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Exhibit 10(d)
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PARTICIPATION AGREEMENT
Dated as of May 29, 1996
among
ASSET HOLDINGS COMPANY VI, L.L.C., as Lessor
HUFFY CORPORATION, as Lessee
and
BANK ONE, DAYTON, N.A., as Lender
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Lease Financing
for Huffy Corporation
Light Manufacturing Facility
Waukesha County, Wisconsin
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TABLE OF CONTENTS
Page
SECTION 1 DEFINITIONS; INTERPRETATION................................................................1
SECTION 2 ACQUISITION, CONSTRUCTION AND LEASE; LOAN; NATURE OF
TRANSACTION..........................................................................................1
SECTION 2.1 Agreement to Acquire, Construct, Fund and Lease.................................1
SECTION 2.2 Funding of Construction Costs; Loan.............................................2
SECTION 2.3 Nature of Transaction ..........................................................3
SECTION 2.4 Amounts Due Under Lease and Loan Agreement......................................3
SECTION 2.5 Controlling Agreements..........................................................4
SECTION 2.6 Permitted Applications of Loan Advances.........................................4
SECTION 3 CONDITIONS PRECEDENT; DOCUMENTS............................................................4
SECTION 3.1 Conditions to the Obligations of the Lessor and the Lender on the Closing
Date........................................................................................4
SECTION 3.2 Conditions to the Obligations of the Lessee.....................................9
SECTION 3.3 Completion Date Conditions......................................................9
SECTION 3.4 Appraisal......................................................................11
SECTION 4 REPRESENTATIONS AND COVENANTS.............................................................11
SECTION 4.1 Representations of the Lessee..................................................11
SECTION 4.2 Representations and Covenants of the Lessor....................................14
SECTION 4.3 Covenant of Lender.............................................................15
SECTION 5 COVENANTS OF THE LESSEE...................................................................15
SECTION 5.1 Qualification as to Corporate Status...........................................15
SECTION 5.2 Further Assurances.............................................................15
SECTION 5.3 Reporting......................................................................16
SECTION 5.4 Financial Covenants of Lessee..................................................17
SECTION 6 TRANSFERS BY LESSOR AND LENDER............................................................19
SECTION 6.1 Lessor Transfers...............................................................19
SECTION 6.2 Lender Transfers...............................................................19
SECTION 7 INDEMNIFICATION...........................................................................19
SECTION 7.1 General Indemnification........................................................19
SECTION 7.2 Environmental Indemnity........................................................21
SECTION 7.3 Proceedings in Respect of Claims...............................................22
SECTION 7.4 General Tax Indemnity..........................................................24
SECTION 7.5 [Reserved].....................................................................29
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SECTION 7.6 End of Term Indemnity ..................................29
SECTION 8 MISCELLANEOUS......................................................30
SECTION 8.1 Survival of Agreements..................................30
SECTION 8.2 Notices.................................................30
SECTION 8.3 Counterparts............................................31
SECTION 8.4 Amendments..............................................31
SECTION 8.5 Headings, Etc...........................................31
SECTION 8.6 Parties in Interest.....................................31
SECTION 8.7 Governing Law...........................................31
SECTION 8.8 No Recourse.............................................32
SECTION 8.9 Expenses................................................32
SECTION 8.10 Severability...........................................32
SECTION 8.11 Submission to Jurisdiction; Waivers....................32
APPENDIX I Definitions and Interpretation
APPENDIX II Form of Request for Loan Advance
APPENDIX III Loan Payment Schedule
EXHIBIT A Form of Lease
EXHIBIT B Form of Loan Agreement
EXHIBIT C Form of Mortgage
EXHIBIT D Form of Assignment of Lease and Rents
EXHIBIT E Form of Non-Disturbance and Attornment Agreement
EXHIBIT F Form of Security Agreement and Assignment
EXHIBIT G Form of Opinion of Counsel to the Lessee
EXHIBIT H Form of Opinion of Counsel to the Lessor
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PARTICIPATION AGREEMENT
THIS PARTICIPATION AGREEMENT, dated as of May 29, 1996, is among ASSET
HOLDINGS COMPANY VI, L.L.C., a Massachusetts limited liability company, as
Lessor, HUFFY CORPORATION, an Ohio corporation, as Lessee, and BANK ONE DAYTON,
N.A., a national banking association, as Lender.
WITNESETH:
WHEREAS, in accordance with the terms and provisions of this Participation
Agreement, the Lease, the Loan Agreement, the Note and the other Operative
Documents, (i) the Lessor has acquired the Land and has agreed to lease the Land
to the Lessee, (ii) the Lessee has agreed to construct the Improvements on the
Land for the Lessor and has agreed to lease the Improvements from the Lessor as
part of the Leased Property under the Lease, (iii) the Lessor and the Lessee
wish to obtain, and the Lender has agreed to provide, funding in the amount of
$6,400,000 for the acquisition of the Land and the development and construction
of the Improvements, and (iv) Lessor has agreed to expend from its own equity
resources the sum of $200,000 to pay a portion of the cost of acquisition of the
Land and the development and construction of the Improvements;
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:
SECTION 1
DEFINITIONS; INTERPRETATION
Unless the context shall otherwise require, capitalized terms used and not
defined herein shall have the meanings assigned thereto in Appendix I hereto for
all purposes hereof and the rules of interpretation set forth in Appendix I
hereto shall apply to this Participation Agreement.
SECTION 2
ACQUISITION, CONSTRUCTION AND LEASE; LOAN;
NATURE OF TRANSACTION
SECTION 2.1 Agreement to Acquire, Construct, Fund and Lease.
(a) Land. Subject to the terms and conditions of this Participation Agreement,
on the Closing Date (i) the Lessor shall acquire the Land and pay an amount
equal to Lessor's Investment in connection therewith, (ii) the Lessor shall
lease the Land to the Lessee pursuant to the Lease and (iii) the Lessee shall
lease the Land from the Lessor pursuant to the Lease.
(b) Improvements. Subject to the terms and conditions of this Participation
Agreement and the other Operative Documents, (i) the Lessee has agreed, pursuant
to the terms of the Lease, to construct and install the Improvements on the Land
for the Lessor, (ii) the Lessor has agreed to
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obtain funding for all or a portion of the costs of such construction and
installation, (iii) the Lessor has agreed to lease the Improvements as part of
the Leased Property to the Lessee pursuant to the Lease and (iv) the Lessee has
agreed to lease the Improvements from the Lessor pursuant to the Lease.
SECTION 2.2 Funding of Construction Costs: Loan.
(a) Subject to the terms and conditions of this Participation Agreement and the
Loan Agreement, the Lender agrees to make the Loan available to the Lessor in
order to finance costs of the Improvements and related costs as provided in
Section 2.6. As hereinafter in this Section provided, the Lender shall from time
to time make Loan Advances in respect of the Loan to the Lessor. Except as
provided in subsection (c) of this Section, the Lessor, in turn, shall remit the
proceeds of each Loan Advance to the Lessee, and the Lessee shall use the
proceeds of each such Loan Advance to pay, or reimburse itself for paying, the
costs of Construction of the Improvements and related costs as provided in
Section 2.6. The Lessor hereby directs the Lender to make disbursements of the
Loan directly to the Lessee unless the Lessor otherwise directs the Lender. The
Lessor will only direct the Lender otherwise if an Event of Default has occurred
and is continuing. The Loan shall (i) be a term and construction loan consisting
of the aggregate total of the Loan Advances, (ii) be in an amount of not to
exceed the Loan Commitment, (iii) bear interest as to each Loan Advance from the
date such Loan Advance was made at the interest determined in accordance with
Section 2.4 of the Loan Agreement, payable on each Loan Payment Date, (iv) bear
interest as to overdue amounts at the Overdue Rate, (v) be repayable as to
principal as provided in Appendix III to the Loan Agreement, commencing on the
Loan Payment Date which next follows the Completion Date, with a final scheduled
Loan Payment Date on the first day of the 84th month following the Completion
Date (vi) be evidenced by the Note and (vii) have the other terms and conditions
as provided in the Loan Agreement and the Note.
(b) From and after the Closing Date until and including the fourth Business Day
next preceding the Completion Date, the Lessee, acting on behalf of the Lessor,
shall have the right to submit to the Lender written requests for Loan Advances.
Each such written request shall be substantially in the form attached hereto as
Appendix II. Upon the receipt by the Lender of a properly completed written
request for a Loan Advance and so long as no Event of Default has occurred and
is then continuing, the Lender shall, on or before the third Business Day next
following the receipt of such written request for a Loan Advance, make the Loan
Advance in immediately available funds to Lessee or to such other Person or
Persons as may be specified in such written request for a Loan Advance.
(c) On each Loan Payment Date commencing with the first Loan Payment Date and
ending with the Completion Date, the Lender, without the necessity or
requirement of any written request for a Loan Advance or any notice to or
consent of the Lessor or the Lessee, shall make a Loan Advance in an amount
equal to the interest due and payable on the Loan on each such Loan Payment
Date; provided, however, that the Lender shall not be obligated to make a Loan
Advance to pay interest on the Loan if an Event of Default has occurred and is
then continuing. The Lender shall promptly notify the Lessee of the date and
amount of each such Loan Advance.
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(d) In no event shall the aggregate of all Loan Advances in respect of the Loan
at any time outstanding exceed the Loan Commitment.
SECTION 2.3 Nature of Transaction. Each party hereto acknowledges and agrees
that none of the Lessee, the Lender, the Lessor, the Financial Advisor nor any
other Person has made any representations or warranties to such party concerning
the tax, financial, accounting or legal characteristics or treatment of the
Operative Documents and that each party has obtained and relied solely upon the
advice of its own tax, accounting and legal advisors concerning the Operative
Documents and the accounting, tax, financial and legal consequences of the
transactions contemplated therein.
SECTION 2.4 Amounts Due Under Lease and Loan Agreement. Anything else herein, in
the Loan Agreement or elsewhere to the contrary notwithstanding, it is the
intention of the Lessee, the Lessor and the Lender that (i) during the period
from the Closing Date to the Completion Date, payment of interest on the Loan on
each Loan Payment Date shall be made from a Loan Advance automatically made by
the Lender as provided in Section 2.2(c) of this Participation Agreement, (ii)
from and after the Completion Date, the Lessee shall be obligated, pursuant to
the terms of the Lease, to pay Basic Rent in respect of the Loan and Lessor's
Investment and the amount and timing of that portion of the installments of
Basic Rent due and payable from time to time from the Lessee under the Lease
which equal the Scheduled Rent shall be equal to the payments due and payable
with respect to interest on and principal of the Loan on each Loan Payment Date,
(iii) if the Lessee elects the Purchase Option or becomes obligated to purchase
the Leased Property under the Lease, the sum of (A) the Loan, all interest and
prepayment premium thereon and all other obligations of the Lessee owing to the
Lessor and the Lender under the Operative Documents plus (B) Lessor's Investment
plus all accrued and unpaid Facility Rent prorated to the date of payment, shall
be paid in full by the Lessee and (iv) upon an Event of Default resulting in an
acceleration of the Lessee's obligation to purchase the Leased Property under
the Lease, the amounts then due and payable by the Lessee under the Lease shall
include the sum of (A) all amounts necessary to pay in full the Loan, accrued
interest and prepayment premium thereon and all other obligations of the Lessee
owing to the Lessor and the Lender under the Operative Documents plus (B)
Lessor's Investment plus all accrued and unpaid Facility Rent prorated to the
date of payment, provided that (v) in the event Lessee effectively exercises the
Remarketing Option pursuant to the provisions of Section 15.6 of the Lease and
duly and timely fulfills the provisions of clauses (i) through (xiii) of Section
15.6 of the Lease, Lessee's obligations shall be limited as provided in Section
15.6 of the Lease. The foregoing notwithstanding, the parties hereto acknowledge
and agree that the obligations of the Lessor (including its incorporators,
stockholders, directors, officers, employees and agents) hereunder, under the
Loan Agreement, the Lease and the other Operative Documents are non-recourse as
provided in Section 4.2 of the Loan Agreement and Section 18.12 of the Lease.
SECTION 2.5 Controlling Agreements. In the event of any conflict between this
Participation Agreement and any other Operative Document, this Participation
Agreement shall control. In the event of any conflict between the Lease and any
other Operative Document to which the Lessee is not a party, the Lease shall
control.
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SECTION 2.6 Permitted Applications of Loan Advances. The parties hereto agree
that the Lessee may apply the proceeds of Loan Advances made under the Loan for
the payment (or the reimbursement by the Lessee of itself for the payment) of
any or all of the following items: (i) costs of Construction of the
Improvements, including costs related to letters of credit, surety bonds,
security deposits or other security in connection with the Construction, the
Construction Contract, any municipal sewer or utility contract, any permit or
consent for any Governmental Authority or other Person, or any other obligation
or requirement relating to the Construction (ii) capitalized interest on the
Loan (but only to the extent and pursuant to the procedures set forth in Section
2.2(c)) and (iii) "soft costs" related to the foregoing, including architect's
fees, engineering fees, permit and license fees and charges, testing, survey
costs, title charges and attorneys' fees and Lessor's completion fee. The Lessee
covenants not to use any Loan Advances to pay, or reimburse itself for paying,
for trade fixtures, personal property or equipment or to use the proceeds of
Loan Advances for working capital.
SECTION 3
CONDITIONS PRECEDENT; DOCUMENTS
SECTION 3.1 Conditions to the Obligations of the Lessor and the Lender on the
Closing Date. The obligations of the Lessor and the Lender to carry out their
respective obligations under Section 2 of this Participation Agreement to be
performed on the Closing Date shall be subject to the fulfillment to the
satisfaction of, or waiver by, each such party hereto (acting directly or
through its counsel) on or prior to the Closing Date of the following conditions
precedent:
(a) Documents. The following documents shall have been executed and delivered by
the respective parties thereto:
(i) Participation Agreement. Counterparts of this Participation Agreement, duly
executed by the parties hereto, shall have been delivered to each of the parties
hereto.
(ii) Lease. The original of the Lease (substantially in the form of Exhibit A),
together with the Memorandum of Lease, each duly executed by the Lessee and the
Lessor, provided that the Memorandum of Lease shall be executed in recordable
form, shall have been delivered to the Lender.
(iii) Loan Agreement. Mortgage. Assignment of Lease and Rents. Note.
Non-Disturbance and Attornment Agreement. Counterparts of the Loan Agreement
(substantially in the form of Exhibit B), duly executed by the Lessor and the
Lender, shall have been delivered to each of the Lessor and the Lender;
counterparts of the Mortgage (substantially in the form of Exhibit C), duly
executed by the Lessee and in recordable form, shall have been delivered to each
of the Lessor and the Lender; the Assignment of Lease and Rents (substantially
in the form of Exhibit D), duly executed by the Lessor, consented to by the
Lessee and in recordable form, shall have been delivered to the Lender; the Note
(substantially in the form attached as an exhibit to the Loan Agreement) payable
to the order of the Lender, duly executed by the Lessor, shall have
been delivered to the Lender and the Non-Disturbance and Attornment Agreement
(substantially in the form of Exhibit E) duly executed by the Lessee, Lessor and
Lender and in recordable form shall
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have been delivered to the Lender, the Lessor and the Lessee.
(iv) Deed. The Deed, duly executed by the grantor thereunder and acknowledged in
form for recording, conveying fee simple title to the Land to Lessor subject
only to Permitted Liens.
(v) Title and Title Insurance. On the Closing Date, the Lessor and the Lender
shall receive from the Title Insurance Company, respectively, an ALTA 1970 Form
B Owners Policy of Title Insurance in the amount of at least the Loan
Commitment, and an ALTA Form B-1992 Mortgagee's Policy of Title Insurance in the
amount of the Loan Commitment, each issued by the Title Insurance Company, in
each case, each acceptable in form and substance to the Lessor and the Lender
(the "Title Policies"). The Title Policies (A) shall be dated as of the Closing
Date, (B) to the extent permitted under Applicable Law, shall include coverage
over the general exceptions to such policy and shall contain such affirmative
endorsements as to easements and rights-of-way, encroachments, the nonviolation
of covenants and restrictions, survey matters and other matters as the Lessor or
the Lender shall reasonably request and (C) shall not contain a "pending
disbursements" exception except as to mechanics lien claims and except as to
limiting coverage to the amount of the Loan actually disbursed from time to
time.
(vi) Security Agreement and Assignment. The Security Agreement and Assignment
(substantially in the form of Exhibit F), duly executed by the Lessee, with an
acknowledgement and consent thereto satisfactory to the Lessor and the Lender
duly executed by the General Contractor and complete copy of the Construction
Contract certified by the Lessee shall have been delivered to the Lender.
(vii) Survey. The Lessee shall have delivered, or shall have caused to be
delivered, to the Lessor and the Lender, at the Lessee's expense, an accurate
survey of the Leased Property certified to the Lessor and the Lender in a form
satisfactory to the Lessor and the Lender and showing no state of facts
unsatisfactory to the Lessor or the Lender and prepared within sixty (60) days
of the Closing Date by a licensed surveyor selected by Lessee and reasonably
satisfactory to Lender. Such survey shall (A) be acceptable to the Title
Insurance Company, (B) show no encroachments on the Land by structures owned by
others, and no encroachments from any part of the Leased Property onto any land
owned by others, except for such encroachments which, in the judgment of the
Lender and its counsel, do not impair in any material respect the value of the
Leased Property or the suitability of the Leased Property for its intended use,
and (C) disclose no state of facts objectionable to the Lessor, the Lender or
the Title Insurance Company.
(viii) Evidence of Insurance. The Lessor and the Lender have received from the
Lessee certificates of insurance evidencing compliance with the provisions of
Article IX of the Lease (including the naming of the Lessor and/or the Lender as
additional insured or loss payees with respect to such insurance), in form and
substance reasonably satisfactory to the Lessor and the Lender.
(ix) Lessee's Resolutions and Incumbency Certificate. Etc. Each of the Lender
and the Lessor shall have received (A) a certificate of the Secretary or an
Assistant Secretary of the Lessee attaching and certifying as to (1) the
resolution of the Lessee's Board of Directors (or an appropriate committee of
such Board) duly authorizing the execution, delivery and performance
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by the Lessee of each Operative Document to which the Lessee is or will be a
party, (2) the incumbency and signatures of Persons authorized to execute and
deliver Operative Documents on the Lessee's behalf, (3) the Lessee's certificate
of incorporation, certified as of a recent date by the Secretary of State of the
state of the Lessee's incorporation and (4) the Lessee's by-laws and (B) good
standing certificates for the Lessee from the appropriate officers of the States
of Ohio and Wisconsin.
(x) Recording Fees: Transfer Taxes. To the extent not covered by the Title
Policy, the Lender shall have received satisfactory evidence of the payment by
the Lessee of all recording and filing fees and taxes with respect to any
recordings or filings made of the Memorandum of Lease, the Mortgage, the
Assignment of Lease and Rents and the Subordination and Nondisturbance
Agreement.
(xi) Opinion of Lessee's Counsel. The opinion of respectively, Nancy A. Michaud,
Esq., General Counsel for Lessee, and Messrs. Michael, Best & Friedrich,
Milwaukee, Wisconsin, as special counsel to the Lessee, each dated the Closing
Date, and being substantially in the form set forth respectively in Exhibits G-1
and G-2 and containing such other matters as the parties to whom such opinion is
addressed shall reasonably request, shall have been delivered and addressed to
each of the Lessor and the Lender.
(xii) Lessor's Resolution and Incumbency Certificate. The Lender shall have
received a certificate of the managing member of the Lessor attaching and
certifying as to (A) the managing member's resolution authorizing the execution,
delivery and performance by it of each Operative Document to which the Lessor is
or will be a party and (B) the incumbency and signatures of person(s) authorized
to execute and deliver such documents on the Lessor's behalf.
(xiii) Opinion of Lessor's Counsel. The Opinion of Ropes and Gray, Boston
Massachusetts dated the Closing Date, substantially is the form of Exhibit H
shall have been delivered and addressed to each of the Lessee and the Lender.
(xiv) [omitted]
(xv) Soil Analysis and Environmental Report. The Lender and the Lessor shall
have received and approved (i) soil analysis report relating to the Leased
Property in form and content satisfactory to the Lender and (ii) an
environmental report which shall certify results related to toxic and other
hazardous substances on the Leased Property.
(xvi) Plans and Specifications. Copies of the Plans and Specifications.
(xvii) [omitted]
(xviii) Architect Certificate. A certification from the Architect to the effect
that the Plans and Specifications and the intended use of the Building comply
with all zoning ordinances and regulations and building and use restrictions
applicable to the Leased Property (including, without limitation, that the
Building will comply with the Americans with Disabilities Act of 1990 and
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similar legislation, and the rules and regulations promulgated with respect
thereto).
(xix) Utilities. Evidence that all utility services necessary for construction
and use of the Improvements (including without limitation, electric, gas,
telephone, water and sewer service) are available to the Leased Property, and
the Lessee has the right to connect to and use all utility services without
restriction; and that all necessary easements to provide such utility services
to the Improvements have been obtained.
(xx) Zoning. A copy of the applicable zoning ordinances, certified by an
appropriate official to be a complete and accurate statement thereof and an up
to date zoning map similarly certified.
(xxi) Governmental Authorizations. All authorizations, if any, required by an
governmental authority for the operation of the Leased Property for the purposes
contemplated by the Plans and Specifications, which are presently procurable.
(xxii) Construction Cost Analysis. The Lender shall have received from the
Construction Consultant with an initial cost analysis and breakdown in
reasonable detail and otherwise reasonably satisfactory to Lender.
(b) Litigation. No action or proceeding shall have been instituted or, to the
Lessee's knowledge, threatened nor shall any governmental action, suit,
proceeding or investigation be instituted or, to the Lessee's knowledge,
threatened before any Governmental Authority, nor shall any order, judgment or
decree have been issued or proposed to be issued by any Governmental Authority,
to set aside, restrain, enjoin or prevent the performance of this Participation
Agreement or any of the other Operative Documents or any transaction
contemplated hereby or thereby or which would materially adversely affect the
Leased Property or any transaction contemplated by the Operative Documents or
which would result in a Material Adverse Effect.
(c) Legality. In the opinion of the Lender, the Lessor or their respective
counsel, the transactions contemplated by the Operative Documents shall not
violate any Applicable Law, and no change shall have occurred or been proposed
in Applicable Law that would make it illegal for the Lender or the Lessor to
participate in any of the transactions contemplated by the Operative Documents.
(d) No Events. (i) No Event of Default, Event of Loss or Event of Taking shall
have occurred and be continuing and (ii) no action shall be pending or, to the
Lessee's knowledge, threatened by a Governmental Authority to initiate a
Condemnation or an Event of Taking.
(e) Representations. Each representation and warranty of the parties hereto or
to any other Operative Document contained herein or in any other Operative
Document shall be true and correct in all material respects as though made on
and as of the Closing Date.
(t) No Material Adverse Effect. There shall not have occurred any event having a
Material Adverse Effect since December 31, 1995.
(g) Fees and Transaction Expenses. The Lessee shall have paid (i) to the Lender
a construction
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loan commitment fee equal to $16,500, (ii) the fee owed to the Financial Advisor
in the amount of $82,500 and (iii) the reasonable fees and expenses of the
Lessor, the Lender and their respective counsel (not to exceed $27,000). The
Lessee shall not be liable for any fees and expenses of internal counsel for the
Lender.
SECTION 3.2 Conditions to the Obligations of the Lessee. The obligations of the
Lessee to lease from the Lessor and construct the Leased Property are subject to
the fulfillment on the Closing Date to the satisfaction of, or waiver by the
Lessee of, the following conditions precedent:
(a) General Conditions. The conditions set forth in Sections 3.1 that require
fulfillment by the Lessor and the Lender shall have been satisfied.
(b) Legality: Desired Accounting Treatment. In the opinion of the Lessee or its
counsel, the transactions contemplated by the Operative Documents shall not
violate any Applicable Law, and no change shall have occurred, or, with respect
to tax laws, shall have been proposed, in Applicable Law that would make it
illegal for the Lessee to participate in any of the transactions contemplated by
the Operative Documents. In addition, the Lessee shall have no obligation to
proceed with the actions contemplated on its part on the Closing Date if, on or
prior to the Closing Date, the Lessee shall have been advised in writing by its
accountants that the Lease will not constitute an operating lease for purposes
of the Lessee's financial reporting.
SECTION 3.3 Completion Date Conditions. The occurrence of the Completion Date
shall be subject to the fulfillment or satisfaction of, or waiver by, each party
hereto (acting directly or through its counsel) of the following conditions
precedent:
(a) Title Policy Endorsements. The Lessee shall have furnished to the Lender the
following endorsements to the Title Policy (each of which shall be subject to no
exceptions other than those set forth in Schedule B to the Title Insurance
Policy): (i) a date-down endorsement (redating and confirming the coverage
provided under the Title Policy and each endorsement thereto) and (ii) a
comprehensive endorsement, in each case, effective as of a date not earlier than
the date of completion of the Construction.
(b) Construction Complete. The Construction shall have been completed
substantially in accordance with the Plans and Specifications and all Applicable
Laws, and the Improvements are ready for occupancy and operation in the ordinary
course of Lessee's business. All fixtures, equipment, materials and other
property contemplated under the Plans and Specifications to be incorporated or
installed in the Leased Property shall have been incorporated or installed free
and clear of all liens except for Permitted Liens.
(c) Lessee Certification. The Lessee shall have furnished the Lessor and the
Lender with both (i) a certification of the Lessee that:
(A) all amounts owing to third parties for the Construction have been paid in
full (other than contingent obligations for which the Lessee has made adequate
reserves or claims being defended in good faith), and to Lessee's knowledge no
litigation or proceedings are pending, or to the best
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of the Lessee's knowledge are threatened, against the Leased Property or the
Lessee which would materially adversely affect (1) the enforceability or
priority of this Participation Agreement or the other Operative Documents and
(2) the ability of the Lessee to fully perform its obligations pursuant to and
as contemplated by the terms and provisions of this Participation Agreement and
the other Operative Documents;
(B) all consents, licenses and permits and other governmental authorizations or
approvals required for the Construction and operation of the Leased Property
have been obtained;
(C) the Leased Property has available all services of public facilities and
other utilities necessary for use and operation of the Leased Property for its
intended purposes including, without limitation, adequate water, gas and
electrical supply, storm and sanitary sewerage facilities, telephone and other
required public utilities and means of access between the Improvements and
public highways for pedestrians and motor vehicles;
(D) all agreements, easements and other rights, public or private, which are
necessary to permit the lawful use and operation of the Leased Property as the
Lessee intends to use the Leased Property under the Lease and which are
necessary to permit the lawful intended use and operation of all then intended
utilities, driveways, roads and other means of egress and ingress to and from
the same have been obtained and are in full force and effect and the Lessee has
no knowledge of any pending modification or cancellation of any of the same, and
the use of the Leased Property does not depend on any variance, special
exception or other municipal approval, permit or consent that has not been
obtained for its continuing legal use;
(E) the Construction has been completed substantially in accordance with the
Plans and Specifications and all Applicable Laws and the Leased Property is
ready for occupancy and operation; and
(F) the Leased Property is in compliance with all applicable zoning laws and
regulations; and
(ii) copies of (A) all final lien waivers regarding the Construction, together
with sworn statements from contractors, subcontractors and material suppliers
and (B) true and complete copies of an "as built" or "record" set of the Plans
and Specifications, and a plat of survey of the Leased Property "as built"
showing all paving, driveways, fences and exterior improvements and copies of
all licenses and permits required by any Governmental Authority having
jurisdiction over the use and occupancy of the Leased Property and for the
operation thereof, including copies of a certificate or certificates of
occupancy for the Leased Property or other legally equivalent permission to
occupy the Leased Property from the Governmental Authority having jurisdiction.
(d) Cutoff Date. The Completion Date shall occur on or prior to the Completion
Deadline.
SECTION 3.4 Appraisal. The Lessee agrees to supply the Lender, within 60 days of
the Closing Date, with an appraisal report for the Land and the Improvements,
which appraisal report shall be prepared by an independent appraising firm, and
be in form and substance, reasonably acceptable to the Lender. In the event that
the appraised value of the Land and the Improvements is less than
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the amount of the Loan, the Lessee agrees to promptly retire that portion of the
Loan which exceeds the aforesaid appraised value. Any such retirement of a
portion of the Loan under the circumstances described in this Section shall be
without any premium or penalty to the Lessee.
SECTION 4
REPRESENTATIONS AND COVENANTS
SECTION 4.1 Representations of the Lessee. Effective as of the date of execution
hereof and as of the Closing Date, the Lessee represents and warrants to each of
the other parties hereto as follows:
(a) Organization: Corporate Powers. The Lessee (i) is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Ohio, (ii) is duly qualified as a foreign corporation and in good standing (A)
in the State of Wisconsin and (B) under the laws of each other jurisdiction
where such qualification is required and where the failure to be duly qualified
and in good standing would have a Material Adverse Effect and (iii) has all
requisite corporate power and authority to own, operate and encumber its
property and assets and to conduct its business as presently conducted and as
proposed to be conducted in connection with and following the consummation of
the transactions contemplated by the Operative Documents.
(b) Authority. The Lessee has the requisite corporate power and authority to
execute, deliver and perform the Operative Documents executed or to be executed
by it. The execution, delivery and performance (or recording or filing, as the
case may be) of the Operative Documents, and the consummation of the
transactions contemplated on the part of the Lessee thereby, have been duly
approved by the Board of Directors of the Lessee and no other corporate
proceedings on the part of the Lessee are necessary to consummate the
transactions so contemplated.
(c) Due Execution and Delivery of Operative Documents. The Operative Documents
executed by the Lessee have been duly executed and delivered (or recorded or
filed, as the case may be) by the Lessee, and, in each case, constitute its
legal, valid and binding obligation, enforceable against it in accordance with
each such Operative Document of its respective terms, except as enforcement may
be limited by bankruptcy, insolvency, reorganization, moratorium or other laws
relating to or limiting creditors' rights generally or by equitable principles
generally.
(d) No Conflict. The execution, delivery and performance of each Operative
Document to which it is a party by the Lessee and each of the transactions
contemplated thereby do not and will not (i) violate any Applicable Law or
Contractual Obligation of the Lessee the consequences of which violation, singly
or in the aggregate, would have a Material Adverse Effect, (ii) result in or
require the creation or imposition of any Lien whatsoever on the Leased Property
(other than Permitted Liens) or (iii) require any approval of stockholders which
has not been obtained.
(e) Governmental Consents. Except as have been made, obtained or given, no
filing or registration with, consent or approval of, notice to, with or by any
Governmental Authority is required to authorize, or is required in connection
with, the execution, delivery and performance by the Lessee of the Operative
Documents, the use of the proceeds of the Loans made to effect the
14
purchase of the Land and the Construction of the Improvements, or the legality,
validity, binding effect or enforceability of any Operative Document.
(f) Governmental Regulation. The Lessee is not an "investment company" or a
company controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended.
(g) Requirements of Law. The Lessee is in compliance with all Requirements of
Law applicable to Lessee and its business, in each case where the failure to so
comply would have a Material Adverse Effect, either individually or together
with other such cases.
(h) Rights in Respect of the Leased Property. The Lessee is not a party to any
contract or agreement to sell any interest in the Leased Property or any part
thereof other than pursuant to the Participation Agreements, the Deed and the
Lease.
(i) Hazardous Materials.
(i) Except in full compliance with all Applicable Law there are no Hazardous
Materials present at, upon, under or within the Leased Property or released or
transported to or from the Leased Property.
(ii) No Governmental Actions have been taken, or are in process or have been
threatened, which could reasonably be expected to subject the Leased Property,
the Lender or the Lessor to any Claims or Liens under any Environmental Law
which would have a materially adverse effect on the Lessor, the Lender or the
Leased Property.
(iii) The Lessee has all Environmental Permits necessary to operate the Leased
Property in accordance with Environmental Laws and is complying with and has at
all times complied with all such Environmental Permits.
(iv) With respect to the Leased Property, no notice, notification, demand,
request for information, citations, summons, complaint or order has been issued
or filed to or with respect to the Lessee, and no penalty has been assessed on
the Lessee and no investigation or review is pending or threatened by any
Governmental Authority or other Person with respect to any alleged violation or
liability of the Lessee under any Environmental Law. No material notice,
notification, demand, request for information, citation, summons, complaint or
order has been issued or filed to or with respect to any other Person, no
material penalty has been assessed on any other Person and no investigation or
review is pending or threatened by any Governmental Authority or other Person
relating to the Leased Property with respect to any alleged material violation
or liability under any Environmental Law by any other Person.
(v) The Leased Property and each portion thereof are presently in compliance
with all Environmental Laws, and there are no present or past facts,
circumstances, activities, events, conditions or occurrences regarding the
Leased Property (including, without limitation, the release or presence of
Hazardous Materials) that could reasonably be anticipated to (A) form the
15
basis of a Claim against the Leased Property, the Lender, the Lender or the
Lessee, (B) cause the Leased Property to be subject to any restrictions on
ownership, occupancy, use or transferability under any Environmental Law, (C)
require the filing or recording of any notice or restriction relating to the
presence of Hazardous Materials in the real estate records in the county or
other appropriate municipality in which the Leased Property is located or (D)
prevent or interfere with the continued operation and maintenance of the Leased
Property as contemplated by the Operative Documents.
(j) Leased Property. The present condition and use of the Leased Property
conforms with all conditions or requirements of all existing permits and
approvals issued with respect to the Leased Property, and the present use of the
Leased Property and the Lessee's future intended use of the Leased Property
under the Lease does not violate any Applicable Law. No notices, complaints or
orders of violation or non-compliance have been issued or threatened or
contemplated by any Governmental Authority with respect to the Leased Property
or any present or intended future use thereof. All agreements, easements and
other rights, public or private, which are necessary to permit the lawful use
and operation of the Leased Property as the Lessee intends to use the Leased
Property under the Lease and which are necessary to permit the lawful intended
use and operation of all presently intended utilities, driveways, roads and
other means of egress and ingress to and from the same have been, or in the
reasonable judgment of the Lessee will be, obtained and are in full force and
effect and the Lessee has no actual knowledge of any pending modification or
cancellation of any of the same.
(k) Qualification of Lessee Representations. The representations of the Lessee
set forth in this Section are qualified by the conditions that (i) all
representations are made and given to the best of the Lessee's knowledge, (ii)
where a representation involves compliance by the Lessee with an Applicable Law
or an Environmental Law such representation is deemed to be compliance by the
Lessee in all material respects with any such law and (iii) where a
representation involves conduct on the part of the Lessee that does not violate
an Applicable Law or an Environmental Law such representation is deemed to
exclude Lessee's non-material violations of any such law.
SECTION 4.2 Representations and Covenants of the Lessor. Effective as of the
date of execution hereof and as of the Closing Date, the Lessor represents and
warrants to the Lender and the Lessee as follows:
(a) Due Organization: Limited Purpose. The Lessor is a limited liability company
duly organized and validly existing in good standing under the laws of the State
of Delaware; is duly qualified as a foreign limited liability company and in
good standing under the laws of the State and the State of Ohio; and has full
power, authority and legal right as a limited liability company to execute,
deliver and perform its obligations under this Participation Agreement and each
other Operative Document to which it is or will be a party. The Lessor further
represents, covenants and warrants that (i) it has been formed and exists for
the sole purpose of, and will not engage in any business or other activity
except as necessary in connection with, acquiring and owning the Leased Property
and taking the actions contemplated on the Lessor's part under the Operative
Documents and (ii) except for obligations and indebtedness of the Lessor
represented by and set forth in the Operative Documents and except for
obligations or indebtedness of the Lessor arising
16
directly or indirectly from the Lessee's failure to discharge the Lessee's
obligations under the Operative Documents, the Lessor will not create, incur,
suffer to be created or incurred, or guarantee any obligation or indebtedness.
(b) Due Authorization: Enforceability. Etc. The Participation Agreement and each
other Operative Document to which the Lessor is or will be a party have been or
will be duly authorized, executed and delivered by or on behalf of the Lessor
and are, or upon execution and delivery will be, legal, valid and binding
obligations of the Lessor enforceable against it in accordance with their
respective terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, or similar laws affecting creditors' rights generally
and by general equitable principles.
(c) No Conflict. The execution and delivery by the Lessor of this Participation
Agreement and each other Operative Document to which the Lessor is or will be a
party are not or will not, and the performance by the Lessor of its obligations
under each and will not, violate its certificate of incorporation or by-laws, do
not and will not contravene any Applicable Law and do not and will not
contravene any provision of, or constitute a default under, any Contractual
Obligation of the Lessor, and the Lessor possesses all requisite regulatory
authority to undertake and perform its obligations under the Operative
Documents.
(d) Litigation. There are no pending or threatened actions or proceedings
against the Lessor before any court, arbitrator or administrative agency that
would have a material adverse effect upon the ability of the Lessor to perform
its obligations under this Participation Agreement or any other Operative
Documents to which it is or will be a party.
(e) Lessor Liens. No Lessor Liens or other Liens created by acts or omissions of
the Lessor (other than Liens created by the Operative Documents) exist on the
Closing Date on the Leased Property, or any portion thereof, and the execution,
delivery and performance by the Lessor of this Participation Agreement or any
other Operative Document to which it is or will be a party will not subject the
Leased Property, or any portion thereof, to any Lessor Liens or other Liens
created by the Lessor (other than by the Operative Documents). Except for Liens
against the Leased Property created by the Operative Documents, Permitted Liens
(other than Lessor Liens), Liens (including Lessor Liens) arising directly or
indirectly from the Lessee's failure to discharge the Lessee's obligations under
the Operative Documents, the Lessor further represents and warrants that it will
not create, suffer to be created or permit any Liens on the Leased Property.
(1) Employee Benefit Plans. The Lessor is not and will not be making its
investment 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).
SECTION 4.3 Covenant of Lender. Upon payment by Lessee of the purchase price for
the Leased Property pursuant to Article XV of the Lease, Lender will release the
lien of the Operative Documents against the Leased Property.
17
SECTION 5
COVENANTS OF THE LESSEE
SECTION 5.1 Qualification as to Corporate Status. The Lessee shall remain a
validly existing corporation organized under the laws of the State of Ohio or
any other State of the United States of America and shall remain qualified to do
business in the State.
SECTION 5.2 Further Assurances. Upon the written request of the Lessor or the
Lender, the Lessee, at its own cost and expense, will cause all financing
statements (including precautionary financing statements), fixture filings and
other similar documents to be recorded or filed at such places and times in such
manner as may be necessary to preserve, protect and perfect the interest of the
Lessor and the Lender in the Leased Property as contemplated by the Operative
Documents.
SECTION 5.3 Reporting.
(a) Financial Statements. The Lessee shall deliver or cause to be delivered to
the Lender:
(i) As soon as practicable, and in any event within sixty (60) days after the
close of each of the first three quarterly accounting periods in each Fiscal
Year, the consolidated condensed balance sheet of the Lessee and its
Subsidiaries as at the end of such quarterly period and the related consolidated
condensed statements of operations for such quarterly period and for the elapsed
portion of the current Fiscal Year ended with the last day of such quarterly
period, and setting forth comparative consolidated figures for the related
period in the prior Fiscal Year, which financial statements shall be certified
by a duly authorized officer of the Lessee that they fairly present the
consolidated financial condition of the Lessee and its Subsidiaries as at the
dates indicated, subject to changes resulting from audit and normal year-end
adjustments;
(ii) As soon as practicable, and in any event within one hundred five (105) days
after the end of each Fiscal Year, consolidated balance sheets of the Lessee and
its Subsidiaries as at the end of such Fiscal Year and the related consolidated
statements of earnings, stockholders' equity and changes in cash-flows of the
Lessee and its Subsidiaries for such Fiscal Year, setting forth in comparative
form the consolidated figures for the Lessee and its Subsidiaries for the
previous Fiscal Year, all in reasonable detail and accompanied by a report
thereon of KPMG Peat Marwick or other independent public accountants of
recognized national standing selected by the Lessee which report shall be
unqualified as to the scope of audit and as to the status of the Lessee and its
Subsidiaries as a going concern and shall state that such consolidated financial
statements present fairly the financial position of the Lessee and its
Subsidiaries as at the dates indicated and the results of their operations and
changes in their financial position for the periods indicated in conformity with
GAAP applied on a basis consistent with prior years (or, in the event of a
change in accounting principles, such accountants' concurrence with such change)
and that the examination by such accountants in connection with such
consolidated financial statements has been made in accordance with generally
accepted auditing standards;
(iii) Together with each delivery of any financial statements pursuant to
clauses (i) and (ii) of this
18
subsection, an officer's certificate of the Lessee, executed by a duly
authorized officer of the Lessee, stating that the signer has instituted
procedures for the review of the terms of this Participation Agreement and the
principal Operative Documents and the review in reasonable detail of the
transactions and conditions of the Lessee and its Subsidiaries taken as a whole
during the accounting period covered by such financial statements, and that such
review has not disclosed the existence during or at the end of such accounting
period, and that the signer does not have knowledge of the existence as at the
date of such officer's certificate, of any condition or event which constitutes
an Event of Default, or, if any such condition or event existed or exists,
specifying the nature and period of existence thereof and what action the Lessee
has taken, is taking and proposes to take with respect thereto and stating that,
to the best of such officer's knowledge, the financial statements delivered
pursuant to clause (i) of this subsection present fairly the financial position
of the Lessee and its Subsidiaries as at the dates indicated and the results of
their operations and changes in their financial position for the periods
indicated in conformity with GAAP consistently applied;
(iv) Promptly, and in any event within five (5) Business Days after the Lessee
obtains knowledge thereof, notice of (A) the occurrence of any event which
constitutes an Event of Default which notice shall specify the nature thereof,
the period of existence thereof and what action the Lessee propose to take with
respect thereto and (B) any litigation or governmental proceedings pending
against the Lessee which the Lessee determines it will disclose in the Lessee's
reports filed on Forms 10K or 1OQ with the SEC (notice being due within five
Business Days); and
(v) With reasonable promptness, such information with respect to the financial
condition of the Lessee or the Leased Property as from time to time may be
reasonably requested by the Lender; provided, however, that the Lender shall
keep such information confidential, except in connection with enforcement or
exercise of the Lender's rights under this Participation Agreement or otherwise
available at law or in equity and provided, further, that the Lender may
disclose such information to the extent necessary to respond to inquiries of
bank regulatory authorities or to comply with legal process or any other legal
disclosure obligations, or to the extent such information has been made publicly
available by parties other than the Lender.
(b) Other Reports. Promptly after the same are available to it, the Lessee shall
deliver to the Lessor copies of all regular and periodic reports and other
reports and filings (if any) made by the Lessee with the SEC, and promptly upon
transmission thereof, copies of all proxy statements, financial statements,
notices and reports as the Company shall send to its shareholders.
SECTION 5.4 Financial Covenants of Lessee.
(a) Lessee covenants to maintain Consolidated Adjusted Net Worth of no less than
$95,000,000, plus an amount equal to 40% of Consolidated Net Earnings for each
fiscal year ending December 31, 1996 and thereafter (such increase to be
effective on the first day of the next fiscal year); provided that in the event
Lessee shall not have any Consolidated Net Earnings for such fiscal year they
shall be deemed to be zero for purposes of such adjustment.
(b) Lessee shall maintain a ratio of Consolidated Current Assets to Consolidated
Current
19
Liabilities of not less than 1.5 to 1.
(c) Lessee shall maintain a ratio of Consolidated Funded Debt to Consolidated
Total Capitalization equal to or less than 0.6 to 1.0.
(d) Capitalized terms used in this Section 5.4 and not otherwise defined shall
have meanings ascribed to them below:
"Consolidated Adjusted Net Worth" shall mean, as of the date of any
determination thereof, the amount of the capital stock accounts, including the
portion thereof attributable to preferred stock of the Lessee (net of any
treasury stock, at cost), less (to the extent incurred after December 31, 1995)
goodwill, organization expenses, patents, trademarks, trade names, copyrights,
franchises, unamortized debt discount and other intangible assets, plus Minority
Interests (as defined in the Credit Agreement), plus the Subordinated Debt, and
plus (or minus in the case of a deficit) (i) cumulative translation adjustments,
and (ii) the surplus and retained earnings of Lessee and its Subsidiaries, all
as determined on a consolidated basis in accordance with GAAP.
"Consolidated Current Assets" shall mean the consolidated current assets of
Lessee and its Subsidiaries, determined in accordance with GAAP.
"Consolidated Current Liabilities" shall mean the consolidated current
liabilities of the Lessee and its Subsidiaries, determined in accordance with
GAAP.
"Consolidated Funded Debt" shall mean the consolidated Funded Debt of the Lessee
and its Subsidiaries.
"Consolidated Net Earnings" shall mean the consolidated net profit after taxes
of the Lessee and its Subsidiaries as determined and computed in accordance with
GAAP.
"Consolidated Total Assets" shall mean, on a consolidated basis of Lessee and
its Subsidiaries, the total of all assets which in accordance with GAAP would be
included in determining total assets as shown on the asset side of a
consolidated balance sheet of Lessee and its Subsidiaries as of the date of
which Consolidated Total Assets is to be determined.
"Consolidated Total Capitalization" shall mean the sum of Consolidated Adjusted
Net Worth and Consolidated Funded Debt.
"Consolidated Total Liabilities" shall mean, on a consolidated basis of Lessee
and its Subsidiaries, the total of all items of indebtedness, obligation or
liability which in accordance with GAAP would be included in determining total
liabilities as shown on the liability side of a consolidated balance sheet of
Lessee and its Subsidiaries as at the date of which Consolidated Total
Liabilities is to be determined, shall not include preferred stock and
Subordinated Debt.
"Credit Agreement" shall mean the Credit Agreement dated as of April 21, 1992,
as amended, among the Lessee, Society National Bank, individually and as agent,
NBD Bank, N.A., the
20
Lender and Security Pacific National Bank.
"Funded Debt" shall mean with respect to any Person all Indebtedness which has a
final maturity of more than one (1) year from the origin thereof and which would
constitute long-term debt in accordance with GAAP (or which is renewable or
extendible at the option of the obligor for a period or periods more than one
year from the date of origin) or which is outstanding as a Revolving Loan (as
defined in the Credit Agreement) or under a similar agreement which provides for
borrowings over a period of more than one (1) year notwithstanding that any
Indebtedness (as defined in the Credit Agreement) incurred pursuant thereto may
be payable upon demand or within one (1) year after creation thereof, excluding
in each case the current portion of such Indebtedness and such Indebtedness
which would constitute short-term debt in accordance with GAAP, determined in
accordance with GAAP.
"Indebtedness" is used with the definition set forth in the Credit Agreement.
"Subordinated Debt" shall have the meaning supplied in the Credit Agreement.
SECTION 6
TRANSFERS BY LESSOR AND LENDER
SECTION 6.1 Lessor Transfers. The Lessor shall not assign, convey, encumber or
otherwise transfer all or any portion of its right, title or interest in, to or
under the Leased Property or the Lease (except pursuant to the Assignment of
Lease and Rents or pursuant to Article VI of the Lease) or any of the Operative
Documents without obtaining the prior written consent of the Lender and the
Lessee.
SECTION 6.2 Lender Transfers. The Lender shall not assign, convey or otherwise
transfer all or any portion of its right, title or interest in, to or under any
of the Operative Documents without the prior written consent of the Lessee and
the Lessor (such consent not to be unreasonably withheld); provided, however,
that without the prior written consent of or notice to the Lessor or the Lessee,
the Lender may sell participating interests in the Loan to such banks and other
financial institutions as the Lender shall, in its sole discretion, determine.
SECTION 7
INDEMNIFICATION
SECTION 7.1 General Indemnification. The Lessee agrees, whether or not any of
the transactions contemplated hereby shall be consummated, 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 by any third-party
that may be imposed on, incurred by or asserted against such Indemnitee, whether
or not such Indemnitee shall also be indemnified as to any such Claim by any
other Person (except to the extent such claim is covered by the insurance
required by the Lease) and in any way relating to or arising out of:
(i) any of the Operative Documents or any of the transactions contemplated
thereby, and any
21
amendment, modification or waiver in respect thereof;
(ii) the Land or any part thereof or interest therein;
(iii) the purchase, design, construction, preparation, installation, inspection,
delivery, non- delivery, acceptance, rejection, ownership, management,
possession, operation, rental, lease, sublease, repossession, maintenance,
repair, alteration, modification, addition or substitution, storage, transfer or
title, redelivery, use, financing, refinancing, disposition, operation,
condition, sale (including, without limitation, any sale pursuant to the Lease),
return or other disposition of all or any part or any interest in the Leased
Property or the imposition of any Lien (or incurring of any liability to refund
or pay over any amount as a result of any Lien) thereon, including without
limitation (A) Claims or penalties arising from any violation of law or in tort
(strict liability or otherwise), (B) latent or other defects, whether or not
discoverable, (C) 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 the Leased Property, (D) the making of any Alterations in
violation of any standards imposed by any insurance policies required to be
maintained by the Lessee pursuant to the Lease which are in effect at any time
with respect to the Leased Property or any part thereof, (E) any Claim for
patent, trademark or copyright infringement and (F) Claims arising from any
public improvements with respect to the Leased Property resulting in any change
or special assessments being levied against the Leased Property or any Claim for
utility "tap-in" fees;
(iv) [omitted];
(v) the retaining or employment of any broker, finder or financial advisor by
the Lessee to act on its behalf in connection with this Participation Agreement,
or the authorization of any broker or financial adviser retained or employed by
any other Person who or which acts on Lessee's behalf, or the incurring of any
fees or commissions to which the Lessor or the Lender might be subjected by
virtue of their entering into the transactions contemplated by this
Participation Agreement;
(vi) the existence of any Lien on or with respect to the Leased Property, the
Construction, any Basic Rent or Supplemental Rent, including any Liens which
arise out of the possession, use, occupancy, construction, repair or rebuilding
of or title to or interest of any Person in the Leased 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 Alterations constructed by the
Lessee, except in all cases the Liens listed as items (i) and (ii) in the
definition of Permitted Liens; or
(vii) any breach of any requirement, condition, restriction or limitation in the
Deed;
provided, however, that the Lessee shall not be required to indemnify any
Indemnitee under this Section for (x) any Claim to the extent that such Claim
results from the willful misconduct or gross negligence of such Indemnitee
(provided that the exception set forth in this clause (x) shall not apply to
Lessor Indemnitees, which the Lessee shall, in any event, be obligated to
indemnify, except as provided in Section 18.12 of the Lease), (y) any Claim
resulting from Lessor Liens which the Lessor is responsible for discharging
under the Operative Documents or (z) any Claim
22
which occurs or arises out of a time when the Lessee was not an owner, lessee or
otherwise using or in possession of the Leased Property or any part thereof. 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 7.2 Environmental Indemnity. Without limitation of Section 7.1, the
Lessee agrees to indemnify, hold harmless and defend each Indemnitee from and
against any and all Claims (including without limitation third party Claims for
personal injury or real or personal property damage), losses (including but not
limited to any loss of value of the Leased Property), 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 but not limited to
reasonable and documented attorneys' and/or paralegals' fees and expenses),
including, but not limited to, 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 government agency,
arising directly or indirectly, in whole or in part, out of:
(i) the presence on or under the Land of any Hazardous Materials, or any
releases or discharges of any Hazardous Materials on, under, from or onto the
Land;
(ii) any activity, including, without limitation, construction, carried on or
undertaken on or off the Land, 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 the Land;
(iii) loss of or damage to any property or the environment (including, without
limitation, clean- up costs, response costs, remediation and removal costs, cost
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;
(iv) any claim concerning lack of compliance with Environmental Laws, or any act
or omission causing an environmental condition that requires remediation or
would allow any governmental agency to record a lien or encumbrance on the land
records; or
(v) any residual contamination on or under the Land, or affecting any natural
resources, and 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, and irrespective of whether any of such activities
were or will be undertaken in accordance with applicable laws, regulations,
codes and ordinances;
in any case arising or occurring (y) prior to or during the Lease Term or (z) at
any time during
23
which the Lessee or any Affiliate thereof owns any interest in or otherwise
occupies or possesses the Leased Property or any portion thereof; PROVIDED,
HOWEVER, that the Lessee shall not be required to indemnify any Indemnitee under
this Section for any Claim to the extent that such Claim results from the
willful misconduct or gross negligence of such Indemnitee (except that the
exception set forth in the immediately preceding PROVISO shall not apply to
Lessor Indemnitees, which the Lessee shall, in any event, be obligated to
indemnify, except as provided in Section 18.12 of the Lease). 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 7.3 PROCEEDINGS IN RESPECT OF CLAIMS. The obligations and liabilities of
the Lessee with respect to any Claims for which, if valid, Lessee is obligated
to provide indemnification pursuant to the provisions of Section 7.1 and Section
7.2 ("Indemnified Claims"), shall be subject to the following terms and
conditions:
(a) Whenever an Indemnitee shall have received notice that an Indemnified Claim
has been asserted or threatened against such Indemnitee, the Indemnitee shall
promptly notify the Lessee of such Claim, together with supporting facts and
data within the possession or knowledge of the Indemnitee related thereto,
provided that the failure to deliver such notice shall not relieve the Lessee of
its indemnification obligations hereunder except to the extent that such failure
prejudices the Lessee. With respect to any amount that the Lessee is requested
by an Indemnitee to pay by reason of Section 7.1 or 7.2, such Indemnitee shall,
if so requested by the Lessee and prior to any payment, submit such additional
information to the Lessee as the Lessee may reasonably request and which is in
the possession of such Indemnitee to substantiate properly the requested
payment.
(b) Lessee shall defend, at its expense, such Indemnified Claim with counsel of
its choice reasonably satisfactory to the Indemnitee, PROVIDED, HOWEVER, that if
an Event of Default has occurred and is continuing, the Indemnitee shall have
the right, upon notice to and at the expense of Lessee, to undertake the defense
of such Claim during the continuance of such Event of Default. The Indemnitee
shall promptly notify the Lessee of any compromise or settlement proposal with
respect to any such Claim and shall not unreasonably refuse to accept any such
proposal if the same is acceptable to the Lessee. The Indemnitee may participate
in a reasonable manner at its own expense and with its own counsel in any
proceeding conducted by the Lessee in accordance with the foregoing. The Lessee
shall not enter into any settlement or other compromise with respect to any
Claim which is entitled to be indemnified under Section 7.1 or 7.2 without the
prior written consent of the Lender acting individually and on behalf of the
affected Indemnitee (and Lessor hereby irrevocably so authorizes Lender to grant
such consent on behalf of Lessor and the Lessor Indemnitees), which consent
shall not be unreasonably withheld. The Lessee and each Indemnitee are and shall
be bound to cooperate with each other in good faith in connection with the
defense of any such action, suit or proceeding in providing any information and
bear witness or give testimony which may be requested by counsel for any of such
parties.
(c) Unless an Event of Default shall have occurred and be continuing, no
Indemnitee shall enter into any settlement or other compromise with respect to
any Claim which is entitled to be
24
indemnified under Section 7.1 or 7.2 without the prior written consent of the
Lessee, which consent shall not be unreasonably withheld (it being agreed that
it will not be unreasonable for the Lessee to withhold consent if such
compromise or settlement adversely affects a material right or property interest
of the Lessee, including, without limitation, Lessee's use, title or possession
of the Leased Property), unless such Indemnitee waives its right to be
indemnified under Section 7.1 or 7.2 with respect to such Claim, PROVIDED that
no Indemnitee shall enter into any settlement which would adversely affect
Lessee's use, title to or possession of the Leased Property without Lessee's
prior written consent.
(d) Upon payment in full of any Claim by the Lessee pursuant to Section 7.1 or
7.2 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) including claims (subject to the provisions of
this Section 7 and Section 18.12 of the Lease) against another Indemnitee 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 give such further assurances as are necessary or
advisable to enable the Lessee vigorously to pursue such Claims.
(e) Any amount payable to an Indemnitee pursuant to Section 7.1 or 7.2 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, and if requested by the Lessee, such determination shall be verified by
a nationally recognized independent accounting firm mutually acceptable to the
Lessee and the Indemnitee at the expense of the Lessee.
(f) If Lessee fails to assume the defense of an Indemnified Claim within a
reasonable time (and in any event not more than 30 days) after receipt of notice
thereof from the Indemnitee, the Indemnitee will (upon delivering notice to such
effect to the Lessee) have the right to undertake, at the Lessee's cost and
expense, the defense, compromise or settlement of such Claim on behalf of and
for the account and risk of the Lessee, subject to the right of the Lessee
(PROVIDED no Event of Default shall have occurred and remained outstanding) to
assume the defense of such Claim at any time prior to the settlement, compromise
or final determination thereof, and PROVIDED HOWEVER, that the Indemnitee shall
not enter into any such compromise or settlement without the written consent of
the Lessee, which shall not be unreasonably withheld, as aforesaid, and PROVIDED
FURTHER that no Indemnitee shall enter into any such settlement which would
adversely affect Lessee's use, title to or possession of the Leased Property
without Lessee's prior written consent. In the event the Indemnitee assumes the
defense of any such Claim, the Indemnitee will cooperate with the Lessee in
keeping the Lessee reasonably informed of the progress of any such defense,
compromise or settlement.
(g) Nothing contained in this SECTION 7.3 shall be deemed to expand the
obligation of the Lessee to defend or be responsible for indemnification of the
Indemnitees with respect to any Claim beyond the specific indemnification
obligations set forth in Sections 7.1, 7.2, 7.4, or elsewhere in the Operative
Documents.
25
SECTION 7.4 General Tax Indemnity.
(a) Except as otherwise provided in this Section, the Lessee shall pay on an
After-Tax Basis, and on written demand shall indemnify and hold each Tax
Indemnitee harmless from and against, any and all fees (including, without
limitation, documentation, recording, license and registration fees), taxes
(including, without limitation, income, gross receipts, sales, rental, use,
turnover, value-added, property, excise and stamp taxes), levies, imposts,
duties, charges, assessments or withholdings of any nature whatsoever, together
with any penalties, fines or interest thereon or additions thereto (any of the
foregoing being referred to herein as "Taxes" and individually as a "Tax" (for
the purposes of this Section, the definition of "Taxes" excludes amounts imposed
on, incurred by, or asserted against each Tax Indemnitee as the result of any
prohibited transaction, within the meaning of Section 406 or 407 of ERISA or
Section 4975(c) of the Code, arising out of the transactions contemplated hereby
or by any other Operative Document)) imposed on or with respect to any Tax
Indemnitee, the Lessee, the Leased Property or any portion thereof or the Land,
or any sublessee or user thereof, by the United States or by any state or local
government or other taxing authority in the United States in connection with or
in any way relating to (i) the acquisition, financing, mortgaging, construction,
preparation, installation, inspection, delivery, non-delivery, acceptance,
rejection, purchase, ownership, possession, rental, lease, sublease,
maintenance, repair, storage, transfer of title, redelivery, use, operation,
condition, sale, return or other application or disposition of all or any part
of the Leased Property or the imposition of any Lien, other than a Lessor Lien
(or incurrence of any liability to refund or pay over any amount as a result of
any Lien, other than a Lessor Lien) thereon, (ii) Basic Rent or Supplemental
Rent or the receipts or earnings arising from or received with respect to the
Leased Property or any part thereof, or any interest therein or any applications
or dispositions thereof, (iii) the Leased Property, the Land or any part thereof
or any interest therein, (iv) all or any of the Operative Documents, any other
documents contemplated thereby and any amendments and supplements thereto and
(v) otherwise with respect to or in connection with the transactions
contemplated by the Operative Documents.
(b) Section 7.4(a) shall not apply to:
(i) Taxes on, based on, or measured by or with respect to, net income of the
Lessor and the Lender (including, without limitation, minimum Taxes, capital
gains Taxes, Taxes on or measured by items of tax preference or alternative
minimum Taxes) other than (A) any such Taxes that are, or are in the nature of,
sales, use, license, rental or property Taxes, (B) withholding Taxes imposed by
the United States or any state (1) on payments with respect to the Note, to the
extent imposed by reason of a change in Applicable Law occurring after the
Closing Date or (2) on Rent, to the extent the net payment of Rent after
deduction of such withholding Taxes would be less than amounts currently payable
with respect to the Note and (C) any increase in any franchise taxes based on or
otherwise measured by net income, estate, inheritance, transfer, income tax or
gross income or gross receipts tax in lieu of net income over the term of the
Lease, net of any decrease in such taxes realized by such Tax Indemnitee, to the
extent that such tax increase or decrease would not have occurred if on the
Closing Date the Lessor had advanced funds to the Lessee in the form of a loan
secured by the Leased Property in an amount equal to the Loan, with debt service
for such loan equal to the portion of the Basic Rent attributable to the Loan
payable
26
on each Rent Payment Date and a principal balance at the maturity of such loan
in an amount equal to the Loan at the end of the Lease Term;
(ii) Taxes on, based on, or in the nature of or measured by, Taxes on doing
business, business privilege, capital, capital stock, net worth, or mercantile
license or similar taxes other than (A) any increase in such Taxes imposed on
such Tax Indemnitee by any state, net of any decrease in such taxes realized by
such Tax Indemnitee, to the extent that such tax increase or decrease would not
have occurred if on the Closing Date the Lessor had advanced funds to the Lessee
in the form of a loan secured by the Leased Property in an amount equal to the
Loan, with debt service for such loan equal to the portion of the Basic Rent
attributable to the Loan payable on each Rent Payment Date and a principal
balance at the maturity of such loan in an amount equal to the Loan at the end
of the Lease Term or (B) any Taxes that are or are in the nature of sales, use,
rental, license or property Taxes;
(iii) Taxes that result from any act, event or omission, or are attributable to
any period of time, that occurs after the earliest of (A) the expiration of the
Lease Term with respect to the Leased Property and, if the Leased Property is
required to be returned to the Lessor in accordance with the Lease, such return
and (B) the discharge in full of the Lessee's obligations to pay the Lease
Balance, or any amount determined by reference thereto, with respect to the
Leased Property and all other amounts due under the Lease, unless such Taxes
relate to acts, events or matters occurring prior to the earliest of such times
or are imposed on or with respect to any payments due under the Operative
Documents after such expiration or discharge;
(iv) Taxes imposed on a Tax Indemnitee that result from any voluntary sale,
assignment, transfer or other disposition by such Tax Indemnitee or any related
Tax Indemnitee of any interest in the Leased Property or any part thereof, or
any interest therein or any interest or obligation arising under the Operative
Documents (including a sale of an interest in the Note) or from any sale,
assignment, transfer or other disposition of any interest in such Tax Indemnitee
or any related Tax Indemnitee, it being understood that each of the following
shall not be considered a voluntary sale: (A) any substitution, replacement or
removal of any of the property by the Lessee shall not be treated as a voluntary
action of any Tax Indemnitee, (B) any sale or transfer resulting from the
exercise by the Lessee of any termination option, any purchase option or sale
option, (C) any sale or transfer while an Event of Default shall have occurred
and be continuing under the Lease and (D) any sale or transfer resulting from
the Lessor's exercise of remedies under the Lease;
(v) any Tax which is being contested in accordance with the provisions of
Section 7.4(c), during the pendency of such contest;
(vi) any Tax that is imposed on a Tax Indemnitee as a result of such Tax
Indemnitee's gross negligence or willful misconduct (other than gross negligence
on the part of the Lessor and the incorporators, stockholders, directors,
officers, employees and agents of the Lessor or gross negligence or willful
misconduct imputed to the Lessor or the Lender solely by reason of their
respective interests in the Leased Property);
(vii) any Tax that results from a Tax Indemnitee engaging, with respect to the
Leased Property, in transactions other than those permitted by the Operative
Documents; or
27
(viii) to the extent any interest, penalties or additions to tax result in whole
or in part from the failure of a Tax Indemnitee to file a return that it is
required to file in a proper and timely manner, unless such failure (A) results
from the transactions contemplated by the Operative Documents in circumstances
where the Lessee did not give timely notice to Lessor (and the Lessor otherwise
had no actual knowledge) of such filing requirement that would have permitted a
proper and timely filing of such return or (B) results from the failure of the
Lessee to supply information necessary for the proper and timely filing of such
return that was not in the possession of the Lessor.
(c) 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 Taxes as to which the Lessee may have an indemnity
obligation pursuant to this Section, or if any Tax Indemnitee shall determine
that any Taxes as to which the Lessee may have an indemnity obligation pursuant
to this Section may be payable, such Tax Indemnitee shall promptly notify the
Lessee. The Lessee shall be entitled, at its expense, to participate in and to
the extent that the Lessee desires to, assume and control the defense thereof;
provided, however, that the Lessee shall not be entitled to assume and control
the defense of any such action, suit or proceeding (but the Tax Indemnitee shall
then contest, at the sole cost and expense of the Lessee, on behalf of the
Lessee) if and to the extent that (A) an Event of Default has occurred and is
continuing, (B) such action, suit or proceeding involves matters which are
unrelated to the transactions contemplated by the Operative Documents and if
determined adversely could be materially detrimental to the interests of such
Tax Indemnitee notwithstanding indemnification by the Lessee or (C) such action,
suit or proceeding involves the federal or any state income tax liability of the
Tax Indemnitee. With respect to any contests controlled by a Tax Indemnitee, (i)
if such contest relates to the federal or any state income tax liability of such
Tax Indemnitee, such Tax Indemnitee shall be required to conduct such contest
only if the Lessee shall have provided to such Tax Indemnitee an opinion of
independent tax counsel selected by the Lessee and reasonably satisfactory to
the Tax Indemnitee stating that a reasonable basis exists to contest such claim
or (ii) in the case of an appeal of an adverse determination of any contest
relating to any Taxes, an opinion of such counsel to the effect that such appeal
is more likely than not to be successful; provided, however, such Tax Indemnitee
shall in no event be required to appeal an adverse determination to the United
States Supreme Court. The Tax Indemnitee may participate in a reasonable manner
at its own expense and with its own counsel in any proceeding conducted by the
Lessee in accordance with the foregoing. Each Tax Indemnitee shall at the
Lessee's 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. Unless an Event of Default shall have occurred and be continuing, no
Tax Indemnitee shall enter into any settlement or other compromise with respect
to any Claim which is entitled to be indemnified under this Section without the
prior written consent of the Lessee, which consent shall not be unreasonably
withheld (it being agreed that it will not be unreasonable for Lessee to
withhold consent if such compromise or settlement would adversely affect
material rights or property interests of the Lessee, including, without
limitation, Lessee's use, title or possession of the Leased Property), unless
such Tax Indemnitee waives its right to be indemnified under this Section with
respect to such Claim, provided the settlement would not adversely affect
materials rights or property interests of the Lessee, including, without
limitation,
28
Lessee's use, title or possession of the Leased Property. Notwithstanding
anything contained herein to the contrary, (i) a Tax Indemnitee will not be
required to contest (and the Lessee shall not be permitted to contest) a Claim
with respect to the imposition of any Tax if such Tax Indemnitee shall waive its
right to indemnification under this Section with respect to such Claim (and any
related Claim with respect to other taxable years the contest of which is
precluded as a result of such waiver) and (ii) no Tax Indemnitee shall be
required to contest any Claim if the subject matter thereof shall be of a
continuing nature and shall have previously been decided adversely, unless there
has been a change in law which in the opinion of the Lessee's counsel creates
substantial authority for the success of such contest. Each Tax Indemnitee and
the Lessee shall consult in good faith with each other regarding the conduct of
such contest controlled by either.
(d) If (i) a Tax Indemnitee shall obtain a credit or refund of any Taxes paid by
the Lessee pursuant to this Section or (ii) by reason of the incurrence or
imposition of any Tax for which a Tax Indemnitee is indemnified hereunder or any
payment made to or for the account of such Tax Indemnitee by the Lessee pursuant
to this Section, such Tax Indemnitee at any time realizes a reduction in any
Taxes for which the Lessee is not required to indemnify such Tax Indemnitee
pursuant to this Section, which reduction in Taxes was not taken into account in
computing such payment by the Lessee to or for the account of such Tax
Indemnitee, then such Tax Indemnitee shall promptly pay to the Lessee the amount
of such credit or refund, together with the amount of any interest received by
such Tax Indemnitee on account of such credit or refund or an amount equal to
such reduction in Taxes, as the case may be; provided, however, that no such
payment shall be made so long as an Event of Default shall have occurred and be
continuing; and provided, further, that the amount payable to the Lessee by any
Tax Indemnitee pursuant to this subsection shall not at any time exceed the
aggregate amount of all indemnity payments made by the Lessee under this Section
to such Tax Indemnitee and all related Tax Indemnities with respect to the Taxes
which gave rise to a credit or refund or with respect to the Tax which gave rise
to a reduction in Taxes less the amount of all prior payments made to the Lessee
by such Tax Indemnitee and related Tax Indemnities under this Section. Each Tax
Indemnitee agrees to act in good faith to claim such refunds and other available
Tax benefits, and take such other actions as may be reasonable to minimize any
payment due from the Lessee pursuant to this Section and to maximize the amount
of any Tax savings available to it. The disallowance or reduction of any credit,
refund or other tax savings with respect to which a Tax Indemnitee has made a
payment to the Lessee under this subsection shall be treated as a Tax for which
the Lessee is obligated to indenmify such Tax Indemnitee hereunder.
(e) Any Tax indemnifiable under this Section shall be paid directly when due to
the applicable taxing authority if 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 shall be paid within thirty (30) days after receipt of a written demand
therefor from such Tax Indemnitee accompanied by a written statement describing
in reasonable detail the amount so payable, but not before the date that the
relevant Taxes are due. Any payments made pursuant to this Section shall be made
directly to the 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
29
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 this
Participation Agreement. Upon the request of any Tax Indemnitee with respect to
a Tax 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 Lessee's payment of
such Tax or such other evidence of payment as is reasonably acceptable to such
Tax Indemnitee.
(t) If the Lessee knows of any report, return or statement required to be filed
with respect to any Taxes that are subject to indemnification under this
Section, the Lessee shall, if the Lessee is permitted by Applicable Law, timely
file such report, return or statement (and, to the extent permitted by law, show
ownership of the Leased Property in the Lessee except to the extent contrary to
financial reporting requirements); Provided, however, that if the Lessee is not
permitted by Applicable Law or does not have access to the information required
to file any such report, return or statement, the Lessee will promptly so notify
the appropriate Tax Indemnitee, in which case Tax Indemnitee will file such
report. In any case in which the Tax Indemnitee will file any such report,
return or statement, Lessee shall, upon written request of such Tax Indemnitee,
provide such Tax Indemnitee with such information as is reasonably available to
the Lessee.
(g) At the Lessee's request, the amount of any indemnity payment by the Lessee
or any payment by a Tax Indemnitee to the Lessee pursuant to this Section shall
be verified and certified by an independent public accounting firm selected by
the Lessee and reasonably acceptable to the Tax Indemnitee. Unless such
verification shall disclose an error in Lessee's favor of 5% or more, the costs
of such verification shall be borne by the Lessee. In no event shall the Lessee
have the right to review the Tax Indemnitee's tax returns or receive any other
confidential information from the Tax Indemnitee in connection with such
verification. The Tax Indemnitee agrees to cooperate with the independent public
accounting firm performing the verification and to supply such firm with all
information reasonably necessary to permit it to accomplish such verification;
provided, however, that the information provided to such firm by such Tax
Indemnitee shall be for its confidential use. The parties agree that the sole
responsibility of the independent public accounting firm shall be to verify the
amount of a payment pursuant to this Participation Agreement and that matters of
interpretation of this Participation Agreement are not within the scope of the
independent accounting firm's responsibilities.
SECTION 7.5 (Reserved]
SECTION 7.6 End of Term Indemnity. In the event that at the end of the Lease
Term (i) the Lessor elects the option set forth in Section 15.6 of the Lease and
(ii) after the Lessor receives the sales proceeds from the Leased Property under
Section 15.6 or 15.7 of the Lease together with the Lessee's payment of the
Recourse Deficiency Amount, the Lessor shall not have received the entire Lease
Balance, then the Lessor or the Lender may obtain, at the Lessee's sole cost and
expense, an appraisal report from the Appraiser (or if the Appraiser is not
available, another appraiser reasonably satisfactory to the Lessor or the
Lender, as the case may be) in form and substance satisfactory to the Lessor and
the Lender to establish the reason for any decline in value of the Leased
Property from that anticipated for such date in the appraisal delivered on the
Closing Date. The Lessee shall promptly reimburse the Lessor for the amount
equal to such decline in value to the extent that appraisal report delivered
pursuant to the preceding sentence
30
concludes that such decline was due to (i) extraordinary use, failure to
maintain, to repair, to restore, to rebuild or to replace the Leased Property in
a manner consistent with reasonable preservation of its value, failure to comply
with all Applicable Laws, failure to use, workmanship, method of installation or
removal or maintenance, repair, rebuilding or replacement, or any other cause or
condition within the reasonable power of the Lessee to control or effect
resulting in the Improvements failing to constitute an office/warehouse and/or
light manufacturing facility (excepting in each case ordinary wear and tear),
(ii) any Alteration made to, or any rebuilding of, the Leased Property or any
part thereof by the Lessee, (iii) any restoration or rebuilding carried out by
the Lessee or any condemnation of any portion of the Leased Property pursuant to
Article XI of the Lease (after taking into account any Award in respect thereof)
or (iv) any use of the Leased Property or any part thereof by the Lessee other
than as permitted pursuant to Article VIII of the Lease. The parties hereto
acknowledge and agree that the obligation imposed upon the Lessee under this
Section arises from a higher standard of maintenance of the Leased Property than
that required under Article VII of the Lease and is applicable whether or not
the Lessee has failed to comply with any such other obligations under the
Operative Documents.
SECTION 8
MISCELLANEOUS
SECTION 8.1 Survival of Agreements. The indemnities of the parties provided for
in Sections 7. 1, .2, .3 and .4 of this Participation Agreement, shall survive
the termination or expiration of this Participation Agreement and any of the
other Operative Documents, any disposition of any interest of the Lessor or the
Lender in the Leased Property and shall be and continue in effect
notwithstanding any investigation made by any party hereto or to any of the
other Operative Documents and the fact that any such party may waive compliance
with any of the other terms, provisions or conditions of any of the Operative
Documents. The representations, warranties, covenants and agreements of the
parties provided for in the Operative Documents shall not be merged into the
Deed.
SECTION 8.2 Notices. Unless otherwise specified herein or in an applicable
Operative Document, it shall, for purposes of this Participation Agreement and
the other Operative Documents, be sufficient service or giving of any notice,
request, complaint, demand, instruction or other instrument or document to any
Person, if it is in writing to the Address set forth below. Any notice given by
telecopy or facsimile transmission shall be deemed given when sent provided
confirmed by regular U.S. mail. Any notice given by mail shall be deemed to be
given when sent by registered or certified mail, return receipt requested. Any
notice sent by any party hereto under the Operative Documents shall also be sent
to the other parties to this Participation Agreement. The parties hereto may
designate, by notice given to each of the other parties, any further or
different addresses than those set forth below to which subsequent notices shall
be sent. For purposes of the Operative Documents (but subject to the preceding
sentence), the Address of the Lessee, the Lender and the Lessor is as follows:
(i) Lessee
Huffy Corporation
31
225 Byers Road
Miamisburg, OH 45342-3657
Attention: Manager, Treasury
Operations and Financial Analysis
Facsimile No.: (513) 865-5470
Telephone No.: (513) 865-5494
With a copy to the Attention of:
Vice President and General Counsel
(Same address as above)
Facsimile No.: (513) 865-5414
Telephone No.: (513) 865-5431
(ii) Lender
Bank One, Dayton, N.A.
Kettering Tower
P.O. Box 1103
Dayton, OH 45401
Attention: R. Michael Dunlavey, Vice President
Facsimile No.: (513) 449-4885
Telephone No.: (513) 449-7407
(iii) Lessor
Asset Holdings Company VI, L.L.C.
c/o J H Management Corporation
Room 608
One International Place
Boston, Massachusetts 02110
Attention: Tiffany Percival
Facsimile No.: (617) 951-7050
Telephone No.: (617) 951-7690
SECTION 8.3 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 8.4 Amendments. No Operative Document nor any of the terms thereof may
be terminated, amended, supplemented, waived or modified with respect to any
party thereto except with the prior written consent of such party thereto and,
in all cases, the Lender and the Lessee. If and to the extent that this
Participation Agreement, the Loan Agreement, the Note, the Lease, the Assignment
of Lease and Rents or the Mortgage constitutes an amendment, supplement,
termination, waiver or other modification to any Operative Document, each of the
parties hereto,
32
by its execution of this Participation Agreement, shall be deemed to have given
its written consent to such amendment supplement, termination, waiver or other
modification.
SECTION 8.5 Headings, Etc. The Table of Contents and headings of the various
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 8.6 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, their successors and their permitted
assigns.
SECTION 8.7 Governing Law. THIS PARTICIPATION AGREEMENT HAS BEEN DELIVERED IN,
AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF OHIO APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
ENTIRELY WITHIN SUCH STATE, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE.
SECTION 8.8 No Recourse. No recourse shall be had for any claims under this
Participation Agreement against any incorporator, shareholder, officer, manager,
member or director, past, present or future, of Lessor or of any successor or of
Lessor's constituent members or other affiliates or of J H Management
Corporation, or against J H Management Corporation, either directly or through
Lessor or any successor, whether by virtue of any constitution, statute or rule
of law or by the enforcement of any assessment or penalty or otherwise, all such
liability being, by acceptance hereof and as part of the consideration for the
acceptance hereof, expressly waived and released.
SECTION 8.9 Expenses.
(a) Expenses of Lessor and Lender. The reasonable fees, expenses and
disbursements (including reasonable counsel fees) of the Lessor and the Lender
in connection with the Operative Documents incurred from and after the Closing
Date shall be paid by the Lessee as Supplemental Rent upon demand therefor by
the Lessor, provided that no such fees shall be payable by Lessee unless
specifically authorized by the Operative Documents.
(b) Amendments Supplements and Appraisal. The Lessee agrees to pay all
reasonable and documented out-of-pocket costs and expenses of the Lessor and the
Lender in connection with the successful amendment or supplementing of the
Operative Documents and the documents and instruments referred to therein
(including, without limitation, the fees and disbursements of counsel for the
Lessor and the Lender).
SECTION 8.10 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
33
provision in any other jurisdiction.
SECTION 8.11 Submission to Jurisdiction: Waivers. Each party hereto hereby
irrevocably and unconditionally (i) submits for itself and its property in any
legal action or proceeding relating to this Participation Agreement or any other
Operative Document, or for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general jurisdiction of the courts of the
State of Ohio, the courts of the United States of America for the District of
Ohio and appellate courts from any thereof, (ii) consents that any such action
or proceedings may be brought to such courts, and waives any objection that it
may now or hereafter have to the venue of any such action or proceeding in any
court or that such action or proceeding was brought in an inconvenient court and
agrees not to plead or claim the same, (iii) agrees that service of process in
any such action or proceeding may be effected by mailing a copy thereof by
registered or certified mail (or any substantially similar form of mail),
postage prepaid, to such party at its address set forth in Schedule 8.2 or at
such other address of which the other parties hereto shall have been notified
pursuant to Section 8.2 and (iv) agrees that nothing herein shall affect the
right to effect service of process in any other manner permitted by law.
IN WITNESS WHEREOF, the parties hereto have caused this Participation Agreement
to be executed by their respective duly authorized officers as of the day and
year first above written.
HUFFY CORPORATION, as Lessee
By: /s/ Pamela J. Whipps
Name: Pamela J. Whipps
Title: Vice President and Treasurer
ASSET HOLDINGS COMPANY VI, L.L.C.,
as Lessor
By Asset Holdings Corporation VI, a Delaware corporation, its managing member
By: /s/ Tiffany Percival
Name: Tiffany Percival
Title: Vice President
BANK ONE, DAYTON, N.A., as Lender
By: /s/ Debrah S. Deibin
Name: Debrah S. Deibin
Title: VP
Name:_____________________________________
Title:____________________________________
34
APPENDIX I
TO
PARTICIPATION AGREEMENT, LEASE AND
DEVELOPMENT AGREEMENT AND LOAN AGREEMENT
DEFINITIONS AND INTERPRETATION
A. Interpretation. In each Operative Document, unless a clear contrary intention
appears, (i) the singular number includes the plural number and vice versa, (ii)
reference to any Person includes such Person's successors and assigns but, if
applicable, only if such successors and assigns are permitted by the Operative
Documents, and reference to a Person in a particular capacity excludes such
Person in any other capacity or individually, (iii) reference to any gender
includes each other gender, (iv) reference to any agreement (including any
Operative Document), document or instrument means such agreement, document or
instrument as amended or modified and in effect from time to time in accordance
with the terms thereof and, if applicable, the terms of the other Operative
Documents and reference to any promissory note includes any promissory note
which is an extension or renewal thereof or a substitute or replacement
therefor, (v) reference to any Applicable Law means such Applicable Law as
amended, modified, codified, replaced or reenacted, in whole or in part, and in
effect from time to time, including rules and regulations promulgated thereunder
and reference to any section or other provision of any Applicable Law means that
provision of such Applicable Law from time to time in effect and constituting
the substantive amendment, modification, codification, replacement or
reenactment of such section or other provision, (vi) reference in any Operative
Document to any Article, Section, Appendix, Schedule or Exhibit means such
Article or Section thereof or Appendix, Schedule or Exhibit thereto, (vii)
"hereunder", "hereof", "hereto" and words of similar import shall be deemed
references to an Operative Document as a whole and not to any particular
Article, Section or other provision hereof, (viii) "including" (and with
correlative meaning include") means including without limiting the generality of
any description preceding such term, (ix) "or" is not exclusive and (x) relative
to the determination of any period of time, "from' means "from and including"
and "to" and "through" mean "to but not including".
B. Accounting Terms. In each Operative Document, unless expressly otherwise
provided, accounting terms shall be construed and interpreted, and accounting
determinations and computations shall be made, in accordance with GAAP.
C. Conflict in Operative Documents. If there is any conflict between any
Operative Documents, such Operative Document shall be interpreted and construed,
if possible, so as to avoid or minimize such conflict but, to the extent (and
only to the extent) of such conflict, the Participation Agreement shall prevail
and control.
D. Defined Terms. Unless a clear contrary intention appears, terms defined
herein have the respective indicated meanings when used in each Operative
Document.
"Acceleration" means the automatic acceleration of Lessee's obligation to
purchase Lessor's interest in the Leased Property pursuant to the provisions of
Section 15.3 of the Lease. "Address" means, with respect to any Person, such
Person's address set forth in Section 8.2 of the
35
Participation Agreement or such other address as such Person shall have
identified to the parties to the Participation Agreement in writing.
"Adjusted LIBOR Rate" means the rate per annum equal to the quotient obtained by
dividing the applicable LIBOR Rate by the percentage obtained by subtracting
from 100% the applicable LIBOR Reserve Percentage on the date of calculation.
"Affiliate" means, with respect to any Person, any other Person directly or
indirectly controlling, controlled by or under common control with such Person.
For purposes of this definition, the term "control" (including the correlative
meanings of the terms "controlling," "controlled by" and "under common control
with), as used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management
policies of such Person, whether through the ownership of voting securities or
by contract or otherwise; provided, however, (but without limiting the
foregoing) that no pledge of voting securities of any Person without the current
right to exercise voting rights with respect thereto shall by itself be deemed
to constitute control over such Person.
"After-Tax Basis" means (i) with respect to any payment to be received by an
Indemnitee (which, for purposes of this definition, shall include any Tax
Indemnitee), the amount of such payment supplemented by a further payment or
payments so that, after deducting from such payments the amount of all Taxes
(net of any current credits, deductions or other Tax benefits arising from the
payment by the Indemnitee of any amount, including Taxes, for which the payment
to be received is made) actually imposed currently on the Indemnitee by any
Governmental Authority or taxing authority with respect to such payments, the
balance of such payments shall be equal to the original payment to be received
and (ii) with respect to any payment to be made by any Indemnitee, the amount of
such payment supplemented by a further payment or payments so that, after
increasing such payment by the amount of any current credits or other Tax
benefits realized by the Indemnitee under the laws of any Governmental Authority
or taxing authority resulting from the making of such payments, the sum of such
payments (net of such credits or benefits) shall be equal to the original
payment to be made; provided, however, for the purposes of this definition, and
for purposes of any payment to be made to either the Lessee or a Tax Indemnitee
on an after-tax basis, it shall be assumed that federal, state and local taxes
are payable at the highest combined marginal federal and state statutory income
tax rate (taking into account the deductibility of state income taxes for
federal income tax purposes) applicable to corporations from time to time and
that such Indemnitee or the Lessee has sufficient income to utilize any
deductions, credits (other than foreign tax credits, the use of which shall be
determined on an actual basis) and other Tax benefits arising from any payments
described in clause (ii) of this definition.
"Alterations" means the construction or installation of non-trade fixtures,
alterations, improvements, modifications and additions to the Leased Property
including without limitation, any repair or restoration pursuant to Article XI
of the Lease or otherwise.
"Applicable Law" means all existing and future applicable laws, rules,
regulations (including Environmental Laws) statutes, treaties, codes,
ordinances, permits, certificates, orders and licenses of and interpretations by
any Governmental Authorities, and applicable judgments,
36
decrees, injunctions, writs, orders or like action of any court, arbitrator or
other administrative, judicial or quasi-judicial tribunal or agency of competent
jurisdiction (including those pertaining to health, safety or the environment
(including, without limitation, wetlands) and those pertaining to the
construction, use or occupancy of the Leased Property) and any restrictive
covenant or deed restriction or easement of record affecting the Leased
Property.
"Architect" means MSI General Corporation, a Wisconsin corporation.
"Assignment of Lease and Rents" means the Assignment of Lease and Rents dated as
of the date hereof from the Lessor to the Lender, together with any other
amendments or supplements thereto.
"Awards" means any award or payment received by or payable to the Lender, the
Lessor or the Lessee on account of any Condemnation or Event of Taking (less the
actual costs, fees and expenses incurred in the collection thereof, for which
the Person incurring the same shall be reimbursed from such award or payment).
"Bankruptcy Code" means the Bankruptcy Reform Act of 1978, as amended.
"Base Rate" means the rate of interest published or announced from time to time
by the Lender as its base rate, which rate may not necessarily represent the
lowest or best rate actually charged to any customer. Any rate of interest
hereunder which is calculated using the Base Rate shall change automatically and
immediately as and when the Base Rate shall change without notice to the Lessor
or the Lessee, and any notice of such change in the Base Rate to which the
Lessor or the Lessee may otherwise be entitled is hereby waived, and any such
change shall not alter any of the terms and conditions of the Participation
Agreement, the Loan Agreement or the Operative Documents.
"Basic Rent" means the sum of the Facility Rent plus the Index Rent plus the
Scheduled Rent payable on each Rent Payment Date, as provided in Section 4.1 of
the Lease.
"Borrowing Date" has the meaning specified in Section 2.4(a) of the
Participation Agreement.
"Business Day" means any day other than a Saturday, Sunday or other day on which
banks are required or authorized to be closed for business in Dayton, Ohio;
provided, however, that the term "Business Day" shall also exclude any day on
which commercial banks are not open for international business (including
dealings in U.S. dollar deposits) in the London Interbank Market.
"Casualty" means an event of damage or casualty relating to all or part of the
Leased Property which does not constitute an Event of Loss.
"Claims" means liabilities, obligations, damages, losses, demands, penalties,
fines, claims, actions, suits, judgments, settlements, utility charges, costs,
expenses and disbursements (including, without limitation, reasonable legal fees
and expenses) of any kind and nature whatsoever.
"Closing Date" means May 30, 1996.
37
"Code" means the Internal Revenue Code of 1986, as amended.
"Completion Date" means the first Loan Payment Date on which the conditions
specified in Section 3.3 of the Participation Agreement shall have been
satisfied.
"Completion Deadline" means May 1, 1997.
"Condemnation" means any condemnation, requisition, confiscation, seizure or
other taking or sale of the use, occupancy or title to the Leased Property or
any part thereof in, by or on account of any actual eminent domain proceeding or
other action by any Governmental Authority or other Person under the power of
eminent domain, or any transfer in lieu of or in anticipation thereof, which in
any case does not constitute an Event of Taking. A Condemnation shall be deemed
to have "occurred" on the earliest of the dates that use, occupancy or title is
taken.
"Construction" means the development and construction of the Improvements
pursuant to the Plans and Specifications.
"Construction Conditions" means the conditions set forth in Section 32 of the
Participation Agreement.
"Construction Consultant" means the firm of architects or engineers retained by
the Lender pursuant to Section 2.7 of the Participation Agreement.
"Construction Contract" means that certain Development Agreement dated April 10,
1996 executed between the Lessor, as Owner, MSI Development Corporation, as
Developer, and the Lessee, as Tenant, as such agreement may be supplemented,
modified or amended.
"Construction Force Majeure Event" means (i) an act of God arising after the
Closing Date, (ii) any cause, circumstance or event arising after the Closing
Date and not reasonably within the control of the Lessee or (iii) any change in
any state or local law, regulation or other legal requirement arising after the
Closing Date and relating to the use of the Land or the construction of the
Improvements on the Land, which prevents the Lessee from completing the
Construction prior to the Completion Deadline and which could not have been
avoided or which cannot be remedied by the Lessee through the exercise of all
commercially reasonable efforts or the expenditure of funds and, in the case of
clauses (i) and (ii) of this definition, the existence or potentiality of which
was not known to and could not have been discovered prior to the Closing Date
through the exercise of due diligence by the Lessee.
"Contractual Obligation" means, as applied to any Person, any provision of any
Securities issued by that Person or any indenture, mortgage, deed of trust,
contract, undertaking, agreement, instrument or other document to which that
Person is a party or by which it or any of its properties is bound or to which
it or any of its properties is subject (including, without limitation, any
restrictive covenant affecting any of the properties of such Person).
"Deed" means the Special Warranty Deed dated on or about the Closing Date from
MSI Development Corporation, a Wisconsin corporation, as grantor, to the Lessor,
as grantee,
38
conveying title to the Land.
"Environmental Laws" means and include the Resource Conservation and Recovery
Act of 1976, (RCRA) 42 U.S.C. Sections 6901-6987, as amended by the Hazardous
and Solid Waste Amendments of 1984, the Comprehensive Environmental Response,
Compensation and Liability Act, as amended by the Superfund Amendments and
Reauthorization Act of 1986, 42 U.S.C. Sections 9601-9657, (CERCLA), the
Hazardous Materials Transportation Act of 1975, 49 U.S.C. Sections 1801-18 12,
the Toxic Substances Control Act, 15 U.S.C. Sections 2601-2671, the Clean Air
Act, 42 U.S.C. Sections 7401 et seq., the Federal Insecticide, Fungicide and
Rodenticide Act, 7 U.S.C. Sections 136 et seq., and all similar federal, state
and local environmental laws, ordinances, rules, orders, statutes, decrees,
judgments, injunctions, codes and regulations, and any other federal, state or
local laws, ordinances, rules, codes and regulations relating to the
environment, human health or natural resources or the regulation or control of
or imposing liability or standards of conduct concerning human health, the
environment, Hazardous Materials or the clean-up or other remediation of the
Leased Property, or any part thereof, as any of the foregoing may have been from
time to time amended, supplemented or supplanted.
"Environmental Permits" means all permits, licenses, authorizations,
certificates and approvals of Governmental Authorities required by Environmental
Laws.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended
from time to time or any successor federal statute.
"Event of Default" means any event or condition designated as an "Event of
Default" in Article XIII of the Lease.
"Event of Loss" is defined in Section 11.1 of the Lease.
"Event of Taking" is defined in Section 11.2 of the Lease.
"Facilitation Agreement" is defined in Section 4.2 of the Lease.
"Facilitation Fee" means the amount specified as the Facilitation Fee to be paid
by the Lessee to the Lessor as set forth in Section 4.2 of the Lease and in the
Facilitation Agreement.
"Facility Rent" means amounts payable as Facility Rent as specified in Section
4.1 of the Lease.
"Fair Market Rental Value" means, with respect to the Leased Property, the fair
market rental value as determined by an independent appraiser chosen by the
Lessor (and reasonably acceptable to the Lessee and the Lender) that would be
obtained in an arm's-length lease between an informed and willing lessee and an
informed and willing lessor, in either case under no compulsion to lease and
neither of which is related to the Lessor or the Lessee for the lease of the
Leased Property on the terms set forth, or referred to, in the Lease. Such fair
market rental value shall be calculated as the value for the use of the Leased
Property to be leased in place at the Land assuming, in the determination of
such fair market rental value, that the Leased Property is in the condition and
repair required to be maintained by the terms of the Lease (unless such fair
market
39
rental value is being determined for the purposes of Section 14.1 of the Lease
and except as otherwise specifically provided in the Lease, in which case this
assumption shall not be made).
"Fair Market Sales Value" means, with respect to the Leased Property or any
portion thereof, the fair market sales value as determined by an independent
appraiser chosen by the Lessee (and reasonably acceptable to the Lender) that
would be obtained in an arms-length transaction between an informed and willing
buyer (other than a lessee currently in possession) and an informed and willing
seller, under no compulsion, respectively, to buy or sell and neither of which
is related to the Lessor or the Lessee, for the purchase of the Leased Property.
Such fair market sales value shall be calculated as the value for the use of the
Leased Property assuming, in the determination of such fair market sales value,
that the Leased Property is in the condition and repair required to be
maintained by the terms of the Lease (unless such fair market sales value is
being determined for purposes of Section 14.1 of the Lease and except as
otherwise specifically provided in the Lease, or the Participation Agreement, in
which case this assumption shall not be made).
"Federal Funds Rate" means, for any period, a fluctuating interest rate
(expressed as a per annum rate) equal for each day during such period to the
weighted average of the rates on overnight federal funds transactions with
members of the Federal Reserve System arranged by federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or, if such
rates are not so published for any day which is a Business Day, the average of
the quotations for such day on such transactions received by the Lender from
three federal funds brokers of recognized standing selected by the Lender. All
determinations of the Federal Funds Rate by the Lender shall, in the absence of
demonstrable error, be binding and conclusive upon the Lessor and the Lessee.
"Final Rent Payment Date" is defined in Section 14.1(e) of the Lease.
"Financial Advisor" means Banc One Capital Corporation, Columbus, Ohio.
"Fiscal Year" means the fiscal year of the Lessee, which shall be the twelve
(12) monthly accounting periods ending on the last calendar day of May or such
other period as the Lessee may designate and the Lender may approve in writing.
"GAAP" means generally accepted accounting principles in the United States of
America as in effect from time to time.
"General Contractor" means MSI General Corporation, a Wisconsin corporation, or
such other general contractor under the Construction Contract as may be selected
by the Lessee.
"Governmental Action" means all permits, authorizations, registrations,
consents, approvals, waivers, exceptions, variances, orders, judgments, decrees,
licenses, exemptions, publications, filings, notices to and declarations of or
with, or required by, any Governmental Authority, or required by any Applicable
Law and shall include, without limitation, all siting, building, environmental
and operating permits and licenses that are required for the acquisition,
construction, use, occupancy, zoning and operation of the Leased Property.
40
"Governmental Authority" means the government of the United States of America,
the government of any other nation, any political subdivision of the United
States of America or any other nation (including, without limitation, any state,
territory, federal district, municipality or possession) and any federal, state,
county, municipal or other governmental or regulatory authority, agency, board,
body, commission, instrumentality or court, or any political subdivision
thereof.
"Hazardous Material" means any substance, waste or material which is toxic,
explosive, corrosive, flammable, infectious, radioactive, carcinogenic,
mutagenic or otherwise hazardous, including petroleum, crude oil or any fraction
thereof, petroleum derivatives, by products and other hydrocarbons and is or
becomes regulated by any Governmental Authority, including any agency,
department, commission, board or instrumentality of the United States, the State
of Wisconsin or any political subdivision thereof and also including asbestos,
urea formaldehyde foam insulation, polychlorinated biphenyls ("PCBs") and radon
gas.
"Improvements" means the buildings, structures and improvements described on
Appendix II of the Lease to be located on the Land, along with all fixtures used
or useful in connection with the operation of the Leased Property, including,
without limitation, all furnaces, boilers, compressors, elevators, fittings,
pipings, connectives, conduits, ducts, partitions, equipment and apparatus of
every kind and description now or hereafter affixed or attached or used or
useful in connection with the buildings, and all Alterations (including all
restorations, repairs, replacements and rebuilding of such buildings,
improvements and structures) thereto (but in all the above cases excluding trade
fixtures and any personal property owned by the Lessee).
"Indemnitee" means the Lender and the Lessor, and their respective successors,
permitted assigns, permitted transferees, employees, officers, directors and
agents thereof (and, in the case of the Lessor, also including its constituent
members, its managers, and their respective officers, employees, directors,
agents, incorporators and stockholders); provided, however, that in no event
shall the Lessee be an Indemnitee.
"Indemnitee Group" means the respective employees, officers, directors and
agents of the Lender or the Lessor (and, in the case of the Lessor, also
including its constituent members and their respective officers, employees,
directors, agents, incorporators and stockholders), as applicable; provided,
however, that in no event shall the Lessee be a member of an Indemnitee Group.
"Index Rent" means an amount equal to all interest accrued and unpaid on the
Loan as of each Rent Payment Date on which Basic Rent shall be due and payable.
"Interest Period" means, (i) for each Loan Advance prior to the Completion Date,
the period commencing on the Borrowing Date for such Loan Advance and ending on
the last day of the one, two or three month period selected by Lessee pursuant
to the provisions of Section 2.4 of the Loan Agreement and, thereafter with
respect to the continuation thereof, each succeeding period commencing on the
last day of the immediately preceding Interest Period and ending on the last day
of the one, two or three month period selected by Lessee pursuant to the
provisions of Section 2.4 of the Loan Agreement; and, (ii) upon the
consolidation of each Loan Advance into a single Loan as of the Completion Date,
the three-month period commencing on the Completion
41
Date, and each successive three-month period thereafter until the Lease
Termination Date.
"Land" means the land described in Appendix II to the Lease.
"Laws" means all ordinances, statutes, rules, regulations, orders, injunctions,
writs, treaties or decrees of any Governmental Authority or any governmental or
political subdivision or agency thereof, or of any court or similar entity
established by any thereof.
"Lease" means the Lease and Development Agreement, dated as of the date hereof
between the Lessor and the Lessee, together with any amendments or supplements
thereto.
"Lease Balance" means, as of any date of determination, an amount equal to the
sum of (i) the principal of the Loan then outstanding, any premium applicable to
The prepayment thereof, all accrued and unpaid interest on the Loan and, without
duplication, all other amounts owing by the Lessee to Lender or Lessor under the
Operative Documents plus (ii) all accrued and unpaid Facility Rent (prorated to
the date of payment) and an amount equal to Lessor's Investment.
"Lease Term" means (i) the period commencing on the Closing Date, and ending on
the Scheduled Termination Date or (ii) such shorter period as may result from
earlier termination of the Lease as provided therein.
"Lease Termination Date" means the Scheduled Termination Date or such earlier
date on which the Lease Term shall end as provided in the Lease.
"Leased Property" means the Improvements and the Land.
"Lender" means Bank One, Dayton, N.A. and its permitted successors and assigns.
"Lessee" means Huffy Corporation, an Ohio corporation, and its permitted
successors and assigns.
"Lessor" means Asset Holdings Company VI, L.L.C., a Massachusetts limited
liability company.
"Lessor Indemnitee" means the Lessor, its successors and permitted assigns,
permitted transferees, incorporators, members, employees, officers, manager and
agents.
"Lessor's Investment" means the sum of $200,000.
"Lessor Liens" means Liens on or against the Leased Property or any portion
thereof, the Lease or any payment of Rent (i) which result from any act of, or
any Claim against, the Lessor unrelated to the exercise of Lessor's rights under
the Operative Documents or (ii) which result from any Tax owed by the Lessor,
except any Tax for which the Lessee is obligated to indemnify the Lessor.
"LIBOR Rate" means, for any Interest Period for any LIBOR Rate Loan, an interest
rate per annum equal to the London Interbank Offered Rate for a term comparable
to the term of the
42
Interest Period, as published in the Federal Reserve Statistical Bulletin for
the applicable Borrowing Date; provided, however, that in the event such a rate
for a particular Interest Period term is not published therein, "LIBOR Rate",
with respect to such Interest Period term, shall mean an interest rate per annum
at which the Lender is offered deposits in U.S. dollars in the London Interbank
Market in accordance with its customary business practice at approximately 10:00
a.m., Dayton, Ohio time, two (2) business days prior to the commencement of such
Interest Period in principal amounts approximately equal to the outstanding
principal amount of the Loan or Loan Advance, whichever may be applicable, and
with maturity comparable to such Interest Period.
"LIBOR Reserve Percentage" means the reserve requirement including any
supplemental and emergency reserves (expressed as a percentage) applicable to
member banks of the Federal Reserve System in respect of eurocurrency
liabilities under Regulation D of the Board of Governors of the Federal Reserve
System, or any substituted or amended reserve requirements applicable to member
banks of the Federal Reserve System which is in effect as of the date hereof and
taking into account any transitional requirements thereto becoming effective
during the term of the Loan.
"Lien" means any lien, mortgage, deed of trust, encumbrance, pledge, charge,
lease, easement, servitude, right of others (legal or equitable) or security
interest of any kind, including any thereof arising under any conditional sale
or other title retention agreement.
"Loan" is defined in Section 2.1 of the Loan Agreement and shall also at all
times refer, collectively, to the aggregate total of all of the Loan Advances.
"Loan Advance" means any advance from time to time by the Lender to the Lessee
(acting on behalf of the Lessor) pursuant to Section 2.2 of the Participation
Agreement of amounts available to be borrowed under the Loan.
"Loan Agreement" means the Loan Agreement dated as of the date hereof, between
the Lender and the Lessor, together with all amendments and supplements thereto.
"Loan Commitment" means the aggregate total amount of Loan Advances which Lender
has committed to make under the Loan Agreement, up to the maximum principal sum
of $6,400,000.
"Loan Documents" means the Loan Agreement, the Note, the Mortgage, the
Assignment of Lease and Rents, the Security Agreement and Assignment and all
documents and instruments executed and delivered in connection with each of the
foregoing.
"Loan Event of Default" means any of the events specified in Section 5.1 of the
Loan Agreement, provided that any requirement for the giving of notice, the
lapse of time, or both or any other condition, event or act has been satisfied.
"Loan Payment Date" means the first Business Day of each month during the Lease
Term, commencing on the first Business Day of the first month following the
Closing Date.
43
"Loan Potential Event of Default" means any event, condition or failure which,
with notice or lapse of time or both, would become a Loan Event of Default.
"Loss Proceeds" shall have the meaning specified in Section 11.6 of the Lease.
"Material Adverse Effect" means a material adverse effect upon (i) the
consolidated financial condition, operations, performance or properties of the
Lessee and its Subsidiaries, or (ii) the ability of the Lessee to perform in any
material respect under the Operative Documents.
"Memorandum of Lease" means the Memorandum of Lease dated as of the date hereof
between Lessee and Lessor which describes the Lease and certain of its
provisions and is intended to be recorded in the Waukesha County, Wisconsin real
property records.
"Mortgage" means that certain Mortgage and Security Agreement dated as of the
date hereof made and executed by Lessor and delivered to Lender with respect to
the Leased Property.
"Non-Disturbance and Attornment Agreement" means that certain Subordination,
Non- Disturbance and Attornment Agreement, dated as of the date hereof, by and
among the Lender, the Lessor and the Lessee, together with any amendments or
supplements thereto.
"Note" means the promissory note issued by Lessor to the Lender under the Loan
Agreement to evidence the Loan, together with any amendments or supplements
thereto or replacements thereof.
"Officer's Certificate" of a Person means a certificate signed by the Chairman
of the Board or the President or any Executive Vice President or any Senior Vice
President or any other Vice President of such Person signing with the Treasurer
or any Assistant Treasurer or the Controller or any Assistant Controller or the
Secretary or any Assistant Secretary of the such Person, or by any Vice
President who is also Controller or Treasurer signing alone.
"Operative Documents" means the Participation Agreement, the Deed, the Lease,
the Security Agreement and Assignment, the Note, the Loan Agreement, the
Assignment of Lease and Rents, the Mortgage and the Non-Disturbance and
Attornment Agreement.
"Overdue Rate" means the lesser of (i) the highest interest rate permitted by
Applicable Law and (ii) an interest rate per annum (calculated on the basis of a
365-day (or 366-day, if appropriate year) equal to the Base Rate in effect from
time to time.
"Participation Agreement" means the Participation Agreement dated as of the date
hereof among the Lender, the Lessor and the Lessee, together with all amendments
and supplements thereto.
"Permitted Liens" means (i) the respective rights and interests of the Lessee,
the Lessor and the Lender as provided in the Operative Documents, (ii) Lessor
Liens, (iii) Liens for Taxes either not yet due or being contested in good faith
and by appropriate proceedings, so long as enforcement thereof is stayed pending
such proceedings, (iv) materialmen's, mechanics', workers', repairmen's,
employees' or other like Liens arising after the Closing Date in the ordinary
course of business for
44
amounts either not yet due or being contested in good faith and by appropriate
proceedings, so long as enforcement thereof is stayed pending such proceedings,
(v) Liens arising after the Closing Date out of judgments or awards with respect
to which at the time an appeal or proceeding for review is being prosecuted in
good faith, so long as the enforcement thereof has been stayed pending such
appeal or review, (vi) easements, rights of way, reservations, servitudes and
rights of others against the Land which are listed on Schedule B to the Title
Policy or permitted by Article VI of the Lease, (vii) assignments, leases and
subleases expressly permitted by the Operative Documents, and (viii) liens which
are not otherwise permitted by clauses (i) through (vii) of this definition, do
not violate the restrictions on the Lessee set forth in Section 5.4 of the
Participation Agreement and secure obligations not exceeding $100,000 at any one
time.
"Person" means an individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, nonincorporated
organization or government or any agency or political subdivision thereof.
"Plans and Specifications" means the final plans and specifications for the
Improvements as such Plans and Specifications may be hereafter amended,
supplemented or otherwise modified from time to time.
"Potential Event of Default" means any event, condition or failure which, with
notice or lapse of time or both, would become an Event of Default.
"Purchase Option" is defined in Section 15.1 of the Lease.
"Purchase Option Price" means an amount equal to the Lease Balance as of the
closing date of the purchase of the Leased Property pursuant to the exercise by
the Lessee of the Purchase Option set forth in Section 15.1 of the Lease.
"Qualified Payment" shall mean any monies paid or payable to the Lessor or the
Lender and identified in the Lease or any other Operative Document as a
"Qualified Payment", it being agreed that all Qualified Payments shall be paid
to the Lender as a pre-payment of the Loan to be applied against principal
payments or installments of the Loan in the inverse order of maturity, but
without (unless agreed in writing by the Lender and the Lessee) affecting or
giving rise to any change or adjustment of the Basic Rent except the installment
due on the Lease Termination Date.
"Recourse Deficiency Amount" means the sum of $4,148,000.
"Regulations" means the income tax regulations promulgated from time to time
under and pursuant to the Code.
"Release" means the release, deposit, disposal or leak of any Hazardous Material
into or upon or under any land or water or air, or otherwise into the
environment, including, without limitation, by means of burial, disposal,
discharge, emission, injection, spillage, leakage, seepage, leaching, dumping,
pumping, pouring, escaping, emptying, placement and the like.
"Release Date" means the date that the Loan has been paid in full.
45
"Remarketing Option" is defined in Section 15.6 of the Lease.
"Rent" means Basic Rent and Supplemental Rent, collectively.
"Rent Payment Date" means the first day of each month during the Lease Term
commencing on the first day of the first month which next follows the Completion
Date.
"Rent Period" means initially the period commencing on the Completion Date and
ending on the first Rent Payment Date, and thereafter each period from one Rent
Payment Date to the next following Rent Payment Date.
"Requirements of Law" means, as to any Person, the charter and by-laws or other
organizational or governing documents of such Person, and any law, rule or
regulation, permit, approval, authorization, license or variance, order or
determination of an arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject, including, without
limitation, the Securities Act, the Securities Exchange Act, Regulations G, T, U
and X, and any building, environmental or land use requirement or permit or
occupational safety or health law, rule or regulation.
"Responsible Officer" means the President, any Senior Vice President or
Executive Vice President, any Vice President, the Secretary, any Assistant
Secretary, the Treasurer, or any Assistant Treasurer.
"Scheduled Rent" means, for the Lease Term, the rent payable pursuant to Section
4.1(c) of the Lease on each Rent Payment Date in the amount set forth in
Appendix III to the Lease, as such Appendix may be adjusted in the circumstances
described in Section 4.1 of the Lease.
"Scheduled Termination Date" means May 1, 2004.
"SEC" means the United States Securities and Exchange Commission.
"Securities" means any stock, shares, voting trust certificates, bonds,
debentures, notes or other evidences of indebtedness, secured or unsecured,
convertible, subordinated or otherwise, or in general any instruments commonly
known as "securities", or any certificates of interest, shares, or
participations in temporary or interim certificates for the purchase or
acquisition of, or any right to subscribe to, purchase or acquire any of the
foregoing.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Security Agreement and Assignment" means the Security Agreement and Assignment
(Construction Contract, Permits, Licenses and Governmental Approvals, and Plans,
Specifications and Drawings), dated as of the date hereof from the Lessee to the
Lender, together with any amendments or supplements thereto.
46
"State" means the State of Wisconsin.
"Subsidiary" means for any Person any corporation or other entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other Persons performing similar functions
are at the time directly or indirectly owned by such Person.
"Supplemental Rent" means any and all amounts, liabilities and obligations other
than Basic Rent which the Lessee assumes or agrees or is otherwise obligated to
pay under the Lease or any other Operative Document (whether or not designated
as Supplemental Rent) to the Lessor, the Lender or any other party, including,
without limitation, amounts under Article XVII of the Lease, Fair Market Sales
Value payments and indemnities and damages for breach of any covenants,
representations, warranties or agreements.
"Tax" or "Taxes" is defined in Section 7.4(a) of the Participation Agreement.
"Tax Indemnitee" means the Lessor, the Lender and their respective Affiliates,
successors, permitted assigns, permitted transferees, employees, officers,
directors and agents thereof (and, in the case of the Lessor, also including its
incorporators, manager, members, and in particular, the manager in its capacity
as the tax matters partner) provided, however, that in no event shall the Lessee
be a Tax Indemnitee.
"Title Insurance Company" means Chicago Title Insurance Company and its
successors and assigns.
"Title Policy" is defined in Section 3.1 of the Participation Agreement.
"UCC" means the Uniform Commercial Code of Ohio, as in effect from time to time.
"Unfunded Benefit Liabilities" means, with respect to any Employee Benefit Plan
at any time, the amount of unfunded benefit liabilities of such Employee Benefit
Plan at such time as determined under ERISA Section 4001(a)(18) which shall not
be less than the accumulated benefit obligation, as disclosed in accordance with
FAS 87, over the fair market value of Employee Benefit Plan assets.
47
APPENDIX II
FORM OF REQUEST FOR LOAN ADVANCE
[Date]
Bank One, Dayton, N.A.
Kettering Tower
P.O. Box 1103
Dayton, Ohio 45401
Attention: R. Michael Dunlavey, Senior
Re: Request for a Loan Advance under that certain Participation Agreement, dated
as of May 29, 1996 (the "Participation Agreement"), by and among Asset Holdings
Company VI, L.L.C., as Lessor (the "Lessor"), Huffy Corporation, as Lessee (the
"Lessee"), and Bank One, Dayton, N.A.
as Lender (the "Lender")
Ladies and Gentlemen:
The Lessee for and on behalf of the Lessor under and pursuant to Section 2.2(b)
of the Participation Agreement hereby requests that Lender make a Loan Advance
(as defined in the Participation Agreement) in the amount of $_____________ on
______________, 199_. In connection therewith, the Lessee, for and on behalf of
itself and the Lessor, hereby certifies as follows (with capitalized terms used
but not defined herein having the respective meanings assigned to such terms in
the Participation Agreement):
1. The proceeds of the requested Loan Advance will be applied to pay, or
reimburse the Lessee for paying, costs permitted under Section 2.6 of the
Participation Agreement.
2. On and as of the date hereof, there is no Event of Default or Potential Event
of Default which has occurred and is now continuing.
3. The amount of the requested Loan Advance, when added to the aggregate amount
of Loan Advances previously made in respect of the Loan, will not exceed
$6,400,000.
4. The name, address and wire instructions for the disbursement of the requested
Loan Advance is set forth in the attachment hereto, and the Lender is hereby
requested to make such disbursement of the Loan Advance on the date set forth
above in accordance with said attachment.
Very truly yours,
ASSET HOLDINGS COMPANY VI, L.L.C.
By Huffy Corporation
By:.
Name:
48
Title:
Attachment
49
APPENDIX III
SCHEDULE OF LOAN PAYMENTS *
- --------------------------------------------------------------------------------
Loan Payment Date Principal Payment Principal Balance
- --------------------------------------------------------------------------------
0 May 96 $6,400,000
- --------------------------------------------------------------------------------
1 June 96 $0 6,400,000
- --------------------------------------------------------------------------------
2 July 96 0 6,400,000
- --------------------------------------------------------------------------------
3 August 96 0 6,400,000
- --------------------------------------------------------------------------------
4 September 96 0 6,400,000
- --------------------------------------------------------------------------------
5 October 1996 0 6,400,000
- --------------------------------------------------------------------------------
6 November 1996 0 6,400,000
- --------------------------------------------------------------------------------
7 December 1996 0 6,400,000
- --------------------------------------------------------------------------------
8 January 1997 0 6,400,000
- --------------------------------------------------------------------------------
9 February 1997 0 6,400,000
- --------------------------------------------------------------------------------
10 March 1997 0 6,400,000
- --------------------------------------------------------------------------------
11 April 1997 0 6,400,000
- --------------------------------------------------------------------------------
12 May 1997 0 6,400,000
- --------------------------------------------------------------------------------
13 June 1997 8,749 6,391,251
- --------------------------------------------------------------------------------
14 July 1997 8,795 6,382,456
- --------------------------------------------------------------------------------
15 August 1997 8,841 6,373,615
- --------------------------------------------------------------------------------
16 September 1997 8,888 6,364,727
- --------------------------------------------------------------------------------
17 October 1997 8,935 6,355,791
- --------------------------------------------------------------------------------
18 November 1997 8,983 6,346,809
- --------------------------------------------------------------------------------
19 December 1997 9,030 6,337,779
- --------------------------------------------------------------------------------
20 January 1998 9,078 6,328,701
- --------------------------------------------------------------------------------
21 February 1998 9,126 6,319,575
- --------------------------------------------------------------------------------
22 March 1998 9,174 6,310,401
- --------------------------------------------------------------------------------
- ---------------------
* Interest shall be payable on each Loan Payment Date as provided in Section 2.4
of the Loan Agreement.
50
- --------------------------------------------------------------------------------
Loan Payment Date Principal Payment Principal Balance
- --------------------------------------------------------------------------------
23 April 1998 9,223 6,301,178
- --------------------------------------------------------------------------------
24 May 1998 9,272 6,291,906
- --------------------------------------------------------------------------------
25 June 1998 9,321 6,282,586
- --------------------------------------------------------------------------------
26 July 1998 9,370 6,273,216
- --------------------------------------------------------------------------------
27 August 1998 9,420 6,263,796
- --------------------------------------------------------------------------------
28 September 1998 9,469 6,254,327
- --------------------------------------------------------------------------------
29 October 1998 9,520 6,244,807
- --------------------------------------------------------------------------------
30 November 1998 9,570 6,235,237
- --------------------------------------------------------------------------------
31 December 1998 9,621 6,225,617
- --------------------------------------------------------------------------------
32 January 1999 9,671 6,215,945
- --------------------------------------------------------------------------------
33 February 1999 9,723 6,206,223
- --------------------------------------------------------------------------------
34 March 1999 9,774 6,196,449
- --------------------------------------------------------------------------------
35 April 1999 9,826 6,186,623
- --------------------------------------------------------------------------------
36 May 1999 9,878 6,176,745
- --------------------------------------------------------------------------------
37 June 1999 9,930 6,166,815
- --------------------------------------------------------------------------------
38 July 1999 9,983 6,156,833
- --------------------------------------------------------------------------------
39 August 1999 10,035 6,146,797
- --------------------------------------------------------------------------------
40 September 1999 10,089 6,136,709
- --------------------------------------------------------------------------------
41 October 1999 10,142 6,126,567
- --------------------------------------------------------------------------------
42 November 1999 10,196 6,116,371
- --------------------------------------------------------------------------------
43 December 1999 10,250 6,106,122
- --------------------------------------------------------------------------------
44 January 2000 10,304 6,095,818
- --------------------------------------------------------------------------------
45 February 2000 10,358 6,085,460
- --------------------------------------------------------------------------------
46 March 2000 10,413 6,075,046
- --------------------------------------------------------------------------------
47 April 2000 10,468 6,064,578
- --------------------------------------------------------------------------------
48 May 2000 10,524 6,054,055
- --------------------------------------------------------------------------------
49 June 2000 10,579 6,043,475
- --------------------------------------------------------------------------------
51
- --------------------------------------------------------------------------------
Loan Payment Date Principal Payment Principal Balance
- --------------------------------------------------------------------------------
50 July 2000 10,635 6,032,840
- --------------------------------------------------------------------------------
51 August 2000 10,692 6,022,149
- --------------------------------------------------------------------------------
52 September 2000 10,748 6,011,401
- --------------------------------------------------------------------------------
53 October 2000 10,805 6,000,596
- --------------------------------------------------------------------------------
54 November 2000 10,862 5,989,733
- --------------------------------------------------------------------------------
55 December 2000 10,920 5,978,814
- --------------------------------------------------------------------------------
56 January 2001 10,977 5,967,836
- --------------------------------------------------------------------------------
57 February 2001 11,036 5,956,801
- --------------------------------------------------------------------------------
58 March 2001 11,094 5,945,707
- --------------------------------------------------------------------------------
59 April 2001 11,153 5,934,554
- --------------------------------------------------------------------------------
60 May 2001 11,212 5,923,343
- --------------------------------------------------------------------------------
61 June 2001 11,271 5,912,072
- --------------------------------------------------------------------------------
62 July 2001 11,331 5,900,741
- --------------------------------------------------------------------------------
63 August 2001 11,391 5,889,351
- --------------------------------------------------------------------------------
64 September 2001 11,451 5,877,900
- --------------------------------------------------------------------------------
65 October 2001 11,511 5,866,388
- --------------------------------------------------------------------------------
66 November 2001 11,572 5,854,816
- --------------------------------------------------------------------------------
67 December 2001 11,634 5,843,182
- --------------------------------------------------------------------------------
68 January 2002 11,695 5,831,487
- --------------------------------------------------------------------------------
69 February 2002 11,757 5,819,730
- --------------------------------------------------------------------------------
70 March 2002 11,819 5,807,911
- --------------------------------------------------------------------------------
71 April 2002 11,882 5,796,029
- --------------------------------------------------------------------------------
72 May 2002 11,945 5,784,084
- --------------------------------------------------------------------------------
73 June 2002 12,008 5,772,077
- --------------------------------------------------------------------------------
74 July 2002 12,071 5,760,005
- --------------------------------------------------------------------------------
75 August 2002 12,135 5,747,870
- --------------------------------------------------------------------------------
76 September 2002 12,200 5,735,670
- --------------------------------------------------------------------------------
52
- --------------------------------------------------------------------------------
Loan Payment Date Principal Payment Principal Balance
- --------------------------------------------------------------------------------
77 October 2002 12,264 5,723,406
- --------------------------------------------------------------------------------
78 November 2002 12,329 5,711,077
- --------------------------------------------------------------------------------
79 December 2002 12,394 5,698,683
- --------------------------------------------------------------------------------
80 January 2003 12,460 5,686,223
- --------------------------------------------------------------------------------
81 February 2003 12,526 5,673,698
- --------------------------------------------------------------------------------
82 March 2003 12,592 5,661,106
- --------------------------------------------------------------------------------
83 April 2003 12,659 5,648,447
- --------------------------------------------------------------------------------
84 May 2003 12,726 5,635,721
- --------------------------------------------------------------------------------
85 June 2003 12,793 5,662,928
- --------------------------------------------------------------------------------
86 July 2003 12,861 5,610,068
- --------------------------------------------------------------------------------
87 August 2003 12,929 5,597,139
- --------------------------------------------------------------------------------
88 September 2003 12,997 5,584,142
- --------------------------------------------------------------------------------
89 October 2003 13,066 5,571,076
- --------------------------------------------------------------------------------
90 November 2003 13,135 5,557,941
- --------------------------------------------------------------------------------
91 December 2003 13,205 5,544,737
- --------------------------------------------------------------------------------
92 January 2004 13,274 5,531,462
- --------------------------------------------------------------------------------
93 February 2004 13,345 5,518,117
- --------------------------------------------------------------------------------
94 March 2004 13,415 5,504,702
- --------------------------------------------------------------------------------
95 April 2004 13,486 5,491,216
- --------------------------------------------------------------------------------
96 May 2004 6,464,040 0
- --------------------------------------------------------------------------------