate to the
acquisition, installation, testing, use, development, construction, operation,
maintenance, repair, refurbishment and restoration of the Properties or any of
them.
17.10 Remedies Cumulative.
The remedies herein provided shall be cumulative and in addition to (and
not in limitation of) any other remedies available at Law, equity or otherwise,
including without limitation any mortgage foreclosure remedies.
17.11 Lessee's Right to Cure by Purchase of All Properties.
Notwithstanding anything in this Lease or in any of the other Operative
Agreements to the contrary, upon the occurrence and continuance of a Lease Event
of Default, Lessee may, but shall not be obligated to, cure such Lease Event of
Default, as the case may be, by purchasing all the Properties, such purchase to
be consummated as provided in Sections 19.1, 20.1 and 20.2 (provided, that to
the extent a monetary Lease Default or monetary Lease Event of Default exists
and is continuing (whether or not related to any Property) such monetary Lease
Default or monetary Lease Event of Default shall also be cured (concurrently
with and in addition to the purchase of all the Properties) by the payment of
the outstanding amounts giving rise to such monetary Lease Default or monetary
Lease Event of Default).
ARTICLE XVIII
18.1 Lessor's Right to Cure Lessee's Lease Defaults.
Lessor, without waiving or releasing any obligation or Lease Event of
Default, may (but shall be under no obligation to) remedy any Lease Event of
Default for the account and at the sole cost and expense of Lessee, including
without limitation the failure by Lessee to maintain the insurance required by
Article XIV, and may after any Lease Event of Default, to the fullest extent
permitted by Law, and notwithstanding any right of quiet enjoyment in favor of
Lessee, enter upon any Property, and take all such action thereon as may be
necessary or appropriate therefor. No such entry shall be deemed an eviction of
any lessee. All out-of-pocket costs and expenses so incurred (including without
limitation fees and expenses of counsel), together with interest thereon at the
Overdue Rate from the date on which such sums or expenses are paid by Lessor,
shall be paid by Lessee to Lessor on demand. Lessor shall use commercially
29
reasonable efforts to notify Lessee prior to Lessor remedying any Lease Event of
Default by making any payment pursuant to this Section 18.1.
ARTICLE XIX
19.1 Provisions Relating to Lessee's Exercise of its Purchase Option.
Subject to Section 19.2, in connection with any termination of this Lease
with respect to any Property pursuant to the terms of Section 16.2, or in
connection with Lessee's exercise of its Purchase Option, upon the date on which
this Lease is to terminate with respect to any Property, and upon tender by
Lessee of the amounts set forth in Sections 16.2(b) or 20.2, as applicable,
Lessor shall execute and deliver to Lessee (or to Lessee's designee) at Lessee's
cost and expense an assignment (by deed or other appropriate instrument) of
Lessor's entire interest in such Property, in each case in recordable form and
otherwise in conformity with local custom and free and clear of any Lessor Liens
and free and clear of the rights of the Financing Parties pursuant to Operative
Agreements and the Security Documents but without any other warranties (of title
or otherwise) from Lessor. Such Property shall be conveyed to Lessee "AS-IS,
"WHERE-IS" and in its then present physical condition.
19.2 No Purchase or Termination With Respect to Less than All of a
Property.
Lessee shall not be entitled to exercise its Purchase Option or the Sale
Option separately with respect to a portion of any Property consisting of Land
(or, if applicable, the leasehold interest pursuant to a Ground Lease),
Equipment and/or Improvements but shall be required to exercise its Purchase
Option or the Sale Option with respect to an entire Property.
ARTICLE XX
20.1 Purchase Option or Sale Option-General Provisions.
Not less than one hundred twenty (120) days and no more than one hundred
eighty (180) days prior to the Expiration Date or (respecting the Purchase
Option only), no less than thirty (30) days and no more than one hundred eighty
(180) days prior to any Payment Date or in accordance with Section 17.11 within
ten (10) Business Days after notice has been delivered to Lessee informing
Lessee of the occurrence of a Lease Event of Default (such notice to be in
accordance with Section 29.1), Lessee may give Lessor irrevocable written notice
(the "Election Notice") that Lessee is electing to exercise either (a) the
option to purchase or cause a third party or Affiliate of Lessee to purchase
all, but not less than all, the Properties on the Expiration Date or on the
Payment Date specified in the Election Notice or the date otherwise specified
for such purchase pursuant to the next sentence (the "Purchase Option") or (b)
with respect to an Election Notice given in connection with the Expiration Date
only, the option to remarket all, but not less than all, the Properties to a
Person other than Lessee or any Affiliate of Lessee and cause a sale of such
Properties to occur on the Expiration Date pursuant to the terms of Section 22.1
(the "Sale Option"). In addition if Lessee has timely given an Election Notice
30
as specified above in this Section 20.1 after the occurrence of a Lease Event of
Default, Lessee may also purchase all, but not less than all, the Properties on
any Business Day scheduled for such purchase in a notice from Lessor to Lessee
specifying the Business Day for such purchase no earlier than five (5) Business
Days after the delivery (or deemed delivery) of such notice to Lessee in
accordance with Section 29.1.
If, with respect to the Expiration Date, Lessee does not give an Election Notice
indicating the Purchase Option or the Sale Option in accordance with the time
periods referenced in this Section 20.1 and has not otherwise caused the
extension of the Term in accordance with Section 2.2, then Lessee shall be
deemed to have elected the Purchase Option. If Lessee shall either (i) elect (or
be deemed to have elected) to exercise the Purchase Option or (ii) elect the
Sale Option and fail to cause all, but not less than all, the Properties to be
sold in accordance with the terms of Section 22.1 on the Expiration Date, then
in either case Lessee shall on the date on which such purchase or sale is
scheduled to occur, purchase or cause a third party or Affiliate of Lessee to
purchase the Properties for an amount equal to the Termination Value for all,
but not less than all, the Properties and, upon receipt of such amounts and
satisfaction of such obligations, Lessor shall transfer to the purchaser all of
Lessor's right, title and interest in and to all, but not less than all, the
Properties in accordance with Section 20.2.
20.2 Lessee Purchase Option.
Provided, that the Election Notice has been appropriately given specifying
the Purchase Option or Lessee shall otherwise be deemed to have elected to
exercise the Purchase Option, Lessee shall purchase or cause a third party or
Affiliate of Lessee to purchase all the Properties on the Expiration Date,
Payment Date or other date duly identified in the notice from Lessor to Lessee
following the occurrence of any Lease Event of Default at a price equal to the
Termination Value for such Properties.
Subject to Section 19.2, in connection with any termination of this Lease
with respect to any Property pursuant to the terms of Section 16.2, or in
connection with Lessee's exercise of its Purchase Option, upon the date on which
this Lease is to terminate (or with respect to the exercise of the Purchase
Option pursuant to Section 17.11, the date specified for such purchase by Lessor
in its notice to Lessee in accordance with Section 20.1) with respect to a
Property or all of the Properties, and upon tender by Lessee of the amounts set
forth in Section 16.2(b) or this Section 20.2, as applicable, Lessor shall
execute, acknowledge (where required) and deliver to the purchaser, at Lessee's
cost and expense, each of the following: (a) a termination or assignment (as
requested by the Lessee) of each applicable Ground Lease (together with a
special or limited warranty Deed for Improvements located on the Land subject
such Ground Lease) and special or limited warranty Deeds conveying each Property
(to the extent it is real property not subject to a Ground Lease) to the
purchaser free and clear of the Lien of this Lease, the Lien of the Credit
Documents and the rights of the Financing Parties pursuant to any other
Operative Agreement and any Lessor Liens; (b) a Bill of Sale conveying each
Property (to the extent it is personal property) to the purchaser free and clear
of the Lien of this Lease, the Lien of the Credit Documents and the rights of
the Financing Parties pursuant to any other Operative Agreement and any Lessor
Liens; (c) any real estate tax affidavit or other document required by law to be
executed and filed in order to record the applicable Deed and/or the applicable
31
Ground Lease termination; and (d) FIRPTA affidavits. All of the foregoing
documentation must be in form and substance reasonably satisfactory to Lessor.
The applicable Property shall be conveyed to the purchaser "AS-IS, WHERE-IS" and
in its then present physical condition. Lessor shall also deliver to Lessee any
Excess Proceeds or other casualty, condemnation or insurance proceeds which have
not been applied and are not to be applied on account of amounts due and owing
in respect of Company Obligations.
On the Expiration Date and/or any Payment Date on which Lessee has elected
to consummate the exercise of its Purchase Option (or, respecting any such
exercise of the Purchase Option after the occurrence of a Lease Event of Default
and after Lessee has elected the Purchase Option, on the date elected by Lessor
for such purchase), Lessee shall pay (or cause to be paid) to Lessor and the
Agent the sum of all costs and expenses incurred by any such party in connection
with the election by Lessee to exercise its Purchase Option and all Rent and all
other amounts payable by Lessee then due and payable or accrued under this Lease
and/or any other Operative Agreement.
20.3 Third Party Sale Option.
(a) Provided, that (i) no Lease Default or Lease Event of Default
shall have occurred and be continuing and (ii) the Election Notice has been
appropriately given specifying the Sale Option, Lessee shall undertake to
cause a sale of the Properties on the Expiration Date (all as specified in
the Election Notice) in accordance with the provisions of Section 22.1
hereof.
(b) In the event Lessee exercises the Sale Option then, as soon as
practicable and in all events not less than sixty (60) days prior to the
Expiration Date, Lessee shall cause to be delivered to Lessor a Phase I
environmental site assessment in accordance with Section 10.2 for each of
the Properties. Lessor (at the direction of the Agent) shall elect whether
the costs incurred respecting the above-referenced Phase I environmental
site assessment shall be paid by either (i) sales proceeds from the
Properties, (ii) Lessor (but only the extent amounts are available therefor
with respect to the Available Commitments and the Available Holder
Commitments or each Lender and each Holder approves the necessary increases
in the Available Commitments and the Available Holder Commitments to fund
such costs) or (iii) Lessee; provided, amounts funded by the Lenders and
the Holders with respect to the foregoing shall be added to the Property
Cost of each applicable Property; provided, further, amounts funded by
Lessee with respect to the foregoing shall be a part of (and limited by)
the Maximum Residual Guarantee Amount. In the event that Lessor shall not
have received such environmental site assessment by the date sixty (60)
days prior to the Expiration Date or in the event that such environmental
assessment shall reveal the existence of any material violation of
Environmental Laws, other material Environmental Violation or potential
material Environmental Violation (with materiality determined in each case
by Lessor in its reasonable discretion), then Lessee shall purchase the
Properties in a manner consistent with the last sentence of Section 20.1.
Upon receipt of such payment and all other amounts due under the Operative
Agreements, Lessor shall transfer to the purchaser all of Lessor's right,
32
title and interest in and to all the Properties in accordance with Section
19.1.
ARTICLE XXI
21.1 [Intentionally Omitted.]
ARTICLE XXII
22.1 Sale Procedure.
(a) During the Marketing Period, Lessee, on behalf of Lessor, shall
attempt to obtain bids for the cash purchase of all the Properties in
connection with a sale to one (1) or more third party purchasers to be
consummated on the Expiration Date or such earlier date as is acceptable to
the Agent and the Lessee (the "Sale Date"), shall notify Lessor promptly of
the name and address of each prospective purchaser and the cash price which
each prospective purchaser shall have offered to pay for each such Property
and shall provide Lessor with such additional information about the bids
and the bid solicitation procedure as Lessor may reasonably request from
time to time. All such prospective purchasers must be Persons other than
Lessee or any Affiliate of Lessee. On the Sale Date, Lessee shall pay (or
cause to be paid) to Lessor and all other parties, as appropriate, all Rent
and all other amounts payable by Lessee then due and payable or accrued
under this Lease and/or any other Operative Agreement and Lessor (at the
direction of the Agent) shall elect whether the costs and expenses incurred
by Lessor and/or the Agent respecting the sale of one or more Properties
shall be paid by either (i) sales proceeds from the Properties, (ii) Lessor
(but only the extent amounts are available therefor with respect to the
Available Commitments and the Available Holder Commitments or each Lender
and each Holder approves the necessary increases in the Available
Commitments and the Available Holder Commitments to fund such costs and
expenses) or (iii) Lessee; provided, amounts funded by the Lenders and the
Holders with respect to such costs and expenses shall be added to the
Property Cost of each applicable Property; provided, further, amounts
funded by Lessee with respect to such costs and expenses shall be a part of
(and limited by) the Maximum Residual Guarantee Amount.
Lessor may reject any and all bids and may solicit and obtain bids by
giving Lessee written notice to that effect; provided, however, that
notwithstanding the foregoing, Lessor may not reject the bids submitted by
Lessee if such bids, in the aggregate, are greater than or equal to the sum
of the Limited Recourse Amount for all the Properties, and represent bona
fide offers from one (1) or more third party purchasers. If the highest
price which a prospective purchaser or the prospective purchasers shall
have offered to pay for all the Properties on the Sale Date is less than
the sum of the Limited Recourse Amount for all the Properties or if such
bids do not represent bona fide offers from one (1) or more third parties
or if there are no bids, Lessor may elect to retain one or more of the
Properties by giving Lessee prior written notice of Lessor's election to
33
retain the same, and promptly upon receipt of such notice, Lessee shall
surrender, or cause to be surrendered, each of the Properties specified in
such notice in accordance with the terms and conditions of Section 10.1.
Upon acceptance of any bid, Lessor agrees, at Lessee's request and expense,
to execute a contract of sale with respect to such sale, so long as the
same is consistent with the terms of this Article 22 and provides by its
terms that it is nonrecourse to Lessor in accordance with the provisions of
Section 12.9 of the Participation Agreement.
Unless Lessor shall have elected to retain one or more of the
Properties pursuant to the provisions of the preceding paragraph, Lessee
shall arrange for Lessor to sell all the Properties free and clear of the
Lien of this Lease and the rights of the Financing Parties pursuant to the
other Operative Agreements and Security Documents and any Lessor Liens
without recourse or warranty (of title or otherwise), for cash on the Sale
Date to the purchaser or purchasers offering the highest cash sales price,
as identified by Lessee or Lessor, as the case may be. To effect such
transfer and assignment, Lessor shall execute, acknowledge (where required)
and deliver to the appropriate purchaser each of the following: (a) special
or limited warranty Deeds conveying each such Property (to the extent it is
real property titled to Lessor) and an assignment of the Ground Lease
conveying the leasehold interest of Lessor in each such Property (to the
extent it is real property and subject to a Ground Lease), together with a
special or limited warranty Deed for Improvements located on the Land
subject to such Ground Lease, to the appropriate purchaser free and clear
of the Lien of this Lease, the Lien of the Credit Documents, the rights of
the Financing Parties pursuant any other Operative Agreement and any Lessor
Liens; (b) a Bill of Sale conveying each such Property (to the extent it is
personal property) titled to Lessor to the appropriate purchaser free and
clear of the Lien of this Lease, the Lien of the Credit Documents, the
rights of the Financing Parties pursuant to any other Operative Agreement
and any Lessor Liens; (c) any real estate tax affidavit or other document
required by law to be executed and filed in order to record each Deed
and/or each Ground Lease assignment; and (d) FIRPTA affidavits, as
appropriate. All of the foregoing documentation must be in form and
substance reasonably satisfactory to Lessor. Lessee shall surrender the
Properties so sold or subject to such documents to each purchaser in the
condition specified in Section 10.1, or in such other condition as may be
agreed between Lessee and such purchaser. Lessor shall also deliver to
Lessee (or at Lessee's election, the purchaser) any Excess Proceeds or
other casualty, condemnation or insurance proceeds pursuant to Section 14.2
which have not been and are not to be applied on account of the amounts due
and owing in respect of Company Obligations pursuant to the Operative
Agreements. Neither Lessee nor Lessor shall take or fail to take any action
which would have the effect of unreasonably discouraging bona fide third
party bids for any Property. If Lessee has elected the Sale Option but each
of the Properties is not either (i) sold on the Sale Date in accordance
with the terms of this Section 22.1, or (ii) retained by Lessor pursuant to
an affirmative election made by Lessor pursuant to the second sentence of
the second paragraph of this Section 22.1(a), then (x) Lessee shall be
obligated to pay Lessor on the Sale Date an amount equal to the aggregate
Termination Value for all the Properties less any sales proceeds received
by the Lessor, and (y) Lessor shall transfer each applicable Property to
Lessee in accordance with Section 20.2.
34
(b) If the Properties are sold on a Sale Date to one (1) or more third
party purchasers in accordance with the terms of Section 22.1(a) and the
aggregate purchase price paid for all the Properties is less than the sum
of the aggregate Property Cost for all the Properties (hereinafter such
difference shall be referred to as the "Deficiency Balance"), then Lessee
hereby unconditionally promises to pay to Lessor on the Sale Date all Rent
and all other amounts then due and owing by Lessee pursuant to the
Operative Agreements and the lesser of (i) the Deficiency Balance or (ii)
the Maximum Residual Guarantee Amount for all the Properties. On a Sale
Date if (x) Lessor receives the aggregate Termination Value for all the
Properties from one (1) or more third party purchasers, (y) Lessor and such
other parties receive all other amounts specified in the last sentence of
the first paragraph of Section 22.1(a) and (z) the aggregate purchase price
paid for all the Properties on such date exceeds the sum of the aggregate
Property Cost for all the Properties, then Lessor shall deliver to Lessee
(or Lessee may retain) such excess. If one or more of the Properties are
retained by Lessor pursuant to an affirmative election made by Lessor
pursuant to the provisions of Section 22.1(a), then Lessee hereby
unconditionally promises to pay to Lessor on the Sale Date all Rent and all
other amounts then due and owing by Lessee pursuant to the Operative
Agreements and an amount equal to the Maximum Residual Guarantee Amount for
the Properties so retained. Any payment of the foregoing amounts described
in this Section 22.1(b) shall be made together with a payment of all other
amounts referenced in the last sentence of the first paragraph of Section
22.1(a).
(c) In the event that all the Properties are either sold to one (1) or
more third party purchasers on the Sale Date or retained by Lessor in
connection with an affirmative election made by Lessor pursuant to the
provisions of Section 22.1(a), then in either case on the applicable Sale
Date Lessee shall provide Lessor or such third party purchaser (unless
otherwise agreed by such third party purchaser) with (i) all permits,
certificates of occupancy, governmental licenses and authorizations
necessary to use, operate, repair, access and maintain each such Property
for the purpose it is being used by Lessee (the cost of which shall be
credited against any Maximum Residual Guarantee Amount payment required of
Lessee), and (ii) such manuals, permits, easements, licenses, intellectual
property (other than proprietary information of Lessee), know-how,
rights-of-way and other rights and privileges in the nature of an easement
as are reasonably necessary or desirable in connection with the use,
operation, repair, access to or maintenance of each such Property for its
intended purpose or otherwise as Lessor or such third party purchaser(s)
shall reasonably request (and a royalty-free license or similar agreement
to effectuate the foregoing on terms reasonably agreeable to Lessor or such
third party purchaser(s), as applicable). All assignments, licenses,
easements, agreements and other deliveries required by clauses (i) and (ii)
of this paragraph (c) shall be in form reasonably satisfactory to Lessor or
such third party purchaser(s), as applicable, and shall be fully assignable
(including without limitation both primary assignments and assignments
given in the nature of security) without payment of any fee, cost or other
charge. Lessee shall also execute any documentation requested by Lessor or
such third party purchaser(s), as applicable, evidencing the continuation
or assignment of each Ground Lease.
35
22.2 Application of Proceeds of Sale.
In the event Lessee receives any proceeds of sale of any Property,
such proceeds shall be deemed to have been received in trust on behalf of
Lessor and Lessee shall promptly remit such proceeds to Lessor. Lessor
shall apply the proceeds of sale of any Property in the following order of
priority:
(a) FIRST, to pay or to reimburse Lessor (and/or the Agent, as
the case may be) for the payment of all reasonable costs and expenses
incurred by Lessor (and/or the Agent, as the case may be) in
connection with the sale (to the extent Lessee has not satisfied its
obligation to pay such costs and expenses);
(b) SECOND, so long as the Credit Agreement is in effect and any
Loans or Holder Advances or any other amount is owing to the Financing
Parties under any Operative Agreement, to the Agent to be applied
pursuant to intercreditor provisions among Lessor, the Lenders and the
Holders contained in the Operative Agreements and Section 8.7 of the
Participation Agreement; and
(c) THIRD, to Lessee.
22.3 Indemnity for Excessive Wear.
If the proceeds of the sale described in Section 22.1 with respect to the
Properties shall be less than the Limited Recourse Amount with respect to the
Properties, and at the time of such sale it shall have been reasonably
determined (pursuant to the Appraisal Procedure) that the Fair Market Sales
Value of the Properties shall have been impaired by Lessee's violation of
Sections 10.1(a) or (c) of this Lease, Lessee shall pay to Lessor within ten
(10) days after receipt of Lessor's written statement (i) the amount necessary
to repair such excess wear and tear determined by the Appraisal Procedure or
(ii) the amount of the Sale Proceeds Shortfall, whichever amount is less.
22.4 Appraisal Procedure.
For determining the Fair Market Sales Value of the Properties or any other
amount which may, pursuant to any provision of any Operative Agreement, be
determined by an appraisal procedure, Lessor and Lessee shall use the following
procedure (the "Appraisal Procedure"). Lessor and Lessee shall endeavor to reach
a mutual agreement as to such amount for a period of ten (10) days from
commencement of the Appraisal Procedure under the applicable section of the
Lease, and if they cannot agree within ten (10) days, then two (2) qualified
appraisers, one (1) chosen by Lessee and one (1) chosen by Lessor, shall
mutually agree thereupon, but if either party shall fail to choose an appraiser
within twenty (20) days after notice from the other party of the selection of
its appraiser, then the appraisal by such appointed appraiser shall be binding
on Lessee and Lessor. If the two (2) appraisers cannot agree within twenty (20)
days after both shall have been appointed, then a third appraiser shall be
selected by the two (2) appraisers or, failing agreement as to such third
appraiser within thirty (30) days after both shall have been appointed, by the
36
American Arbitration Association. The decisions of the three (3) appraisers
shall be given within twenty (20) days of the appointment of the third appraiser
and the decision of the appraiser most different from the average of the other
two (2) shall be discarded and such average shall be binding on Lessor and
Lessee; provided, that if the highest appraisal and the lowest appraisal are
equidistant from the third appraisal, the third appraisal shall be binding on
Lessor and Lessee. The fees and expenses of the appraiser appointed by Lessee
shall be paid by Lessee; the fees and expenses of the appraiser appointed by
Lessor shall be paid by Lessor (such fees and expenses and Lessor's share of the
fees and expenses of the third appraiser as described below not being
indemnified pursuant to Section 11 of the Participation Agreement); and the fees
and expenses of the third appraiser shall be divided equally between Lessee and
Lessor.
22.5 Certain Obligations Continue.
During the Marketing Period, the obligation of Lessee to pay Rent with
respect to the Properties (including without limitation the installment of Basic
Rent due on the Expiration Date) shall continue undiminished until payment in
full to Lessor of the sale proceeds, if any, the Maximum Residual Guarantee
Amount, the amount due under Section 22.3, if any, and all other amounts due to
Lessor or any other Person with respect to all Properties or any Operative
Agreement. Lessor shall have the right, but shall be under no duty, to solicit
bids, to inquire into the efforts of Lessee to obtain bids or otherwise to take
action in connection with any such sale, other than as expressly provided in
this Article XXII.
22.6 Effect of Sale.
Any conveyance of a Property to Lessee or any applicable purchaser pursuant
to Article XX or XXII shall cut off and terminate any interest in the Land,
Improvements or other Property claimed by, through or under Lessor, including
any interest claimed by the Agent, Lenders and Holders. The Agent and the Lessor
shall execute, acknowledge and deliver such releases, terminations and
reconveyances (at the cost of Lessee) as may be reasonably necessary to clear
(in the case of the Agent) any such Liens in favor of the Agent arising under
the Operative Agreements as Security Documents and (in the case of Lessor) any
such Liens in favor of Lessor arising under the Operative Agreements as Security
Documents and any Lessor Liens; provided, notwithstanding the foregoing, no
Financing Party shall be required to execute, acknowledge or deliver any
releases, terminations or reconveyances with respect to any Lien for which the
Lessee is responsible pursuant to the Operative Agreements.
ARTICLE XXIII
23.1 Holding Over.
If Lessee shall for any reason remain in possession of a Property after the
expiration or earlier termination of this Lease as to such Property (unless such
Property is conveyed to Lessee), such possession shall be as a tenancy at
sufferance during which time Lessee shall continue to pay Supplemental Rent that
would be payable by Lessee hereunder were the Lease then in full force and
37
effect with respect to such Property and Lessee shall continue to pay Basic Rent
at the lesser of the highest lawful rate and one hundred ten percent (110%) of
the last payment of Basic Rent due with respect to such Property prior to such
expiration or earlier termination of this Lease. Such Basic Rent shall be
payable from time to time upon demand by Lessor and such additional amount of
Basic Rent shall be applied by Lessor ratably to the Lenders and the Holders
based on their relative amounts of the then outstanding aggregate Property Cost
for all Properties. During any period of tenancy at sufferance, Lessee shall,
subject to the second preceding sentence, be obligated to perform and observe
all of the terms, covenants and conditions of this Lease, but shall have no
rights hereunder other than the right, to the extent given by law to tenants at
sufferance, to continue its occupancy and use of such Property. Nothing
contained in this Article XXIII shall constitute the consent, express or
implied, of Lessor to the holding over of Lessee after the expiration or earlier
termination of this Lease as to any Property (unless such Property is conveyed
to Lessee) and nothing contained herein shall be read or construed as preventing
Lessor from maintaining a suit for possession of such Property or exercising any
other remedy available to Lessor at law or in equity.
ARTICLE XXIV
24.1 Risk of Loss.
During the Term, unless Lessee shall not be in actual possession of any
Property in question solely by reason of Lessor's exercise of its remedies of
dispossession under Article XVII, the risk of loss or decrease in the enjoyment
and beneficial use of such Property as a result of the damage or destruction
thereof by fire, the elements, casualties, thefts, riots, wars or otherwise is
assumed by Lessee, and Lessor shall in no event be answerable or accountable
therefor.
ARTICLE XXV
25.1 Assignment.
(a) Except pursuant to the Security Agreement, Lessee may not assign
this Lease or any of its rights or obligations hereunder or with respect to
any Property in whole or in part to any Person without the prior written
consent of the Agent, the Lenders, the Holders and Lessor which consent may
be withheld or granted in the absolute discretion of each such party.
(b) No assignment by Lessee (referenced in this Section 25.1 or
otherwise) or other relinquishment of possession to any Property shall in
any way discharge or diminish any of the obligations of Lessee to Lessor
hereunder and Lessee shall remain directly and primarily liable under the
Operative Agreements as to any rights or obligations assigned by Lessee or
regarding any Property in which rights or obligations have been assigned or
otherwise transferred.
38
25.2 Subleases.
(a) Promptly, but in any event within five (5) Business Days,
following the execution and delivery of any sublease permitted by this
Article XXV, Lessee shall notify Lessor of the execution of such sublease.
As of the date of each Lease Supplement, Lessee shall lease the respective
Property described in such Lease Supplement from Lessor, and any existing
tenant respecting such Property shall automatically be deemed to be a
subtenant of Lessee and not a tenant of Lessor.
(b) Without the prior written consent of the Agent, any Lender, any
Holder or Lessor and subject to the other provisions of this Section 25.2,
Lessee may sublet any Property or portion thereof so long as such sublease
(i) is on market terms and (ii) is expressly subject and subordinate to
this Lease; provided, Lessor and the Agent shall provide nondisturbance
agreements to any sublessee which is not an Affiliate of any Credit Party
which delivers an attornment agreement, in form and substance reasonably
acceptable to Lessor. Except as referenced in the immediately preceding
sentence, no other subleases shall be permitted unless consented to in
writing by Lessor. All subleasing shall be done on market terms and shall
in no way diminish the fair market value or useful life of any applicable
Property.
(c) No sublease (referenced in this Section 25.2 or otherwise) or
other relinquishment of possession to any Property shall in any way
discharge or diminish any of Lessee's obligations to Lessor hereunder and
Lessee shall remain directly and primarily liable under this Lease as to
such Property, or portion thereof, so sublet.
ARTICLE XXVI
26.1 No Waiver.
---------
No failure by Lessor or Lessee to insist upon the strict performance of any
term hereof or to exercise any right, power or remedy upon a default hereunder,
and no acceptance of full or partial payment of Rent during the continuance of
any such default, shall constitute a waiver of any such default or of any such
term. To the fullest extent permitted by law, no waiver of any default shall
affect or alter this Lease, and this Lease shall continue in full force and
effect with respect to any other then existing or subsequent default.
ARTICLE XXVII
27.1 Acceptance of Surrender.
No surrender to Lessor of this Lease or of all or any portion of any
Property or of any part of any thereof or of any interest therein shall be valid
or effective unless agreed to and accepted in writing by Lessor and no act by
Lessor or the Agent or any representative or agent of Lessor or the Agent, other
39
than a written acceptance, shall constitute an acceptance of any such surrender.
27.2 No Merger of Title.
There shall be no merger of this Lease or of the leasehold estate created
hereby by reason of the fact that the same Person may acquire, own or hold,
directly or indirectly, in whole or in part, (a) this Lease or the leasehold
estate created hereby or any interest in this Lease or such leasehold estate,
(b) any right, title or interest in any Property, (c) any Notes, or (d) a
beneficial interest in Lessor.
ARTICLE XXVIII
[Intentionally Omitted]
ARTICLE XXIX
29.1 Notices.
All notices required or permitted to be given under this Lease shall be in
writing and delivered as provided in the Participation Agreement.
ARTICLE XXX
30.1 Miscellaneous.
Anything contained in this Lease to the contrary notwithstanding, all
claims against and liabilities of Lessee or Lessor arising from events
commencing prior to the expiration or earlier termination of this Lease shall
survive such expiration or earlier termination. If any provision of this Lease
shall be held to be unenforceable in any jurisdiction, such unenforceability
shall not affect the enforceability of any other provision of this Lease and
such jurisdiction or of such provision or of any other provision hereof in any
other jurisdiction.
30.2 Amendments and Modifications.
Neither this Lease nor any Lease Supplement may be amended, waived,
discharged or terminated except in accordance with the provisions of Section
12.4 of the Participation Agreement.
30.3 Successors and Assigns.
All the terms and provisions of this Lease shall inure to the benefit of
the parties hereto and their respective successors and permitted assigns.
40
30.4 Headings and Table of Contents.
The headings and table of contents in this Lease are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
30.5 Counterparts.
This Lease may be executed in any number of counterparts, each of which
shall be an original, but all of which shall together constitute one (1) and the
same instrument.
30.6 GOVERNING LAW.
THIS LEASE SHALL BE GOVERNED BY AND CONSTRUED, INTERPRETED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.
30.7 Calculation of Rent.
All calculation of Rent payable hereunder shall be computed based on the
actual number of days elapsed over a year of three hundred sixty (360) days or,
to the extent such Rent is based on the ABR, three hundred sixty-five (365)
(or three hundred sixty-six (366), as applicable) days.
30.8 Memoranda of Lease and Lease Supplements.
This Lease shall not be recorded; provided, Lessor and Lessee shall
promptly record (a) a memorandum of this Lease and the applicable Lease
Supplement (in substantially the form of Exhibit B attached hereto) or a short
form lease (in form and substance reasonably satisfactory to Lessor) regarding
each Property promptly after the acquisition thereof in the local filing office
with respect thereto and as required under applicable Law to sufficiently
evidence this Lease and any such Lease Supplement in the applicable real estate
filing records, the cost of which shall be paid through Advances as part of the
Transaction Expenses to the extent all applicable conditions precedent pursuant
to Section 5 of the Participation Agreement to funding have been met.
30.9 Allocations of Payments.
Notwithstanding any other term or provision of this Lease to the contrary,
the allocations of the proceeds of the Properties (including amounts payable in
accordance with Articles XV, XVII, XX and XXII) and any and all other Rent and
other amounts received hereunder shall be subject to the provisions contained in
the Operative Agreements including without limitation the provisions of Section
8.7 of the Participation Agreement.
41
30.10 Limitations on Recourse.
Notwithstanding anything contained in this Lease to the contrary, Lessee
agrees to look solely to Lessor's estate and interest in the Properties (and in
no circumstance to the Agent, the Lenders, the Holders or otherwise to Lessor)
for the collection of any judgment requiring the payment of money by Lessor in
the event of liability by Lessor, and no other property or assets of Lessor or
any shareholder, owner or partner (direct or indirect) in or of Lessor, or any
director, officer, employee, beneficiary, Affiliate of any of the foregoing
shall be subject to levy, execution or other enforcement procedure for the
satisfaction of the remedies of Lessee under or with respect to this Lease, the
relationship of Lessor and Lessee hereunder or Lessee's use of the Properties or
any other liability of Lessor to Lessee. Nothing in this Section shall be
interpreted so as to limit the terms of Sections 6.1 or 6.2 or the provisions of
Section 12.9 of the Participation Agreement.
30.11 WAIVERS OF JURY TRIAL.
EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY, TO THE
FULLEST EXTENT ALLOWED BY APPLICABLE LAW, WAIVES TRIAL BY JURY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS LEASE AND FOR ANY COUNTERCLAIM
THEREIN.
30.12 Exercise of Lessor Rights.
Lessee hereby acknowledges and agrees that the rights and powers of Lessor
under this Lease have been assigned to the Agent pursuant to the terms of the
Security Agreement and the other Operative Agreements. Lessor and Lessee hereby
acknowledge and agree that (a) the Agent shall, in its discretion, direct and/or
act on behalf of Lessor pursuant to the provisions of Sections 8.2(h) and 8.6 of
the Participation Agreement, (b) all notices to be given to Lessor shall also be
given to the Agent and (c) all notices to be given by Lessor may be given by the
Agent, at its election.
30.13 SUBMISSION TO JURISDICTION; VENUE.
THE PROVISIONS OF THE PARTICIPATION AGREEMENT RELATING TO SUBMISSION TO
JURISDICTION AND VENUE ARE HEREBY INCORPORATED BY REFERENCE HEREIN, MUTATIS
MUTANDIS.
30.14 USURY SAVINGS PROVISION.
IT IS THE INTENT OF THE PARTIES HERETO TO CONFORM TO AND CONTRACT IN STRICT
COMPLIANCE WITH APPLICABLE USURY LAW FROM TIME TO TIME IN EFFECT. TO THE EXTENT
ANY RENT OR PAYMENTS HEREUNDER ARE HEREAFTER CHARACTERIZED BY ANY COURT OF
COMPETENT JURISDICTION AS THE REPAYMENT OF PRINCIPAL AND INTEREST THEREON, THIS
42
SECTION 30.14 SHALL APPLY. ANY SUCH RENT OR PAYMENTS SO CHARACTERIZED AS
INTEREST MAY BE REFERRED TO HEREIN AS "INTEREST." ALL AGREEMENTS AMONG THE
PARTIES HERETO ARE HEREBY LIMITED BY THE PROVISIONS OF THIS SECTION WHICH SHALL
OVERRIDE AND CONTROL ALL SUCH AGREEMENTS, WHETHER NOW EXISTING OR HEREAFTER
ARISING AND WHETHER WRITTEN OR ORAL. IN NO WAY, NOR IN ANY EVENT OR CONTINGENCY
(INCLUDING WITHOUT LIMITATION PREPAYMENT OR ACCELERATION OF THE MATURITY OF ANY
OBLIGATION), SHALL ANY INTEREST TAKEN, RESERVED, CONTRACTED FOR, CHARGED, OR
RECEIVED UNDER THIS LEASE OR OTHERWISE, EXCEED THE MAXIMUM NONUSURIOUS AMOUNT
PERMISSIBLE UNDER APPLICABLE LAW. IF, FROM ANY POSSIBLE CONSTRUCTION OF ANY OF
THE OPERATIVE AGREEMENTS OR ANY OTHER DOCUMENT OR AGREEMENT, INTEREST WOULD
OTHERWISE BE PAYABLE IN EXCESS OF THE MAXIMUM NONUSURIOUS AMOUNT, ANY SUCH
CONSTRUCTION SHALL BE SUBJECT TO THE PROVISIONS OF THIS SECTION AND SUCH AMOUNTS
UNDER SUCH DOCUMENTS OR AGREEMENTS SHALL BE AUTOMATICALLY REDUCED TO THE MAXIMUM
NONUSURIOUS AMOUNT PERMITTED UNDER APPLICABLE LAW, WITHOUT THE NECESSITY OF
EXECUTION OF ANY AMENDMENT OR NEW DOCUMENT OR AGREEMENT. IF LESSOR SHALL EVER
RECEIVE ANYTHING OF VALUE WHICH IS CHARACTERIZED AS INTEREST WITH RESPECT TO THE
OBLIGATIONS OWED HEREUNDER OR UNDER APPLICABLE LAW AND WHICH WOULD, APART FROM
THIS PROVISION, BE IN EXCESS OF THE MAXIMUM LAWFUL AMOUNT, AN AMOUNT EQUAL TO
THE AMOUNT WHICH WOULD HAVE BEEN EXCESSIVE INTEREST SHALL, WITHOUT PENALTY, BE
APPLIED TO THE REDUCTION OF THE COMPONENT OF PAYMENTS DEEMED TO BE PRINCIPAL AND
NOT TO THE PAYMENT OF INTEREST, OR REFUNDED TO LESSEE OR ANY OTHER PAYOR
THEREOF, IF AND TO THE EXTENT SUCH AMOUNT WHICH WOULD HAVE BEEN EXCESSIVE
EXCEEDS THE COMPONENT OF PAYMENTS DEEMED TO BE PRINCIPAL. THE RIGHT TO DEMAND
PAYMENT OF ANY AMOUNTS EVIDENCED BY ANY OF THE OPERATIVE AGREEMENTS DOES NOT
INCLUDE THE RIGHT TO RECEIVE ANY INTEREST WHICH HAS NOT OTHERWISE ACCRUED ON THE
DATE OF SUCH DEMAND, AND LESSOR DOES NOT INTEND TO CHARGE OR RECEIVE ANY
UNEARNED INTEREST IN THE EVENT OF SUCH DEMAND. ALL INTEREST PAID OR AGREED TO BE
PAID TO LESSOR SHALL, TO THE EXTENT PERMITTED BY APPLICABLE LAW, BE AMORTIZED,
PRORATED, ALLOCATED, AND SPREAD THROUGHOUT THE FULL STATED TERM (INCLUDING
WITHOUT LIMITATION ANY RENEWAL OR EXTENSION) OF THIS LEASE SO THAT THE AMOUNT OF
INTEREST ON ACCOUNT OF SUCH PAYMENTS DOES NOT EXCEED THE MAXIMUM NONUSURIOUS
AMOUNT PERMITTED BY APPLICABLE LAW.
[signature page follows]
43
IN WITNESS WHEREOF, the parties have caused this Lease to be duly executed
and delivered as of the date first above written.
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not individually, but solely as the Owner
Trustee under the FRI Trust 1999-1, as
Lessor
By: /s/ C. Scott Nielsen
---------------------------------------
Name: C. Scott Nielsen
-------------------------------------
Title: Vice President
------------------------------------
FRANKLIN TEMPLETON CORPORATE SERVICES, INC.,
as Lessee
By: /s/ Charles R. Sims
---------------------------------------
Name: Charles R. Sims
-------------------------------------
Title: Treasurer
------------------------------------
Receipt of this original
counterpart of the foregoing
Lease is hereby acknowledged
as the date hereof
BANK OF AMERICA, N.A.,
as the Agent
By: /s/ John G. Hayes
--------------------------------
Name: John G. Hayes
------------------------------
Title: Principal
-----------------------------
EXHIBIT A TO THE LEASE
LEASE SUPPLEMENT NO. ___
THIS LEASE SUPPLEMENT NO. ___ (this "Lease Supplement") dated as of
___________, _______ between FIRST SECURITY BANK, NATIONAL ASSOCIATION, a
national banking association, not individually, but solely as the Owner Trustee
under the FRI Trust 1999-1, as lessor (the "Lessor"), and FRANKLIN TEMPLETON
CORPORATE SERVICES, INC., a Delaware corporation, as lessee (the "Lessee").
WHEREAS, Lessor is the owner or will be the owner of the Property described
on Schedule 1 hereto (the "Leased Property") and wishes to lease the same to
Lessee;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. Definitions; Rules of Usage. For purposes of this Lease
Supplement, capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to them in Appendix A to the Participation Agreement,
dated as of September 27, 1999 among Lessee, Lessor, not individually, except as
expressly stated therein, but solely as the Owner Trustee under the FRI Trust
1999-1, the various banks and other lending institutions which are parties
thereto from time to time, as the Holders, the various banks and other lending
institutions which are parties thereto from time to time, as the Lenders, and
Bank of America, N.A., as the Agent for the Lenders and respecting the Security
Documents, as the Agent for the Lenders and Holders, to the extent of their
interests, as such may be amended, modified, extended, supplemented, restated
and/or replaced from time to time.
SECTION 2. The Properties. Attached hereto as Schedule 1 is the description
of the Leased Property, with an Equipment Schedule attached hereto as Schedule
1-A, an Improvement Schedule attached hereto as Schedule 1-B and [a legal
description of the Land / a copy of the Ground Lease] attached hereto as
Schedule 1-C. Effective upon the execution and delivery of this Lease Supplement
by Lessor and Lessee, the Leased Property shall be subject to the terms and
provisions of the Lease. Without further action, any and all additional
Equipment funded under the Operative Agreements and any and all additional
Improvements made to the Land shall be deemed to be titled to the Lessor and
subject to the terms and conditions of the Lease and this Lease Supplement.
This Lease Supplement shall constitute a mortgage, deed of trust, security
agreement and financing statement under the laws of the state in which the
Leased Property is situated. The maturity date of the obligations secured hereby
shall be [___________] unless extended to not later than [___________].
For purposes of provisions of the Lease and this Lease Supplement related
to the creation and enforcement of the Lease and this Lease Supplement as a
security agreement and a fixture filing, Lessee is the debtor and Lessor is the
A-1
secured party. The mailing addresses of the debtor (Lessee herein) and of the
secured party (Lessor herein) from which information concerning security
interests hereunder may be obtained are set forth on the signature pages hereto.
A carbon, photographic or other reproduction of the Lease and this Lease
Supplement or of any financing statement related to the Lease and this Lease
Supplement shall be sufficient as a financing statement for any of the purposes
referenced herein.
SECTION 3. [Intentionally Omitted.]
SECTION 4. Ratification; Incorporation by Reference. Except as specifically
modified hereby, the terms and provisions of the Lease and the Operative
Agreements are hereby ratified and confirmed and remain in full force and
effect. The Lease is hereby incorporated herein by reference as though restated
herein in its entirety.
SECTION 5. Original Lease Supplement. The single executed original of this
Lease Supplement marked "THIS COUNTERPART IS THE ORIGINAL EXECUTED COUNTERPART"
on the signature page thereof and containing the receipt of the Agent therefor
on or following the signature page thereof shall be the original executed
counterpart of this Lease Supplement (the "Original Executed Counterpart"). To
the extent that this Lease Supplement constitutes chattel paper, as such term is
defined in the Uniform Commercial Code as in effect in any applicable
jurisdiction, no security interest in this Lease Supplement may be created
through the transfer or possession of any counterpart other than the Original
Executed Counterpart.
SECTION 6. GOVERNING LAW. THIS LEASE SUPPLEMENT SHALL BE GOVERNED BY AND
CONSTRUED, INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE LAW OF THE STATE OF
CALIFORNIA [USE FOR PROPERTY LOCATED OUTSIDE OF CALIFORNIA ONLY: EXCEPT TO THE
EXTENT THE LAWS OF THE STATE WHERE A PARTICULAR PROPERTY IS LOCATED ARE REQUIRED
TO APPLY].
SECTION 7. Mortgage; Power of Sale. Without limiting any other remedies set
forth in the Lease, in the event that a court of competent jurisdiction rules
that the Lease constitutes a mortgage, deed of trust or other secured financing,
then Lessor and Lessee agree that Lessee hereby grants a Lien against the Leased
Property WITH POWER OF SALE, and that, upon the occurrence of any Lease Event of
Default, Lessor shall have the power and authority, to the extent provided by
law, after prior notice and lapse of such time as may be required by law, to
foreclose its interest (or cause such interest to be foreclosed) in all or any
part of the Leased Property.
SECTION 8. Counterpart Execution. This Lease Supplement may be executed in
any number of counterparts and by each of the parties hereto in separate
counterparts, all such counterparts together constituting but one (1) and the
same instrument.
[The remainder of this page has been intentionally left blank.]
A-2
IN WITNESS WHEREOF, each of the parties hereto has caused this Lease
Supplement to be duly executed by an officer thereunto duly authorized as of the
date and year first above written.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not individually, but solely as
the Owner Trustee under the FRI Trust
1999-1, as Lessor
By:
------------------------------------
Name:
------------------------------------
Title:
------------------------------------
First Security Bank, National Association
79 South Main Street
Third Floor
Salt Lake City, Utah 84111
Attn: Val T. Orton
Vice President
FRANKLIN TEMPLETON CORPORATE SERVICES, INC.,
as Lessee
By:
------------------------------------
Name:
------------------------------------
Title:
------------------------------------
[LESSEE ADDRESS]
-------------------------
-------------------------
Attn:
-----------------
Receipt of this original counterpart
of the foregoing Lease Supplement
is hereby acknowledged as the date
hereof.
BANK OF AMERICA, N.A., as the Agent
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
[BANK ADDRESS]
- ----------------------------
- ----------------------------
Attn:
----------------------
A-3
STATE OF _____________________
COUNTY OF ____________________
On ______________,_____, before me, the undersigned notary public in and for
said County and State, personally appeared _____________________________________
_______________________________________________________________________________,
______ personally known to me [or]
______ proved to me on the basis of satisfactory evidence
to be the person(s) whose name(s) ______________________________________
subscribed to the within instrument and acknowledged to me that
________________________________ executed the same in
__________________________________ authorized capacity(ies) and that, by
_____________________ signature(s) on the instrument, the person(s) or the
entity(ies) upon behalf of which the person(s) acted executed the instrument.
WITNESS my hand and official seal.
__________________________________________
My commission expires on _________________
A-4
STATE OF _____________________
COUNTY OF ____________________
On ______________,_____, before me, the undersigned notary public in and for
said County and State, personally appeared _____________________________________
_______________________________________________________________________________,
______ personally known to me [or]
______ proved to me on the basis of satisfactory evidence
to be the person(s) whose name(s) ______________________________________
subscribed to the within instrument and acknowledged to me that
________________________________ executed the same in
__________________________________ authorized capacity(ies) and that, by
_____________________ signature(s) on the instrument, the person(s) or the
entity(ies) upon behalf of which the person(s) acted executed the instrument.
WITNESS my hand and official seal.
__________________________________________
My commission expires on _________________
A-5
SCHEDULE 1
TO LEASE SUPPLEMENT NO. ____
(Description of the Leased Property)
A-6
SCHEDULE 1-A
TO LEASE SUPPLEMENT NO. ____
(Equipment)
A-7
SCHEDULE 1-B
TO LEASE SUPPLEMENT NO. ____
(Improvements)
A-8
SCHEDULE 1-C
TO LEASE SUPPLEMENT NO. ____
[(Land)/
(Ground Lease)]
A-9
B-7
EXHIBIT B TO THE LEASE
[MODIFY OR SUBSTITUTE SHORT FORM LEASE AS
NECESSARY FOR LOCAL LAW REQUIREMENTS]
Recordation requested by:
Moore & Van Allen, PLLC
After recordation return to:
Moore & Van Allen, PLLC (LSJ)
100 North Tryon Street, Floor 47
Charlotte, NC 28202-4003
Space above this line
for Recorder's use
- --------------------------------------------------------------------------------
The undersigned Lessor declares:
Document Transfer Tax is $0 -- Lease for a term of less than 35 years
(including renewal options)
| |___ unincorporated area | | City of San Mateo
Parcel No.
-------------------------
| | computed on full value of interest or property conveyed, or
| | computed on full value less value of liens or encumbrances
remaining at time of sale.
MEMORANDUM OF LEASE AGREEMENT
AND
LEASE SUPPLEMENT NO. ____
THIS MEMORANDUM OF LEASE AGREEMENT AND LEASE SUPPLEMENT NO. ____
("Memorandum"), dated as of _____________, is by and between FIRST SECURITY
BANK, NATIONAL ASSOCIATION, a national banking association, not individually,
but solely as the Owner Trustee under the FRI Trust 1999-1, with an office at 79
South Main Street, Salt Lake City, Utah 84111 (hereinafter referred to as
"Lessor"), and FRANKLIN TEMPLETON CORPORATE SERVICES, INC., a Delaware
corporation, with an office at [___________________] (hereinafter referred to as
"Lessee").
WITNESSETH:
B-1
That for value received, Lessor and Lessee do hereby covenant, promise and
agree as follows:
1. Demised Premises and Date of Lease. Lessor has leased to Lessee, and
Lessee has leased from Lessor, for the Term (as hereinafter defined), Lessor's
interest in certain real property and other property located in
________________, which is described in the attached Schedule 1 (the
"Property"), pursuant to the terms of an unrecorded Lease Agreement between
Lessor and Lessee dated as of September 27, 1999 (as such may be amended,
modified, extended, supplemented, restated and/or replaced from time to time,
"Lease") and an unrecorded Lease Supplement No. ____ between Lessor and Lessee
dated as of ______________ (the "Lease Supplement"). [Lessor is ground leasing
the Property from Lessee pursuant to a separate Ground Lease of even date
herewith (Lessee, in its capacity as the ground lessor is referred to herein as
"Ground Lessor").]
The Lease and the Lease Supplement shall constitute a mortgage, deed of
trust and security agreement and financing statement under the laws of the state
in which the Property is situated. The maturity date of the obligations secured
thereby shall be ___________, unless extended to not later than ___________.
For purposes of provisions of the Lease and the Lease Supplement related to
the creation and enforcement of the Lease and the Lease Supplement as a security
agreement and a fixture filing, Lessee is the debtor and Lessor is the secured
party. The mailing addresses of the debtor (Lessee herein) and of the secured
party (Lessor herein) from which information concerning security interests
hereunder may be obtained are as set forth on the signature pages hereof. A
carbon, photographic or other reproduction of this Memorandum or of any
financing statement related to the Lease and the Lease Supplement shall be
sufficient as a financing statement for any of the purposes referenced herein.
2. Term, Renewal, Extension and Purchase Option. The term of the Lease for
the Property ("Term") commenced as of __________, and shall end as of _________,
unless the Term is extended or earlier terminated in accordance with the
provisions of the Lease. The Lease contains provisions for renewal and
extension. The Lessee has the option to purchase or arrange for a third party to
purchase Lessor's interest in the Property on the terms set forth in the Lease.
3. Tax Payer Numbers.
Lessor's tax payer number: __________________.
Lessee's tax payer number: __________________.
4. Mortgage by Lessee; Power of Sale. Without limiting any other remedies
set forth in the Lease, in the event that a court of competent jurisdiction
rules that the Lease constitutes a mortgage, deed of trust or other secured
financing, then Lessor and Lessee agree that Lessee has granted, pursuant to the
terms of the Lease and the Lease Supplement, a Lien against the Property WITH
POWER OF SALE, and that, upon the occurrence and during the continuance of any
B-2
Lease Event of Default, Lessor shall have the power and authority, to the extent
provided by law, after prior notice and lapse of such time as may be required by
law, to foreclose its interest (or cause such interest to be foreclosed) in all
or any part of the Property.
5. Effect of Memorandum. The purpose of this instrument is to give notice
of the Lease and the Lease Supplement and their respective terms, covenants and
conditions to the same extent as if the Lease and the Lease Supplement were
fully set forth herein. This Memorandum shall not modify in any manner the
terms, conditions or intent of the Lease or the Lease Supplement and the parties
agree that this Memorandum is not intended nor shall it be used to interpret the
Lease or the Lease Supplement or determine the intent of the parties under the
Lease or the Lease Supplement. This Memorandum, the Lease and the Lease
Supplement shall bind and inure to the benefit of the parties hereto, and their
successors and permitted assigns.
[The remainder of this page has been intentionally left blank.]
B-3
IN WITNESS WHEREOF, the parties hereto have duly executed this instrument
as of the day and year first written.
LESSOR:
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not individually, but solely as the Owner
Trustee under the FRI Trust 1999-1
By:
------------------------------------
Name:
------------------------------------
Title:
------------------------------------
First Security Bank, National Association
79 South Main Street
Third Floor
Salt Lake City, Utah 84111
Attn: Val T. Orton
Vice President
LESSEE:
FRANKLIN
TEMPLETON CORPORATE SERVICES, INC.
By:
------------------------------------
Name:
------------------------------------
Title:
------------------------------------
[LESSEE ADDRESS]
-------------------------
-------------------------
Attn:
-------------------
B-4
SCHEDULE 1
(Description of Property)
B-5
STATE OF _____________________
COUNTY OF ____________________
On ______________,_____, before me, the undersigned notary public in and for
said County and State, personally appeared _____________________________________
_______________________________________________________________________________,
______ personally known to me [or]
______ proved to me on the basis of satisfactory evidence
to be the person(s) whose name(s) ______________________________________
subscribed to the within instrument and acknowledged to me that
________________________________ executed the same in
__________________________________ authorized capacity(ies) and that, by
_____________________ signature(s) on the instrument, the person(s) or the
entity(ies) upon behalf of which the person(s) acted executed the instrument.
WITNESS my hand and official seal.
__________________________________________
My commission expires on _________________
B-6
STATE OF _____________________
COUNTY OF ____________________
On ______________,_____, before me, the undersigned notary public in and for
said County and State, personally appeared _____________________________________
_______________________________________________________________________________,
______ personally known to me [or]
______ proved to me on the basis of satisfactory evidence
to be the person(s) whose name(s) ______________________________________
subscribed to the within instrument and acknowledged to me that
________________________________ executed the same in
__________________________________ authorized capacity(ies) and that, by
_____________________ signature(s) on the instrument, the person(s) or the
entity(ies) upon behalf of which the person(s) acted executed the instrument.
WITNESS my hand and official seal.
__________________________________________
My commission expires on _________________
B-7
- --------------------------------------------------------------------------------
SECURITY AGREEMENT
Dated as of
September 27, 1999
between
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not individually, but solely as the Owner Trustee under
the FRI Trust 1999-1
and
BANK OF AMERICA, N.A.,
as the Agent for the Lenders and the Holders
and accepted and agreed to by
FRANKLIN TEMPLETON CORPORATE SERVICES, INC.
- --------------------------------------------------------------------------------
i
TABLE OF CONTENTS
1. Definitions......................................................2
2. Grant of Security Interest.......................................4
3. Payment of Obligations...........................................6
4. Other Covenants..................................................6
5. Default; Remedies................................................6
6. Remedies Not Exclusive...........................................7
7. Performance by the Agent of the Borrower's Obligations...........7
8. Duty of the Agent................................................8
9. Powers Coupled with an Interest..................................8
10. Execution of Financing Statements................................8
11. Security Agreement Under Uniform Commercial Code.................8
12. Authority of the Agent...........................................9
13. Notices. ........................................................9
14. Severability....................................................10
15. Amendment in Writing; No Waivers; Cumulative Remedies...........10
16. Section Headings................................................10
17. Successors and Assigns..........................................10
18. The Borrower's Waiver of Rights.................................10
19. Governing Law...................................................11
20. Obligations Are Without Recourse................................11
21. Partial Release; Full Release...................................11
22. Miscellaneous...................................................11
23. Conflicts with Participation Agreement..........................12
24. Lessee as a Party...............................................12
i
SECURITY AGREEMENT
This SECURITY AGREEMENT, dated as of September 27, 1999 (as amended,
modified, extended, supplemented, restated and/or replaced from time to time,
this "Security Agreement"), is made between FIRST SECURITY BANK, NATIONAL
ASSOCIATION, a national banking association, not individually, but solely as
Owner Trustee under the FRI Trust 1999-1 (the "Borrower"), and BANK OF AMERICA,
N.A., a national banking association ("Bank"), as agent for (a) the Lenders
(hereinafter defined) under the Credit Agreement dated as of September 27, 1999
(as amended, modified, extended, supplemented, restated and/or replaced from
time to time, the "Credit Agreement") by and among the Borrower, the lending
institutions from time to time parties thereto (the "Lenders") and Bank as the
agent for the Lenders and (b) the holders of the certificates issued pursuant to
the Trust Agreement dated as of September 27, 1999 (as amended, modified,
extended, supplemented, restated and/or replaced from time to time, the "Trust
Agreement") among the holders from time to time parties thereto (the "Holders")
and the Borrower, in its individual capacity thereunder and in its capacity as
Owner Trustee thereunder. The Lenders and the Holders, together with their
successors and permitted assigns, are collectively referred to hereinafter as
the "Secured Parties." Bank, in its capacity as agent for the Secured Parties is
referred to hereinafter as the "Agent", and this Security Agreement is accepted
and agreed to by FRANKLIN TEMPLETON CORPORATE SERVICES, INC., a Delaware
corporation.
Preliminary Statement
Pursuant to the Credit Agreement, the Lenders have severally agreed to make
Loans to the Borrower in an aggregate amount not to exceed the Commitments upon
the terms and subject to the conditions set forth therein, to be evidenced by
the Notes issued by the Borrower under the Credit Agreement. Pursuant to the
Trust Agreement, the Holders have agreed to purchase the ownership interests of
the Trust created thereby in an aggregate amount not to exceed the Holder
Commitments upon the terms and subject to the conditions set forth therein, to
be evidenced by the Certificates issued by the Borrower under the Trust
Agreement. The Borrower is, or shall be upon the date of the initial Advance
with respect to each Property, the legal and beneficial owner of such Property
(except the Borrower may have a ground leasehold interest in certain Properties
pursuant to one (1) or more Ground Leases).
It is a condition, among others, to the obligation of the Lenders to make
their respective Loans to the Borrower under the Credit Agreement and the
Holders to make their respective Holder Advances under the Trust Agreement that
the Borrower shall have executed and delivered this Security Agreement to the
Agent, for the benefit of the Lenders and the Holders.
NOW, THEREFORE, in consideration of the premises and to induce the Lenders
to make their respective Loans under the Credit Agreement and to induce the
Holders to make their respective Holder Advances under the Trust Agreement, the
Borrower hereby agrees with the Agent, for the benefit of the Agent and the
Secured Parties, as follows:
1. Definitions.
(a) As used herein, the following terms shall have the following respective
meanings:
"Accounts" shall mean all "accounts," as such term is defined in the
Uniform Commercial Code, now owned or hereafter acquired by the Borrower,
including without limitation (i) all accounts receivable, other
receivables, book debts and other forms of obligations now owned or
hereafter received or acquired by or belonging or owing to the Borrower,
whether arising out of goods sold or leased or services rendered by it or
from any other transaction (including without limitation any such
obligations which may be characterized as an account under the Uniform
Commercial Code), (ii) all of the Borrower's rights in, to and under all
purchase orders or receipts now owned or hereafter acquired by it for goods
or services, (iii) all of the Borrower's rights to any goods represented by
any of the foregoing (including without limitation unpaid sellers' rights
of rescission, replevin, reclamation and stoppage in transit and rights to
returned, reclaimed or repossessed goods), (iv) all monies due or to become
due to the Borrower under all purchase orders and contracts for the sale or
lease of goods or the performance of services or both by the Borrower
(whether or not yet earned by performance on the part of the Borrower) now
or hereafter in existence, including without limitation the right to
receive the proceeds of said purchase orders and contracts, and (v) all
collateral security and guarantees of any kind, now or hereafter in
existence, given by any Person with respect to any of the foregoing.
"Chattel Paper" shall mean any and all "chattel paper," as such term
is defined in the Uniform Commercial Code, now owned or hereafter acquired
by the Borrower, wherever located.
"Documents" shall mean any and all "documents", as such term is
defined in the Uniform Commercial Code, now owned or hereafter acquired by
the Borrower, wherever located, including without limitation each bill of
lading, dock warrant, dock receipt, warehouse receipt or order for the
delivery of goods, and also any other document which in the regular course
of business or financing is treated as adequately evidencing that the
Person in possession of it is entitled to receive, hold and dispose of the
document and the goods it covers.
"General Intangibles" shall mean any and all "general intangibles," as
such term is defined in the Uniform Commercial Code, now owned or hereafter
acquired by the Borrower, including without limitation all contracts,
undertakings, or agreements in or under which the Borrower may now or
hereafter have any right (other than any right evidenced by Chattel Paper,
Documents or Instruments), title or interest, including without limitation
any agreements relating to the terms of payment or the terms of performance
of any Account.
"Holders" shall have the meaning specified in the first paragraph of
this Security Agreement.
2
"Instruments" shall mean any and all "instruments", as such term is
defined in the Uniform Commercial Code, now owned or hereafter acquired by
the Borrower, wherever located, including without limitation all
certificated securities, all certificates of deposit, and all notes and
other, without limitation, evidences of indebtedness, other than
instruments that constitute, or are a part of a group of writings that
constitute, Chattel Paper.
"Investment Property" shall mean any and all "investment property," as
such term is defined in the Uniform Commercial Code, now owned or hereafter
acquired by the Borrower, wherever located.
"Lenders" shall have the meaning specified in the first paragraph of
this Security Agreement.
"Lessee" shall mean Franklin Templeton Corporate Services, Inc., a
Delaware corporation, its successors, permitted assigns and permitted
transferees.
"Obligations" shall mean any and all obligations (i) of Borrower now
existing or hereafter arising under the Credit Agreement, the Notes, the
Trust Agreement, the Certificates and/or any other Operative Agreement or
(ii) with respect to Section 24 the obligations of all of the Credit
Parties now existing or hereafter arising under the Operative Agreements.
"Trust Agreement" shall mean the Amended, Restated and Replacement
Trust Agreement dated as of September 27, 1999 (as amended, modified,
extended, supplemented, restated and/or replaced from time to time in
accordance with the applicable provisions thereof, the "Trust Agreement")
among the several banks and other financial institutions from time to time
parties thereto and First Security Bank, National Association, in its
individual capacity and in its capacity as owner trustee thereunder,
together with its successors and assigns.
"Trust Estate" shall have the meaning given to such term in Section
2.2(a) of the Trust Agreement.
(b) Capitalized terms used but not otherwise defined in this Security
Agreement shall have the respective meanings specified in the Credit
Agreement or Appendix A to the Participation Agreement dated as of
September 27, 1999 (as amended, modified, extended, supplemented, restated
and/or replaced from time to time in accordance with the applicable
provisions thereof, the "Participation Agreement") among Lessee, Franklin
Resources, Inc., as guarantor, the Borrower, the Holders, the Lenders and
Bank of America, N.A., as agent for the Lenders and respecting the Security
Documents, as the agent for the Lenders and the Holders, to the extent of
their interests.
(c) The rules of usage set forth in Appendix A to the Participation
Agreement shall apply to this Agreement.
3
2. Grant of Security Interest.
To secure payment of all the amounts advanced under the Credit Agreement in
connection with the Notes, all the amounts advanced or contributed under the
Trust Agreement in connection with the Certificates and all other amounts now or
hereafter owing to the Lenders, the Holders or the Agent thereunder or under any
other Operative Agreement, THE BORROWER HEREBY CONVEYS, GRANTS, ASSIGNS,
TRANSFERS, HYPOTHECATES, MORTGAGES AND SETS OVER TO THE AGENT FOR THE BENEFIT OF
THE SECURED PARTIES, SUBJECT IN EACH CASE TO THE PRIOR LIENS, A FIRST PRIORITY
SECURITY INTEREST IN AND LIEN ON THE TRUST ESTATE, WHETHER NOW EXISTING OR
HEREAFTER ACQUIRED INCLUDING WITHOUT LIMITATION THE FOLLOWING:
(a) all right, title and interest of the Borrower in and to the
Operative Agreements now existing or hereafter acquired by the Borrower
(including without limitation all rights to payment and indemnity rights of
the Borrower under the Participation Agreement) (all of the foregoing in
this paragraph (a) being referred to as the "Rights in Operative
Agreements");
(b) all right, title and interest of the Borrower in and to all of the
Equipment;
(c) all right, title and interest of the Borrower in and to all of the
Fixtures;
(d) all the estate, right, title, claim or demand whatsoever of the
Borrower, in possession or expectancy, in and to each Property, Fixture or
Equipment or any part thereof;
(e) all right, title and interest of the Borrower in and to all
substitutes, modifications and replacements of, and all additions,
accessions and improvements to, the Fixtures and Equipment, subsequently
acquired or leased by the Borrower or constructed, assembled or placed by
the Borrower on any Property, immediately upon such acquisition, lease,
construction, assembling or placement, and in each such case, without any
further conveyance, assignment or other act by the Borrower;
(f) all right, title and interest of the Borrower in, to and under
books and records relating to or used in connection with the operation of
one (1) or more Properties or any part thereof; all rights of the Borrower
to the payment of money and all property; and all rights in and to any
causes of action or choses in action now or hereafter existing in favor of
the Borrower and all rights to any recoveries therefrom;
(g) all right, title and interest of the Borrower in and to all
unearned premiums under insurance policies now held or subsequently
4
obtained by the Lessee relating to one (1) or more Properties and the
Borrower's interest in and to all proceeds of any insurance policies
maintained by or for the benefit of the Borrower, including without
limitation any right to collect and receive such proceeds; and all awards
and other compensation, including without limitation the interest payable
thereon and any right to collect and receive the same, made to the present
or any subsequent owner of any Property for the taking by eminent domain,
condemnation or otherwise, of all or any part of any Property or any
easement or other right therein;
(h) all right, title and interest of the Borrower in and to (i) all
consents, licenses, certificates and other governmental approvals relating
to construction, completion, use or operation of any Property or any part
thereof and (ii) all Plans and Specifications relating to any Property;
(i) all right, title and interest of the Borrower in and to all Rent
and all other rents, payments, purchase prices, receipts, revenues, issues
and profits payable under the Lease or pursuant to any other lease with
respect to any Property;
(j) all right, title and interest of the Borrower in and to all
Instruments and Documents;
(k) all right, title and interest of the Borrower in and to all
General Intangibles;
(l) all right, title and interest of the Borrower in and to all
Chattel Paper (including without limitation all rights under the Lease) and
each Ground Lease;
(m) all right, title and interest of the Borrower in and to all money,
cash or cash equivalent and bank accounts;
(n) all right, title and interest of the Borrower in and to all
Accounts;
(o) all right, title and interest of the Borrower in and to all
proceeds of letters of credit issued in favor of the Borrower in connection
with any Property; and
(p) all right, title and interest of the Borrower in and to all
proceeds, both cash and noncash, of any of the foregoing.
(All of the foregoing property and rights and interests now owned or held
or subsequently acquired by the Borrower and described in the foregoing clauses
(a) through (p) are collectively referred to as the "Trust Property").
5
TO HAVE AND TO HOLD the Trust Property and the rights and privileges hereby
granted unto the Agent (for the benefit of the Agent and the Secured Parties),
its successors and assigns for the uses and purposes set forth, until the
earlier of (i) all of the obligations owing to the Lenders, the Holders or the
Agent under the Operative Agreements are paid in full or (ii) all Company
Obligations are paid and performed in full; provided, that EXCLUDED from the
Trust Property at all times and in all respects shall be all Excepted Payments.
3. Payment of Obligations.
The Borrower shall pay all Obligations in accordance with the terms of the
Credit Agreement, the Notes, the Trust Agreement, the Certificates and the other
Operative Agreements and perform each term to be performed by it under the
Credit Agreement, the Notes, the Trust Agreement, the Certificates and the other
Operative Agreements.
4. Other Covenants.
At any time and from time to time, upon the written request of the Agent,
and at the expense of the Borrower (with funds provided by the Lessee for such
purpose), the Borrower will promptly and duly execute and deliver such further
instruments and documents and take such further actions as the Agent reasonably
may request for the purposes of obtaining or preserving the full benefits of
this Security Agreement and of the rights and powers granted by this Security
Agreement.
5. Default; Remedies.
(a) Subject in each case to the rights of the Lessee under the
Operative Agreements, if a Credit Agreement Event of Default has occurred
and is continuing:
(i) the Agent, in addition to all other remedies available at law
or in equity, shall have the right forthwith to enter upon any
Property (or any other place where any component of any Property is
located at such time) without charge, and take possession of all or
any portion of the Trust Property, and to re-let the Trust Property
and receive the rents, issues and profits thereof, to make repairs and
to apply said rentals and profits, after payment of all necessary or
proper charges and expenses, on account of the amounts hereby secured
(subject to the Excepted Payments); and
(ii) the Agent, shall, as a matter of right, be entitled to the
appointment of a receiver for the Trust Property, and the Borrower
hereby consents to such appointment and waives notice of any
application therefor.
(b) Subject to the rights of the Lessee under the Operative
Agreements, if a Credit Agreement Event of Default has occurred and is
continuing, the Agent may proceed by an action at law, suit in equity or
other appropriate proceeding, to protect and enforce its rights, whether
for the foreclosure of the Lien of this Security Agreement, or for the
specific performance of any agreement contained herein or for an injunction
6
against the violation of any of the terms hereof. The proceeds of any sale
of any of the Trust Property shall be applied pursuant to Section 8.7 of
the Participation Agreement. In addition, the Agent may proceed under
Section 11 hereof.
(c) The Borrower hereby waives the benefit of all appraisement,
valuation, stay, extension and redemption laws now or hereafter in force
and all rights of marshalling in the event of any sale of the Trust
Property or any portion thereof or interest therein.
6. Remedies Not Exclusive.
The Agent shall be entitled to enforce payment of the indebtedness and
performance of the Obligations and to exercise all rights and powers under this
Security Agreement or under any of the other Operative Agreements or other
agreements or any laws now or hereafter in force, notwithstanding some or all of
the Obligations may now or hereafter be otherwise secured, whether by deed of
trust, mortgage, security agreement, pledge, Lien, assignment or otherwise.
Neither the acceptance of this Security Agreement nor its enforcement, shall
prejudice or in any manner affect the Agent's right to realize upon or enforce
any other security now or hereafter held by the Agent, it being agreed that the
Agent shall be entitled to enforce this Security Agreement and any other
security now or hereafter held by the Agent in such order and manner as the
Agent may determine in its absolute discretion. No remedy conferred hereunder or
under any other Operative Agreement upon or reserved to the Agent is intended to
be exclusive of any other remedy herein or therein or by law provided or
permitted, but each shall be cumulative and shall be in addition to every other
remedy given hereunder or thereunder or now or hereafter existing at law or in
equity or by statute. Every power or remedy given by any of the Operative
Agreements to the Agent or to which it may otherwise be entitled, may be
exercised, concurrently or independently, from time to time and as often as may
be deemed expedient by the Agent. In no event shall the Agent, in the exercise
of the remedies provided in this Security Agreement (including without
limitation in connection with the assignment of Rents to the Agent, or the
appointment of a receiver and the entry of such receiver onto all or any part of
the Land), be deemed a "mortgagee in possession" or a "pledgee in possession",
and the Agent shall not in any way be made liable for any act, either of
commission or omission, in connection with the exercise of such remedies.
7. Performance by the Agent of the Borrower's Obligations.
If the Borrower fails to perform or comply with any of its agreements
contained herein the Agent, at its option, but without any obligation so to do,
may perform or comply, or otherwise cause performance or compliance, with such
agreement. The expenses of the Agent incurred in connection with actions
undertaken as provided in this Section 7, together with interest thereon at a
rate per annum equal to the Overdue Rate, from the date of payment by the Agent
to the date reimbursed by the Borrower, shall be payable by the Borrower (with
funds provided by the Lessee for such purpose except to the extent such actions
relate to claims expressly excluded from Lessee's indemnification obligations in
Sections 11.1 or 11.2 of the Participation Agreement) to the Agent on demand and
constitute part of the Obligations secured hereby.
7
8. Duty of the Agent.
The Agent's sole duty with respect to the custody, safekeeping and physical
preservation of any Trust Property in its possession, under Section 9-207 of the
Uniform Commercial Code or otherwise, shall be to deal with it in the same
manner as the Agent deals with similar property for its own account. Neither the
Agent, any Lender, any Holder nor any of their respective directors, officers,
employees, shareholders, partners or agents shall be liable for failure to
demand, collect or realize upon any of the Trust Property or for any delay in
doing so or shall be under any obligation to sell or otherwise dispose of any
Trust Property upon the request of the Borrower or any other Person or to take
any other action whatsoever with regard to the Trust Property or any part
thereof.
9. Powers Coupled with an Interest.
All powers, authorizations and agencies contained in this Security
Agreement are coupled with an interest and are irrevocable until this Security
Agreement is terminated and the Liens created hereby are released.
10. Execution of Financing Statements.
Pursuant to Section 9-402 of the Uniform Commercial Code, the Borrower
authorizes the Agent at the expense of the Borrower (such amounts to be paid
with funds provided by the Lessee for such purpose) to file financing statements
with respect to the Trust Property under this Security Agreement without the
signature of the Borrower in such form and in such filing offices as the Agent
reasonably determines appropriate to perfect the security interests of the Agent
under this Security Agreement. A carbon, photographic or other reproduction of
this Security Agreement shall be sufficient as a financing statement for filing
in any jurisdiction. For purposes of such financing statement, the Borrower
shall be deemed to be the debtor, and the Agent shall be deemed to be the
secured party. The address of the Borrower is 79 South Main Street, Third Floor,
Salt Lake City, Utah 84111, Attention: Val T. Orton, Vice President, and the
address of the Agent is Bank of America, N.A., 231 South LaSalle Street, 10th
Floor, Mail Code IL1-231-1052, Chicago, IL 60697, Attention: Lizet Flores.
11. Security Agreement Under Uniform Commercial Code.
(a) It is the intention of the parties hereto that this Security
Agreement as it relates to matters of the grant, perfection and priority of
security interests the subject hereof, shall constitute a security
agreement within the meaning of the Uniform Commercial Code of the States
in which the Trust Property is located. If a Credit Agreement Event of
Default shall occur, then in addition to having any other right or remedy
available at law or in equity, and subject to the rights of the Lessee
under the Operative Agreements, the Agent may proceed under the applicable
Uniform Commercial Code and exercise such rights and remedies as may be
provided to a secured party by such Uniform Commercial Code with respect to
all or any portion of the Trust Property which is personal property
(including without limitation taking possession of and selling such
8
property). If the Agent shall elect to proceed under the Uniform Commercial
Code, then fifteen (15) days' notice of sale of the personal property shall
be deemed reasonable notice and the reasonable expenses of retaking,
holding, preparing for sale, selling and the like incurred by the Agent
shall include, but not be limited to, attorneys' fees and legal expenses.
At the Agent's request, the Borrower shall assemble such personal property
and make it available to the Agent at a place designated by the Agent which
is reasonably convenient to both parties.
(b) The Borrower, upon request by the Agent from time to time, shall
execute, acknowledge and deliver to the Agent one (1) or more separate
security agreements, in form satisfactory to the Agent, covering all or any
part of the Trust Property and will further execute, acknowledge and
deliver, or cause to be executed, acknowledged and delivered, any financing
statement, affidavit, continuation statement or certificate or other
document as the Agent may request in order to perfect, preserve, maintain,
continue or extend the security interest under, and the priority of the
Liens granted by, this Security Agreement and such security instrument. The
Borrower further agrees to pay to the Agent (with funds provided by the
Lessee for such purpose) on demand all costs and expenses incurred by the
Agent in connection with the preparation, execution, recording, filing and
re-filing of any such document and all reasonable costs and expenses of any
record searches for financing statements the Agent shall reasonably
require. The filing of any financing or continuation statements in the
records relating to personal property or chattels shall not be construed as
in any way impairing the right of the Agent to proceed against any property
encumbered by this Security Agreement.
12. Authority of the Agent.
The Borrower acknowledges that the rights and responsibilities of the Agent
under this Security Agreement with respect to any action taken by the Agent or
the exercise or non-exercise by the Agent of any option, voting right, request,
judgment or other right or remedy provided for herein or resulting or arising
out of this Security Agreement shall be governed by the Credit Agreement and
Section 8.6 of the Participation Agreement and by such other agreements with
respect thereto as may exist from time to time (until such time as all amounts
due and owing to the Secured Parties and the Agent under the Operative
Agreements have been paid in full), but the Agent shall be conclusively presumed
to be acting as agent for the Secured Parties with full and valid authority so
to act or refrain from acting, and the Borrower shall be under no obligation, or
entitlement, to make any inquiry respecting such authority.
13. Notices.
All notices required or permitted to be given under this Security Agreement
shall be in writing and delivered as provided in Section 12.2 of the
Participation Agreement.
9
14. Severability.
Any provision of this Security Agreement which is prohibited or
unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof.
15. Amendment in Writing; No Waivers; Cumulative Remedies.
(a) None of the terms or provisions of this Security Agreement may be
waived, amended, supplemented or otherwise modified except in accordance
with the terms of Section 12.4 of the Participation Agreement.
(b) No failure to exercise, nor any delay in exercising, on the part
of the Agent, any right, power or privilege hereunder shall operate as a
waiver thereof. No single or partial exercise of any right, power or
privilege hereunder shall preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. A waiver by the Agent
of any right or remedy hereunder on any one (1) occasion shall not be
construed as a bar to any right or remedy which the Agent would otherwise
have on any future occasion.
(c) The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights
or remedies provided by law.
16. Section Headings.
The section headings used in this Security Agreement are for convenience of
reference only and are not to affect the construction hereof or be taken into
consideration in the interpretation hereof.
17. Successors and Assigns.
This Security Agreement shall be binding upon the successors of the
Borrower, and the Borrower shall not assign any of its rights or obligations
hereunder or with respect to any of the Trust Property without the prior written
consent of the Agent. This Security Agreement shall inure to the benefit of the
Agent, the Lenders, the Holders and their respective successors and permitted
assigns, in accordance with their respective interests herein, and in accordance
with the Participation Agreement.
18. The Borrower's Waiver of Rights.
Except as otherwise set forth herein, to the fullest extent permitted by
law, the Borrower waives the benefit of all laws now existing or that may
subsequently be enacted providing for (a) any appraisement before sale of any
portion of the Trust Property, (b) any extension of the time for the enforcement
of the collection of the indebtedness or the creation or extension of a period
of redemption from any sale made in collecting such debt and (c) exemption of
10
any portion of the Trust Property from attachment, levy or sale under execution
or exemption from civil process. Except as otherwise set forth herein, to the
fullest extent the Borrower may do so, the Borrower agrees that the Borrower
will not at any time insist upon, plead, claim or take the benefit or advantage
of any law now or hereafter in force providing for any appraisement, valuation,
stay, exemption, extension or redemption, or requiring foreclosure of this
Security Agreement before exercising any other remedy granted hereunder and the
Borrower, for the Borrower and its successors and assigns, and for any and all
Persons ever claiming any interest in the Trust Property, to the extent
permitted by law, hereby waives and releases all rights of redemption,
valuation, appraisement, stay of execution, notice of election to mature or
declare due the whole of the Obligations and marshalling in the event of
foreclosure of the Liens hereby created.
19. GOVERNING LAW.
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN SECTION 11(a) HEREOF, THIS
SECURITY AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED, INTERPRETED AND ENFORCED
IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA.
20. Obligations Are Without Recourse.
The provisions of the Participation Agreement relating to limitations on
liability are hereby incorporated by reference herein, mutatis mutandis.
21. Partial Release; Full Release.
The Agent may release for such consideration as it may require any portion
of the Trust Property without (as to the remainder of the Trust Property) in any
way impairing or affecting the Lien, security interest and priority herein
provided for the Agent compared to any other Lien holder or secured party.
Further, the Agent shall execute and deliver to the Borrower such documents and
instruments as may be required to release the Lien and security interest created
by this Security Agreement with respect to the Properties as provided in Section
8.8 of the Participation Agreement or to grant the easements and permit the
other matters provided for in Section 8.5 of the Participation Agreement.
22. Miscellaneous.
(a) This Security Agreement is one (1) of the documents which create
Liens and security interests that secure payment and performance of the
Obligations. The Agent, at its election, may commence or consolidate in a
single action all proceedings to realize upon all such Liens and security
interests. The Borrower hereby waives (i) any objections to the
commencement or continuation of an action to foreclose the Lien of this
Security Agreement or exercise of any other remedies hereunder based on any
action being prosecuted or any judgment entered with respect to the
Obligations or any Liens or security interests that secure payment and
performance of the Obligations and (ii) any objections to the commencement
of, continuation of, or entry of a judgment in any such other action based
11
on any action or judgment connected to this Security Agreement. In case of
a foreclosure sale, the Trust Property may be sold, at the Agent's
election, in one (1) parcel or in more than one (1) parcel and the Agent is
specifically empowered (without being required to do so, and in its sole
and absolute discretion) to cause successive sales of portions of the Trust
Property to be held.
(b) This Security Agreement may not be amended, waived, discharged or
terminated except in accordance with Section 12.4 of the Participation
Agreement. Upon the prior written consent of the Majority Secured Parties
and unless such matter is a Unanimous Vote Matter, the Agent may release
any portion of the Trust Property or any other security, and grant such
extensions and indulgences in relation to the Obligations secured hereby
without in any manner affecting the priority of the Lien hereof on any part
of the Trust Property.
(c) THE PROVISIONS OF THE PARTICIPATION AGREEMENT RELATING TO
SUBMISSION TO JURISDICTION AND VENUE ARE HEREBY INCORPORATED BY REFERENCE
HEREIN, MUTATIS MUTANDIS.
(d) EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY, TO THE
FULLEST EXTENT ALLOWED BY APPLICABLE LAW, WAIVES TRIAL BY JURY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS SECURITY AGREEMENT, ANY OTHER
OPERATIVE AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.
23. Conflicts with Participation Agreement.
Notwithstanding any other provision hereof, in the event of any conflict
between the terms of this Security Agreement and the Participation Agreement,
the terms of the Participation Agreement shall govern.
24. LESSEE as a Party.
LESSEE HAS EXECUTED THIS SECURITY AGREEMENT FOR THE PURPOSE OF SUBJECTING
TO THE SECURITY INTERESTS GRANTED HEREUNDER ALL OF ITS RIGHT, TITLE, ESTATE AND
INTEREST, IF ANY, IN AND TO THE TRUST PROPERTY TO SECURE ALL OBLIGATIONS OF ALL
CREDIT PARTIES UNDER THE OPERATIVE AGREEMENTS. ACCORDINGLY, LESSEE HEREBY GRANTS
TO THE AGENT (FOR THE BENEFIT OF THE AGENT AND THE SECURED PARTIES) A SECURITY
INTEREST IN AND TO ALL OF ITS RIGHT, TITLE, ESTATE AND INTEREST, IF ANY, IN AND
TO THE TRUST ESTATE (TO THE EXTENT LESSEE HAS ANY RIGHT, TITLE OR INTEREST
THEREIN AND WITHOUT REGARD TO ANY LANGUAGE IN SECTION 2 OR THE DEFINITION OF
"TRUST ESTATE' OR ANY DEFINITION OF ANY ITEM CONSTITUTING THE TRUST ESTATE WHICH
OTHERWISE WOULD LIMIT THE TRUST ESTATE TO THE RIGHT, TITLE AND INTEREST OF THE
BORROWER THEREIN). TO SECURE ALL OBLIGATIONS OF ALL CREDIT PARTIES UNDER THE
OPERATIVE AGREEMENTS. LESSEE ACKNOWLEDGES AND AGREES THAT, UPON THE OCCURRENCE
12
OF AN EVENT OF DEFAULT, THE AGENT SHALL HAVE THE RIGHT TO EXERCISE ANY OR ALL OF
ITS REMEDIES HEREUNDER AS AGAINST ANY SUCH RIGHT, TITLE, ESTATE OR INTEREST OF
LESSEE IN OR TO THE TRUST PROPERTY. NOTWITHSTANDING THE FOREGOING, BY THE
ACCEPTANCE HEREOF BY THE BORROWER, THE AGENT, THE LENDERS AND THE HOLDERS, IT IS
UNDERSTOOD AND AGREED THAT LESSEE'S RIGHT, TITLE AND INTEREST IN THE TRUST
ESTATE SHALL NEVER UNDER ANY CIRCUMSTANCES BE DEEMED FOR THESE PURPOSES TO
INCLUDE ANY RIGHT, TITLE OR INTEREST IN ANY ACCOUNTS, CHATTEL PAPER, DOCUMENTS,
GENERAL INTANGIBLES, INSTRUMENTS OR INVESTMENT PROPERTY ARISING FROM THE
OPERATION BY LESSEE, GUARANTOR OR ANY OF THEIR AFFILIATES OF ANY BUSINESS OR
OPERATIONS (EXCLUSIVE OF THE OPERATION OF ANY PROPERTY AS A REAL ESTATE
FACILITY) ON ANY PROPERTY.
[signature page follows]
13
IN WITNESS WHEREOF, each of the undersigned have caused the Security
Agreement to be duly executed and delivered as of the date first above written.
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not individually, but solely as the Owner
Trustee under the FRI Trust 1999-1
By: /s/ C. Scott Nielsen
-------------------------------------
Name: C. Scott Nielsen
-------------------------------------
Title: Vice President
------------------------------------
BANK OF AMERICA, N.A., as the Agent for the
Lenders and the Holders
By: /s/ John G. Hayes
-------------------------------------
Name: John G. Hayes
-------------------------------------
Title: Principal
------------------------------------
Accepted and Agreed to:
FRANKLIN TEMPLETON CORPORATE SERVICES, INC.
By: /s/ Charles R. Sims
-------------------------------
Name: Charles R. Sims
-------------------------------
Title: Treasurer
------------------------------