[EXECUTION COPY]
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PARTICIPATION AGREEMENT
Dated as of December 15, 2004
among
ITT INDUSTRIES, INC.,
as Lessee,
REXUS L.L.C.,
as Lessor,
and
AIR BAIL S.A.S.
and
RBS LOMBARD, INC.,
as Investors,
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AIR BAIL S.A.S.,
Arranger
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TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS; INTERPRETATION....................................................... 1
ARTICLE II DOCUMENTATION DATE................................................................ 1
Section 2.1. Documentation Date.......................................................... 1
ARTICLE III PURCHASE OF PROPERTIES BY LESSOR.................................................. 4
Section 3.1. Purchase and Lease.......................................................... 4
Section 3.2. Lessor Commitment........................................................... 4
Section 3.3. Investors' Commitments...................................................... 4
Section 3.4. Procedures for Acquisition Date............................................. 4
ARTICLE IV OVERDUE AMOUNTS; RENT PAYMENTS; FEES.............................................. 5
Section 4.1. Overdue Amounts; Application of Rent Payments, etc.......................... 5
Section 4.2. Structuring Fee............................................................. 5
Section 4.3. Place and Manner of Payments................................................ 5
Section 4.4. Sharing of Payments......................................................... 6
ARTICLE V AMOUNTS DUE UNDER THE LEASE....................................................... 6
Section 5.1. Amounts Due Under the Lease................................................. 6
ARTICLE VI Conditions TO ACQUISITION DATE OR REPLACEMENT DATE................................ 7
Section 6.1. Acquisition Date or Replacement Date........................................ 7
ARTICLE VII APPLICATIONS OF PAYMENTS.......................................................... 10
Section 7.1. Basic Rent.................................................................. 10
Section 7.2. Purchase Payments by the Lessee; Reallocation of Property Costs............. 10
Section 7.3. Supplemental Rent........................................................... 11
Section 7.4. Application of Payments after Lease Event of Default........................ 11
Section 7.5. Casualty and Condemnation Amounts........................................... 12
Section 7.6. Other Payments.............................................................. 12
Section 7.7. Payments to Account......................................................... 12
ARTICLE VIII REPRESENTATIONS................................................................... 13
Section 8.1. Representations of the Lessee............................................... 13
Section 8.2. Representations on the Acquisition Date and each Replacement Date........... 17
Section 8.3. Warranties and Representations of the Lessor................................ 17
Section 8.4. Representations of each Investor............................................ 18
ARTICLE IX PAYMENT OF CERTAIN EXPENSES....................................................... 18
Section 9.1. Transaction Expenses and Other Fees and Expenses............................ 18
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(continued)
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Section 9.2. Brokers' Fees and Stamp Taxes............................................... 19
Section 9.3. Lessor LLC Agreement and Related Obligations................................ 19
ARTICLE X OTHER COVENANTS AND AGREEMENTS.................................................... 19
Section 10.1. Affirmative Covenants of the Lessee......................................... 19
Section 10.2. Negative Covenants.......................................................... 22
Section 10.3. Covenants of the Lessor..................................................... 25
Section 10.4. Release of Property......................................................... 25
ARTICLE XI CERTAIN AGREEMENTS................................................................ 26
Section 11.1. Certain Restrictions on Access.............................................. 26
Section 11.2. Permitted Tax Disclosure.................................................... 26
ARTICLE XII TRANSFERS OF INVESTORS' AND LESSOR'S INTERESTS.................................... 26
Section 12.1. Assignments................................................................. 26
Section 12.2. Participations.............................................................. 27
Section 12.3. Withholding Taxes; Pledge Under Regulation A................................ 27
ARTICLE XIII INDEMNIFICATION................................................................... 28
Section 13.1. General Indemnification..................................................... 28
Section 13.2. Environmental Indemnity..................................................... 30
Section 13.3. Proceedings in Respect of Claims............................................ 31
Section 13.4. General Tax Indemnity....................................................... 32
Section 13.5. Title Representation and Indemnity.......................................... 34
Section 13.6. Withholding Taxes, etc...................................................... 35
Section 13.7. Increased Costs, etc........................................................ 37
Section 13.8. Funding Losses; Break Costs................................................. 38
Section 13.9. Capital Adequacy............................................................ 38
Section 13.10. Indemnity Payments in Addition to Lease Obligations......................... 39
Section 13.11. Payment of Amounts Due under this Article XIII.............................. 39
Section 13.12. Survival.................................................................... 39
ARTICLE XIV MISCELLANEOUS..................................................................... 39
Section 14.1. Survival of Agreements...................................................... 39
Section 14.2. No Broker, Etc.............................................................. 39
Section 14.3. Notices..................................................................... 39
Section 14.4. Counterparts................................................................ 40
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(continued)
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Section 14.5. Amendments, Etc............................................................. 40
Section 14.6. Headings, Etc............................................................... 40
Section 14.7. Parties in Interest......................................................... 40
Section 14.8. GOVERNING LAW............................................................... 40
Section 14.9. Severability................................................................ 40
Section 14.10. Liability Limited........................................................... 41
Section 14.11. Further Assurances.......................................................... 41
Section 14.12. SUBMISSION TO JURISDICTION.................................................. 41
Section 14.13. Setoff...................................................................... 41
Section 14.14. Successors and Assigns...................................................... 42
Section 14.15. WAIVER OF JURY TRIAL........................................................ 42
Section 14.16. NO ORAL AGREEMENTS.......................................................... 42
Section 14.17. No Investor Responsible for Other Investors................................. 42
Schedule I -- Commitments
Schedule II -- Notice Information, Wire Instructions and Funding Offices
Schedule III -- Description of Properties, Go Dark Values and Original
Property Costs
Schedule 10.2(b) Description of Liens on Principal Properties
Exhibit A -- Form of Legal Opinion of In-House Counsel to Lessee
Exhibit B -- Form of Acquisition Date Notice
Exhibit C -- Form of Local Counsel Opinion
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PARTICIPATION AGREEMENT
This PARTICIPATION AGREEMENT (as amended, supplemented, amended and
restated or otherwise modified from time to time, this "Participation
Agreement"), dated as of December 15, 2004, is entered into by and among ITT
INDUSTRIES, INC., an Indiana corporation, as Lessee (the "Lessee"); REXUS
L.L.C., a Delaware limited liability company, as Lessor (the "Lessor"); and AIR
BAIL S.A.S., a French corporation duly registered as a Societe par Actions
Simplifiee ("Air Bail"), and RBS LOMBARD, INC., a New York corporation ("RBS"
and, collectively with Air Bail, the "Investors"), as Investors.
WITNESSETH:
WHEREAS, subject to the terms and conditions hereof, on the Acquisition
Date the Lessor will purchase from the Lessee or its Subsidiaries the real
properties described on Schedule III hereto under the heading "Leased
Properties";
WHEREAS, the Lessor desires to lease each Leased Property to the Lessee,
and the Lessee desires to lease each Leased Property from the Lessor;
WHEREAS, each Investor is willing to make a capital contribution to the
Lessor for the purpose of permitting the Lessor to acquire the Properties and
pay certain Transaction Expenses in connection therewith;
WHEREAS, to secure the obligations of the Lessee under the Lease and the
other Operative Documents, the Lessee will grant to the Lessor a first priority
Lien on each Property (including each Mortgaged Property);
NOW THEREFORE, in consideration of the mutual agreements contained in this
Participation Agreement and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS; INTERPRETATION
Unless the context shall otherwise require, capitalized terms used and not
defined herein shall have the meanings assigned thereto in Appendix A to the
Master Lease dated as of the date hereof, between the Lessee and the Lessor, for
all purposes hereof (as such Appendix A may be amended, supplemented, amended
and restated or otherwise modified from time to time, "Appendix A to the Master
Lease"); and the rules of interpretation set forth in Appendix A to the Master
Lease shall apply to this Participation Agreement.
ARTICLE II
DOCUMENTATION DATE
Section 2.1. Documentation Date. The Documentation Date (the
"Documentation Date") shall be deemed to have occurred and all rights and
obligations of the parties to the Operative Documents
Participation Agreement
(each subject to any conditions specified therein) shall be in effect, upon
satisfaction or waiver of each of the following conditions precedent:
(a) Participation Agreement. This Participation Agreement shall have
been duly authorized, executed and delivered by the parties hereto.
(b) Master Lease. The Master Lease shall have been duly authorized,
executed and delivered by the parties thereto.
(c) Lessor LLC Agreement. The Lessor LLC Agreement shall have been
duly authorized, executed and delivered by the parties thereto.
(d) Lessor Administration Agreement. The Lessor Administration
Agreement shall have been duly authorized, executed and delivered by the
parties thereto.
(e) Corporate Documents; Certificates. The Lessee shall have
delivered, or shall have caused to be delivered, to the Lessor and each
Investor the following:
(i) Incumbency Certificate. An incumbency certificate,
executed by the Secretary or Assistant Secretary of the Lessee,
which shall identify by name and title and bear the signature of the
officers of the Lessee authorized to sign the Operative Documents to
which the Lessee is or shall be a party, upon which certificate the
Lessor, and the Investors shall be entitled to rely until informed
of any change in writing by the Lessee.
(ii) Articles of Incorporation. Copies of its articles of
incorporation, certified to be true and complete as of a recent date
by the appropriate governmental authority of the jurisdiction of its
incorporation or existence.
(iii) Resolutions. A certificate executed by the Lessee
certifying that the execution and delivery of each Operative
Document to which the Lessee is or is to be a party and the
effectuation of the transactions contemplated therein have been duly
authorized.
(iv) Bylaws. A copy of the Lessee's bylaws certified by its
secretary or assistant secretary as of the Documentation Date to be
true and correct and in full force and effect as of such date.
(v) Good Standing. A copy of a certificate of good standing
for the Lessee, certified as of a recent date by the Secretary of
State of the State of Indiana.
(f) Lessor Organizational Documents; Certificates. The Lessor shall
have delivered, or shall have caused to be delivered to each of the other
parties hereto the following:
(i) Certificate of the Lessor. A certificate, executed by the
Lessor certifying that the execution and delivery of each of the
Operative Documents to which the Lessor is a party has been
authorized pursuant to Section 8.02 of the Lessor LLC Agreement.
(ii) Certificate of Formation. Copies of the Lessor's
Certificate of Formation, certified as of a recent date by the
Secretary of State of the State of Delaware.
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Participation Agreement
(iii) Good Standing. A certificate of good standing for the
Lessor, certified as of a recent date by the Secretary of State of
the State of Delaware.
(g) Opinions of Counsel. An opinion of counsel for the Lessee (which
may be the Lessee's internal counsel) addressed to the Lessor and each of
the Investors, covering the matters set forth in Exhibit A and such other
matters as the Lessor or any Investor may reasonably request.
(h) Representations and Warranties; Lessee Officer's Certificate. On
the Documentation Date, the representations and warranties of each of the
parties hereto contained in Sections 8.1, 8.2, 8.3 and 8.4 shall be true
and correct as though made on and as of such date, except to the extent
such representations or warranties relate solely to an earlier date, in
which case such representations and warranties shall have been true and
correct on and as of such earlier date, and the Lessee shall have
delivered an officer's certificate to such effect with respect to its
representations and warranties.
(i) No Lease Default. No Lease Default or Lease Event of Default
shall have occurred and be continuing on the Documentation Date.
(j) Governmental Approvals. All Governmental Actions required by any
Applicable Law for the purpose of authorizing the Lessee, the Lessor and
each Investor to enter into the Operative Documents shall have been
obtained or made and be in full force and effect.
(k) Litigation. No action or proceeding shall have been instituted
or threatened, nor shall any governmental action be instituted or
threatened before any Governmental Authority, nor shall any order,
judgment or decree have been issued or proposed to be issued by any
Governmental Authority, (x) to set aside, restrain, enjoin or prevent the
performance of this Participation Agreement or any transaction
contemplated hereby or by any other Operative Document or (y) that, in the
reasonable opinion of the Lessor, could be expected to have a Material
Adverse Effect or have a material adverse effect on the rights and
remedies of the Lessor or any Investor under the Operative Documents, the
ability of the Lessee to perform its obligations under the Operative
Documents or the Fair Market Sales Value, utility, condition or residual
value of any real property described on Schedule III hereto.
(l) Applicable Law. In the reasonable opinion of the Lessor, no
change shall have occurred or been proposed in Applicable Law affecting
the Lessee, the Lessor, any Investor, the Lessor Administrator or any
Property that would make it uneconomic or illegal for any party to any
Operative Document to participate in any of the transactions contemplated
by the Operative Documents or otherwise would prohibit the consummation of
any transaction contemplated by the Operative Documents or expand the
duties, obligations and risks of the Lessor or any Investor.
(m) Withholding Tax Forms. The Lessor shall have delivered (or
caused to be delivered) to the Lessee a properly completed and signed U.S.
Internal Revenue Service ("IRS") form W-9.
All documents and instruments required to be delivered pursuant to this
Section 2.1 shall be delivered at the offices of Jones Day in London, England or
at such other location as may be determined by the Lessor and in such quantities
as shall be reasonably requested.
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Participation Agreement
ARTICLE III
PURCHASE OF PROPERTIES BY LESSOR
Section 3.1. Purchase and Lease. Subject to the conditions and terms
hereof, on the Acquisition Date the Lessor shall take the following actions with
respect to each Property described under the heading "Leased Properties" on
Schedule III hereto at the written request of the Lessee:
(a) the Lessor shall pay the Original Property Cost for each such
Property to the Seller thereof as the purchase price therefor;
(b) the Lessor shall acquire each such Property from the Seller
thereof; and
(c) the Lessor shall lease each such Property to the Lessee under
the Master Lease and the respective Lease Supplements.
Notwithstanding any other provision hereof, (i) no Property Cost shall be paid
by the Lessor with respect to any Property after the Acquisition Date, (ii) the
Lessor shall not be obligated to pay any Property Cost with respect to any
Property if, after giving effect thereto, the Aggregate Property Cost would
exceed the Lessor Commitment Amount, and (iii) the Acquisition Date shall not
occur after December 30, 2004.
Section 3.2. Lessor Commitment. Subject to the conditions and terms
hereof, on the Acquisition Date the Lessor shall acquire each Property described
under the heading "Leased Properties" on Schedule III hereto by paying to the
Seller in immediately available funds an amount equal to the Original Property
Cost for such Property. Notwithstanding any other provision hereof, the Lessor
shall not be obligated to pay any Original Property Cost if, after giving effect
to such payment, the Aggregate Property Cost would exceed the Lessor Commitment
Amount.
Section 3.3. Investors' Commitments. Subject to the conditions and terms
hereof, on the Acquisition Date each Investor shall make a capital contribution
to the Lessor in an amount equal to such Investor's Commitment Percentage of the
aggregate Original Property Costs of the Properties being acquired on the
Acquisition Date. Notwithstanding any other provision hereof, no Investor shall
be obligated to make any capital contribution to the Lessor if, after giving
effect to the proposed capital contribution, the aggregate outstanding amount of
such Investor's capital contributions would exceed such Investor's Commitment
Percentage of the Lessor Commitment Amount.
Section 3.4. Procedures for Acquisition Date. (a) The Lessee shall give
the Lessor prior written notice pursuant to an Acquisition Date Notice
substantially in the form of Exhibit B (the "Acquisition Date Notice"), which
Acquisition Date Notice shall be delivered not later than 10:00 a.m. (New York
time), three (3) Business Days prior to the proposed Acquisition Date. The
Acquisition Date Notice shall set forth (i) the proposed Acquisition Date, (ii)
the Property or Properties to be acquired by the Lessor, (iii) the Seller of
each Property being acquired, (iv) a certification by the Lessee that all
conditions to be satisfied by the Lessee set forth in the Operative Documents to
which the Lessee is a party with respect to the payment by the Lessor of the
applicable Property Cost have been fully and completely satisfied to the extent
required to be satisfied by the Lessee, and (v) wire transfer instructions for
the disbursement of the proceeds of such Original Property Cost to the Lessee or
to such other Persons specified in the Acquisition Date Notice. Subject to
timely delivery of the Acquisition Date Notice and the other terms and
conditions of the Operative Documents, each Investor shall make its Commitment
Percentage of the requested Original Property Cost available to the Lessor at
the Account by 2:00 p.m., (New York time), on the requested Acquisition Date,
and the Lessor shall make such amounts available to the Persons and accounts as
the Lessee shall have indicated in the Acquisition Date Notice.
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Participation Agreement
(a) Except as the Lessor may otherwise agree in writing, amounts paid by
the Lessor on the Acquisition Date shall be used solely to pay the purchase
price for each Property or to pay or reimburse the Lessee for Transaction
Expenses, as the case may be.
(b) The Lessor shall, immediately upon its receipt of the Acquisition Date
Notice from the Lessee, deliver a copy of the Acquisition Date Notice to each
Investor.
(c) The Go Dark Value and Original Property Cost (including allocated
Transaction Expenses) for each Leased Property acquired on the Acquisition Date
and each Mortgaged Property upon which a Lien is granted to the Lessor on the
Acquisition Date shall be as set forth on Schedule III hereto.
ARTICLE IV
OVERDUE AMOUNTS; RENT PAYMENTS; FEES
Section 4.1. Overdue Amounts; Application of Rent Payments, etc. (a) If
all or any portion of the Aggregate Property Cost, any Accrual Rent, Fixed Rent,
Supplemental Rent or any other amount payable hereunder shall not be paid when
due (whether at stated maturity, acceleration thereof or otherwise), such
overdue amount shall bear interest at a rate per annum which is equal to the
Overdue Rate.
(a) All Basic Rent and Supplemental Rent paid by the Lessee under the
Lease from time to time shall be applied as set forth in Article VII.
(b) If not repaid sooner, the Aggregate Property Cost shall be repaid in
full on the Scheduled Lease Termination Date.
Section 4.2. Structuring Fee. The Lessee agrees to pay to the Arranger on
the Acquisition Date the Structuring Fee in accordance with the Arrangement
Letter.
Section 4.3. Place and Manner of Payments. Except as otherwise
specifically provided herein, all payments by the Lessee hereunder, under the
Master Lease or under any other Operative Document shall be made to the Lessor
(or, in the case of Supplemental Rent owing under Article XIII, directly to the
Person entitled thereto), in Dollars in immediately available funds, without
offset, deduction, counterclaim or withholding of any kind (except as provided
in Section 12.3(a)), to the Account in New York, New York not later than 10:00
a.m. (New York time) on the date when due. Payments received after such time
shall be deemed to have been received on the next succeeding Business Day. The
Lessee shall, at the time it makes any payment under any Operative Document,
specify to the Lessor the Basic Rent, Property Cost, Termination Price,
Termination Base Amount, Fees, Supplemental Rent or other amounts payable by the
Lessee hereunder to which such payment is to be applied (and in the event that
it fails so to specify, or if such application would be inconsistent with the
terms hereof, the Lessor shall apply such payment in such manner as the Lessor
may determine to be appropriate in respect of obligations owing by Lessee
subject to the terms of Article VII). Whenever any payment hereunder shall be
stated to be due on a day which is not a Business Day, the due date thereof
shall be extended to the next Business Day (subject to accrual of interest and
fees for the period of such extension); provided that if the next Business Day
falls in the next calendar year, payment shall instead be due on the preceding
Business Day.
Section 4.4. Sharing of Payments. The Investors agree among themselves
that, in the event that the Lessor or any Investor shall obtain payment in
respect of any obligation owing to the Lessor or to
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Participation Agreement
such Investor under the Operative Documents through the exercise of a right of
setoff, banker's lien or counterclaim, or pursuant to a secured claim under
Section 506 of the Bankruptcy Code or other security or interest arising from,
or in lieu of, such secured claim, received by such Investor under any
applicable bankruptcy, insolvency or other similar law or otherwise, or by any
other means, in excess of its pro rata share of such payment as provided for in
this Participation Agreement and the Lessor LLC Agreement, such Investor shall
promptly purchase from the other Investor a participation in such amounts, and
make such other adjustments from time to time, as shall be equitable to the end
that all Investors share such payment in accordance with their respective
ratable shares as provided for in the Lessor LLC Agreement. The Investors
further agree among themselves that if payment to an Investor obtained by such
Investor through the exercise of a right of setoff, banker's lien, counterclaim
or other event as aforesaid shall be rescinded or must otherwise be restored,
each Investor which shall have shared the benefit of such payment shall, by
repurchase of a participation theretofore sold, return its share of that benefit
(together with its share of any accrued interest payable with respect thereto)
to each Investor whose payment shall have been rescinded or otherwise restored.
The Lessee agrees that any Investor so purchasing such a participation may, to
the fullest extent permitted by law, exercise all rights of payment, including
setoff, banker's lien or counterclaim, with respect to such participation as
fully as if such Investor were a holder of such obligation in the amount of such
participation. Except as otherwise expressly provided herein, if any Investor
shall fail to remit to any other Investor an amount payable by such party to
such other Investor pursuant to the Operative Documents on the date when such
amount is due, such payments shall be made together with interest thereon for
each date from the date such amount is due until the date such amount is paid to
the Lessor at a rate per annum equal to the Overnight LIBOR. If under any
applicable bankruptcy, insolvency or other similar law, any Investor receives a
secured claim in lieu of a setoff to which this Section 4.4 applies, such
Investor shall, to the extent practicable, exercise its rights in respect of
such secured claim in a manner consistent with the rights of the Investors under
this Section 4.4 to share in the benefits of any recovery on such secured claim.
ARTICLE V
AMOUNTS DUE UNDER THE LEASE
Section 5.1. Amounts Due Under the Lease. Anything herein or elsewhere to
the contrary notwithstanding, it is the intention of the Lessee, the Lessor and
the Investors that: (i) the amount and timing of installments of Basic Rent due
and payable from time to time from the Lessee under the Lease shall be equal to
the sum of (x) the aggregate payments due and payable as Accrual Rent on each
Scheduled Payment Date and (y) the aggregate payments due and payable as Fixed
Rent on each Scheduled Payment Date; (ii) if the Lessee elects to purchase or
becomes obligated to purchase all of the Properties under the Lease or elects
the Return Option, the Lease Balance with respect thereto and all other
obligations of the Lessee owing to the Lessor and the Investors shall be due and
payable in full by the Lessee on the date set forth in the Lease; (iii) upon a
Lease Event of Default resulting in an acceleration of the Lessee's obligation
to purchase the Lessor's interest in each Property under the Lease, the amounts
then due and payable by the Lessee under the Lease shall include all amounts
necessary to pay in full the Lease Balance plus all other amounts then due from
the Lessee under the Operative Documents (and the Lessee agrees that, in any
such event, it will pay such amounts regardless of whether the Lease is then in
effect); and (v) if the Lessee elects to terminate or is required to purchase or
terminate any Property pursuant to Section 15.1 or 19.1 of the Master Lease, the
amounts then due and payable by the Lessee shall include all amounts necessary
to pay the Termination Base Amount or Termination Price (as applicable) of such
Property together with all Rent allocable thereto.
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Participation Agreement
ARTICLE VI
CONDITIONS TO ACQUISITION DATE OR REPLACEMENT DATE
Section 6.1. Acquisition Date or Replacement Date. The closing date with
respect to the Lessor's acquisition of the real properties described under the
heading "Leased Properties" on Schedule III hereto shall occur on a Business Day
on or after the Documentation Date on which all the conditions precedent thereto
set forth in this Section 6.1 shall have been satisfied or waived by the
applicable parties as set forth herein (such date, the "Acquisition Date"). The
obligation of the Lessor to acquire the real properties described under the
heading "Leased Properties" on Schedule III hereto and to pay the Property Costs
therefor and the obligation of each Investor to make any related capital
contribution to the Lessor on the Acquisition Date, are subject to satisfaction
or waiver of the conditions precedent set forth in Section 2.1 and the following
conditions precedent, and the obligation of the Lessor to acquire any
Replacement Property and terminate the Lease with respect to any Terminated
Property in connection therewith, is subject to the satisfaction or waiver of
the following conditions precedent:
(a) Acquisition Date Notice. In the case of the Acquisition Date,
the Lessor shall have received a fully executed counterpart of the
Acquisition Date Notice in accordance with Section 3.4. Each of the
delivery of the Acquisition Date Notice and the acceptance of the Original
Property Costs shall constitute a representation and warranty by the
Lessee that on the Acquisition Date (both immediately before and after
giving effect to the payment of the Property Cost and the application of
the proceeds thereof), the statements made in Section 8.2 are true and
correct.
(b) [INTENTIONALLY OMITTED]
(c) Environmental Audit. At least ten (10) Business Days prior to
the Acquisition Date or Replacement Date (as applicable), the Lessor shall
have received an Environmental Audit performed by an environmental
consultant reasonably acceptable to the Lessor and either addressed to the
Lessor and each Investor or accompanied by a letter allowing such Persons
to rely thereon with respect to each Subject Property and in form and
substance reasonably satisfactory to the Lessor and stating that the
applicable assessment has revealed no evidence of Recognized Environmental
Conditions in connection with the site except for specified matters, which
matters the Lessor and the Lessee reasonably agree are not material. If
such Environmental Audit reveals the need for additional review or
testing, the Lessee shall have provided such additional assessments as are
recommended by such consultant.
(d) Property Survey. With respect to each Replacement Date, the
Lessee shall have delivered to each of the Lessor and each Investor on or
prior to such Replacement Date an ALTA/ASCM (Urban) Survey of each Subject
Property in form and substance acceptable to such Persons.
(e) Title Abstracts. On or prior to the Acquisition Date or
Replacement Date (as applicable), the Lessee shall have delivered to the
Lessor a complete title report for each Subject Property (each, a "Title
Abstract") that shall be dated down to the Acquisition Date or such
Replacement Date (as applicable) and shall identify and include copies of
all liens, mortgages, encumbrances, easements, covenants, leases,
agreements and other items affecting the Subject Property, include a legal
description, a tax lot and tax block for the Subject Property and provide
evidence that all real estate and other taxes with regard to the Subject
Property are current and fully paid. Such Title Abstract must be in all
respects acceptable to the Lessor and provide evidence reasonably
satisfactory that, immediately prior to the conveyance of the Subject
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Participation Agreement
Property to the Lessor by the Seller, the Seller had fee simple title to
the Subject Property subject only to matters approved by the Lessor in its
reasonable discretion. Title insurance will not be required and the Lessor
will rely upon the Lessee's title indemnity set forth in Section 13.5.
(f) Evidence of Insurance. The Lessor shall have received evidence
that the insurance maintained by the Lessee with respect to the Subject
Property satisfies the requirements set forth in Article XIII of the
Master Lease, setting forth the respective coverage, limits of liability,
carrier, policy number and period of coverage.
(g) Representations and Warranties. On the Acquisition Date or
Replacement Date (as applicable), the representations and warranties of
the Lessee set forth in Section 8.2 shall be true and correct; provided
that a failure of any representation or warranty of the Lessee to be true
and correct on the Acquisition Date or Replacement Date (as applicable)
shall not be a condition precedent to the Lessee's performance of its
obligations under the Operative Documents.
(h) Responsible Officer's Certificate. The Lessor and each Investor
shall have received a Responsible Officer's Certificate of the Lessee,
addressed to the Lessor and each Investor and dated the Acquisition Date
or Replacement Date (as applicable), stating that (w) to such Responsible
Officer's knowledge after reasonable inquiry, the representations and
warranties of the Lessee contained in Section 8.2 are true and correct on
and as of the Acquisition Date or such Replacement Date (as applicable);
(x) to such Responsible Officer's knowledge after reasonable inquiry, no
Lease Default or Lease Event of Default has occurred and is continuing;
(y) to such Responsible Officer's knowledge after reasonable inquiry, each
Operative Document to which the Lessee is a party is in full force and
effect with respect to it; and (z) to such Responsible Officer's knowledge
after reasonable inquiry, the Lessee has duly performed and complied with
all conditions contained herein or in any other Operative Document
required to be performed and complied with by it on or prior to the
Acquisition Date or Replacement Date, as the case may be.
(i) Government Approvals. All necessary Governmental Actions
required by any Applicable Law (including pursuant to any Environmental
Laws) as of the Acquisition Date or Replacement Date for the purpose of
authorizing the Lessor to acquire the applicable Leased Property (or, in
the case of a Mortgaged Property, to acquire the Lien on such Property)
shall have been obtained or made and be in full force and effect,
including, in the case of the Clifton Property, in accordance with the
requirements of ISRA if ISRA is applicable. The Lessee shall take all
actions, at its sole cost and expense, to obtain a written determination
issued by the NJDEP authorizing the Transactions to occur with respect to
the Clifton Property, including, without limitation, a Remediation In
Progress Waiver under N.J.S.A. 13:I K-11.5 and N.J.A.C. 7:26B-5.4;
provided, that the Lessee shall provide to the Lessor a copy of any
submission to the NJDEP of any application or any other document intended
to secure a written determination from the NJDEP.
(j) Deed. With respect to each Subject Property that is a Leased
Property, the Lessor shall have received, at least three (3) Business Days
prior to the Acquisition Date or Replacement Date (as applicable), a copy
of the proposed Deed with respect to such Subject Property, and on or
prior to the Acquisition Date or Replacement Date (as applicable), such
Deed duly executed conveying fee simple title to such Property to the
Lessor, containing customary seller's warranties in the applicable
jurisdiction and subject only to Permitted Property Liens, together with
any transfer and recordation tax forms necessary or appropriate to record
the same. The legal description, tax lot designation and zoning of the
Land relating to each Subject Property shall be reasonably acceptable to
the Lessor.
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Participation Agreement
(k) Fees and Transaction Expenses. All Fees then due and payable
pursuant to Section 4.2 shall have been paid. All Transaction Expenses due
and payable by the Lessee to the Arranger, the Lessor and the Investors
for which invoices shall have been received by the Lessee shall have been
paid. Jones Day, as special counsel for Air Bail S.A.S., shall have
received, to the extent then invoiced, payment in full in cash of all
Transaction Expenses payable to such counsel pursuant to Section 9.1.
(l) Lease Supplement; Lessor Mortgage. On or prior to the
Acquisition Date or Replacement Date (as applicable), the Lessee shall
have delivered to the Lessor (x) in the case of a Subject Property that is
a Leased Property, the original counterpart of the Lease Supplement
executed by the Lessee and the Lessor with respect to the Subject Property
and (y) in the case of a Subject Property that is a Mortgaged Property, a
Lessor Mortgage covering such Subject Property and in form and substance
reasonably satisfactory to the Lessor.
(m) Financing Statements. On or prior to the Acquisition Date or
Replacement Date (as applicable), the Lessee shall have delivered all UCC
financing statements relating to the Subject Property as the Lessor may
reasonably request in order to protect the interests of the Lessor under
the Lease relating to the Subject Property to the extent the Master Lease
constitutes a security agreement.
(n) Recordation of Lessor Mortgage; Lessor Financing Statements. The
Lessor shall have received (x) evidence reasonably satisfactory to it that
each of (i) the applicable Lease Supplement and any other instrument
constituting a Lessor Mortgage and (ii) the Financing Statements relating
to the Subject Property has been, or is being, recorded or filed in a
manner sufficient to properly perfect its interests therein.
(o) UCC Search Results. The Lessor shall have received copies of
file search reports from the Uniform Commercial Code filing officer (i) in
the jurisdiction in which each Subject Property is located, (ii) in the
jurisdiction in which the chief executive office of the Lessee is located
and (iii) in the State of Indiana, setting forth the results of such
Uniform Commercial Code file searches.
(p) No Lease Default. There shall not have occurred and be
continuing any Lease Default or Lease Event of Default and no Lease
Default or Lease Event of Default will have occurred after giving effect
to the acquisition of the Subject Property (or, in the case of a Mortgaged
Property, the granting of a Lien on such Property to the Lessor).
(q) Opinion of Counsel and of Local Counsel to the Lessee. The
Lessor and each Investor shall have received (i) an opinion of counsel
qualified with respect to the laws of the jurisdiction in which the
Subject Property is situated, addressed to the Lessor and each Investor,
substantially in the form of Exhibit C (or in such other form that is
acceptable to the Lessor and each Investor) and (ii) if requested by the
Lessor, opinions from such other counsel and covering such issues as the
Lessor may reasonably request.
(r) Good Standing Certificates. The Lessee shall have delivered to
the Lessor and each Investor a certificate of good standing (or its
equivalent) to the effect that it is qualified to do business in the
jurisdiction where the Subject Property is located.
(s) [INTENTIONALLY OMITTED]
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Participation Agreement
(t) Available Commitments. After giving effect to the applicable
payment of Property Cost on the Acquisition Date, the requirements set
forth in Sections 3.2 and 3.3 with respect to commitment limits shall not
be violated.
(u) Additional Matters. On the Acquisition Date or Replacement Date
(as applicable), the Lessor and each Investor shall have received such
additional documents and instruments related to the acquisition, financing
and mortgage (as applicable) of the Subject Property as any of them shall
reasonably request in order to establish the rights and interests of the
Lessor and the Investors intended to be created under the Operative
Documents in respect of the Subject Property.
All documents and instruments required to be delivered pursuant to this Section
6.1 shall be delivered at the offices of Jones Day in London, England, or at
such other location as may be determined by the Lessor and the Lessee and in
such quantities as shall be reasonably requested, and the Lessor and each
Investor hereby agree that delivery of any document or instrument to such
offices or other location shall constitute delivery to the Lessor and each
Investor for all purposes of the Operative Documents.
ARTICLE VII
APPLICATIONS OF PAYMENTS
Section 7.1. Basic Rent. Each payment of (x) Basic Rent and (y)
Supplemental Rent representing payment of interest on overdue installments of
Basic Rent received by the Lessor shall be applied first, to payment of accrued
and unpaid interest at the Overdue Rate then owing on any Basic Rent or
Supplemental Rent not paid when due, second to payment of accrued and unpaid
Accrual Rent then due and owing and third, to the Fixed Rent then due and owing.
Section 7.2. Purchase Payments by the Lessee; Reallocation of Property
Costs. Any payment received by the Lessor as a result of:
(a) the purchase of any Property in accordance with Section 18.1 or
18.2 of the Master Lease, or
(b) compliance with the obligation to purchase all of the Properties
in accordance with Section 16.2(g) of the Master Lease, or
(c) the payment of the Termination Base Amount, Termination Price or
other purchase price with respect to any Property in accordance with
Section 15.1 or 19.1 of the Master Lease,
shall be applied by the Lessor first to payment of accrued and unpaid Accrual
Rent then due and owing, second to any Fixed Rent then due and owing, third, to
the payment of the Termination Indemnity Amount (if any) payable in connection
with such payment, fourth to the payment of the Property Cost of the applicable
Property (if such Property is a Leased Property), fifth to the payment of the
Property Cost of each other Property that is a Leased Property, on a pro rata
basis (based on the Original Property Cost of each such Leased Property), and
sixth any excess remaining thereafter shall be distributed in accordance with
Section 7.4(a).
Upon any payment of the Termination Price or Termination Base Amount with
respect to any Property, the Property Costs of the Leased Properties subject to
the Master Lease after giving effect to
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Participation Agreement
such termination shall be reallocated on a pro rata basis (based on the Go Dark
Value of each such Leased Property) so that, immediately after giving effect to
such reallocation, the Aggregate Property Cost equals an amount equal to (x) the
Aggregate Property Cost immediately prior to such payment of Termination Price
or Termination Base Amount minus (y) the Termination Base Amount included in
such Termination Price (in the case of a payment of Termination Price) or such
Termination Base Amount (in the case of a payment of Termination Base Amount).
Section 7.3. Supplemental Rent. All payments of Supplemental Rent received
by the Lessor (excluding any amounts payable pursuant to the preceding
provisions of this Article VII or Section 7.4 below) shall be distributed
promptly by the Lessor upon receipt thereof to the Persons entitled thereto
pursuant to the Operative Documents.
Section 7.4. Application of Payments after Lease Event of Default. (a)
During the continuance of a Lease Event of Default and subject to clause (b)
below, all amounts of Rent and all other amounts (including proceeds from any
sale of the Properties) received by the Lessor shall be applied by the Lessor in
the following order of priority:
first, so much of such payment or amount as shall be required to pay
or reimburse the Lessor and the Lessor Administrator for any tax, fees,
expense, indemnification or other loss incurred by the Lessor or the
Lessor Administrator (to the extent incurred in connection with any duties
as the Lessor or the Lessor Administrator), shall be distributed to the
Lessor and the Lessor Administrator without priority of one over the other
in accordance with the amount of such payment or payments payable to each
such Person;
second, so much of such payments or amounts as shall be required to
pay to the Lessor and the Lessor Administrator the amounts payable to them
pursuant to any expense reimbursement or indemnification provisions of the
Operative Documents shall be distributed to the Lessor and the Lessor
Administrator without priority of one over the other in accordance with
the amount of such payment or payments payable to each such Person;
third, so much of such payments or amounts as shall be required to
pay to the Investors the amounts payable to them pursuant to any expense
reimbursement or indemnification provisions of the Operative Documents
shall be distributed to the Investors without priority of one over the
other in accordance with the amount of such payment or payments payable to
each such Person;
fourth, to accrued and unpaid interest at the Overdue Rate then
owing on any Basic Rent or Supplemental Rent not paid when due;
fifth, for application to pay in full all accrued and unpaid Accrual
Rent then owing;
sixth, for application to pay in full the Termination Indemnity
Amount (if any) for each Property;
seventh, for application to pay in full the Aggregate Property Cost;
eighth, to the Lessor for any other amounts payable to it under the
Operative Documents, including all Supplemental Rent then owing to the
Lessor;
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Participation Agreement
ninth, to the Investors for any other amounts payable to them under
the Operative Documents, including all other Supplemental Rent not covered
by any other clause in this paragraph (a) then owing pro rata based on the
amounts payable; and
tenth, the balance, if any, of such payment or amounts remaining
thereafter shall be promptly distributed to, or as directed by, the
Persons entitled thereto by Applicable Law.
(b) All payments received and amounts realized by the Lessor in connection
with any Casualty or Condemnation during the continuance of a Lease Event of
Default shall be applied by the Lessor as follows:
(i) in the event that the Lessor elects pursuant to Section 14.2(a)
of the Master Lease to pay all or a portion of such amounts to the Lessee
for the repair of damage caused by such Casualty or Condemnation in
accordance with Section 14.2 of the Master Lease, then such amounts shall
be distributed to the Lessee in accordance with Section 14.2 of the Master
Lease, and
(ii) in the event that the Lessor elects pursuant to Section 14.2(a)
of the Master Lease to apply all or a portion of such amounts to the
purchase price of the related Property, then such amounts shall be
distributed in accordance with clause (a) of this Section 7.4.
Section 7.5. Casualty and Condemnation Amounts. Subject to Section 7.4(b),
any amounts payable to the Lessor as a result of a Casualty or Condemnation
pursuant to Section 14.2 of the Master Lease shall be distributed as follows:
(a) all amounts payable to the Lessee in accordance with Section
14.2(a) or 14.2(f) of the Master Lease shall be distributed to the Lessee,
and
(b) all amounts that are to be applied to the purchase price of the
related Property in accordance with Section 14.2(a) and Article XV of the
Master Lease shall be applied by the Lessor in accordance with Section
7.2.
Section 7.6. Other Payments. (a) Except as otherwise provided in clause
(b) below, any payment received by the Lessor for which no provision as to the
application thereof is made in the Operative Documents or elsewhere in this
Article VII (including any balance remaining after the application in full of
amounts to satisfy any expressed provision) shall be distributed in accordance
with the Lessor LLC Agreement.
(a) All payments received and amounts realized by the Lessor under the
Master Lease or otherwise with respect to the Properties to the extent received
or realized at any time after the indefeasible payment in full of the Lease
Balance and any other amounts due and owing to the Lessor or the Investors under
or in connection with the Operative Documents, shall be distributed forthwith by
the Lessor in the order of priority set forth in Section 7.4(a).
(b) Any payment received by the Lessor for which provisions as to the
application thereof is made in an Operative Document but not elsewhere in this
Article VII shall be distributed forthwith by the Lessor to the Person and for
the purpose for which such payment was made in accordance with the terms of such
Operative Document.
Section 7.7. Payments to Account. All payments made to the Lessor pursuant
to the Operative Documents shall be made to the Account.
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Participation Agreement
ARTICLE VIII
REPRESENTATIONS
Section 8.1. Representations of the Lessee. The Lessee hereby represents
and warrants to the Lessor, each Investor and the Arranger that:
(a) Organization; Powers. Each of the Lessee and each of the
Subsidiaries (i) is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization, (ii)
has all requisite power and authority to own its property and assets and
to carry on its business as now conducted and as proposed to be conducted,
(iii) is qualified to do business in every jurisdiction where such
qualification is required, except where the failure so to qualify would
not result in a Material Adverse Effect, and (iv) in the case of the
Lessee, has the corporate power and authority to execute, deliver and
perform its obligations under the Operative Documents to which it is a
party and to incur the Obligations hereunder and thereunder.
(b) Authorization. The execution, delivery and performance by the
Lessee of each Operative Document to which it is or will be a party and
the incurrence of the Obligations thereunder (collectively, the
"Transactions") (i) have been or, upon execution and delivery thereof,
will be duly authorized by all requisite corporate action and (ii) will
not (x) violate (A) any provision of any law, statute, rule or regulation
(including the Margin Regulations) or of the certificate of incorporation
or other constitutive documents or by-laws of the Lessee, (B) any order of
any Governmental Authority or (C) any provision of any indenture,
agreement or other instrument to which the Lessee is a party or by which
it or any of its property is or may be bound, (y) be in conflict with,
result in a breach of or constitute (alone or with notice or lapse of time
or both) a default under any such indenture, agreement or other instrument
or (z) result in the creation or imposition of any lien upon any property
or assets of the Lessee.
(c) Enforceability. This Participation Agreement and each other
Operative Document to which the Lessee is a party constitutes a legal,
valid and binding obligation of the Lessee enforceable in accordance with
its terms.
(d) Governmental Approvals. No action, consent or approval of,
registration or filing with or other action by any Governmental Authority,
other than those which have been taken, given or made, as the case may be,
is or will be required with respect to the Lessee in connection with the
Transactions.
(e) Financial Statements.
(i) The Lessee's consolidated balance sheet and consolidated
statements of income, cash flows and changes in shareholders' equity
as of and for the year ended December 31, 2003, and the Lessee's
consolidated condensed income statements, consolidated condensed
balance sheets and consolidated condensed statement of cash flows
for the nine months ended September 30, 2004, in each case as posted
(or hyperlinked) on the Lessee's internet home page located at
www.itt.com on the Closing Date, present fairly, in all material
respects, the consolidated combined financial condition and the
results of operations of the Lessee and the Subsidiaries as of such
dates and for such periods in accordance with GAAP.
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Participation Agreement
(ii) As of the Documentation Date and as of the Acquisition
Date, there has been no material adverse change in the consolidated
financial condition of the Lessee and the Lessee Subsidiaries taken
as a whole from the financial condition reported in the financial
statements referenced in paragraph (i) of this Section 8.1(e).
(f) Litigation; Compliance with Laws.
(i) As of the Documentation Date, there are no actions,
proceedings or investigations filed or (to the knowledge of the
Lessees) threatened or affecting the Lessee or any Subsidiary in any
court or before any Governmental Authority or arbitration board or
tribunal which question the validity or legality of this
Participation Agreement, the Master Lease or any other Operative
Document, the Transactions or any action taken or to be taken
pursuant to this Participation Agreement, the Lease or any other
Operative Document and no order or judgment has been issued or
entered restraining or enjoining the Lessee or any Subsidiary from
the execution, delivery or performance of this Participation
Agreement, the Lease or any other Operative Document nor is there
any other action, proceeding or investigation filed or (to the
knowledge of the Lessee or any Subsidiary) threatened against the
Lessee or any Subsidiary in any court or before any Governmental
Authority or arbitration board or tribunal which would be reasonably
likely to result in a Material Adverse Effect or materially restrict
the ability of the Lessee to comply with its obligations under the
Operative Documents to which it is a party.
(ii) Neither the Lessee nor any Subsidiary is in violation of
any law, rule or regulation (including any law, rule or regulation
relating to the protection of the environment or to employee health
or safety), or in default with respect to any judgment, writ,
injunction or decree of any Governmental Authority, where such
violation or default would be reasonably likely to result in a
Material Adverse Effect.
(iii) No exchange control law or regulation materially
restricts the Lessee from complying with its obligations in respect
of the Obligations or otherwise under the Operative Documents.
(g) Federal Reserve Regulations. (i) Neither the Lessee nor any
Subsidiary that will receive proceeds of any Property Costs paid hereunder
is engaged principally, or as one of its important activities, in the
business of extending credit for the purpose of purchasing or carrying
Margin Stock.
(ii) No part of the proceeds of any Original Property Costs paid by
the Lessor will be used, whether directly or indirectly, and whether
immediately, incidentally or ultimately, to purchase or carry Margin Stock
or to refund indebtedness originally incurred for such purpose, or for any
other purpose which entails a violation of, or which is inconsistent with,
the provisions of the Margin Regulations.
(h) Investment Company Act; Public Utility Holding Company Act. The
Lessee is not (i) an "investment company" as defined in, or subject to
regulation under, the Investment Company Act of 1940 (the "1940 Act") or
(ii) a "holding company" as defined in, or subject to regulation under,
the Public Utility Holding Company Act of 1935.
(i) Full Disclosure; No Material Misstatements. None of the
representations or warranties made by the Lessee in connection with this
Participation Agreement as of the date
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Participation Agreement
such representations and warranties are made or deemed made, and no
report, financial statement or other information furnished by or on behalf
of the Lessee to the Lessor, any Investor or the Arranger pursuant to or
in connection with this Participation Agreement or the other Operative
Documents, contains or will contain any material misstatement of fact or
omits or will omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they
were or will be made, not misleading.
(j) Taxes. Each of the Lessee and each of the material Subsidiaries
have filed or caused to be filed all federal, state and local tax returns
which are required to be filed by them, and have paid or caused to be paid
all Taxes shown to be due and payable on such returns or on any
assessments received by any of them, other than any Taxes or assessments
the validity of which is being contested in good faith by appropriate
proceedings, and with respect to which appropriate accounting reserves
have to the extent required by GAAP been set aside. No liens for Taxes
have been imposed on or with respect to any Property.
(k) Employee Pension Benefit Plans. The present aggregate value of
accumulated benefit obligations of all unfunded and underfunded pension
plans of the Lessee and its Subsidiaries (based on those assumptions used
for disclosure in corporate financial statements in accordance with GAAP)
did not, as of December 31, 2003, exceed by more than $645,000,000 the
value of the assets of all such plans. Of such $645,000,000, $185,000,000
is primarily attributable to employee pension plans in countries where the
funding of such obligations is not required or customary and $101,000,000
relates primarily to domestic pension plans where funding is not permitted
under current tax regulations. In these cases the Lessee has recorded book
reserves to meet the obligations. Trust assets totaling approximately
$23,100,000 have been established to provide for certain of the foregoing
domestic pension benefits, however, because of restrictions relating to
bankruptcy or insolvency, such funds are not included in the funded amount
of plans for purposes of GAAP.
(l) Information Delivered to Appraiser. All information heretofore
furnished by the Lessee in writing to the Lessor, the Investors, the
Arranger and any appraiser of any Property in connection with an Appraisal
with respect to the intended use and operation of the Properties for
purposes of or in connection with this Participation Agreement and the
other Operative Documents or any transaction contemplated hereby or
thereby is, and all such information hereafter furnished by the Lessee in
writing to any such Person or to any such appraiser will be, complete and
correct in all material respects taken as a whole.
(m) Name, Location, Etc. As of the Documentation Date, the Lessee's
(i) exact name as such name appears in its certificate of formation is ITT
Industries, Inc., (ii) jurisdiction of organization is the State of
Indiana and (iii) chief executive office and principal place of business
are located at 4 West Red Oak Lane, White Plains, NY 10604.
(n) Liens. The Lessor Mortgage with respect to the Subject Property
creates, or upon its execution will create, a valid security interest in
and mortgage lien on the Subject Property purported to be covered thereby
in favor of the Lessor, and upon recordation of such Lessor Mortgage and
the Lessor Financing Statements relating to the Subject Property, such
security interest and mortgage lien will constitute first priority
perfected security interests and mortgage liens, prior to all Liens other
than Permitted Property Liens and no Property shall be encumbered by any
Liens not identified in Title Abstracts approved in writing by the Lessor.
(o) Offer of Securities, etc. Neither the Lessee nor any Person
authorized to act on their behalf has, directly or indirectly, (i) offered
any interest in the Properties (or, if such sale or
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Participation Agreement
offer would be integrated with the sale or offer of such interest in the
Properties, any other interest similar thereto) for sale to any Person or
(ii) solicited from any Person any offer to acquire any interest in the
Properties (or any such other interest), in either case in violation of
the Securities Act.
(p) Compliance with Law and Insurance Requirements. The contemplated
use of each Subject Property by the Lessee and its agents, assignees,
employees, lessees, sublessees, licensees, tenants and subtenants shall be
in material compliance with all Applicable Law (including all zoning and
land use laws and Environmental Laws) and Insurance Requirements, except
for such Applicable Law as it shall be contesting in good faith by
appropriate proceedings. There is no action, suit or proceeding (including
any proceeding in condemnation or eminent domain or under any
Environmental Law) pending or, to Lessee's actual knowledge, threatened
with respect to it, or the Subject Property that materially adversely
affects the title to, or the use, operation or value of, the Subject
Property.
(q) Utilities, etc. All utilities required to adequately service the
applicable Improvements for each Subject Property in accordance with its
intended use will be available pursuant to adequate permits (including any
that may be required under applicable Environmental Laws). No Casualty has
had a Material Adverse Effect or a material adverse effect on the rights
and remedies of the Lessor or any Investor under the Operative Documents,
the ability of the Lessee to perform its obligations under the Operative
Documents or the Fair Market Sales Value, utility, condition or residual
value of any Subject Property. Each Subject Property has available all
material services of public facilities and other utilities necessary for
use and operation of such Property for its intended purpose, including
adequate water and electricity. All utilities serving the Subject Property
are located in, and access to such Property is provided by, either public
rights-of-way abutting such Property or Appurtenant Rights. All material
licenses, approvals, authorizations, consents, permits (including
building, demolition and Environmental Permits, licenses, approvals,
authorizations and consents), easements and rights-of-way, including proof
and dedication, required for (x) the use, treatment, storage, transport,
disposal or disposition of any Hazardous Material on, at, under or from
the Subject Property during the construction of the Improvements thereon,
and (y) construction of Modifications (if any) on each Subject Property
have been obtained from the appropriate Governmental Authorities having
jurisdiction or from private parties, as the case may be. The Lessee has
obtained all appropriate Governmental Action, and has and will keep in
full force and effect, all material operating permits, in each case to the
extent necessary to allow for each Subject Property to be operated in
accordance with its intended use.
(r) Deed. The Deed for each Subject Property that is or is to be a
Leased Property is sufficient to convey to the Lessor good and marketable
title to such Property (subject to any Permitted Property Liens).
(s) Insurance. The Lessee will, on or before the Acquisition Date,
have obtained insurance coverage covering the Subject Property that meets
the requirements set forth in Article XIII of the Master Lease, and such
coverage shall be in full force and effect.
(t) Flood Hazard Areas. Except as otherwise identified on the
applicable survey, plat or map with respect to the Subject Property
delivered pursuant to Section 6.1(d), no portion of the Subject Property
will be located within an area identified as a special flood hazardous
area by the Federal Emergency Management Agency.
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Participation Agreement
(u) Title. The representations and warranties of the Lessee set
forth in Section 13.5(a) are true and correct.
Section 8.2. Representations on the Acquisition Date and each Replacement
Date. The Lessee represents and warrants to the other parties hereto as of the
Acquisition Date and as of each Replacement Date as follows:
(a) Representations and Warranties. The Lessee's representations and
warranties set forth in Section 8.1 are true and correct on and as of the
Acquisition Date or applicable Replacement Date, as the case may be,
except to the extent such representations or warranties relate solely to
an earlier date, in which case such representations and warranties shall
have been true and correct on and as of such earlier date.
(b) No Lease Default, etc. The Lessee is in compliance with its
obligations under the Operative Documents and there exists no Lease
Default or Lease Event of Default. No Lease Default or Lease Event of
Default will occur as a result of, or after giving effect to, (i) in the
case of a Subject Property that is a Mortgaged Property, the granting of
the Liens under the Lessor Mortgages on the Acquisition Date or
Replacement Date (as applicable) or (ii) in the case of a Subject Property
that is a Leased Property, the purchase of such Leased Property on the
Acquisition Date or the replacement of the applicable Property on the
Replacement Date, as the case may be.
(c) Liens. The Lessee has not permitted any Liens to be placed
against any Property other than Permitted Property Liens.
(d) Advance. The applicable conditions precedent to the closing date
for the applicable acquisition or replacement of Property set forth in
Article VI have been satisfied (to the extent required to be satisfied by
the Lessee).
Section 8.3. Warranties and Representations of the Lessor. The Lessor
hereby represents and warrants to the Lessee that:
(a) The Lessor is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of
Delaware and has all requisite limited liability company power and
authority to execute and deliver, and to perform its obligations under,
the Operative Documents to which it is a party.
(b) The Operative Documents to which it is, or will be, a party have
been duly authorized by all requisite limited liability company action,
have been duly executed and delivered by the Lessor, and constitute, and
each other Operative Document to which Lessor is a party when executed and
delivered by Lessor will constitute, the valid and binding obligations of
the Lessor enforceable against the Lessor in accordance with the
respective terms thereof, except as such enforceability may be limited by
(i) applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the 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) Neither the execution and delivery of the Operative Documents,
the consummation of the transactions contemplated thereby nor the
fulfillment of or compliance with the provisions thereof will require
consent, approval, authorization, filing, registration or
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Participation Agreement
qualification under or conflict with or violate any Applicable Law that
applies to the Lessor or any of its property, except as contemplated by
the Operative Documents.
(d) The Lessor is not and will not be funding the Property Costs
hereunder, and is not performing its obligations under the Operative
Documents, with the assets of an "employee benefit plan" (as defined in
Section 3(3) of ERISA) which is subject to Title I of ERISA, or "plan" (as
defined in Section 4975(e)(1) of the Code).
(e) The Lessor is participating in the Transactions for its own
account and not with a view toward redistribution; provided that
disposition of its rights hereunder shall remain in its control and the
foregoing shall not affect the ability of the Lessor to assign, transfer
or sell participations in its rights in accordance with the Operative
Documents.
(f) Lessor Liens. There are no Lessor Liens on any Property or any
part thereof, and the execution, delivery and performance by the Lessor of
the Operative Documents to which it is or will be a party will not subject
any Property or any part thereof to any Lessor Liens.
Section 8.4. Representations of each Investor. Each Investor represents
and warrants to the other parties hereto that:
(a) Source of Funds. Such Investor is not and will not be making its
capital contributions to the Lessor under the Lessor LLC Agreement, and is
not performing its obligations under the Operative Documents, with the
assets of an "employee benefit plan" (as defined in Section 3(3) of ERISA)
which is subject to Title I of ERISA, or "plan" (as defined in Section
4975(e)(1) of the Code).
(b) Status. Such Investor is an Affiliate of a commercial bank,
branch or agency of a foreign bank or other similar financial institution.
(c) Acquisition for Investment. Each Investor is participating in
the Transactions for its own account and not with a view toward
redistribution; provided that disposition of its rights hereunder shall
remain in its control and the foregoing shall not affect the ability of
any Investor to assign or sell participations in its rights in accordance
with the Operative Documents.
(d) Lessor Liens. There are no Lessor Liens attributable to such
Investor on any Property or any part thereof, and the execution, delivery
and performance by such Investor of the Operative Documents to which it is
or will be a party will not subject any Property or any part thereof to
any Lessor Liens attributable to such Investor.
ARTICLE IX
PAYMENT OF CERTAIN EXPENSES
The Lessee agrees, for the benefit of the Arranger, the Lessor and each
Investor, that:
Section 9.1. Transaction Expenses and Other Fees and Expenses. (a) The
Lessee shall pay, or cause to be paid, from time to time all Transaction
Expenses in respect of the transactions on the Documentation Date, the
Acquisition Date, each Termination Date and each Replacement Date.
(b) The Lessee shall pay or cause to be paid when due the Fees.
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Participation Agreement
(c) The Lessee shall pay or cause to be paid, on demand, (i) all
reasonable out-of-pocket expenses of the Lessor, the Lessor Administrator, each
Investor and the Arranger (including reasonable attorneys' fees and legal
expenses) incurred in connection with this Participation Agreement, the other
Operative Documents and the transactions contemplated hereby and thereby, (ii)
all costs and expenses (including reasonable attorneys' fees and legal expenses)
incurred by the Lessor, the Lessor Administrator, each Investor and the Arranger
in connection with any future amendments, supplements or waivers with respect to
any of the Operative Documents, whether or not such amendments, supplements or
waivers are ultimately entered into or given, (iii) all costs and expenses
(including reasonable attorneys' fees and legal expenses) incurred by the
Lessor, the Lessor Administrator, each Investor and the Arranger in connection
with any purchase, termination or replacement of any Property by the Lessee or
any other Person pursuant to the Master Lease and (iv) all costs and expenses
(including reasonable attorneys' fees and legal expenses) incurred by the
Lessor, the Lessor Administrator, any Investor or the Arranger in respect of (A)
the enforcement or protection of any of their rights or remedies against the
Lessee under any of the Operative Documents or (B) the negotiation of any
restructuring or "work-out" with the Lessee, whether or not consummated, of any
Obligations of the Lessee.
Section 9.2. Brokers' Fees and Stamp Taxes. The Lessee shall pay or cause
to be paid any brokers' fees and any and all stamp, transfer and other similar
taxes, fees and excise, if any, including any interest and penalties, which are
payable in connection with the transactions contemplated by this Participation
Agreement and the other Operative Documents.
Section 9.3. Lessor LLC Agreement and Related Obligations. The Lessee
shall pay, without duplication of any other obligation of the Lessee to pay any
such amount under the Operative Documents, before the due date thereof, all
costs, expenses and other amounts required to be paid by the Lessor under the
Lessor LLC Agreement or the Lessor Administration Agreement, or for which the
Lessor is responsible under the Lessor LLC Agreement or the Lessor
Administration Agreement, including (i) all direct costs and expenses related to
the activities of the Lessor (other than the fees and expenses of counsel
retained by each Shareholder with respect to the preparation and negotiation of
the Lessor LLC Agreement), including the fees and expenses of The Corporation
Trust Company, (ii) the nonrefundable administration fee payable to the Lessor
Administrator during the period commencing on the Acquisition Date and ending on
the Expiration Date in the amount of $10,000 per annum (payable annually in
advance) and (iii) the fees, costs and expenses of the U.S. Auditor (as defined
in the Lessor LLC Agreement) in connection with the preparation of records,
books and accounts for the Lessor. All amounts payable by the Lessee pursuant to
this Section 9.3 shall be paid directly to the Account.
ARTICLE X
OTHER COVENANTS AND AGREEMENTS
Section 10.1. Affirmative Covenants of the Lessee. The Lessee hereby
covenants and agrees with the Lessor, each Investor and the Arranger that so
long as this Participation Agreement shall remain in effect or any portion of
the Lease Balance or any other amounts payable hereunder or under the other
Operative Documents shall be unpaid, unless the Lessor shall otherwise consent
in writing, it will, and will cause each of the Lessee Subsidiaries to:
(a) Existence. Do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate existence, rights
and franchises, except as expressly permitted under Section 10.2(a);
provided, however, that nothing in this Section shall prevent the
abandonment or termination of the existence, rights or franchises of any
Subsidiary or any rights
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Participation Agreement
or franchises of the Lessee if such abandonment or termination is in the
best interests of the Lessee and is not disadvantageous in any material
respect to the Lessor or the Investors.
(b) Business and Properties. Comply in all material respects with
all applicable laws, rules, regulations and orders of any Governmental
Authority (including any of the foregoing relating to the protection of
the environment or to employee health and safety), whether now in effect
or hereafter enacted; and at all times maintain and preserve all property
material to the conduct of its business and keep such property in good
repair, working order and condition and from time to time make, or cause
to be made, all needful and proper repairs, renewals, additions,
improvements and replacements thereto necessary in order that the business
carried on in connection therewith may be properly conducted at all times.
(c) Financial Statements, Reports, etc.
(i) Furnish to the Lessor (whether submitted in hard copy or
by making publicly available), within 120 days after the end of each
fiscal year, its consolidated balance sheet and the related
consolidated statements of income and cash flows showing its
consolidated financial condition as of the close of such fiscal year
and the consolidated results of its operations during such year, all
audited by Deloitte & Touche or other independent certified public
accountants of recognized national standing selected by the Lessee
and accompanied by an opinion of such accountants to the effect that
such consolidated financial statements fairly present its financial
condition and results of operations on a consolidated basis in
accordance with GAAP (it being agreed that the requirements of this
paragraph may be satisfied by the delivery pursuant to paragraph
(iv) below of an annual report on Form 10-K containing the
foregoing);
(ii) Furnish to the Lessor (whether submitted in hard copy or
by making publicly available), within 90 days after the end of each
of the first three fiscal quarters of each fiscal year, its
consolidated balance sheet and related consolidated statements of
income, cash flow and stockholders' equity, showing its consolidated
financial condition as of the close of such fiscal quarter and the
consolidated results of its operations during such fiscal quarter
and the then elapsed portion of the fiscal year, all certified by
one of its Financial Officers as fairly presenting its financial
condition and results of operations on a consolidated basis in
accordance with GAAP, subject to normal year-end audit adjustments
(it being agreed that the requirements of this paragraph may be
satisfied by the delivery pursuant to paragraph (iv) below of a
quarterly report on Form 10-Q containing the foregoing);
(iii) Furnish to the Lessor, within 120 days after the end of
each fiscal year and within 90 days after the end of each of the
first three fiscal quarters of each fiscal year, a certificate of a
Financial Officer certifying that, to the best of such Financial
Officer's knowledge, no Lease Event of Default or Lease Default has
occurred or, if such a Lease Event of Default or Lease Default has
occurred, specifying the nature and extent thereof and any
corrective action taken or proposed to be taken with respect
thereto;
(iv) Furnish to the Lessor (whether submitted in hard copy or
by making publicly available), promptly after the same become
publicly available, copies of all reports on forms 10-K, 10-Q and
8-K filed by it with the SEC, or any Governmental Authority
succeeding to any of or all the functions of the SEC, or, in the
case of the Lessee, copies of all reports distributed to its
shareholders, as the case may be;
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Participation Agreement
(v) Furnish to the Lessor, promptly, from time to time, such
other information as the Lessor or any Investor shall reasonably
request; and
(vi) Furnish to the Lessor, within 120 days after the end of
each fiscal year and within 90 days after the end of each of the
first three fiscal quarters of each fiscal year, calculations of the
financial test referred to in Section 10.2(d).
The requirements of clauses (i), (ii) and (iv) above may be satisfied by
the posting of such documents on the Lessee's internet homepage located at
www.itt.com or the SEC's homepage on the internet; provided, that such
documents are in a format that is downloadable and printable.
(d) Insurance. Without limitation of the Lessee's obligations under
Article XIII of the Master Lease, keep its insurable properties adequately
insured at all times by financially sound and reputable insurers, and
maintain such other insurance, to such extent and against such risks,
including fire and other risks insured against by extended coverage, as is
customary with companies similarly situated and in the same or similar
businesses (it being understood that the Lessee and its Subsidiaries may
self-insure to the extent customary with companies similarly situated and
in the same or similar businesses).
(e) Obligations and Taxes. Pay and discharge promptly when due all
taxes, assessments and governmental charges imposed upon it or upon its
income or profits or in respect of its property, as well as all other
material liabilities, in each case before the same shall become delinquent
or in default and before penalties accrue thereon, unless and to the
extent that the same are being contested in good faith by appropriate
proceedings and adequate reserves with respect thereto shall, to the
extent required by GAAP, have been set aside.
(f) Litigation and Other Notices. Give to the Lessor and each
Investor prompt written notice of the following:
(i) the filing or commencement of, or any written threat or
written notice of intention of any person to file or commence, any
action, suit or proceeding which could reasonably be expected to
result in a Material Adverse Effect; and
(ii) any change in any of the Ratings.
(g) Maintaining Records; Access to Properties and Inspections.
Maintain financial records in accordance with GAAP and, upon reasonable
notice, at all reasonable times, permit any authorized representative
designated by the Lessor to visit and inspect the properties of the Lessee
and of any material Lessee Subsidiary and to discuss the affairs, finances
and condition of the Lessee and any material Lessee Subsidiary with a
Financial Officer of the Lessee and such other officers as the Lessee
shall deem appropriate.
(h) Use of Proceeds. Use the proceeds of the Property Costs paid by
the Lessor only for purposes not inconsistent with the Lessee's
representation set forth in Sections 8.1(b) and 8.1(g)(ii).
(i) Notice of Defaults. Promptly and in any event within fifteen
(15) days after the occurrence of each Lease Default or Lease Event of
Default continuing on the date of such statement, deliver to the Lessor
and each Investor a statement of a Responsible Officer of the Lessee
specifying the nature and extent of such Lease Default or Lease Event of
Default and the action (if any) that is proposed to be taken with respect
thereto.
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Participation Agreement
(j) Visitation and Inspection of the Properties. At any reasonable
time and from time to time, the Lessee shall permit the Lessor, any
Investor and any agents or representatives thereof to visit and inspect
the Properties upon reasonable notice to the Lessee (except that no such
notice will be required to be given during the existence and continuance
of a Lease Event of Default); provided, however, that (x) no such visit or
inspection shall include any "cleared areas" that require United States
government security clearances unless the applicable agent or
representative conducting the inspection has received such required
security clearances and (y) any visit or inspection by an individual that
is not a U.S. citizen or permanent resident will require notification of
the Lessee's security office and will be limited to plant-approved public
tour areas (the restrictions described in this proviso, collectively, the
"DOD Restrictions"). Any visit to a Property pursuant to this Section
10.1(j) shall be at the sole risk and expense of the visiting party unless
a Lease Event of Default has occurred and is continuing, in which case any
such visit shall be at the sole expense of the Lessee.
(k) Compliance with ISRA. If ISRA is applicable, the Lessee shall
take all actions, at its sole cost and expense, to maintain Compliance
with ISRA with respect to the Clifton Property. "Compliance with ISRA"
shall mean performance by the Lessee of any requirements imposed under
ISRA as a result of the Transactions. The ISRA process shall be deemed
completed upon the receipt by the Lessee of an NFA Letter, as defined by
N.J.S.A. 13:I K-9(e); with respect to the ISRA proceeding related to the
Transactions, and full satisfaction of any and all conditions or
requirements established by NJDEP in such NFA Letter.
(l) Title Abstract for Clifton Property; Title Insurance for
Properties.
(i) The Lessee will furnish to the Lessor, not later than
ninety (90) days after the Closing Date, a new Title Abstract for
the Clifton Property, which Title Abstract shall be dated down to a
date after the Closing Date and shall identify no Liens (including
any easements, covenants, leases, agreements or other items), claims
or lawsuits affecting the Clifton Property other than Permitted
Property Liens.
(ii) If the Lessee's senior unsecured debt rating falls below
"BBB - " (in the case of S&P) or below "Baa3" (in the case of
Moody's), or if either Moody's or S&P shall cease to provide a
rating for the Lessee's senior unsecured debt, then, in any such
case, the Lessee shall (x) notify the Lessor of such downgrade or
such cessation immediately and in any event no later than five (5)
Business Days after the occurrence thereof and (y) upon the request
of the Lessor, obtain a Title Insurance Policy within fifteen (15)
Business Days after such request with respect to each Property
specified by the Lessor that is then subject to the Master Lease (as
a Leased Property or as a Mortgaged Property) and had a Go Dark
Value in excess of $7,000,000. Each Title Insurance Policy required
under this Section 10.1(l)(ii) shall be in an amount not less than
the then outstanding Termination Base Amount of each applicable
Property.
Section 10.2. Negative Covenants. The Lessee covenants and agrees with the
Lessor and each Investor that so long as this Participation Agreement shall
remain in effect or any portion of the Lease Balance or any other amounts
payable hereunder or under the other Operative Documents shall be unpaid, unless
the Lessor shall otherwise consent in writing, it will not, and will not cause
or permit any of the Lessee Subsidiaries to:
(a) Consolidations, Mergers, and Sales of Assets. Consolidate or merge
with or into any other person or sell, lease or transfer all or substantially
all of its property and assets, or agree to do any of the foregoing, unless (i)
no Lease Default or Lease Event of Default has occurred and is continuing or
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Participation Agreement
would have occurred immediately after giving effect thereto, and (ii) in the
case of a consolidation or merger involving the Lessee and in which the Lessee
is not the surviving corporation or, in the case where the Lessee sells, leases
or transfers all or substantially all of its property and assets, the surviving
corporation or person purchasing, leasing or receiving such property and assets
is organized in the United States of America or a state thereof and agrees to be
bound by the terms and provisions applicable to the Lessee hereunder.
(b) Limitations on Liens. Without limitation of the Lessee's agreements
set forth in Section 11.1 of the Master Lease, create, suffer to be created, or
assume (directly or indirectly) any mortgage, pledge or other lien upon any
Principal Property, or permit any Restricted Subsidiary to create, suffer to be
created, or assume (directly or indirectly) any mortgage, pledge or other lien
upon any Principal Property; provided, however, that this covenant shall not
apply to any of the following:
(i) any mortgage, pledge or other lien on any Principal Property
hereafter acquired, constructed or improved by the Lessee or any
Restricted Subsidiary which is created or assumed to secure or provide for
the payment of any part of the purchase price of such property or the cost
of such construction or improvement, or any mortgage, pledge or other lien
on any Principal Property existing at the time of acquisition thereof;
provided, however, that the mortgage, pledge or other lien shall not
extend to any Principal Property theretofore owned by the Lessee or any
Restricted Subsidiary;
(ii) any mortgage, pledge or other lien on any Principal Property
existing on the date of this Participation Agreement as described in
Schedule 10.2(b);
(iii) any mortgage, pledge or other lien existing upon any property
of a company which is merged with or into or is consolidated into, or
substantially all the assets or shares of capital stock of which are
acquired by, the Lessee or a Restricted Subsidiary, at the time of such
merger, consolidation or acquisition; provided that such mortgage, pledge
or other lien does not extend to any other Principal Property, other than
improvements to the property subject to such mortgage, pledge or other
lien;
(iv) any pledge or deposit to secure payment of workers'
compensation or insurance premiums, or in connection with tenders, bids,
contracts (other than contracts for the payment of money) or leases;
(v) any pledge of, or other lien upon, any assets as security for
the payment of any tax, assessment or other similar charge by any
Governmental Authority or public body, or as security required by law or
governmental regulation as a condition to the transaction of any business
or the exercise of any privilege or right;
(vi) any pledge or lien necessary to secure a stay of any legal or
equitable process in a proceeding to enforce a liability or obligation
contested in good faith by the Lessee or a Restricted Subsidiary or
required in connection with the institution by the Lessee or a Restricted
Subsidiary of any legal or equitable proceeding to enforce a right or to
obtain a remedy claimed in good faith by the Lessee or a Restricted
Subsidiary, or required in connection with any order or decree in any such
proceeding or in connection with any contest of any tax or other
governmental charge; or the making of any deposit with or the giving of
any form of security to any governmental agency or any body created or
approved by law or governmental regulation in order to entitle the Lessee
or a Restricted Subsidiary to maintain self-insurance or to participate in
any fund in connection with workers' compensation, unemployment insurance,
old age pensions or
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Participation Agreement
other social security or to share in any provisions or other benefits
provided for companies participating in any such arrangement or for
liability on insurance of credits or other risks;
(vii) any mechanics', carriers', workmen's, repairmen's, or other
like liens, if arising in the ordinary course of business, in respect of
obligations which are not overdue or liability for which is being
contested in good faith by appropriate proceedings;
(viii) any lien or encumbrance on property in favor of the United
States of America, or of any agency, department or other instrumentality
thereof, to secure partial, progress or advance payments pursuant to the
provisions of any contract;
(ix) any mortgage, pledge or other lien securing any indebtedness
incurred in any manner to finance or recover the cost to the Lessee or any
Restricted Subsidiary of any physical property, real or personal, which
prior to or simultaneously with the creation of such indebtedness shall
have been leased by the Lessee or a Restricted Subsidiary to the United
States of America or a department or agency thereof at an aggregate
rental, payable during that portion of the initial term of such lease
(without giving effect to any options of renewal or extension) which shall
be unexpired at the date of the creation of such indebtedness, sufficient
(taken together with any amounts required to be paid by the lessee to the
lessor upon any termination of such lease) to pay in full at the stated
maturity date or dates thereof the principal of and the interest on such
indebtedness;
(x) any mortgage, pledge or other lien securing indebtedness of a
Restricted Subsidiary to the Lessee or a Restricted Subsidiary, provided
in the case of any sale or other disposition of such indebtedness by the
Lessee or such Restricted Subsidiary, such sale or other disposition shall
be deemed to constitute the creation of another mortgage, pledge or other
lien not permitted by this clause (x);
(xi) any mortgage, pledge or other lien affecting property of the
Lessee or any Restricted Subsidiary securing indebtedness of the United
States of America or a State thereof (or any instrumentality or agency of
either thereof) issued in connection with a pollution control or abatement
program required in the opinion of the Lessee to meet environmental
criteria with respect to manufacturing or processing operations of the
Lessee or any Restricted Subsidiary and the proceeds of which indebtedness
have financed the cost of acquisition of such program;
(xii) the renewal, extension, replacement or refunding of any
mortgage, pledge, lien, deposit, charge or other encumbrance permitted by
the foregoing provisions of this covenant upon the same property therefore
subject thereto, or the renewal, extension, replacement or refunding of
the amount secured thereby, provided that in each case such amount
outstanding at that time shall not be increased;
(xiii) any other mortgage, pledge or other lien, provided that
immediately after the creation or assumption of such mortgage, pledge or
other lien, the total of (x) the aggregate principal amount of
indebtedness of the Lessee and all Restricted Subsidiaries secured by all
mortgages, pledges and other liens created or assumed under the provisions
of this clause (xiii), plus (y) the aggregate amount of Capitalized
Lease-Back Obligations of the Lessee and Restricted Subsidiaries under the
entire unexpired terms of all leases entered into in connection with sale
and lease-back transactions which would have been precluded by the
provisions of Section 10.2(c) but for the satisfaction of the condition
set forth in clause (ii) thereof, shall not exceed an amount equal to 5%
of Consolidated Net Tangible Assets; or
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Participation Agreement
(xiv) any security interest or lien related to cash
collateralization of L/C Exposures (as defined in the Existing Credit
Agreement) pursuant to Article VI of the Existing Credit Agreement.
The lease of any property by the Lessee or a Restricted Subsidiary and rental
obligations with respect thereto (whether or not arising out of a sale and
lease-back of properties and whether or not in accordance with GAAP such
property is carried as an asset and such rental obligations are carried as
indebtedness on the Lessee's or a Restricted Subsidiary's balance sheet) shall
not in any event be deemed to be the creation of a mortgage, pledge or other
lien.
(c) Limitations on Sale and Leaseback Transactions. In the case of the
Lessee or any Restricted Subsidiary, enter into any arrangement with any person
providing for the leasing by the Lessee or any Restricted Subsidiary of any
Principal Property (except for temporary leases for a term of not more than
three years and except for leases between the Lessee and a Restricted Subsidiary
or between Restricted Subsidiaries), which property has been or is to be sold or
transferred by the Lessee or such Restricted Subsidiary to such person more than
120 days after the acquisition thereof or the completion of construction and
commencement of full operation thereof, unless either (i) the Lessee shall apply
an amount equal to the greater of the Fair Value of such property or the net
proceeds of such sale, within 120 days of the effective date of any such
arrangement, to the retirement (other than any mandatory retirement or by way of
payment at maturity) of Indebtedness or to the acquisition, construction,
development or improvement of properties, facilities or equipment used for
operating purposes which are, or upon such acquisition, construction,
development or improvement will be, a Principal Property or a part thereof; or
(ii) at the time of entering into such arrangement, such Principal Property
could have been subjected to a mortgage, pledge or other lien securing
indebtedness of the Lessee or a Restricted Subsidiary in a principal amount
equal to the Capitalized Lease-Back Obligations with respect to such Principal
Property under paragraph (xiii) of Section 10.2(b).
(d) Consolidated EBITDA to Consolidated Interest Expense. Permit the ratio
of (i) Consolidated EBITDA to (ii) Consolidated Interest Expense, each as
calculated for any period of the four prior consecutive fiscal quarters, to be
less than 3.75 to 1.0.
Section 10.3. Covenants of the Lessor. Each of the Lessor and each
Investor hereby severally agrees that, until payment in full of the Lease
Balance or such other time as the Master Lease shall have terminated with
respect to all of the Properties:
(a) it will not create, incur, assume or suffer to exist any Lessor
Lien attributable to it upon any Property, or upon the Master Lease, the
Lease Supplements or any other Operative Document; and
(b) it will, at its own cost and expense, promptly take such action
as may be necessary duly to discharge, or to cause to be discharged, all
Lessor Liens on the Properties and its rights under the Operative
Documents attributable to it; provided that such Person may contest any
such Lessor Lien in good faith and by appropriate proceedings so long as
such contest shall not involve (x) any enjoinment of, or interference
with, the Lessee's use, possession or operation of any Property, (y) any
risk of criminal liability being imposed on the Lessee or (z) any material
risk of foreclosure, forfeiture or loss of any Property or any material
part thereof.
Section 10.4. Release of Property. If the Lessee shall at any time (i)
purchase any affected Property pursuant to Section 15.1 of the Master Lease,
(ii) exercise its Termination Option with respect to any Property, (iii)
exercise its Replacement Option with respect to any Property or (iv) purchase
(or cause to be purchased) all of the Leased Properties in accordance with the
Master Lease, and in each case, the
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Participation Agreement
Lessee satisfies each of the obligations and conditions set forth in the Master
Lease for the release of a Property therefrom, then, upon payment by the Lessee
of all amounts required to be paid by the Lessee in connection therewith and the
application of such payments pursuant to Article VII, including all amounts due
and owing pursuant to Article XIII of this Participation Agreement, the
applicable purchased Property, Terminated Property or replaced Property (as the
case may be) shall be released from the Liens created by the Operative Documents
(including any Liens created by the Lease Supplement or other Lessor Mortgage
covering such Property), and the Lessor and each Investor shall, at the sole
cost and expense of the Lessee, execute and deliver such instruments as the
Lessee may reasonably request to effectuate and evidence such releases.
ARTICLE XI
CERTAIN AGREEMENTS
Section 11.1. Certain Restrictions on Access. The Lessor and each Investor
specifically acknowledge that (a) certain portions of the Properties may be
subject to (i) United States government export control regulations and (ii) the
National Industrial Security Policy Operating Manual procedures and (b)
notwithstanding any legal right of the Lessor and the Investors, access to the
Properties shall be limited as set forth in Section 10.1(j).
Section 11.2. Permitted Tax Disclosure. Notwithstanding anything herein to
the contrary, any party to this Participation Agreement (and any employee,
representative or other agent of any party to this Participation Agreement) may
disclose to any and all persons, without limitation of any kind: (a) the United
States federal income tax treatment and United States federal income tax
structure of the transactions contemplated by the Operative Documents and any
facts that may be relevant to understanding the United States federal or state
income tax treatment of such transactions ("tax treatment"); and (b) all
materials of any kind (including opinions or other tax analyses) that are
provided to such party (or any employee, representative or other agent of such
party) relating to such tax treatment and tax structure. However, such
information relating to the tax treatment or tax structure is required to be
kept confidential to the extent necessary to comply with any applicable federal
or state securities laws.
ARTICLE XII
TRANSFERS OF INVESTORS' AND LESSOR'S INTERESTS
Section 12.1. Assignments. (a) Each Investor may, without the prior
written consent of the Lessee, assign or otherwise transfer all or a portion of
its Lessor Interest to one or more transferees in accordance with Article X of
the Lessor LLC Agreement; provided that the name and address of the transferee
shall be provided to the Lessee at the time of the transfer for recordation in
its books and records. Upon the effectiveness of any such assignment or other
transfer, the transferee of such Lessor Interest shall become an "Investor" for
all purposes of the Operative Documents and, to the extent of such transfer, the
assigning Investor shall be relieved of its obligations hereunder to the extent
of the Lessor Interest being assigned or otherwise transferred.
(b) The Lessor may, with the prior written consent of the Lessee (which
consent shall not be unreasonably withheld or delayed), assign all of its rights
and obligations hereunder to any Person pursuant to an assignment agreement in
form and substance reasonably satisfactory to the Lessee; provided that the name
and address of such Person shall be provided to the Lessee at the time of the
transfer for recordation in its books and records. Any assignment hereunder
shall be effective on the
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Participation Agreement
effective date of the applicable assignment agreement. The Lessor shall make
such filings and give such notices as shall be necessary to evidence such
assignment in all public offices where filings have been made under the
Operative Documents, and the Lessee shall cooperate with the Lessor in effecting
such filings and notices. Upon the effectiveness of any such assignment, the
assignee shall become the "Lessor" for all purposes of the Operative Documents
and the assignor shall be relieved of its obligations hereunder. The Lessee
shall not be responsible for any costs or expenses incurred in connection with
an assignment of all or any of the Lessor's rights and obligations pursuant to
this Section 12.1, and the Lessor (or its assignee) shall pay all such costs and
expenses, including (x) any and all Taxes and fees incurred in recording,
registering or filing any document or instrument, or giving any notices in
connection with any such assignment and (y) all reasonable costs and expenses
(including legal expenses) incurred by the Lessee in connection with such
assignment. In connection with any assignment pursuant to this Section 12.1(b),
the Lessee will, promptly upon the request of the Lessor, execute and deliver an
acknowledgment of such assignment and the succession of the transferee to all
rights and obligations of the transferor Lessor under the Operative Documents in
such form as the transferee may reasonably request.
Section 12.2. Participations. Each Investor may sell, transfer, grant or
assign participations in all or any part of such Investor's interests and
obligations hereunder; provided that (i) such selling Investor shall remain an
"Investor", for all purposes under the Operative Documents (such selling
Investor's obligations under the Operative Documents remaining unchanged) and
the sub-participant shall not constitute an Investor, (ii) no such
sub-participant shall have, or be granted, rights to approve any amendment or
waiver relating to the Operative Documents except to the extent any such
amendment or waiver would (A) reduce the principal of or rate of interest on or
fees in respect of any investment in which the sub-participant is participating,
(B) postpone the date fixed for any payment of principal (including extension of
the Expiration Date or the date of any mandatory prepayment), interest or fees
in which the sub-participant is participating, or (C) release all or
substantially all of the collateral or guarantees (except as expressly provided
in the Operative Documents) supporting any of the investment in which the
sub-participant is participating, (iii) sub-sub-participations by the
sub-participant (except to an Affiliate, parent company or Affiliate of a parent
company of the sub-participant) shall be prohibited and (iv) written notice of
each such participation is given to the Lessee and the name and address of the
sub-participant shall be provided to the Lessee at the time of the participation
for recordation in its books and records. In the case of any such participation,
the sub-participant shall not have any rights under the Operative Documents (the
sub-participant's rights against the selling Investor in respect of such
participation to be those set forth in the participation agreement with such
Investor creating such participation) and all amounts payable by the Lessee
hereunder shall be determined as if such Investor had not sold such
participation; provided, however, that such sub-participant shall be entitled to
receive additional amounts under Sections 13.7, 13.8 and 13.9 on the same basis
as if it were an Investor (but only to the extent that the Investor would have
been entitled to receive such additional amounts with respect to the interest
participated had it not sold such participation). The Lessee shall not be
responsible for any costs or expenses incurred by any Investor in connection
with a sale, transfer, grant or assignment of participations pursuant to this
Section 12.2.
Section 12.3. Withholding Taxes; Pledge Under Regulation A. (a)If the
assignee of any Investor pursuant to Section 12.1 or the subparticipant of any
Investor pursuant to Section 12.2 is (i) not a citizen or resident of the United
States of America, (ii) not a corporation, partnership or other entity created
or organized in or under the laws of the United States of America (or any
jurisdiction thereof), or (iii) not an estate or trust that is subject to
federal income taxation regardless of the source of its income (each, a
"Non-U.S. Transferee"), then such Non-U.S. Transferee shall deliver upon the
request of the Lessee (or cause to be delivered) to each of the Lessor and the
Lessee one of the following properly completed and signed U.S. tax forms: (i) an
IRS form W-8ECI (or successor applicable form) or (ii) an IRS form W-8BEN (or
successor applicable form) certifying its foreign status and, if applicable,
claiming
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Participation Agreement
an exemption under a U.S. tax treaty for all income payable to such Non-U.S.
Transferee under the Operative Documents. If a Non-U.S. Transferee fails, upon
request by the Lessee, to deliver one of the above valid forms, the Lessee may
(notwithstanding Section 13.6) withhold the applicable amount of U.S. income tax
on payments it makes to (or to the Lessor on behalf of) the Non-U.S. Transferee,
and the Non-U.S. Transferee shall not be entitled to indemnification under
Section 13.4 for the U.S. withholding taxes so imposed. If the assignee of any
Investor pursuant to Section 12.1 or the subparticipant of any Investor pursuant
to Section 12.2 is not a Non-U.S. Transferee (each, a "U.S. Transferee"), then
such U.S. Transferee shall deliver (or cause to be delivered) to each of the
Lessor and the Lessee a properly completed and signed U.S. tax form W-9.
(a) The Lessor and each Investor may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Article
XII, disclose to such assignee or participant or proposed assignee or
participant, any information relating to the Lessee or the transactions under
the Operative Documents, subject to appropriate confidentiality requirements
relating to such information.
(b) Anything in this Article XII to the contrary notwithstanding, any
Investor may without the consent of Lessee or the Lessor, assign and pledge all
or any portion of its investment in the transactions contemplated hereby to any
Federal Reserve Bank, the United States Treasury or to any other financial
institution as collateral security pursuant to Regulation A of the F.R.S. Board
and any operating circular issued by the Federal Reserve System and/or the
Federal Reserve Bank or otherwise; provided, any payment by the Lessee for the
benefit of the assigning or pledging Investor shall be deemed to satisfy the
Lessee's obligations with respect thereto.
ARTICLE XIII
INDEMNIFICATION
Section 13.1. General Indemnification. (a) The Lessee agrees to assume
liability for, and to indemnify, protect, defend, save and keep harmless each
Indemnitee, on an After Tax Basis, from and against any and all Claims that may
be imposed on, incurred by or asserted against such Indemnitee (whether because
of action or omission by such Indemnitee or otherwise, except as set forth in
Section 13.1(b) below), whether or not such Indemnitee shall also be indemnified
as to any such Claim by any other Person and whether or not such Claim arises or
accrues prior to the Documentation Date or after the Expiration Date, in any way
relating to or arising out of the transactions contemplated by this
Participation Agreement and the other Operative Documents, including:
(i) any of the Operative Documents and any amendment, modification
or waiver in respect thereof;
(ii) the Properties or any part thereof or interest therein;
(iii) the purchase, design, construction, preparation, installation,
inspection, delivery, nondelivery, acceptance, rejection, ownership,
management, possession, operation, rental, lease, sublease, repossession,
maintenance, repair, alteration, modification, addition or substitution,
storage, transfer of title, redelivery, use, financing, refinancing,
disposition, operation, condition, sale (including any sale pursuant to
Section 16.2(e) or 16.2(g) of the Master Lease or any sale, purchase or
termination pursuant to Article XV, XVIII or XIX of the Master Lease),
return or other disposition of all or any part or any interest in the
Properties or the imposition of any Lien thereon, including: (1) Claims or
penalties arising from any violation of law or in tort (on the basis of
strict liability or otherwise), (2) latent or other defects, whether or
not discoverable, (3)
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Participation Agreement
any Claim based upon a violation or alleged violation of the terms of any
restriction, easement, condition or covenant or other matter affecting
title to any Property, (4) the making of any Modifications in violation of
any standards imposed by any insurance policies required to be maintained
by Lessee or Lessee pursuant to the Lease which are in effect at any time
with respect to any Property or any part thereof, (5) any Claim for
patent, trademark or copyright infringement with respect to any Property,
and (6) Claims arising from any public improvements with respect to any
Property resulting in any change or special assessments being levied
against any Property or any plans to widen, modify or realign any street
or highway adjacent to any Property, or any Claim for utility "tap-in"
fees;
(iv) the breach or, to the extent a Claim actually arises as a
result thereof, the alleged breach, by the Lessee of any covenant,
representation or warranty made by it in any Operative Document or any
certificate required to be delivered by it by any Operative Document;
(v) the retaining or employment of any broker, finder or financial
advisor (other than the Arranger) by the Lessee to act on its behalf in
connection with this Participation Agreement or any other Operative
Document;
(vi) the existence of any Lien on or with respect to any Property,
any Improvements, any Basic Rent or Supplemental Rent, title thereto, or
any interest therein including any Liens which arise out of the
possession, use, occupancy, construction, repair or rebuilding of any
Property or by reason of labor or materials furnished or claimed to have
been furnished to the Lessee, or any of its contractors or agents or by
reason of the financing of any personalty or equipment purchased or leased
by the Lessee or Modifications constructed by the Lessee;
(vii) any ground lease, sublease or any other lease or arrangement
(including any structure involving a local tax abatement structure or
acquisition of equity interests in entities which directly or indirectly
own a Property) pursuant to which the Lessor acquires its interest in any
Property; and
(viii) any failure by the Lessee to pay all amounts of Rent as and
when the same become due, including any Claims incurred by the Lessor in
connection with any draw made by it on an overdraft facility for the
purpose of paying amounts owing to any other Person.
(b) Notwithstanding the terms of clause (a) of this Section 13.1, the
Lessee shall not be required to indemnify any Indemnitee under this Section 13.1
for any Claim to the extent arising or resulting from (1) the willful misconduct
or gross negligence of such Indemnitee (it being understood that the Lessee
shall be required to indemnify an Indemnitee even if the ordinary (but not
gross) negligence of such Indemnitee caused or contributed to such Claim), (2) a
breach by such Indemnitee of any agreement entered into in connection with the
assignment or participation of any interest of such Indemnitee under the
Operative Documents, (3) acts or events occurring in respect of any Property in
the period after the Lessee shall have returned such Property to the Lessor in
full compliance with all requirements of the Master Lease to the extent not
resulting from any act or event otherwise covered by this indemnity that
occurred during the period that the Lessee leased such Property, (4) the failure
of such Indemnitee to comply with laws applicable to banks or their affiliates
generally or the failure of such Indemnitee to file any notice, report, filing
or other document required by any Governmental Authority regulating banks or
their affiliates in connection with such Indemnitee's execution of, and
participation in the transactions contemplated by, the Operative Documents, (5)
Taxes or Impositions (it being understood and agreed by the parties hereto that
all Claims relating to Taxes or Impositions shall be governed solely by the
provisions of Section 13.4) or (6) as to the Lessor, the failure of the Lessor
to distribute in accordance with this Participation Agreement and the Lessor LLC
Agreement (as applicable) any amounts received
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Participation Agreement
and distributable by it thereunder so long as such amounts were received in
accordance with the Operative Documents. It is expressly understood and agreed
that the indemnity provided for herein shall survive the expiration or
termination of and shall be separate and independent from any remedy under the
Lease or any other Operative Document.
Section 13.2. Environmental Indemnity. Without limitation of the other
provisions of this Article XIII, the Lessee hereby agrees (at all times, whether
or not the Lease Term shall have commenced) to indemnify, hold harmless and
defend each Indemnitee from and against any and all Claims (including
Governmental Authority Claims and third party Claims for personal injury or real
or personal property damage), losses (including, to the extent the Termination
Base Amount therefor has not been fully paid, any loss of value of the Property
related thereto), damages (including any consequential damages), liabilities,
fines, penalties, charges, administrative and judicial proceedings (including
informal proceedings) and orders, judgments, Remedial Action, requirements,
enforcement actions of any kind, and all reasonable and documented costs and
expenses incurred in connection therewith (including reasonable and documented
attorneys' and/or paralegals' fees and expenses), including all costs incurred
in connection with any investigation or monitoring of site conditions or any
clean-up, remedial, removal or restoration work by any federal, state or local
Governmental Authority, in any way relating to or arising in whole or in part,
out of (or alleged to in any way relate to or arise in whole or in part out of):
(a) the presence on or under any Property of any Hazardous
Materials, or any Releases of any Hazardous Materials on, under, from or
onto any Property;
(b) any activity, including construction, carried on or undertaken
on or off any Property, and whether by the Lessee or any predecessor in
title or any employees, agents, contractors or subcontractors of the
Lessee or any predecessor in title, or any other Persons (including such
Indemnitee), in connection with the handling, treatment, removal, storage,
decontamination, clean-up, transport or disposal of any Hazardous
Materials that at any time are located or present on or under or that at
any time migrate, flow, percolate, diffuse or in any way move onto or
under any Property;
(c) loss of or damage to any property or the environment (including
clean-up costs, response costs, remediation and removal costs, costs of
corrective action, costs of financial assurance, fines and penalties and
natural resource damages), or death or injury to any Person, and all
expenses associated with the protection of wildlife, aquatic species,
vegetation, flora and fauna, and any mitigative action required by or
under Environmental Laws arising from any Property or related thereto;
(d) any Claim concerning lack of compliance with Environmental Laws
at any Property, or any act or omission causing an Environmental Violation
that requires remediation or would allow any Governmental Authority to
record a Lien on the land records of any Property; or
(e) any residual contamination on or under any Land, or affecting
any natural resources, and to any contamination of any property or natural
resources arising in connection with the generation, use, handling,
storage, transport or disposal of any such Hazardous Materials on or
relating to any Land, and irrespective of whether any of such activities
were or will be undertaken in accordance with applicable laws,
regulations, codes and ordinances,
provided, however, that the Lessee shall not be required to indemnify any
Indemnitee under this Section 13.2 for (i) any Claim to the extent resulting
from the willful misconduct or gross negligence of such Indemnitee (it being
understood that the Lessee shall be required to indemnify an Indemnitee even if
the ordinary (but not gross) negligence of such Indemnitee caused or contributed
to such Claim) or
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Participation Agreement
(ii) any Claim to the extent attributable solely to acts, circumstances or
events occurring in the period after the Lessee shall have returned all of the
Leased Properties to the Lessor in full compliance with the provisions of the
Operative Documents to the extent not resulting from any act or event otherwise
covered by this indemnity that occurred during the period that the Lessee leased
the Leased Properties. It is expressly understood and agreed that the indemnity
provided for herein shall survive the expiration or termination of and shall be
separate and independent from any remedy under the Lease or any other Operative
Document.
Section 13.3. Proceedings in Respect of Claims. In case any action, suit
or proceeding shall be brought against any Indemnitee in respect of Claims
indemnifiable under Sections 13.1 or 13.2, such Indemnitee shall promptly notify
the Lessee of the commencement thereof, and the Lessee shall be entitled, at the
Lessee's expense, to participate in, and, to the extent that the Lessee desires
to, assume and control the defense thereof; provided, however, that if the
Lessee shall have exercised its rights to control the defense of such Claim to
the exclusion of the applicable Indemnitee, the Lessee shall have acknowledged
in writing its obligation to fully indemnify such Indemnitee in respect of such
action, suit or proceeding, and the Lessee shall keep such Indemnitee fully
apprised of the status of such action, suit or proceeding and shall provide such
Indemnitee with all information with respect to such action, suit or proceeding
as such Indemnitee shall reasonably request, and provided, further, that the
Lessee shall not be entitled to assume and control the defense of any such
action, suit or proceeding if and to the extent that, (A) in the reasonable
opinion of such Indemnitee's counsel, (x) such action, suit or proceeding
involves any risk of imposition of criminal liability or will involve a material
risk of the sale, forfeiture or loss of, or the creation of any Lien (other than
a Permitted Property Lien) on the Properties or any part thereof or any
interference with the payment of Rent unless, in the case of civil liability
only, the Lessee shall have posted a bond or other security reasonably
satisfactory to the relevant Indemnitees in respect of such risk or (y) the
control of such action, suit or proceeding would involve an actual or potential
conflict of interest, (B) such proceeding involves Claims not fully indemnified
by the Lessee that the Lessee and the Indemnitee have been unable to sever from
the indemnified claim(s), or (C) a Lease Event of Default has occurred and is
continuing. The Indemnitee will join in the Lessee's efforts to sever such
action. In the event that an Indemnitee has assumed control of any such
proceeding, it shall keep the Lessee fully apprised of the status of such
action, suit or proceeding and shall provide the Lessee with all information
with respect to such action, suit or proceeding as the Lessee may reasonably
request. The Indemnitee may participate at its own expense and with its own
counsel in any proceeding conducted by the Lessee in accordance with the
foregoing. The Lessee shall not enter into any settlement or other compromise
with respect to any Claim which is entitled to be indemnified under Section 13.1
or 13.2 without prior written consent of the Indemnitee, which consent shall not
be unreasonably withheld in the case of a money settlement not involving an
admission of liability of such Indemnitee.
Each Indemnitee shall at the expense of the Lessee supply the Lessee with
such information and documents reasonably requested by the Lessee as are
necessary or advisable for the Lessee to participate in any action, suit or
proceeding to the extent permitted by Section 13.1 or 13.2. Unless a Lease Event
of Default shall have occurred and be continuing, no Indemnitee shall enter into
any settlement or other compromise with respect to any Claim that is entitled to
be indemnified under Section 13.1 or 13.2 without the prior written consent of
the Lessee, unless such Indemnitee waives its rights to be indemnified under
Section 13.1 or 13.2, as the case may be, with respect to such Claim.
Upon payment in full of any Claim by the Lessee pursuant to Section 13.1
or 13.2 to or on behalf of an Indemnitee, the Lessee, without any further
action, shall be subrogated to any and all claims that such Indemnitee may have
relating thereto (other than claims in respect of insurance policies maintained
by such Indemnitee at its own expense), and such Indemnitee shall execute such
instruments of assignment and conveyance, evidence of claims and payment and
such other documents, instruments and agreements as may be necessary to preserve
any such claims and otherwise cooperate with the Lessee and
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Participation Agreement
give such further assurances as are necessary or advisable to enable the Lessee
vigorously to pursue such claims.
Any amount payable to an Indemnitee pursuant to Section 13.1 or 13.2 shall
be paid to such Indemnitee promptly upon receipt of a written demand therefor
from such Indemnitee, accompanied by a written statement describing in
reasonable detail the basis for such indemnity and the computation of the amount
so payable.
Section 13.4. General Tax Indemnity.
(a) Indemnification. Without limitation of the rights of any Tax
Indemnitee under any other indemnification provision of this Article XIII, the
Lessee shall pay and assume liability for, and does hereby agree to indemnify,
protect and defend each Property and all Tax Indemnitees, and hold them harmless
against, all Impositions on an After Tax Basis. The determination of all
Impositions to be paid or indemnified against by the Lessee on an After Tax
Basis shall be made (in good faith) by the Tax Indemnitee. Such determination
shall state with reasonable clarity and detail the basis for such determination
and shall, absent manifest error, be final and conclusive and binding on the
Lessee.
(b) Contests. If any claim shall be made against any Tax Indemnitee or if
any proceeding shall be commenced against any Tax Indemnitee (including a
written notice of such proceeding) for any Imposition as to which the Lessee may
have an indemnity obligation pursuant to this Section 13.4, or if any Tax
Indemnitee shall determine that any Imposition to which the Lessee may have an
indemnity obligation pursuant to this Section 13.4 may be payable, such Tax
Indemnitee shall promptly (and in any event, within thirty (30) days) notify the
Lessee in writing (provided that failure to so notify the Lessee within thirty
(30) days shall not alter such Tax Indemnitee's rights under this Section 13.4
except to the extent such failure precludes the ability to conduct a contest of
the applicable Impositions) and, so long as no Lease Default or Lease Event of
Default has occurred and is continuing, shall not take any action with respect
to such claim, proceeding or Imposition without the written consent of the
Lessee (such consent not to be unreasonably withheld or unreasonably delayed)
for thirty (30) days after the receipt of such notice by the Lessee; provided,
however, that in the case of any such claim or proceeding, if such Tax
Indemnitee shall be required by Applicable Law to take action prior to the end
of such thirty (30) day period, such Tax Indemnitee shall, in such notice to the
Lessee, so inform the Lessee and such Tax Indemnitee shall not take any action
with respect to such claim, proceeding or Imposition without the consent of the
Lessee (such consent not to be unreasonably withheld or unreasonably delayed)
for 10 days after the receipt of such notice by the Lessee unless such Tax
Indemnitee shall be required by Applicable Law to take action prior to the end
of such ten (10) day period, provided, further, however, that the failure of the
Tax Indemnitee to give notice referred to in this sentence shall not diminish
Lessee's obligations hereunder except to the extent that such failure precludes
Lessee from contesting such claim.
The Lessee shall be entitled for a period of thirty (30) days from receipt
of such notice from such Tax Indemnitee (or such shorter period as such Tax
Indemnitee has notified the Lessee is required by Applicable Law for such Tax
Indemnitee to commence such contest), to request in writing that such Tax
Indemnitee contest the Imposition, at the Lessee's sole expense. If (x) such
contest can be pursued in the name of the Lessee and independently from any
other proceeding involving a Tax liability of such Tax Indemnitee for which the
Lessee has not agreed to indemnify such Tax Indemnitee, (y) such contest must be
pursued in the name of such Tax Indemnitee, but can be pursued independently
from any other proceeding involving a Tax liability of such Tax Indemnitee for
which the Lessee has not agreed to indemnify such Tax Indemnitee or (z) such Tax
Indemnitee so requests, then the Lessee shall be permitted to control the
contest of such claim, provided that in the case of any such contest, if such
Tax Indemnitee reasonably determines that such contest by the Lessee could have
an adverse impact on the business or operations of such Tax Indemnitee and
provides a written explanation to the Lessee of such
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determination, such Tax Indemnitee may elect to control or reassert control of
the contest. In all other claims relating to Impositions requested to be
contested by the Lessee, such Tax Indemnitee shall control the contest of such
claim, acting through counsel reasonably acceptable to the Lessee.
Notwithstanding anything to the contrary contained herein, in no event shall the
Lessee be permitted to pursue or continue any contest (or such Tax Indemnitee be
required to pursue or continue any contest) of any Imposition or claim thereof
through any action, suit or proceeding (A) if such Tax Indemnitee provides the
Lessee with a legal opinion of independent counsel reasonably acceptable to the
Lessee that such action, suit or proceeding involves a risk of imposition of
criminal liability or could involve a material risk of the sale, forfeiture or
loss of, or the creation of any Lien (other than a Permitted Property Lien) on
any Property or any part thereof or any interference with the payment of Rent
unless, with respect to civil liability only, the Lessee shall have posted a
bond or other security reasonably satisfactory to the relevant Tax Indemnitee in
respect of such risk, (B) if any Lease Default or Lease Event of Default has
occurred and is continuing, (C) unless the Lessee shall have agreed to pay and
shall pay to such Tax Indemnitee on demand and on an After-Tax Basis all
reasonable out-of-pocket costs, losses and expenses that such Tax Indemnitee may
incur in connection with contesting such Imposition or claim thereof, including
all reasonable legal, accounting and investigatory fees and disbursements as
well as the Impositions which are the subject of such contest to the extent the
contest is unsuccessful, or (D) if such contest shall involve the payment of a
Tax prior to the contest, unless the Lessee shall provide to such Tax Indemnitee
an interest-free advance in an amount equal to, on an After Tax Basis, the
Imposition that the Tax Indemnitee is so required to pay or (E) unless prior to
commencing any contest the Lessee shall have acknowledged its liability for the
Imposition (if and to the extent that the Tax Indemnitee or Lessee, as the case
may be, shall not prevail in the contest in respect of the Imposition). In
addition, for Tax Indemnitee controlled contests and claims contested in the
name of a Tax Indemnitee, no contest of any Imposition shall be required unless:
(A) the amount of the potential indemnity (taking into account all similar or
logically related claims that have been or are likely to be raised in any audit
involving any or all of such Tax Indemnitees for which the Lessee may be liable
to pay an indemnity under this Section 13.4(b)) exceeds $100,000 and (B) if
requested by such Tax Indemnitee, the Lessee shall have provided to such Tax
Indemnitee at the Lessee's sole expense, an opinion of independent counsel
selected by the Lessee and reasonably acceptable to the Tax Indemnitee that a
reasonable basis exists to contest such Imposition (or, in the case of an appeal
from an adverse judicial determination, that there is substantial authority for
a reversal or favorable modification of such decision of such appeal). In no
event shall a Tax Indemnitee be required to appeal an adverse judicial
determination to the United States Supreme Court. In addition, a Tax Indemnitee
shall not be required to contest any claim in its name (or that of an Affiliate)
if the subject matter thereof 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 13.4(b), unless there shall have been
a change in law and the Tax Indemnitee shall have received, at the Lessee's
expense, an opinion of independent tax counsel selected by the Lessee and
reasonably acceptable to the Tax Indemnitee stating that, as a result of such
change in law, it is more likely than not that the Tax Indemnitee will prevail
in such contest.
The party conducting the contest of an Imposition shall consult in good
faith with the other party and its counsel with respect to such contest (or
claim for refund) but the decisions regarding what actions are to be taken with
respect to such contest shall be made by the controlling party in its sole
judgment. In addition, the party controlling the contest shall keep the
non-controlling party reasonably informed as to the progress of the contest, and
shall provide the noncontrolling party with a copy of (or appropriate excerpts
from) any reports or claims issued by the relevant Governmental Authority to the
controlling party thereof, relating to such contest.
Each Tax Indemnitee shall, at the Lessee's sole expense, supply the Lessee
with such information and documents reasonably requested by the Lessee as are
necessary or advisable for the Lessee to participate in any action, suit or
proceeding to the extent permitted by this Section 13.4(b), provided,
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however, that such Tax Indemnitee shall not be required to provide to the Lessee
copies of (i) any information, documentation or materials that it reasonably
deems to be confidential or proprietary or (ii) its tax returns or any other
information, documentation or materials in respect of such Tax Indemnitee's
financial position. Notwithstanding anything in this Section 13.4(b) to the
contrary, so long as no Lease Event of Default shall have occurred and be
continuing, no Tax Indemnitee shall enter into any settlement or other
compromise or fail to appeal an adverse determination with respect to any claim
for which it is entitled to be indemnified under this Section 13.4 (and with
respect to which contest is required under this Section 13.4(b)) without the
prior written consent of the Lessee (which shall not be unreasonably withheld or
delayed), unless such Tax Indemnitee waives its right to be indemnified under
this Section 13.4 with respect to such claim pursuant to the next paragraph.
Notwithstanding anything contained herein to the contrary, a Tax
Indemnitee will not be required to contest or continue to contest (and the
Lessee shall not be permitted to contest or continue to contest) a claim with
respect to any Imposition and shall be permitted to settle or commence any such
claim without the consent of Lessee if such Tax Indemnitee shall waive its right
to indemnification under this Section 13.4 with respect to such claim (and any
claim with respect to such year or any other taxable year the contest of which
is materially adversely affected as a result of such waiver).
(c) Payments. Any Imposition indemnifiable under this Section 13.4 shall
be paid when due directly to the applicable taxing authority if such direct
payment is practicable and permitted. If direct payment to the applicable taxing
authority is not permitted or is otherwise not made, any amount payable to a Tax
Indemnitee pursuant to this Section 13.4 shall be paid to the relevant Tax
Indemnitee within twenty (20) days after receipt of a written demand therefor
from such Tax Indemnitee, which demand shall be accompanied by a written
statement describing in reasonable detail the amount so payable, but in no event
shall the Lessee be required to pay such reimbursement prior to fifteen (15)
days before the date that the relevant Taxes are due. Any payments made pursuant
to this Section 13.4 shall be made directly to such Tax Indemnitee entitled
thereto or the Lessee, as the case may be, in immediately available funds at
such bank or to such account as specified by the payee in written directions to
the payor, or, if no such direction shall have been given, by check of the payor
payable to the order of the payee by certified mail, postage prepaid at its
address as set forth in Schedule II hereto. Upon the request of any Tax
Indemnitee with respect to Imposition that the Lessee is required to pay, the
Lessee shall furnish to such Tax Indemnitee the original or a certified copy of
a receipt for the Lessee's payment of such Tax or such other evidence of payment
as is reasonably acceptable to such Tax Indemnitee.
(d) Reports. In the case of any report, return or statement required to be
filed by the Lessor with respect to any Impositions that are subject to
indemnification under this Section 13.4, the Lessee shall promptly notify the
Lessor of such requirement and, at the Lessee's sole expense (i) if the Lessee
is permitted by Applicable Law, timely file such report, return or statement in
its own name and send a copy of such report, return or statement to the Lessor,
or (ii) if such report, return or statement is required to be in the name of or
filed by the Lessor, or the Lessor otherwise requests that such report, return
or statement be filed in the name of or by the Lessor, the Lessee shall prepare
and finish such report, return or statement in such manner as shall be
satisfactory to the Lessor and shall send the same to the Lessor for filing no
later than fifteen (15) days prior to the due date therefor. In any case in
which any Tax Indemnitee will file any such report, return or statement with
respect to any Impositions that are subject to indemnification under this
Section 13.4, the Lessee shall, upon written request of such Tax Indemnitee,
provide such Tax Indemnitee with such information as is reasonably necessary to
allow such Tax Indemnitee to file such report, return or statement.
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Participation Agreement
Section 13.5. Title Representation and Indemnity.
(a) The Lessee represents and warrants to the Lessor, each Investor and
the Arranger that: (i) the Seller of each Leased Property is the sole fee owner
thereof and the Lessee is the sole fee owner of each Mortgaged Property, (ii)
none of the Properties are encumbered or affected by any Liens, including any
mortgages or encumbrances, or any easements, covenants, leases, agreements,
restrictions, purchase options, rights of first offer (other than the right of
first offer with respect to the Clifton Property that is described on Schedule
10.2(b) hereto), reversionary rights or other interests, other than Permitted
Property Liens, (iii) all appurtenances to each Property, including any and all
easements, access and other rights appropriate for use and occupancy of such
Property for commercial and other purposes are also owned by the Seller thereof
free and clear of any third-party rights or claims, (iv) there are no mechanics,
tax, judgment or other Liens affecting any of the Properties and all real estate
and other Taxes with regard to each Property are current and fully paid and (v)
there has not been any work performed or materials supplied to any Property
prior to the date hereof which has not been fully paid for and which could give
rise to the filing of any mechanic's liens against any Property. With regard to
third-party leases, the Lessee also represents and warrants to the Lessor that
any leases still appearing in the public records relative to any of the
Properties have expired or been terminated and that the tenants named therein
have no further rights with respect to the applicable Property or Properties.
(b) In furtherance of the representations and warranties set forth in
clause (a) above and in lieu of title insurance, the Lessee hereby indemnifies
and holds the Lessor, the Investors and the Arranger harmless from any and all
losses, costs and expenses and any diminution in the value of the Lessor's
interest in the Properties that might result from (x) any of the foregoing
representations and warranties being incorrect or inaccurate, either now or in
the future, or (y) any of the following: (i) the invalidity or unenforceability
of the lien of any Lessor Mortgage, (ii) any lack of priority of the Lien of any
Lessor Mortgage over any other Lien encumbering any Property, (iii) any
violation, variation, encroachment or adverse circumstance that would have been
disclosed by an accurate Survey, including any discrepancy which would have been
disclosed with respect to the legal description of any Leased Property attached
to Exhibit A of the Lease Supplement therefor, or (iv) the existence of any Lien
on any Property, including any Permitted Property Lien (other than a Permitted
Property Lien of the type described in clause (i), clause (vii) or clause (viii)
of the definition thereof), it being understood that the Lessee's liability with
respect to the indemnification set forth in this Section 13.5(b) is absolute,
joint and several and shall include both intentional and unintentional
misrepresentations and breaches. In addition to the foregoing, the Lessee agrees
that the representations embodied in Section 13.5(a) are continuing in nature,
and the Lessee covenants and agrees that it shall not cause, permit or allow any
act to occur or any document to be executed which is or may be at variance with
the representations and warranties set forth in Section 13.5(a). In addition,
the Lessee agrees that the indemnification embodied in this Section 13.5(b)
shall also apply to any breach of the foregoing covenant.
Section 13.6. Withholding Taxes, etc.
(a) Payments Free of Taxes.
(i) All payments made by the Lessee under this Participation
Agreement, the Master Lease and the other Operative Documents shall be
made free and clear of, and without deduction or withholding for or on
account of, any present or future income (but excluding those Taxes
described in clauses (i) and (ii) of the definition of Impositions),
excise, stamp, transfer or franchise taxes and other taxes, fees, duties,
withholdings or other charges of any nature whatsoever (including interest
and penalties) now or hereafter imposed (the "Withholding Taxes") by any
Governmental Authority or taxing authority domestic or foreign (the
"Taxing Authority"), whether or not such Withholding Taxes were correctly
or legally asserted. If any
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Participation Agreement
Withholding Taxes are required to be withheld or deducted from any amounts
payable to, or for the benefit of, any Tax Indemnitee or any Affiliate
thereof under this Participation Agreement or the other Operative
Documents, the amounts so payable to such Tax Indemnitee shall be
increased to the extent necessary to yield on an After Tax Basis such
amounts payable under this Participation Agreement and the other Operative
Documents at the rates or in the amounts specified in this Participation
Agreement and the other Operative Documents. Whenever any Withholding
Taxes are payable by the Lessee with respect to any payment to or for the
account of a particular Tax Indemnitee, as promptly as possible
thereafter, the Lessee shall send to such Tax Indemnitee a certified copy
of an original official receipt received by the Lessee showing payment
thereof. If the Lessee fails to pay any Withholding Taxes when due to the
appropriate taxing authority or fails to remit to the Tax Indemnitee
required receipts or other required documentary evidence, the Lessee shall
indemnify the Tax Indemnitee for any obligations that may become payable
by the Tax Indemnitee as a result of any such failure.
(ii) All payments made by the Lessor under this Participation
Agreement and the other Operative Documents to any other Tax Indemnitee
shall be made net of any deduction or withholding for Withholding Taxes.
If any Withholding Taxes are required to be withheld or deducted from any
amounts payable by the Lessor to, or for the benefit of, any other Tax
Indemnitee under this Participation Agreement or any other Operative
Document, then the Lessee shall indemnify and pay such Tax Indemnitee on
an After Tax Basis an amount necessary to yield such Tax Indemnitee (after
payment of all Withholding Taxes) such amounts payable under this
Participation Agreement and the other Operative Documents at the rates or
in the amounts specified in this Participation Agreement and the other
Operative Documents.
(iii) Moreover, if any Taxes (the "Indirect Withholding Taxes") in
the nature of Withholding Taxes are directly asserted by any Taxing
Authority against any of the Lessor or any Investor with respect to any
payment received by such Person, such Person may pay such Taxes and the
Lessee will pay directly to such Person (which payment shall constitute
Supplemental Rent hereunder), within fifteen (15) Business Days after
receipt of a written demand therefor accompanied by a written statement
describing in reasonable detail the amount so payable from the Lessor or
such Investor (as applicable) such additional amounts (including any
interest, reasonable costs or expenses and any penalties incurred in
connection therewith) as are necessary in order that on a fully After Tax
Basis the net amount received by such Person after the payment of such
Indirect Withholding Taxes (including any Taxes on such additional amount)
shall equal the amount such Person would have received had such Indirect
Withholding Taxes not been asserted plus interest on such additional
amounts at a rate per annum of Overnight LIBOR plus 77 basis points (or,
in the case of any such additional amounts outstanding after the
expiration of such fifteen (15) Business Day period, a rate per annum
equal to the Overdue Rate), calculated (on the basis of actual days
elapsed in a year of 360 days) from the date of payment of such Indirect
Withholding Taxes by the Lessor or such Investor (as applicable) to the
date of payment of such additional amounts by the Lessee. If the Lessee
fails to pay any such Indirect Withholding Taxes as and when due to the
appropriate Taxing Authority or fails to remit to the Lessor for the
benefit of the Lessor or such Investor (as applicable), the required
receipts or other required documentary evidence, then the Lessee shall
indemnify the Lessor or such Investor (as applicable), on an After Tax
Basis, for any incremental Taxes (whether or not constituting Withholding
Taxes), interest, penalties and reasonable expenses that may become
payable by the Lessor or such Investor (as applicable) as a result of any
such failure.
(iv) Notwithstanding the foregoing provisions of this Section
13.6(a), if the applicable Tax Indemnitee is a direct or indirect
transferee or assignee of an original Tax Indemnitee, then Lessee shall be
obligated to indemnify such Tax Indemnitee for Withholding
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Participation Agreement
Taxes and Indirect Withholding Taxes only to the extent that based on the
Applicable Law in effect on the date such Withholding Tax or Indirect
Withholding Tax is imposed or becomes payable, the amount of such Tax does
not exceed the amount of such Tax that would have been imposed against or
payable by such original Tax Indemnitee.
(v) The obligations of the Lessee under this Section 13.6(a) shall
survive the termination of this Participation Agreement and the other
Operative Documents and the payment of the Lease Balance and all other
amounts payable under the Operative Documents.
(b) Withholding Exemption Certificates. On or prior to the Acquisition
Date, or if such date does not occur within thirty (30) days after the date of
this Participation Agreement, by the end of such 30-day period, each Investor
that is not organized under the laws of the United States of America or a state
or political subdivision thereof shall deliver to the Lessor and the Lessee two
duly completed copies of (i) an IRS form W-8ECI (or successor applicable form)
or (ii) an IRS form W-8BEN(or successor applicable form) certifying its foreign
status and, if applicable, claiming an exemption under a U.S. tax treaty. Each
such Investor further agrees (i) promptly to notify the Lessee and the Lessor of
any change of circumstances that would prevent such Investor from receiving
payments hereunder without any deduction or withholding or with reduced
deduction or withholding of such taxes as indicated on the most recent such
certificate or other form previously delivered by such Investor and (ii) if such
Investor has not so notified the Lessee and the Lessor of any change of
circumstances which would prevent such Investor from receiving payments
hereunder without any deduction or withholding or with reduced deduction or
withholding of taxes as indicated on the most recent such certificate or other
form previously delivered by such Investor, then on or before the date that any
certificate or other form delivered by such Investor under this Section 13.6(b)
expires or becomes obsolete or after the occurrence of any event requiring a
change in the most recent such certificate or form previously delivered by such
Investor, to deliver to the Lessee and the Lessor a new certificate or form,
certifying that such Investor is entitled to receive payments under the
Operative Documents without deduction or withholding or with reduced deduction
or withholding of such taxes. If any Investor fails to provide to the Lessee or
the Lessor pursuant to this Section 13.6(b) (or, in the case of any Person that
becomes an Investor through an assignment by another Investor, pursuant to
Section 12.1) any certificates or other evidence required by such provision to
establish that such Investor is, at the time it becomes an Investor hereunder,
entitled to receive payments under the Operative Documents without deduction or
withholding or with reduced deduction or withholding of any United States
federal income taxes, such Investor shall not be entitled to any indemnification
under Section 13.6(a) for any withholding taxes to the extent imposed on such
Investor primarily as a result of such failure.
(c) Tax Returns. Nothing contained in this Section 13.6 shall require the
Lessor or any Investor (or any other Person) to make available any of its Tax
returns (or any other information relating to its Taxes, which it deems to be
confidential).
Section 13.7. Increased Costs, etc. If the adoption of or any change in
any Applicable Law or in the interpretation or application thereof applicable to
any Affected Party, or compliance by any Affected Party with any request or
directive (whether or not having the force of law) from any central bank or
other Governmental Authority, in each case made subsequent to the Documentation
Date (or, if later, the date on which such Affected Party becomes an Affected
Party):
(i) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by, or
deposits or other liabilities in or for the account of loans or other
extensions of credit by, or any other acquisition of funds by, any office
of such Affected Party; or
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Participation Agreement
(ii) shall impose on such Affected Party any other condition
(excluding any Tax of any kind) whatsoever in connection with the
Operative Documents;
and the result of any of the foregoing is to increase the cost to such Affected
Party of making, continuing or maintaining its investment in the Transactions,
or to reduce any amount receivable hereunder in respect thereof, then, in any
such case, upon notice to the Lessee from such Affected Party, through the
Lessor in accordance herewith, the Lessee shall pay such Affected Party any
additional amounts necessary to compensate such Affected Party for such
increased cost or reduced amount receivable; provided, however, that the Lessee
shall not be obligated to pay any Affected Party that is a direct or indirect
transferee or assignee of an original Affected Party any such additional amounts
in excess of the amounts, if any, that would have been payable to the original
Affected Party after giving effect to such adoption, change or compliance. All
payments required by this Section 13.7 shall be made by the Lessee within five
(5) Business Days after demand by the applicable Affected Party. If any Affected
Party becomes entitled to claim any additional amounts pursuant to this
subsection, it shall provide prompt notice thereof to the Lessee, through the
Lessor, certifying (x) that one of the events described in this Section 13.7 has
occurred and describing in reasonable detail the nature of such event, (y) as to
the increased cost or reduced amount resulting from such event and (z) as to the
additional amount demanded by such Affected Party and a reasonably detailed
explanation of the calculation thereof (including the method by which such
Affected Party allocated such amounts to the Lessee). Such a certificate as to
any additional amounts payable pursuant to this clause submitted by such
Affected Party, through the Lessor, to the Lessee shall be conclusive and
binding for all purposes, absent manifest error.
Section 13.8. Funding Losses; Break Costs. (a) The Lessee agrees to
indemnify each Indemnitee and to hold each Indemnitee harmless from any Break
Costs that such Indemnitee may sustain or incur (other than through such
Person's own gross negligence or willful misconduct) as a consequence of (i)
failure by the Lessor to pay the Property Cost for any Property on the date
specified in the Acquisition Date Notice as the Acquisition Date therefor, (ii)
default by the Lessee in paying any Property Cost or Aggregate Property Cost
after the Lessee has given a notice thereof in accordance with the provisions of
the Master Lease, (iii) the Lessee paying Basic Rent on a day that is not a
Scheduled Payment Date or (iv) the Lessee paying any Property Cost, Aggregate
Property Cost, Termination Base Amount or Termination Price.
(b) The Lessee shall, upon receipt from the Lessor or any Investor of a
statement of the amount of any loss, cost or expense constituting Break Costs
prepared in good faith and in reasonable detail (which statement shall be
binding absent manifest error), pay the amount of such Break Costs to the
requesting Person.
Section 13.9. Capital Adequacy. If the adoption of any applicable law,
rule or regulation regarding capital adequacy, or any change therein, or any
change in the interpretation or administration thereof by any Governmental
Authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Affected Party with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such authority, central bank or comparable agency, in each case made
subsequent to the Documentation Date has or will have the effect of reducing the
rate of return on any Affected Party's or its parent company's capital, as a
consequence of its commitments or obligations hereunder to a level below that
which such Affected Party or its parent company could have achieved but for such
adoption, effectiveness, change or compliance (taking into consideration such
Affected Party's or its parent company's policies with respect to capital
adequacy), then, upon notice from such Affected Party, the Lessee shall pay to
such Affected Party such additional amount or amounts as will compensate such
Affected Party and its parent company for such reduction (it being understood
that such parent company shall not be reimbursed to the extent its subsidiary
Affected Party is reimbursed by the Lessee in connection with the same or a
similar law, rule, regulation, change,
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Participation Agreement
request or directive applicable to such Affected Party). All payments required
by this Section 13.9 shall be made by the Lessee within five (5) Business Days
after demand by the Affected Party. If any Affected Party becomes entitled to
claim any additional amounts pursuant to this Section 13.9, it shall provide
prompt written notice thereof to the Lessee certifying (x) that one of the
events described in this Section 13.9 has occurred and describing in reasonable
detail the nature of such event, (y) as to the increased cost or reduced amount
resulting from such event and (z) as to the additional amount demanded by such
Affected Party and a reasonably detailed explanation of the calculation thereof.
Such a certificate as to any additional amounts payable pursuant to this Section
13.9 submitted by such Affected Party, through the Lessor, to the Lessee shall
be conclusive in the absence of manifest error.
Section 13.10. Indemnity Payments in Addition to Lease Obligations. The
Lessee acknowledges and agrees that the Lessee's obligations to make indemnity
payments under this Article XIII are separate from, in addition to, and do not
reduce, the Lessee's obligations to pay any amounts owing from time to time
under the Lease.
Section 13.11. Payment of Amounts Due under this Article XIII. All amounts
payable by the Lessee pursuant to this Article XIII shall be paid by the Lessee
directly to the Lessor, the Lessor Administrator, the applicable Investor or the
Arranger (as applicable), upon demand from such Person therefor, in immediately
available funds consisting of lawful currency of the United States of America
together with interest on such amounts at a rate per annum of Overnight LIBOR
plus 77 basis points from the date of demand until the same shall be paid (or,
in the case of any such amounts outstanding ten (10) Business Days after the
date of such demand, a rate per annum equal to the Overdue Rate).
Section 13.12. Survival. The obligations of the Lessee under this Article
XIII shall survive the termination of this Participation Agreement and the other
Operative Documents and the payment of the Lease Balance and all other amounts
payable under the Operative Documents, and shall be separate and independent
from any remedy under the Lease or any other Operative Document.
ARTICLE XIV
MISCELLANEOUS
Section 14.1. Survival of Agreements. All covenants, agreements,
representations and warranties made by the Lessee in the Operative Documents and
in the certificates or other instruments prepared or delivered in connection
therewith shall be considered to have been relied upon by the Lessor, the
Investors and the Arranger and shall survive the execution and delivery of this
Participation Agreement, the payment by the Lessor of the Property Costs and the
transfer of the Leased Properties to the Lessor regardless of any investigation
made by any Indemnitee or on its behalf, and shall continue in full force and
effect as long as any portion of the Lease Balance is outstanding and unpaid.
The provisions of Article IX and Article XIII shall remain operative and in full
force and effect regardless of the occurrence of the Expiration Date, the
consummation of the transactions contemplated by the Operative Documents, the
payment of the Lease Balance, the invalidity or unenforceability of any term or
provision of any Operative Document or any investigation made by or on behalf of
any Indemnitee.
Section 14.2. No Broker, Etc. Each of the parties hereto represents to the
others that it has not retained or employed any broker, finder or financial
adviser (other than the Arranger) to act on its behalf in connection with this
Participation Agreement or the transactions contemplated herein or in the other
Operative Documents nor has it authorized any broker, finder or financial
adviser retained or employed by any other Person so to act. In the event that
any party retains any other broker, finder or financial advisor, such party will
promptly notify the other parties in writing of such broker, finder or financial
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Participation Agreement
advisor. Any party which 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.
Section 14.3. Notices. Unless otherwise specifically provided herein, all
notices, consents, directions, approvals, instructions, requests and other
communications required or permitted by the terms hereof to be given to any
Person shall be given in writing by United States mail, by nationally recognized
courier service, by hand, by facsimile or, in the case of any such notices,
consents, directions, approvals, instructions or other communications given to
the Lessee or (if followed by hard copy) RBS Lombard, Inc., by electronic mail,
shall be directed to the address, facsimile number or electronic mail address of
such Person as indicated on Schedule II and shall become effective (i) if
delivered by United States mail, five (5) Business Days after being deposited in
the mail, certified or registered with appropriate postage prepaid, (ii) if
delivered by a nationally recognized courier service, upon delivery to the
intended recipient, (iii) if delivered by hand, when received, (iv) if delivered
by facsimile, when transmitted (upon electronic confirmation thereof) or (v) in
the case of the Lessee and RBS Lombard, Inc., if delivered by electronic mail,
when transmitted to an electronic mail address, provided that any facsimile or
electronic mail transmitted after 5:00 P.M. (recipient time) shall be deemed to
have been received on the next Business Day. From time to time any party may
designate a new address or facsimile number or electronic mail address for
purposes of notice hereunder by written notice to each of the other parties
hereto in accordance with this Section.
Section 14.4. Counterparts. This Participation Agreement may be executed
by the parties hereto in separate counterparts, each of which when so executed
and delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
Section 14.5. Amendments, Etc. Neither any Operative Document nor any of
the terms thereof may be terminated (except as expressly required under the
terms of any Operative Document or upon payment in full of the Lease Balance),
amended, supplemented, waived or modified without the written agreement or
consent of the Lessee and the Lessor; provided, however, that the Lessee's
consent shall not be required with respect to any termination, amendment,
supplement, waiver or modification of the Lessor Administration Agreement or the
Lessor LLC Agreement other than (x) any such amendment, supplement, waiver or
modification that increases the costs, expenses or other amounts required to be
paid by the Lessee (provided that the Lessee's consent to any such amendment,
supplement, waiver or modification shall not be unreasonably withheld) or (y)
any amendment or other modification to the Lessor LLC Agreement that expands the
scope of the Lessor's permitted activities beyond those activities relating to
the transactions contemplated by the Operative Documents or permits the Lessor
to dissolve prior to the Expiration Date or earlier termination of the Master
Lease with respect to all of the Properties.
Section 14.6. Headings, Etc. The Table of Contents and headings of the
various Articles and Sections of this Participation Agreement are for
convenience of reference only and shall not modify, define, expand or limit any
of the terms or provisions hereof.
Section 14.7. Parties in Interest. Except as expressly provided herein,
none of the provisions of this Participation Agreement is intended for the
benefit of any Person except the parties hereto. No party hereto shall assign or
transfer any of its rights or obligations under the Operative Documents except
in accordance with the terms and conditions thereof.
Section 14.8. GOVERNING LAW. THIS PARTICIPATION AGREEMENT AND THE OTHER
OPERATIVE DOCUMENTS (EXCEPT AS OTHERWISE PROVIDED IN ANY OPERATIVE DOCUMENT) AND
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE
CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK WITHOUT REGARD TO CONFLICTS OF LAW
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Participation Agreement
PRINCIPLES, EXCEPT TITLE 14 OF ARTICLE 5 OF THE NEW YORK GENERAL OBLIGATIONS
LAW.
Section 14.9. Severability. Any provision of this Participation 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.
Section 14.10. Liability Limited. (a) Notwithstanding any provision to the
contrary in any Operative Document, the obligations and agreements of the Lessor
hereunder and under the other Operative Documents and any other certificate,
instrument or document executed in connection herewith or therewith, and any
other document supplemental hereto or thereto, shall be nonrecourse to the
Lessor and its shareholders, members, officers, agents and employees, and none
of the Lessor and its shareholders, officers, agents and employees shall have
any personal liability or accountability whatsoever under or in respect of any
Operative Document or any transaction contemplated thereby, recourse being
limited to the Lessor's interest in the Properties (including the proceeds
thereof) and the Rent payable under the Operative Documents; provided, however,
that the Lessor shall be liable (a) for its own willful misconduct or gross
negligence, (b) breach of any of its representations or warranties under the
Operative Documents, (c) any Lessor Liens attributable to it, or (d) breach of
its obligations under Section 3.2 after the satisfaction of all conditions to
such obligations. It is understood and agreed that, except as provided in the
preceding sentence: (i) the Lessor shall have no personal liability under any of
the Operative Documents; (ii) all obligations of the Lessor to the Investors are
solely nonrecourse obligations except to the extent that the Lessor has received
payment from others; and (iii) all such personal liability of the Lessor is
expressly waived and released as a condition of, and as consideration for, the
execution and delivery of the Operative Documents by the Lessor.
(b) No Investor shall have any obligation to any other Investor or to the
Lessee with respect to transactions contemplated by the Operative Documents
except those obligations of such Investor expressly set forth in the Operative
Documents or except as set forth in the instruments delivered in connection
therewith, and no Investor shall be liable for performance by any other party
hereto of such other party's obligations under the Operative Documents except as
otherwise so set forth.
Section 14.11. 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
preserve the security interests and liens (and the priority thereof) intended to
be created pursuant to this Participation Agreement, the other Operative
Documents, and the transactions thereunder (including the preparation, execution
and filing of any and all Uniform Commercial Code financing statements and other
filings or registrations which the parties hereto may from time to time request
to be filed or effected). The Lessee, at its own expense and upon prior request
from any other party, shall take such action as specified in such request, to
the extent such action is reasonably necessary (including any action specified
in the preceding sentence) in order to maintain and protect all security
interests provided for hereunder or under any other Operative Document.
Section 14.12. SUBMISSION TO JURISDICTION. EACH PARTY HERETO HEREBY
SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF NEW YORK FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING
OUT OF OR RELATING TO THIS PARTICIPATION AGREEMENT OR ANY OF THE OTHER OPERATIVE
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY HERETO IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT
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Participation Agreement
PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT
ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.
Section 14.13. Setoff. Each Investor and the Lessor shall, upon the
occurrence of any Lease Event of Default, have the right to appropriate and,
subject to Section 7.4, apply to the payment of the Obligations as security for
the payment of such Obligations, any and all balances, credits, deposits,
accounts or moneys of the Lessee then or thereafter maintained with any Investor
or the Lessor. The rights of the Investors and the Lessor under this Section are
in addition to other rights and remedies (including other rights of setoff under
applicable law or otherwise) which such Person may have.
Section 14.14. Successors and Assigns. All the terms and provisions of
this Participation Agreement shall inure to the benefit of the parties hereto
and their respective successors and permitted assigns; provided, that the Lessee
may not assign or otherwise transfer any of its rights or obligations hereunder
without the prior written consent of the Lessor and each Investor, and any
attempted assignment or transfer by the Lessee without such consents shall be
null and void.
Section 14.15. WAIVER OF JURY TRIAL. EACH PARTY HERETO VOLUNTARILY AND
INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED ON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS
PARTICIPATION AGREEMENT OR ANY OTHER OPERATIVE DOCUMENT, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF
ANY OF THE PARTIES HERETO. EACH PARTY HERETO HEREBY AGREES THAT IT WILL NOT SEEK
TO CONSOLIDATE ANY SUCH LITIGATION WITH ANY OTHER LITIGATION IN WHICH A JURY
TRIAL HAS NOT OR CANNOT BE WAIVED. THE PROVISIONS OF THIS SECTION 14.14 HAVE
BEEN FULLY NEGOTIATED BY THE PARTIES HERETO AND SHALL BE SUBJECT TO NO
EXCEPTIONS. THE LESSEE ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND
SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH
OTHER OPERATIVE DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A
MATERIAL INDUCEMENT FOR EACH OF THE LESSOR AND THE INVESTORS ENTERING INTO THIS
PARTICIPATION AGREEMENT AND EACH SUCH OTHER OPERATIVE DOCUMENT.
Section 14.16. NO ORAL AGREEMENTS. THIS PARTICIPATION AGREEMENT AND THE
OTHER OPERATIVE DOCUMENTS EMBODY THE ENTIRE AGREEMENT AND UNDERSTANDING AMONG
THE PARTIES HERETO AND SUPERSEDE ALL OTHER AGREEMENTS AND UNDERSTANDINGS BETWEEN
SUCH PARTIES RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF. THIS
PARTICIPATION AGREEMENT AND THE OTHER OPERATIVE DOCUMENTS REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
Section 14.17. No Investor Responsible for Other Investors. The
obligations of each of the Lessor and each Investor under this Participation
Agreement and the other Operative Documents are several and not joint; and, in
the event of a failure by any such Person to perform any of its obligations
hereunder or under any other Operative Document, neither the Lessor nor any
Investor (other than such defaulting Lessor or Investor, as the case may be)
shall have any liability as a consequence thereof.
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Participation Agreement
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Participation
Agreement to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
ITT INDUSTRIES, INC., as Lessee
By /s/ Donald Foley
-------------------------------------------
Name: Donald Foley
Title: Senior Vice President, Treasurer and
Director of Tax
PARTICIPATION AGREEMENT
REXUS L.L.C., as Lessor
By /s/ Larry Bowman
-------------------------------------------
Name: Larry Bowman
Title: President
PARTICIPATION AGREEMENT
AIR BAIL S.A.S.,
as an Investor
By /s/ Stephane Guet
-------------------------------------------
Name: Stephane Guet
Title: Attorney in Fact
PARTICIPATION AGREEMENT
RBS LOMBARD, INC.,
as an Investor
By /s/ J.S. Godier
-------------------------------------------
Name: J.S. Godier
Title: Executive Vice President
PARTICIPATION AGREEMENT
Schedule I
to Participation Agreement
Commitments
COMMITMENT
INVESTOR COMMITMENT PERCENTAGE
Air Bail S.A.S. $ 85,000,000 70.833333%
RBS Lombard, Inc. $ 35,000,000 29.166667%
TOTAL $ 120,000,000 100.000000%
Schedule II
to Participation Agreement
Notice Information, Wire Instructions and Funding Offices
LESSEE
ITT INDUSTRIES, INC.
4 West Red Oak Lane
White Plains, NY 10604
Attention: Donald Foley, Treasurer
Facsimile No.: 914-696-2972
Telephone No.: 914-641-2147
email: donald.foley@itt.com
with a copy to:
Red Oak Corporate Park
4 West Red Oak Lane
White Plains, NY 10604
Attention: Keith Richey, International Tax Counsel
Facsimile No.: 914-696-2968
Telephone No.: 914-641-2142
e-mail: keith.richey@itt.com
Wire Transfer Instructions:
[omitted]
LESSOR:
REXUS L.L.C.
c/o Societe Generale (Canada), as Lessor Administrator
1501 McGill College
Bureau 1800
Montreal, QC, H3A 3MB
Canada
Attention: Manager, Treasury & Loan Servicing Group / Debbie Toth
Facsimile No.: 514-841-6250
Telephone No.: 514-841-6000
with a copy to:
Rexus L.L.C.
Societe Generale, New York Branch
1221 Avenue of the Americas
New York, NY 10020
Attention: President
Facsimile No.: 212-278-7720
Telephone No.: 212-278-6446
Wire Transfer Instructions:
[omitted]
INVESTORS:
AIR BAIL S.A.S.
Notices:
17, Cours Valmy
92800 Puteaux
France
Facsimile: 33 1 42 14 98 54
Telephone: 33 1 42 14 84 08
Attention: OPER/DFI/FIN/AFI
with a copy to:
Jones Day
222 East 41st Street
New York, New York 10017-6702
Facsimile: 212-755-7306
Telephone: 212-326-3745
Attention: Stacey Lefont
- 2 -
Wire Transfer Instructions:
[omitted]
Funding Office:
17, Cours Valmy
92800 Puteaux
France
RBS LOMBARD, INC.
Notices:
Virginia Purchia / Steven Imbriaco
NY Lending Operations
The Royal Bank of Scotland plc, New York Branch
101 Park Avenue, 12th Floor
New York, NY 10178
Facsimile No.: 212-401-4842
Telephone No.: 212-401-1437 / 1405
e-mail: virginia.purchia@rbos.com
with a copy to:
Vice President, Portfolio Manager
RBS Lombard, Inc.
101 Park Avenue, 21st Floor
New York, NY 10178
Facsimile No.: 212-401-3404
Telephone No.: 212-401-3471
e-mail: rory.mullan@rbos.com
Wire Transfer Instructions:
[omitted]
Funding Office:
101 Park Avenue
New York, NY 10178
- 2 -
Schedule III
to Participation Agreement
Description of Properties, Go Dark Values and Original Property Costs
ORIGINAL
STREET GO DARK PROPERTY
CITY STATE ADDRESS VALUE COST
- ---------------- ---------- --------------------- ------------ --------------
LEASED PROPERTIES
Fort Wayne Indiana 1919 W. Cook Road $ 11,650,485 $ 28,571,429
Cheektowaga New York 175 Standard Parkway $ 2,718,447 $ 6,666,667
Colorado Springs Colorado 4410 & 4450 $ 18,407,767 $ 45,142,857
E. Fountain Boulevard
Archbold Ohio 701 E. Lugbill Road $ 3,339,806 $ 8,190,476
Morton Grove Illinois 8200 North Austin Ave $ 10,873,786 $ 26,666,666
Chicago Illinois 3500 North Spaulding $ 1,941,748 $ 4,761,905
MORTGAGED PROPERTIES
Clifton New Jersey 100 Kingsland Road $ 31,067,961 Not Applicable
------------ --------------
TOTAL: $80,000,0000 $ 120,000,000
- 3 -
Schedule 10.2(b)
to Participation Agreement
Description of Liens on Principal Properties
Principal Property Description of Liens
- ------------------ -------------------------------
Clifton Property Rights of Related Retail
Clifton, L.P., a Delaware
limited partnership, under that
certain Right of First Offer
Agreement, dated as of May 6,
1999, between the Lessee and
Related Retail Clifton, L.P., a
Delaware limited partnership
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