<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 28, 1996
- OR -
__ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-8207
THE HOME DEPOT, INC.
(Exact name of registrant as specified in its charter)
Delaware 95-3261426
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification
Number)
2727 Paces Ferry Road Atlanta, Georgia 30339
(Address of principal executive offices) (Zip Code)
(770) 433-8211
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
$.05 par value 479,107,754 Shares, as of August 15, 1996
<PAGE>
THE HOME DEPOT, INC. AND SUBSIDIARIES
INDEX TO FORM 10-Q
JULY 28, 1996
Page
Part I. Financial Information:
Item 1. Financial Statements
CONSOLIDATED STATEMENTS OF EARNINGS -
Three-Month and Six-Month Periods
Ended July 28, 1996 and July 30, 1995 3
CONSOLIDATED CONDENSED BALANCE SHEETS -
As of July 28, 1996 and January 28, 1996 4
CONSOLIDATED STATEMENTS OF CASH FLOWS -
Six-Month Periods
Ended July 28, 1996 and July 30, 1995 5
NOTES TO CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS 6
Item 2. Management's Discussion and Analysis of Results
of Operations and Financial Condition 7 - 10
Part II. Other Information:
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 6. Exhibits and Reports on Form 8-K 11
Signature Page 12
Index to Exhibits 13
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
THE HOME DEPOT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(In Thousands, Except Per Share Data)
<CAPTION>
Three Months Ended Six Months Ended
July 28, July 30, July 28, July 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Net Sales $ 5,292,917 $ 4,151,722 $ 9,655,132 $ 7,720,684
Cost of Merchandise Sold 3,856,022 3,028,676 6,998,307 5,600,117
Gross Profit 1,436,895 1,123,046 2,656,825 2,120,567
Operating Expenses:
Selling and Store Operating 904,708 699,700 1,720,717 1,365,677
Pre-Opening 10,143 13,485 23,002 26,020
General and Administrative 80,108 67,703 152,208 132,559
Total Operating Expenses 994,959 780,888 1,895,927 1,524,256
Operating Income 441,936 342,158 760,898 596,311
Interest Income (Expense):
Interest and Investment
Income 2,833 4,655 6,959 8,855
Interest Expense (405) (1,216) (2,734) (3,454)
Interest, Net 2,428 3,439 4,225 5,401
Earnings Before Income
Taxes 444,364 345,597 765,123 601,712
Income Taxes 174,190 132,710 299,930 231,060
Net Earnings $ 270,174 $ 212,887 $ 465,193 $ 370,652
Earnings Per Common and
Common Equivalent Share $ 0.56 $ 0.45 $ 0.97 $ 0.78
Dividends Per Share $ 0.06 $ 0.05 $ 0.11 $ 0.09
Weighted Average Number of
Common and Common
Equivalent Shares 482,446 477,737 481,384 477,424
See accompanying notes to consolidated condensed financial
statements.
</TABLE>
<PAGE>
<TABLE>
THE HOME DEPOT INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
(In Thousands, Except Share Data)
<CAPTION>
July 28, January 28,
ASSETS 1996 1996
<S> <C> <C>
Current Assets:
Cash and Cash Equivalents $ 33,224 $ 53,269
Short-Term Investments 233 54,756
Receivables, Net 305,370 325,384
Merchandise Inventories 2,516,349 2,180,318
Other Current Assets 60,842 58,242
Total Current Assets 2,916,018 2,671,969
Property and Equipment, at cost 5,475,113 4,968,895
Less: Accumulated Depreciation and
Amortization (605,918) (507,871)
Net Property and Equipment 4,869,195 4,461,024
Long-Term Investments 13,831 25,436
Notes Receivable 51,955 54,715
Cost in Excess of the Fair Value of
Net Assets Acquired 86,416 87,238
Other 60,137 53,651
$ 7,997,552 $ 7,354,033
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $ 1,229,334 $ 824,808
Accrued Salaries and Related Expenses 233,502 198,208
Sales Taxes Payable 144,453 113,066
Other Accrued Expenses 289,306 242,859
Income Taxes Payable 77,311 35,214
Current Installments of Long-Term Debt 2,148 2,327
Total Current Liabilities 1,976,054 1,416,482
Long-Term Debt, excluding current installments 275,389 720,080
Other Long-Term Liabilities 147,911 115,917
Deferred Income Taxes 42,470 37,225
Minority Interest 87,176 76,563
Stockholders' Equity:
Common Stock, par value $0.05.
Authorized: 1,000,000,000 shares; issued
and outstanding - 479,056,000 shares at 7/28/96
and 477,106,000 shares at 1/28/96 23,953 23,855
Paid-In Capital 2,469,148 2,407,815
Retained Earnings 2,991,621 2,579,059
Cumulative Translation Adjustments (4,745) (6,131)
Unrealized Loss on Investments, Net (42) (47)
5,479,935 5,004,551
Less: Notes Receivable from ESOP 10,890 16,539
Shares Held in Employee Benefit Trust 493 246
Total Stockholders' Equity 5,468,552 4,987,766
$ 7,997,552 $ 7,354,033
See accompanying notes to consolidated condensed financial
statements.
</TABLE>
<PAGE>
<TABLE>
THE HOME DEPOT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In Thousands) Six Months Ended
July 28, 1996 July 30, 1995
<S> <C> <C>
Cash Provided from Operations:
Net Earnings $ 465,193 $ 370,652
Reconciliation of Net Earnings to Net Cash
Provided by Operations:
Depreciation and Amortization 109,332 82,494
Deferred Income Tax Expense 5,239 5,572
Decrease (Increase) in Receivables, Net 10,459 (8,565)
Increase in Merchandise Inventories (335,628) (265,748)
Increase in Accounts Payable and
Accrued Expenses 545,634 486,355
Increase in Income Taxes Payable 47,932 49,486
Other 13,586 20,742
Net Cash Provided by Operations 861,747 740,988
Cash Flows From Investing Activities:
Capital Expenditures (532,354) (665,433)
Proceeds from Sales of Property and Equipment 9,709 14,433
Sales and Maturities of Short-Term
Investments, Net 66,132 16,777
Proceeds from Maturities of Long-Term Investments 0 4,688
Proceeds from Sales of Long-Term Investments 0 3,885
Advances Secured by Real Estate, Net 11,489 (13,567)
Net Cash Used in Investing Activities (445,024) (639,217)
Cash Flows From Financing Activities:
Repayments of Commercial Paper Obligations, Net (454,000) (100,000)
Cash Received from ESOP 5,649 430
Principal Repayments of Long-Term Debt (1,357) (1,728)
Proceeds from Sale of Common Stock, Net 55,637 43,268
Shares Purchased for Employee Benefit Trust (247) (246)
Cash Dividends Paid to Stockholders (52,631) (42,089)
Minority Interest Contributions to Partnership 10,289 16,374
Net Cash Used in Financing Activities (436,660) (83,991)
Effect of Exchange Rate Changes on Cash (108) 8
(Decrease) Increase in Cash and Cash Equivalents (20,045) 17,788
Cash and Cash Equivalents at Beginning of Period 53,269 1,154
Cash and Cash Equivalents at End of Period $ 33,224 $ 18,942
See accompanying notes to consolidated condensed financial
statements.
</TABLE>
<PAGE>
THE HOME DEPOT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. Summary of Significant Accounting Policies:
Basis of Presentation - The accompanying consolidated
condensed financial statements have been prepared in
accordance with the instructions to Form 10-Q and do not
include all of the information and footnotes required by
generally accepted accounting principles for complete
financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been
included. These statements should be read in conjunction
with the consolidated financial statements and notes
thereto included in the Company's Annual Report on Form
10-K for the year ended January 28, 1996, as filed with
the Securities and Exchange Commission (File No. 1-8207).
<PAGE>
<TABLE>
THE HOME DEPOT, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
The data below reflects selected sales data, the percentage
relationship between sales and major categories in the
Consolidated Statements of Earnings, and the percentage change in
the dollar amounts of each of the items.
<CAPTION>
Percentage Increase
(Decrease) in
Three Months Ended Six Months Ended Dollar Amounts
July 28, July 30, July 28, July 30, Three Six
1996 1995 1996 1995 Months Months
Selected Consolidated
Statements of Earnings Data
<S> <C> <C> <C> <C> <C> <C>
Net Sales 100.0% 100.0% 100.0% 100.0% 27.5% 25.1%
Gross Profit 27.1 27.0 27.5 27.5 27.9 25.3
Operating
Expenses:
Selling and
Store
Operating 17.1 16.9 17.8 17.7 29.3 26.0
Pre-Opening 0.2 0.3 0.2 0.3 (24.8)(11.6)
General and
Administrative 1.5 1.6 1.6 1.7 18.3 14.8
Total Operating
Expenses 18.8 18.8 19.6 19.7 27.4 24.4
Operating Income 8.3 8.2 7.9 7.7 29.2 27.6
Interest Income
(Expense):
Interest and
Investment
Income 0.1 0.1 0.1 0.1 (39.1)(21.4)
Interest Expense --- --- (0.1) --- (66.7)(20.8)
Interest, Net 0.1 0.1 0.0 0.1 (29.4)(21.8)
Earnings Before
Income Taxes 8.4 8.3 7.9 7.8 28.6 27.2
Income Taxes 3.3 3.2 3.1 3.0 31.3 29.8
Net Earnings 5.1% 5.1% 4.8% 4.8% 26.9 25.5
Selected
Consolidated
Sales Data
Number of
Transactions 124,840,000 98,624,000 229,048,000 183,248,000 26.6 25.0
Average Amount of
Sale Per
Transaction $ 42.40 $ 42.10 $ 42.15 $ 42.13 0.7 0.0
Weighted Average
Weekly Sales Per
Operating
Store $ 911,000 $ 871,000 $ 848,000 $ 832,000 4.6 1.9
Weighted Average
Sales Per
Square Foot $ 450 $ 433 $ 419 $ 414 3.9 1.2
</TABLE>
<PAGE>
THE HOME DEPOT, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
(CONTINUED)
RESULTS OF OPERATIONS
Sales for the second quarter of fiscal 1996 increased 27% to
$5,292,917,000 compared to sales of $4,151,722,000 for the second
quarter of fiscal 1995. For the first six months of fiscal 1996,
sales increased 25% to $9,655,132,000 from sales of
$7,720,684,000 for the comparable period in fiscal 1995. The
sales increase for both periods was primarily attributable to new
stores (456 at the end of the second quarter of fiscal 1996
compared to 379 at the end of the second quarter of fiscal 1995)
and a comparable store-for-store sales increase of 9% and 6% for
the second quarter and first six months of fiscal 1996,
respectively. For the second quarter, management believes a
portion of the sales increase was also due to pent-up demand
resulting from a late start to the spring season.
Gross profit as a percent of sales was 27.1% for the second
quarter of fiscal 1996 compared to 27.0% for the comparable
period of fiscal 1995. The increase for the quarter was
primarily attributable to, among other things, changes in
merchandise mix and more effective buying practices which reduced
the Company's merchandise cost. For the first six months of
fiscal 1996, gross profit as a percent of sales was 27.5%
compared to 27.5% for the comparable period of fiscal 1995.
Operating expenses as a percent to sales were 18.8% for the
second quarters of fiscal 1996 and fiscal 1995. For the first
six months of fiscal 1996, operating expenses as a percent of
sales were down slightly to 19.6% from 19.7% for the same period
of fiscal 1995. Selling and store operating expenses as a
percent of sales increased to 17.1% and 17.8% for the second
quarter and first six months of fiscal 1996, respectively, from
16.9% and 17.7% for the second quarter and first six months of
fiscal 1995, respectively. The increase for the second quarter
was attributable to, among other things, one-time expenditures
related to the Olympic Games and higher store relocation and
remodeling costs resulting primarily from the adoption in fiscal
1996 of certain accounting standards which changed the timing of
recognition of these expenses. Additionally, profits increased
in the Home Depot Canada partnership resulting in higher minority
interest. Pre-opening expenses as a percent to sales decreased
to 0.2% for both the second quarter and first six months of
fiscal 1996 from 0.3% for the comparable periods of fiscal 1995.
These decreases were primarily attributable to the timing of
store openings, as many of the Company's fiscal third quarter
1996 store openings are expected to occur the latter part of the
quarter and as a result have not yet incurred significant pre-
opening expenses. General and administrative expenses as a
percent to sales decreased to 1.5% and 1.6% for the second
quarter and first six months of fiscal 1996 from 1.6% and 1.7% in
the second quarter and first six months of fiscal 1995. These
decreases were attributable to higher sales volumes and continued
focus on controlling costs.
Net Interest income as a percent to sales increased to 0.1% in
the second fiscal quarter of 1996 from 0.0% in the comparable
period of 1995 due to higher capitalized interest compared to the
prior year. Interest income for the first six months of fiscal
1996 as a percent to sales was 0.1% compared to 0.1% for the
first six months of fiscal 1995.
<PAGE>
THE HOME DEPOT, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
(CONTINUED)
RESULTS OF OPERATIONS - (Continued)
The Company's combined Federal and state effective income tax
rate increased to 39.2% for the second quarter and first six
months of fiscal 1996 from 38.4% for the comparable periods of
fiscal 1995. In the fourth quarter of fiscal 1995, the Company
adjusted its combined Federal and state effective income tax rate
to 38.8% for the fiscal year. The increase in the rate for the
second quarter and first six months of fiscal 1996 from the
adjusted 1995 tax rate was due to a higher effective state tax
rate.
Net earnings as a percent of sales were 5.1% and 4.8% for the
second quarter and first six months of fiscal 1996, respectively,
as well as for the comparable periods of fiscal 1995.
Earnings per share was $0.56 and $0.97 for the second quarter and
first six months of fiscal 1996, respectively, compared to $0.45
and $0.78 for the second quarter and first six months of fiscal
1995, respectively.
LIQUIDITY AND CAPITAL RESOURCES
Cash flow generated from store operations provides the Company
with a significant source of liquidity. Additionally, a
significant portion of the Company's inventory is financed under
vendor credit terms.
During the first six months of fiscal 1996, the Company opened 33
stores and relocated 5 stores. The Company currently plans to
open approximately 57 new stores and relocate 2 stores during the
last six months of fiscal 1996 and open approximately 110 new
stores, including relocations, during fiscal 1997. Of the
planned 90 new stores and 7 relocations in fiscal 1996, it is
expected that 74 will be owned and 23 will be leased.
In June 1996, the Company entered into a $300,000,000 operating
lease agreement for the purpose of financing construction costs
of new stores. Under the agreement, the lessor will purchase the
properties, pay for the construction costs and subsequently lease
the facilities to the Company. The lease provides for
substantial residual value guarantees and includes purchase
options at original cost on each property. This agreement will
primarily cover new stores planned to open in 1996 and 1997. In
addition to the leasing agreement, some planned locations for the
remainder of fiscal 1996 and 1997 will be leased directly, and it
is expected that many may be obtained through the purchase of pre-
existing leasehold interests, acquisition of land parcels and the
construction or purchase of buildings during fiscal 1996. While
the cost of new stores to be constructed and owned by the Company
varies widely, principally due to land costs, new store costs
(including land, building and fixtures) are currently estimated
to average approximately $13,800,000 per location. The Company
may purchase leasehold interests at varying amounts depending
upon the value of such properties. The cost to remodel
(including leasehold interests) and fixture stores to be leased
is expected to average approximately $2,300,000 per store. In
addition, each new store will require approximately $2,800,000 to
finance inventories, net of vendor financing.
<PAGE>
THE HOME DEPOT, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
(CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES - (Continued)
As of July 28, 1996, the Company had $33,457,000 in cash and
short-term investments, and $13,831,000 in long-term investments.
Management believes that its current cash position, the proceeds
from short-term and long-term investments, internally generated
funds, funds available from the $300,000,000 operating lease
agreement, its commercial paper program, and/or the ability to
obtain alternate sources of financing should enable the Company
to complete its capital expenditure programs, including store
expansion and renovation, through the next several fiscal years.
IMPACT OF INFLATION AND CHANGING PRICES
Although the Company cannot accurately determine the precise
effect of inflation on its operations, it does not believe
inflation has had a material effect on sales or results of
operations.
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
At the Company's Annual Meeting of Stockholders, on May
29, 1996, the stockholders elected the slate of nominees
for election as director with votes cast as follows: Mr.
Bernard Marcus had 411,214,359 shares for and 4,127,483
shares withheld; Mr. Donald R. Keough had 411,792,197
shares for and 3,549,645 shares withheld; Mr. Kenneth G.
Langone had 411,218,076 shares for and 4,123,766 shares
withheld; and Mr. John L. Clendenin had 410,794,093
shares for and 4,547,749 shares withheld. There were no
abstentions or broker non-votes applicable to the
election of directors. The following other directors
have terms of office as a director that continued after
the meeting: Mr. Arthur M. Blank, Col. Frank Borman, Mr.
Ronald M. Brill, Dr. Johnnetta B. Cole, Mr. Berry R.
Cox, Mr. Milledge A. Hart, III and Ms. M. Faye Wilson.
The stockholders adopted a proposal to approve the
amendment to the Senior Officers' Bonus Pool Plan with
votes cast as follows: 392,660,842 shares for;
18,645,438 shares against; 4,035,562 shares abstained;
and 0 broker non-votes.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10. $300,000,000 Operating Lease Agreement between
Home Depot U.S.A., Inc. and
Credit Suisse Leasing 92-A
11.1 Computation of Earnings per Common and Common
Equivalent Share
27. Financial Data Schedule (only submitted to SEC
in electronic format)
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter
ended July 28, 1996.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
THE HOME DEPOT, INC.
(Registrant)
By: /s/ Arthur M. Blank
Arthur M. Blank
President
/s/ Marshall L. Day
Marshall L. Day
Senior Vice President
Chief Financial Officer
August 26, 1996
(Date)
<PAGE>
THE HOME DEPOT, INC. AND SUBSIDIARIES
INDEX TO EXHIBITS
Exhibit Description
10. $300,000,000 Operating Lease Agreement between Home Depot
U.S.A., Inc. and Credit Suisse Leasing 92-A
11.1 Computation of Earnings per Common and Common Equivalent Share
27. Financial Data Schedule (only submitted to SEC in electronic
format)
PARTICIPATION AGREEMENT
dated as of June 25, 1996
among
THE HOME DEPOT, INC.,
as Guarantor,
HOME DEPOT U.S.A., INC., as
Lessee and Construction Agent,
HD REAL ESTATE FUNDING CORP.,
as Facility Lender,
CREDIT SUISSE LEASING 92A, L.P.,
as Lessor,
OTHER FINANCIAL INSTITUTIONS LISTED ON THE
SIGNATURE PAGES HEREOF OR THAT MAY
HEREAFTER BECOME PARTY HERETO,
as Lenders,
and
CREDIT SUISSE, as Agent Bank and Lender
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1.
DEFINITIONS; INTERPRETATION 2
SECTION 2.
INITIAL CLOSING DATE 2
SECTION 3.
ACQUISITIONS OF LAND AND FACILITIES; FUNDINGS OF ADVANCES 3
SECTION 3.1. Agreement to Acquire and Lease 3
SECTION 3.2. Lessor's Commitment 3
SECTION 3.3. Facility Lender Commitments 4
SECTION 3.4. Issuance of Commercial Paper 4
SECTION 3.5. Procedures for Acquisitions of Land 4
SECTION 3.6. Guarantor's and Lessee's Deemed
Representation for Each Acquisition 5
SECTION 3.7. Procedures for Advances 5
SECTION 3.8. Guarantor's and Lessee's Deemed
Representation
for Each Advance 6
SECTION 3.9. Allocation of Advances 6
SECTION 3.10. Use of Proceeds 7
SECTION 3.11. Return of Advances 7
SECTION 4.
CERTIFICATE EARNINGS; INTEREST; COMMITMENT FEES 7
SECTION 4.1. Certificate Earnings 7
SECTION 4.2. Interest on Loans 8
SECTION 4.3. Commitment Fees 8
SECTION 5.
DISTRIBUTIONS OF PAYMENTS AND COLLATERAL PROCEEDS 8
SECTION 5.1. Agreement of Agent Bank and
Participants 8
SECTION 5.2. Basic Rent 9
SECTION 5.3. Purchase Payments by Lessee 10
SECTION 5.4. Residual Value Guarantee 11
SECTION 5.5. Sales Proceeds of Remarketing of
Properties 12
SECTION 5.6. Supplemental Rent 13
SECTION 5.7. Excepted Payments 13
<PAGE>
SECTION 5.8. Distribution of Payments after Lease
Event of Default or Loan Agreement Event
of Default 13
SECTION 5.9. Other Payments 14
SECTION 5.10. Casualty and Condemnation Amounts 15
SECTION 5.11. Reduction of Commitment 15
SECTION 5.12. Order of Application 15
SECTION 5.13. Remaining Funds 16
SECTION 5.14. Time of Payment 16
SECTION 6. CERTAIN INTENTIONS OF THE PARTIES 16
SECTION 7.CONDITIONS PRECEDENT TO ACQUISITIONS AND ADVANCES 17
SECTION 7.1. Conditions Precedent -- Documentation 17
SECTION 7.2. Further Conditions Precedent 19
SECTION 8
. COMPLETION DATE CONDITIONS 20
SECTION 9
. REPRESENTATIONS 22
SECTION 9.1. Representations of the Lessor 22
SECTION 9.2. Representations of the Guarantor and the
Lessee 24
SECTION 9.3. Representations of Guarantor and Lessee
on Property Closing Date 28
SECTION 9.4. Additional Representations of Guarantor
and Lessee 30
SECTION 9.5. Representations of Facility Lender 31
SECTION 9.6. Representations and Warranties of the
Agent Bank and the Lenders 31
SECTION 10.
PAYMENT OF CERTAIN EXPENSES 32
SECTION 10.1. Transaction Expenses 32
SECTION 10.2. Brokers' Fees and Stamp Taxes 33
SECTION 10.3. Certain Fees and Expenses 33
SECTION 11.
OTHER COVENANTS AND AGREEMENTS 33
SECTION 11.1. Covenants of Guarantor and Lessee 33
SECTION 11.2. Cooperation with the Lessee 39
SECTION 11.3. Release of Properties 40
SECTION 11.4. Discharge of Liens 40
SECTION 11.5. Notice of Credit Rating 40
SECTION 11.6. Covenants of the Facility Lender and the
Lessor 41
SECTION 11.7. No Bankruptcy Proceedings 42
<PAGE>
SECTION 11.8. Notice of Claims Against Lessor 43
SECTION 12.
LESSEE DIRECTIONS 43
SECTION 12.1. Lessee Directions 43
SECTION 13.
TRANSFER OF INTEREST 44
SECTION 13.1. Restrictions on and Effect of Transfer44
SECTION 13.2. Replacement of Lessor or Facility
Lender. 45
SECTION 14.
INDEMNIFICATION 45
SECTION 14.1. General Indemnification 45
SECTION 14.2. Environmental Indemnity 47
SECTION 14.3. Proceedings in Respect of Claims 49
SECTION 14.4. End of Term Indemnity 50
SECTION 14.5. General Tax Indemnity 51
SECTION 14.6. Completion Guaranty 55
SECTION 15.
MISCELLANEOUS 55
SECTION 15.1. Survival of Agreements 55
SECTION 15.2. No Broker; etc. 56
SECTION 15.3. Notices 56
SECTION 15.4. Counterparts 58
SECTION 15.5. Amendments 58
SECTION 15.6 Usury 60
SECTION 15.7 Confidentiality 60
SECTION 15.8. Headings; etc. 61
SECTION 15.9. Parties in Interest 61
SECTION 15.10. GOVERNING LAW 61
SECTION 15.11. Severability 61
SECTION 15.12. Further Assurances 61
SECTION 15.13. WAIVER OF JURY TRIAL 61
SECTION 15.14 Limitations on Recourse Against
Lessor 62
SECTION 15.15 Limitations on Recourse Against
Facility Lender 62
<PAGE>
SCHEDULES
SCHEDULE I Lenders and Their Addresses
APPENDICES
APPENDIX 1 Definitions and Interpretation
APPENDIX 2 Initial Closing Date Conditions Precedent
APPENDIX 3 Pricing Provisions for Lessor Investment
Amounts
EXHIBITS
EXHIBIT A Acquisition Request
EXHIBIT B Funding Request
EXHIBIT C Opinion of Counsel to Lessee
EXHIBIT D Supplement to the Assignment of Leases
EXHIBIT E Local Counsel Opinion
EXHIBIT F Property Closing Certificate
EXHIBIT G Opinion of Counsel to Facility Lender
EXHIBIT H Completion Date Certificate
EXHIBIT I Opinion of Counsel to Lessor
EXHIBIT J Assignment of Lease and Consent to Assignment
EXHIBIT K Construction Agency Agreement Assignment and
Consent to Construction Agency Agreement
Assignment
EXHIBIT L Master Assignment and Consent to Master
Assignment
EXHIBIT M Form of Security Agreement
EXHIBIT N-1 Form of Mortgage and Security Agreement
EXHIBIT N-2 Form of Deed of Trust and Security Agreement
EXHIBIT N-3 Form of Deed to Secure Debt and Security
Agreement
EXHIBIT O Form of Lease
EXHIBIT P Form of Compliance Certificate
<PAGE>
PARTICIPATION AGREEMENT
THIS PARTICIPATION AGREEMENT, dated as of June 25, 1996
(this "Agreement" or "Participation Agreement"), is entered into
by and among THE HOME DEPOT, INC., a Delaware corporation, as
Guarantor (the "Guarantor"); HOME DEPOT U.S.A., INC. a Delaware
corporation, as Lessee and Construction Agent ("Lessee" or
"Construction Agent"), HD REAL ESTATE FUNDING CORP., a Delaware
corporation ("Facility Lender"), CREDIT SUISSE LEASING 92A, L.P.,
a Delaware limited partnership, as lessor ("Lessor"), the
financial institutions listed on the signature pages hereto or
that may hereafter become parties hereto, (each, a "Lender" and
collectively, the "Lenders") and CREDIT SUISSE, a Swiss bank
operating through its New York branch, as Agent Bank for the
Lenders (in such capacity, the "Agent Bank")
PRELIMINARY STATEMENT
In accordance with the terms of this Participation
Agreement, the Lease, the Loan Agreement, the Liquidity Agreement
and the other Operative Documents,
A. the Lessor contemplates acquiring undeveloped
parcels of Land from time to time during the Commitment
Period, by purchasing Land from third party sellers;
B. using Advances from the Lessor, Lessee
contemplates building, or causing to be built, as
Construction Agent, Improvements on such undeveloped parcels
of Land for the Lessor;
C. the Lessor wishes to arrange financing for up to
97% of the total cost of the acquisition of such Land and
the construction of such Improvements;
D. the Facility Lender has agreed to issue Commercial
Paper Notes during the Commitment Period in an aggregate
amount not to exceed the Facility Lender Commitments, with
the proceeds of the sale of the Commercial Paper Notes to be
lent to the Lessor pursuant to the Loan Agreement for the
acquisition of such Land by the Lessor and the construction
of such Improvements by the Construction Agent, as agent for
the Lessor;
E. the Agent Bank and the Lenders are willing to
provide the Liquidity Facility to the Facility Lender to
ensure the Facility Lender's ability to pay the Principal
Component and the Interest Component of such Commercial
Paper Notes and to make Loans to the Lessor as needed for
the acquisition and improvement of the Properties;
F. the Lessee wishes to lease the Properties from the
Lessor under the Lease and the Guarantor is willing to
guarantee the Lessee's obligations under the Operative
Documents;
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G. to secure its obligations to the Facility Lender
pursuant to the Loan Agreement, the Lessor is granting a
lien to the Facility Lender, pursuant to the Mortgages and
the other Security Documents, on all of the Lessor's right,
title and interest in the Properties and substantially all
of the Lessor's rights under the Lease with respect to the
Properties; and
H. to secure its obligations to the Agent Bank and
the Lenders under the Liquidity Agreement, the Facility
Lender is pledging to the Agent Bank, for the benefit of the
Lenders, pursuant to the Master Assignment and the Security
Agreement, substantially all of its right, title and
interest in and to the Loan Agreement, the Notes and
Security Documents received from the Lessor.
In consideration of the mutual agreements contained in this
Participation Agreement and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1.
DEFINITIONS; INTERPRETATION
Unless the context shall otherwise require, capitalized
terms used and not defined herein shall have the meanings
assigned thereto in Appendix 1 attached hereto and made a part
hereof by this reference for all purposes hereof; and the rules
of interpretation set forth in Appendix 1 hereto shall apply to
this Participation Agreement.
SECTION 2.
INITIAL CLOSING DATE
The initial Closing Date shall occur on the earliest date
(on or before June 30, 1996) on which all the conditions
precedent thereto set forth in Appendix 2 attached hereto and
made a part hereof by this reference shall have been satisfied or
waived by the applicable parties as set forth therein (such date
referred to herein as the "Initial Closing Date").
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SECTION 3.
ACQUISITIONS OF LAND AND FACILITIES; FUNDINGS OF ADVANCES
SECTION 3.1. Agreement to Acquire and Lease. Subject
to the conditions and terms of this Participation Agreement and
the other Operative Documents, the Lessor agrees to take the
following actions at the request of Lessee from time to time
during the Commitment Period:
(a) purchase Land (through Advances funded by the Lessor
and the Facility Lender as provided herein);
(b) concurrently with each Property Closing Date, lease the
applicable Land and the existing Improvements thereon
to the Lessee under the Lease;
(c) cause the Improvements to be built by its agent, the
Construction Agent, pursuant to the Construction Agency
Agreement (utilizing funds provided by the Lessor and
the Facility Lender as provided herein); and
(d) as of the applicable Completion Date, lease the
completed Improvements to the Lessee under the Lease.
Notwithstanding any other provision hereof, the Lessor shall not
be obligated to make any Advance if (i) the amount of such
Advance would exceed the Available Commitments, (ii) if after
giving effect to such Advance, the aggregate Property Costs with
respect to the Properties would exceed the Maximum Property
Costs, (iii) if after giving effect to such Advance, the Property
Costs with respect to any Property would exceed 100% of the As
Built Value of such Property; or (iv) if such Advance is for the
purchase or improvement of a Support Facility and the total
amount of Advances expended for such purposes would (after giving
effect to such Advance) exceed twenty percent (20%) of the Total
Commitments.
SECTION 3.2. Lessor's Commitment. Subject to the
terms and conditions of this Participation Agreement and the
other Operative Documents, the Lessor, at the request of the
Lessee, agrees to make investments of its own funds in the
Properties from time to time during the Commitment Period on a
Funding Date in amounts (each a "Lessor Investment Amount") equal
to the amount of the applicable Advance requested in the
applicable Funding Request to be funded by a Lessor Investment
Amount; provided that, the aggregate amount of the Lessor
Investment Amounts funded shall at all times equal or exceed the
Lessor's Commitment Percentage of the total outstanding Advances.
Notwithstanding any other provision hereof, the Lessor shall not
be obligated to make available any Lessor Investment Amount if,
after giving effect to the requested Lessor Investment Amount,
the aggregate amount of Lessor Investment Amounts funded would
exceed the Lessor's Commitment.
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SECTION 3.3. Facility Lender Commitments. Subject to
the conditions and terms of this Participation Agreement and the
other Operative Documents, the Facility Lender, at the request of
the Lessor or its agent, the Construction Agent, agrees to make
Loans to the Lessor pursuant to the Loan Agreement, and the
Lessor hereby agrees to make the proceeds of such Loans available
to the Lessee or the Construction Agent pursuant to Section 3.1,
from time to time during the Commitment Period on each Funding
Date in an amount in immediately available funds equal to the
amount of the Advance requested to be funded by Loan proceeds in
the applicable Funding Request; provided that, the aggregate
principal amount of the Loans shall at all times be less than or
equal to the Facility Lender Commitment Percentage of the
aggregate outstanding Advances. Notwithstanding any other
provision hereof, the Facility Lender shall not be obligated to
make any Loan if, (i) after giving effect to the proposed Loan,
the aggregate outstanding amount of the Loans would exceed the
Facility Lender Commitments, or (ii) the Facility Lender is
unable to issue Commercial Paper Notes in an amount sufficient to
fund such Loan pursuant to Section 3.4 or to borrow the necessary
amount from the Lenders as Direct Funding Loans pursuant to the
Liquidity Facility.
SECTION 3.4. Issuance of Commercial Paper. Provided
that the Liquidity Agreement is in full force and effect and
subject to the terms and conditions of this Participation
Agreement and the other Operative Documents, in order to fund its
obligation to make the Loans to the Lessor pursuant to the Loan
Agreement: (a) the Facility Lender shall (i) issue Commercial
Paper Notes, the net proceeds of which are sufficient to make
Loans in a principal amount equal to the amount of the Advance
requested by the Lessee to be funded with Loan proceeds on each
Funding Date, or (ii) request a Direct Funding Loan pursuant to
the Liquidity Agreement in such principal amount; and
(b) The Facility Lender shall cause (i) the Issuing and
Paying Agent Bank to deliver the net proceeds of the Commercial
Paper Notes issued on such Funding Date, or (ii) the Agent to
deliver the proceeds of any Direct Funding Loans made pursuant to
the Liquidity Agreement on such Funding Date, to the Construction
Agent or such other Person as may be directed by the Construction
Agent;
provided however, that in no event shall (i) the sum of (x) the
Interest Component and Principal Component of all outstanding
Commercial Paper Notes, plus (y) the aggregate outstanding
principal amount of the Facility Loans, minus (z) Deposited Funds
at any time exceed the Commitment then in effect, or (ii) the
Facility Lender issue any Commercial Paper Notes with a maturity
date later than five (5) Business Days' prior to the Maturity
Date then in effect.
SECTION 3.5. Procedures for Acquisitions of Land.
With respect to each acquisition of Land,
(a) Lessee and/or Construction Agent shall provide to
Lessor and Agent Bank with respect to the proposed
acquisition, the Environment Audit, Appraisal, survey and
title insurance commitment required to be delivered pursuant
to Section 7.1 for such Property and the Lessor and Agent
Bank shall notify the Lessee of any deficiencies in, or
comments on, such items as soon as possible (and in any
event within ten (10) Business Days);
(b) Lessor and Agent Bank shall receive the form of
opinion of counsel required pursuant to Section 7.1(j) (with
the understanding that Lessor and Agent Bank shall respond
to any draft of such opinion within five (5) Business Days);
(c) Upon satisfaction of the foregoing conditions and
receipt of the form of Deed, Lessor shall execute and
deliver a limited power of attorney to Lessee (or a
representative thereof) in recordable form and satisfactory
to Lessor and Agent Bank sufficient to allow Lessee, upon
satisfaction of the remaining conditions precedent set forth
in Sections 7.1 and 7.2, to execute and record such
documents necessary or advisable in connection with the
acquisition of such Land on the Property Closing Date;
(d) Lessor, Facility Lender and Agent Bank shall
execute and deliver such other documents as may be required
to be executed by them in order to fulfill or to confirm
whether the conditions precedent set forth in Section 7.1
have been fulfilled or waived within three (3) Business
Days' following request; and
(e) Lessee shall give the Lessor, the Facility Lender,
and the Agent Bank an irrevocable prior written notice not
later than 1:00 p.m., New York time, on the Business Day of
the proposed Property Closing Date, pursuant, in each case,
to an Acquisition Request in the form of Exhibit A attached
hereto and made a part hereof by this reference (an
"Acquisition Request"), specifying with respect to such
Land: (i) the Property Closing Date, (ii) the Land to be
acquired, (iii) the identity of the seller and the Property
Acquisition Cost, and (iv) the Estimated Completion Date for
such Property.
SECTION 3.6. Guarantor's and Lessee's Deemed
Representation for Each Acquisition. Each Acquisition Request by
Lessee shall be deemed a representation and warranty by Guarantor
and the Lessee to the Lessor, the Facility Lender, each Lender
and the Agent Bank that on the proposed Property Closing Date,
(i) no Default or Event of Default exists, (ii) the
representations of Guarantor and Lessee set forth in Section 9
are true and correct in all material respects as though made on
and as of such Property Closing Date except to the extent such
representations or warranties relate solely to an earlier date,
in which case such representations and warranties shall have been
true and correct in all material respects on and as of such
earlier date, and (iii) the conditions precedent to the
acquisition of such Land by the Lessor on such Property Closing
Date set forth in Section 7 have been satisfied.
SECTION 3.7. Procedures for Advances. With respect
to each funding of an Advance, Construction Agent shall give the
Lessor, the Facility Lender, and the Agent Bank an irrevocable
prior written notice not later than 1:00 p.m., New York time, on
the Business Day of the proposed Funding
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Date, pursuant, in each case, to a Funding Request in the form of
Exhibit B attached hereto and made a part hereof by this
reference (a "Funding Request"), specifying (i) the proposed
Funding Date, (ii) the amount of the Advance requested, (iii) the
relative percentages of such Advance to be funded by Lessor
Investment Amounts and Loan proceeds, and (iv) to which
Properties such Advance is being allocated and the allocation of
such Advance to the respective Property Acquisition Costs and
Property Improvements Costs of such Properties. All requests for
Advances shall be in a minimum amount of $250,000; provided that,
to the extent any Advances are to be funded using the proceeds of
Direct Funding Loans (other than Interest Payment Loans), the
portion of the Advance to be funded by Direct Funding Loans shall
be in a minimum amount of $5,000,000 and in integral multiples of
$250,000. All remittances made by the Lessor and the Facility
Lender for the funding of any Advance shall be made in
immediately available funds by wire transfer to the Construction
Agent, with receipt by the Construction Agent not later than 3:00
p.m., New York time, on the applicable Funding Date. Upon (i)
the Construction Agent's receipt of the funds provided by the
Lessor and the Facility Lender with respect to an Advance and
(ii) satisfaction or waiver of the conditions precedent to such
Advance set forth in Section 7, the Construction Agent shall pay
to Lessee or the Person designated by Lessee for payment or
reimbursement of the Property Acquisition Costs of such Land or
Property or Property Improvements Costs, as the case may be, the
funds provided by the Lessor and the Facility Lender for such
Advance.
SECTION 3.8. Guarantor's and Lessee's Deemed
Representation for Each Advance. Each Funding Request by Lessee
shall be deemed a representation and warranty by Guarantor and
the Lessee to the Lessor, the Facility Lender, each Lender and
the Agent Bank that on the proposed Funding Date, (i) the amount
of Advance requested represents amounts owing in respect of the
purchase price of Land, or amounts owed or paid by Lessee to
third parties in respect of Property Costs for which Lessee has
not previously been reimbursed by an Advance, (ii) the Advance
will not cause the aggregate Advances allocated to the Properties
on such Funding Date and any prior Funding Dates to exceed the
Maximum Property Costs, (iii) the Advance will not cause the
aggregate Advances allocated to reimburse or to pay Soft Costs
incurred in connection with the Properties to exceed ten percent
(10%) of the Total Commitments, (iv) no Default or Event of
Default exists, (v) the representations of the Guarantor and the
Lessee set forth in Section 9 are true and correct in all
material respects as though made on and as of such Funding Date,
except to the extent such representations or warranties relate
solely to an earlier date, in which case such representations and
warranties shall have been true and correct in all material
respects on and as of such earlier date, and (vi) the conditions
precedent to such Advance and the related Lessor Investment
Amount and Loans set forth in Section 7 have been satisfied.
SECTION 3.9. Allocation of Advances. The amount of
each Advance shall be allocated to the Property Acquisition Costs
and/or Property Improvement Costs of the Properties specified in
the applicable Funding Request as provided in Section 3.7.
Notwithstanding any provision of this Participation Agreement to
the contrary however, the outstanding Lessor Investment Amounts
and the outstanding Loans shall be deemed to be allocated among
the respective Property Acquisition Costs and/or Property
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Improvement Costs (as applicable) of each Property pro rata based
upon the percentage of the aggregate outstanding Lessor
Investment Amounts or Loans, as the case may be, to the aggregate
amount of Advances regardless of the actual application of the
proceeds thereof to any particular Property.
SECTION 3.10. Use of Proceeds. The proceeds of all
Advances made pursuant to the Operative Documents shall be used
solely for the acquisition of Land located in the United States
or Canada and the construction of Improvements thereon pursuant
to the Construction Agency Agreement which shall be leased (upon
completion, in the case of Improvements constructed thereon by
the Construction Agent) by the Lessor to the Lessee pursuant to
the Lease, which Improvements shall be constructed as a Facility
on such Land; provided that the total amount of Advances expended
for the acquisition and construction of Properties to be used as
Support Facilities shall not exceed twenty percent (20%) of the
Total Commitments.
SECTION 3.11. Return of Advances. In the event that
the Facility Lender is required to return the proceeds of any
Facility Loan to the Agent Bank pursuant to Section 3.03(b) of
the Liquidity Agreement, the Lessor, the Lessee and the
Construction Agent agree (without duplication) to return any such
proceeds advanced to any of them pursuant to the Operative
Documents.
SECTION 4.
CERTIFICATE EARNINGS; INTEREST; COMMITMENT FEES
SECTION 4.1. Certificate Earnings. (a) The amount of
the Lessor Investment Amounts outstanding from time to time shall
accrue earnings ("Certificate Earnings") at the Certificate
Earnings Rate. If all or any portion of the Lessor Investment
Amounts, any Certificate Earnings payable thereon or any other
amount payable by Guarantor or a Lessee hereunder shall not be
paid within five (5) Business Days of the date when due (whether
at stated maturity, the acceleration or otherwise), such overdue
amount shall bear interest at a rate per annum which is equal to
the Overdue Rate which, in the event such amount is not paid
within such five (5) Business Day period, shall be deemed to have
begun to accrue on the due date thereof).
(b) Lessor shall select the applicable Certificate
Earnings Rate in accordance with the terms and conditions set
forth on Appendix 3 attached hereto and incorporated herein by
this reference.
(c) On each Payment Date, the Lessor shall, subject to
the provisions of Section 5, receive from the Basic Rent paid by
the Lessee, the Lessor Basic Rent (determined on the basis of
accrued Certificate Earnings) received from the Lessee under the
Lease from time to time as provided in Section 5.
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(d) The Lessor shall be deemed to have requested
that, prior to the Completion Date, the aggregate amount of
accrued Certificate Earnings due and payable on such date with
respect to the Lessor Investment Amounts allocated to the
Property Acquisition Costs and Property Improvements Cost, as
applicable of the Construction Period Properties be capitalized.
Such capitalization shall be deemed to occur on the relevant
Scheduled Payment Date. On each such Scheduled Payment Date, the
Lessor Investment Amounts and the Property Acquisition Costs and
Property Improvements Cost, as applicable of each Construction
Period Property shall be increased by the amount so capitalized.
SECTION 4.2. Interest on Loans. (a) Each Loan shall
accrue interest computed and payable in accordance with the terms
of the Loan Agreement.
(b) The interest on the Loans shall be paid through
the payment of the Lender Basic Rent (determined on the basis of
interest on the Loans) received from the Lessee under the Lease
from time to time as provided in Section 5.
(c) To the extent that any Interest Payment Loans are
made pursuant to the Loan Agreement to capitalize interest on the
Loans allocated to the Property Acquisition Costs and the
Property Improvements Cost, as applicable of the Construction
Period Properties, such Interest Payment Loan shall be deemed to
have been made on the relevant Scheduled Payment Date. On each
such Scheduled Payment Date, the Loans and the Property
Acquisition Costs and the Property Improvements Cost, as
applicable of each Construction Period Property shall be
increased by the amount so capitalized.
SECTION 4.3. Commitment Fees. Lessor shall receive
commitment fees on the Lessor's Commitment as set forth on
Appendix 3.
SECTION 5.
DISTRIBUTIONS OF PAYMENTS AND COLLATERAL PROCEEDS
In order to provide for the priority and allocation of
payments received from the Lessee and Guarantor and the proceeds
of the exercise of remedies by any of the Participants pursuant
to the Security Documents, the parties hereto agree as follows:
SECTION 5.1. Agreement of Agent Bank and
Participants. Pursuant to the Master Assignment and the Security
Agreement, all of the payments (other than the Excepted Payments)
under the Lease, the Construction Agency Agreement, the
Mortgages, the Notes, the Participation Agreement and the Loan
Agreement have been assigned to the Agent Bank for the benefit of
the Lenders. The
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Agent Bank hereby agrees to deposit all such payments, receipts
and other consideration of any kind whatsoever (other than
Excepted Payments) received by the Agent Bank pursuant to the
Master Assignment, the Security Agreement and any other Security
Document in the form received into the Cash Collateral Account.
Each Participant hereby agrees that any payment received pursuant
to the Guaranty (other than payments received by the Facility
Lender pursuant to Section 5.6 which shall be deposited in the
Commercial Paper Account) shall immediately be delivered in the
form received to the Agent Bank for deposit in the Cash
Collateral Account and application as set forth herein. Agent
Bank shall make distributions from the Cash Collateral Account
pursuant to the requirements of this Section 5 to each
Participant or other Person entitled thereto as promptly as
possible (it being understood that any such payment received on a
timely basis in accordance with the provisions of the Lease, this
Participation Agreement and the other Operative Documents shall
be distributed by the Agent Bank on the same Business Day to the
extent practicable).
SECTION 5.2. Basic Rent. Subject to Section 5.8,
each payment of Basic Rent (and any payment of interest on
overdue installments of Basic Rent) shall be made by Lessee to
the Agent Bank and shall be distributed by the Agent Bank as
follows:
first, an amount equal to the Lender Basic Rent shall
be distributed to the Lenders for application to pay in full
all accrued but unpaid interest owing to the Lenders
pursuant to the terms of the Liquidity Agreement and the
Liquidity Notes and the remainder of such amount shall be
deposited in the Commercial Paper Account to pay in full the
Interest Component of all Commercial Paper Notes in order of
maturity (subject to the last paragraph of this Section
5.2), and
second, an amount equal to the Lessor Basic Rent shall
be distributed to the Lessor for application to pay in full
all accrued but unpaid Certificate Earnings not required to
be capitalized pursuant to Section 4.1(d) (together with any
overdue interest thereon).
Notwithstanding any provision of this Section 5.2 to the
contrary, in the event that the Facility Lender is required
pursuant to the terms of the Operative Documents to make Interest
Payment Loans to capitalize interest on the Notes, subject to the
terms and conditions of the Operative Documents, Commercial Paper
Notes shall be issued with a greater aggregate Principal
Component (or, if the Facility Lender is not able or permitted to
do so, Facility Loans shall be made pursuant to the Liquidity
Agreement) to pay accrued but unpaid interest on the Facility
Loans or the Interest Component of maturing Commercial Paper
Notes such that the outstanding principal amount of the Loans
shall at all times equal the sum of (x) the outstanding principal
amount of the Facility Loans, plus (y) Principal Component of the
outstanding Commercial Paper Notes, minus (z) the Deposited
Funds; provided, however, that if a Loan Agreement Default under
Section 5(a) or (e) of the Loan Agreement or a Loan Agreement
Event of Default shall have occurred and be continuing, any such
payments which would otherwise be paid to the Lessor pursuant to
clause second of this Section 5.2 shall be instead held in the
Cash Collateral Account until the earliest to occur of (i) the
first date thereafter on which all such Loan
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Agreement Defaults and Loan Agreement Events of Default shall
have been cured (in which case such payment under clause second
shall then be made), (ii) the date of any acceleration of the
Loans (in which case such payment shall then be applied in the
manner contemplated by Section 5.8), or (iii) the 180th day after
the occurrence of such Loan Agreement Default or Loan Agreement
Event of Default (in which case such payment under clause second
shall then be made).
SECTION 5.3. Purchase Payments by Lessee. Subject to
Section 5.8, any payment made by the Lessee pursuant to the Lease
or by the Construction Agent pursuant to the Construction Agency
Agreement as a result of:
(a) the purchase of any of the Properties in connection
with Lessee's exercise of its Purchase Option under
Section 20.1 of the Lease or the Expiration Date
Purchase Option pursuant to Section 22.2 of the Lease
(and any related purchase by the Construction Agent
pursuant to the Construction Agency Agreement), or
(b) the Lessee's purchase of a Property or Properties
pursuant to Section 17.6 of the Lease (and any related
purchase by the Construction Agent pursuant to the
Construction Agency Agreement) or the Construction
Agent's purchase pursuant to Section 5.3 of the
Construction Agency Agreement, or
(c) payment of the Property Balance in accordance with
Section 15.4, Section 16.2(b) Section 22.3(b) of the
Lease (and any related purchase by the Construction
Agent pursuant to the Construction Agency Agreement),
shall except as otherwise provided in Section 5.11, be
distributed by the Agent Bank in the following order of priority:
first, an amount equal to the Facility Lender Property
Balance with respect to such Property shall be distributed
to the Lenders in an amount sufficient to repay the
outstanding Facility Loans in full, such amount to be paid
pro rata to the Lenders in accordance with the terms of the
Liquidity Agreement, with the remainder of such amount to be
deposited in the Commercial Paper Account to be applied to
repay in full the Commercial Paper Notes in order of
maturity (and the outstanding principal amount of the Notes
shall be proportionately reduced by such repayments), and
second, an amount equal to the Lessor Property Balance
with respect to such Property shall be distributed to the
Lessor, and the Lessor Investment Amounts shall be reduced
by such amount, provided, however, that if a Loan Agreement
Default under Section 5(a) or (e) of the Loan Agreement or a
Loan Agreement Event of Default shall have occurred and be
continuing, any such payments which would otherwise be paid
to the Lessor pursuant to clause second of this Section 5.3
shall be instead held in the Cash Collateral Account until
the earliest to occur of (i) the first date thereafter on
which all
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such Loan Agreement Defaults and Loan Agreement Events of
Default shall have been cured (in which case such payment
under clause second shall then be made), (ii) the date of
any acceleration of the Loans (in which case such payment
shall then be applied in the manner contemplated by Section
5.8), or (iii) the 180th day after the occurrence of such
Loan Agreement Default or Loan Agreement Event of Default
(in which case such payment under clause second shall then
be made).
SECTION 5.4. Residual Value Guarantee. (a) Subject
to Section 5.8, in the event that upon the Expiration Date,
following the election by the Lessee of the Remarketing Option in
accordance with Article XXII of the Lease, the outstanding
principal amount of Loans divided by the outstanding principal
amount of all Advances pursuant to the Total Commitment
(expressed as a percentage) equals the Facility Lender Commitment
Percentage, the Residual Value Guarantee paid by Lessee pursuant
to Article XXII of the Lease (which shall equal the Tranche A
Balance) shall be distributed by the Agent Bank on the Expiration
Date in the following order of priority (with the principal
amount of Tranche A Note to be deemed to have been paid in full
by such distribution):
first, to the Lenders to repay all outstanding Tranche
A Facility Loans in full,
second, the balance, if any, to be deposited in the
Commercial Paper Account to be applied to pay in full the
Commercial Paper Notes in order of maturity (with any
remaining amount of the Commercial Paper Notes to be paid in
full with Gross Proceeds or Residual Loans).
No amount of the Residual Value Guarantee shall be applied
pursuant to this Section 5.4(a) to reduce the Tranche B Balance
or any portion of the Lessor Investor Amounts.
(b) In the event that upon the Expiration Date, following
the election by the Lessee of the Remarketing Option in
accordance with Article XXII of the Lease, the outstanding
principal amount of the Loans divided by the aggregate amount of
all Advances outstanding pursuant to the Total Commitments
(expressed as a percentage) is less than the Facility Lender
Commitment Percentage, the Residual Value Guarantee shall be
distributed by the Agent Bank in the following order of priority
(with the principal amount of the Notes to be reduced by the
amounts distributed pursuant to the first and second priority
categories):
first, to the Lenders in an amount sufficient to pay
the outstanding Tranche A Facility Loans in full,
second, the balance, if any, to be deposited in the
Commercial Paper Account to repay in full the Commercial
Paper Notes in order of maturity in an amount sufficient to
repay the outstanding Commercial Paper Notes in full (with
any remaining amount of the outstanding Commercial Paper
Notes to be repaid in full with Gross Proceeds or Residual
Loans), provided that the amount deposited in the Commercial
Paper Account pursuant to
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this clause second, together with the amount applied under
clause first above, shall not exceed an amount equal to
86.6% of the principal amount of the Loans outstanding on
the Expiration Date prior to any application of funds
pursuant to Sections 5.3 or 5.5,
third, the balance, if any, to be distributed to the
Lessor to be applied to Certificate Earnings, any overdue
interest and to repay Lessor Investment Amounts.
SECTION 5.5. Sales Proceeds of Remarketing of
Properties. Subject to Section 5.8, any payments received by
Agent Bank as Gross Proceeds from the sale of the Properties sold
pursuant to Lessee's exercise of the Remarketing Option pursuant
to Article XXII of the Lease or otherwise sold by Agent Bank, or
following the repayment in full of all of the Facility Loans and
the termination of the Master Assignment, the Facility Lender or
Lessor, together with any payment made by Lessee as a result of
an indemnity payment pursuant to Section 14.4, shall be
distributed by Agent Bank, Facility Lender or Lessor, as the case
may be, on the Expiration Date (or following the Expiration Date,
upon receipt), in the following order of priority:
first, to the Lenders for application to repay the
Tranche B Facility Loans in full (with a corresponding
reduction in the Tranche B Note),
second, the balance, if any, to be deposited in the
Commercial Paper Account for payment in full of the
Commercial Paper Notes in order of maturity (with any
remaining amount of the outstanding Commercial Paper Notes
to be repaid with Residual Loans), provided that the amount
deposited in the Commercial Paper Account pursuant to this
clause second, together with the amount applied under clause
first above, shall not exceed an amount equal to 13.4% of
the principal amount of the Loans outstanding on the
Expiration Date prior to any application of funds pursuant
to Sections 5.3 or 5.4,
third, the balance, if any, to be distributed to the
Lessor to be applied to payment of Certificate Earnings and
overdue interest and to repay the Lessor Investment Amounts,
fourth, the balance, if any, shall be distributed to
the Lessee to the extent permitted by Section 5.13;
provided, however, that if a Loan Agreement Default under Section
5(a) or (e) of the Loan Agreement or a Loan Agreement Event of
Default shall have occurred and be continuing, any such payments
which would otherwise be paid to the Lessor pursuant to clause
third of Section 5.5 shall be instead held in the Cash Collateral
Account until the earliest to occur of (i) the first date
thereafter on which all such Loan Agreement Defaults and Loan
Agreement Events of Default shall have been cured (in which case
such payment under clause third shall then be made), (ii) the
date of any acceleration of the Loans (in which case such payment
shall then be applied in the manner contemplated by Section 5.8),
or (iii) the 180th day after the occurrence of such Loan
Agreement Default or Loan Agreement Event of Default (in which
case such payment under clause third shall then be made).
<PAGE>
To the extent that any amounts received pursuant to this
Section 5.5 relate to a specific Property, the Property Balance
relating to such Property shall be deemed to be reduced by the
amounts applied pursuant hereto, with a corresponding reduction
in the principal amount of the Notes.
SECTION 5.6. Supplemental Rent. Subject to Section
5.7, all payments of Supplemental Rent received by any Agent Bank
(excluding any amounts payable pursuant to the preceding
provisions of this Section 5) shall be distributed promptly by
Agent Bank upon receipt thereof to the Persons entitled thereto
pursuant to the Operative Documents. In the event that a Lease
Event of Default has occurred and is continuing, relieving the
Lenders of their obligation to make Liquidity Loans or (in the
case of a Material Lease Event of Default) Residual Loans
pursuant to the Liquidity Agreement, unless, upon electing not to
make such Loans, the Agent Bank has immediately demanded payment
of the Lease Balance from the Lessee pursuant to the Lease and,
in the event such amount is not immediately repaid, immediately
demanded payment of such amount from the Guarantor pursuant to
the Guaranty, the Facility Lender, acting through the Issuing and
Payment Agent, shall be entitled to receive and to apply to the
Commercial Paper Notes in order of maturity, an amount equal to
the sum of (i) the mandatory prepayment of the Notes required by
Section 2.4 of Loan Agreement, such amount to be funded by a
payment of Supplemental Rent pursuant to the Lease, and (upon
payment of such amount by Lessee or the Guarantor) the Lease
Balance shall be reduced by the amount of any such payment, plus
any Basic Rent owed by the Lessee with respect to the Interest
Component of the maturing Commercial Paper Notes giving rise to
such mandatory prepayment. In the event that the Lessee does not
fund such amount, the Facility Lender, acting through the
Administrative Agent, shall be entitled to make an immediate
demand therefor in accordance with the terms of Section 7 of the
Guaranty. In addition, in the event of any voluntary prepayment
of the principal amount of the Loans pursuant to Section 2.4 of
the Loan Agreement, which amounts are applied to repay the
principal of Liquidity Loans or Commercial Paper Notes, the Lease
Balance shall be reduced by the amount of such payment to the
extent funded by the payment of Supplemental Rent.
SECTION 5.7. Excepted Payments. Notwithstanding any
other provision of this Participation Agreement or the Operative
Documents, any Excepted Payment received at any time by the Agent
Bank or any Participant shall, subject to the penultimate
sentence of Section 5.1, be distributed promptly to the Person
entitled to receive such Excepted Payment.
SECTION 5.8. Distribution of Payments after Lease
Event of Default or Loan Agreement Event of Default. (a) Subject
to Section 5.6, all payments (other than Excepted Payments)
received and amounts realized by Agent Bank, Facility Lender or
Lessor after a Lease Event of Default has occurred and is
continuing, including proceeds from the sale of any of the
Properties or other collateral, proceeds of any amounts from any
insurer or any Governmental Authority in connection with any
Casualty or Condemnation, from the Lessee as payment in
accordance with the Lease, including any payment received from
the Lessee pursuant to Section 17 of the Lease (but excluding
Section 17.6 of the Lease), or subject to
<PAGE>
subsection (c) below from the Guarantor pursuant to the Guaranty
shall, be paid to the Agent Bank as promptly as possible and
shall be distributed by Agent Bank in the following order of
priority:
first, so much of such payment or amount as shall be
required to reimburse Agent Bank, Facility Lender, the
Lenders or Lessor for any tax, expense or other loss
incurred by Agent Bank, Facility Lender, the Lenders or
Lessor incurred in connection with the collection of such
amounts (to the extent not previously reimbursed) shall be
distributed to Agent Bank, Facility Lender, the Lenders or
Lessor, as applicable (to be divided amongst the
Participants pro rata to the extent insufficient to satisfy
all claims);
second, subject to clause (c) below, so much of such
amount as shall be required to pay in full each Lender's
Participant Balance, and in the case that the amount so to
be distributed shall be insufficient to pay in full as
aforesaid, then, pro rata among the Lenders without priority
of one Lender over the other in the proportion that each
Lender's Participant Balance bears to the aggregate
Participant Balances of all of the Lenders, shall be
distributed to the Lenders;
third, subject to clause (c) below, the balance, if
any, shall be deposited in the Commercial Paper Account to
repay in full the Interest Component and Principal Component
of all outstanding Commercial Paper Notes;
fourth, so much of such amount or amounts as shall be
required to pay in full the Participant Balance of Lessor
shall be distributed to the Lessor; and
fifth, the balance, if any, of such payment or amounts
remaining thereafter shall be promptly distributed to, or as
directed by, the Lessor, pursuant to the Operative
Documents.
(b) During the occurrence and continuance of a Loan
Agreement Event of Default if the Loans have been accelerated,
all amounts (other than Excepted Payments) received or realized
by any Participant and otherwise distributable pursuant to
Sections 5.2 and 5.3 shall be distributed as provided for in
Section 5.8 (a) above except that if such Loan Agreement Default
does not arise out of, or is not attributable to a Lease Event of
Default, clause fifth shall, subject to Section 5.13, be directed
by the Lessee.
(c) Notwithstanding the foregoing, any payments received
pursuant to the Guaranty upon the occurrence and during the
continuance of a Lease Event of Default (except as provided in
Section 5.6), shall be divided amongst clause second and clause
third of subsection (a) above pro rata, without priority one over
another.
SECTION 5.9. Other Payments. (a) Except as otherwise
provided in Sections 5.2, 5.3, 5.8 and paragraph (b) below,
(i) any payment received by Agent Bank for which no
provision as to the application thereof is made in the
Operative Documents or elsewhere in this Section 5, and
(ii) all payments received and amounts realized by any
Participant under the Lease or otherwise with respect to the
Properties to the extent received or realized at any time
after payment in full of the Participant Balances of all of
the Participants and any other amounts due and owing to the
Lessor, Facility Lender, Lenders or the Agent Bank,
shall be distributed forthwith by the Agent Bank in the order of
priority set forth in Section 5.3 (in the case of any payment
described in clause (i) above) or in Section 5.8 hereof (in the
case of any payment described in clause (ii) above).
(b) Except as otherwise provided in Sections 5.2, 5.3
and 5.8 hereof and except after a Lease Event of Default has
occurred and is continuing, any payment received by Agent Bank
for which provision as to the application thereof is made in an
Operative Document but not elsewhere in this Section 5 shall be
distributed forthwith by Agent Bank to the Person and for the
purpose for which such payment was made in accordance with the
terms of such Operative Document.
SECTION 5.10. Casualty and Condemnation Amounts. Any
amounts payable to Agent Bank, Lessor or Facility Lender as a
result of a Casualty or Condemnation pursuant to Section 15.1 of
the Lease (but excluding any amounts payable pursuant to Section
16.2 of the Lease) shall, if no Lease Event of Default exists, be
paid over to the Lessee to reimburse Lessee for any amounts
expended by Lessee for the rebuilding or restoration of the
Property to which such Casualty or Condemnation applied, and any
excess proceeds shall be paid in accordance with the Lease. If a
Lease Event of Default exists, then during the continuance of
such Lease Event of Default, all such amounts shall be held by
Agent Bank in the Cash Collateral Account and upon exercise of
Agent Bank's remedies under the Operative Documents shall be
distributed pursuant to Section 5.8.
SECTION 5.11. Reduction of Commitment. In the event
of reduction of the Commitment pursuant to the terms of Sections
4.02 or 4.04 of the Liquidity Agreement (with an automatic and
corresponding reduction of the Facility Lender's Commitments) to
an amount which is less than the sum of the Lease Balance plus
the aggregate Property Improvement Costs expended pursuant to the
Construction Agency Agreement for Properties which have not yet
reached Completion Date (the "Invested Amount"), the Lessee and
the Construction Agent shall, to the extent permitted by Section
20 of Lease (and to extent that the Agent Bank consents to any
required decrease of the Permitted Amount) purchase Properties in
accordance with the terms of the Lease to reduce the Invested
Amount to the amount of the Commitment. The Purchase Option
Price paid by Lessee in such event shall be distributed to the
Non-Consenting Lenders in accordance with Section 5.02(b)(ii) of
the Liquidity Agreement.
SECTION 5.12. Order of Application. To the extent any
payment made to any Participant pursuant to Sections 5.2, 5.3,
5.4, 5.5 or 5.8 is insufficient to pay in full the Participant
Balance of such Participant, then each such payment shall first
be applied to overdue interest, then to accrued interest and then
to principal.
SECTION 5.13. Remaining Funds. Upon the termination
of the Total Commitments and the Commitments and the payment in
full of (i) the Loans, the Facility Loans, the Commercial Paper
Notes, the Lessor Investment Amounts and all accrued and unpaid
Certificate Earnings, and (ii) all amounts owing by the Lessee or
Guarantor to any Person under the Operative Documents, all
remaining moneys in the Cash Collateral Account shall be paid to
the Lessee.
SECTION 5.14. Time of Payment. Each payment due from
Lessee or Guarantor under the Operative Documents shall be made
in immediately available funds prior to 2:00 p.m. New York time
on the date when due in immediately available funds consisting of
lawful currency of the United States of America, unless such date
shall not be a Business Day, in which case payment shall be made
on the next succeeding Business Day. Payments received after
2:00 p.m. New York time shall be deemed received on the next
succeeding Business Day.
SECTION 6.
CERTAIN INTENTIONS OF THE PARTIES
Anything else herein, in any other Operative Document, or
elsewhere to the contrary notwithstanding, it is the intention of
Guarantor, the Lessee, the Lessor, the Facility Lender, the
Lenders and the Agent Bank (and, assuming enforcement of the
Operative Documents in accordance with their terms, it is the
representation and warranty of the Guarantor and the Lessee)
that: (i) the amount and timing of installments of Basic Rent due
and payable from time to time from the Lessee under the Lease
shall be equal to the aggregate payments due and payable for
interest on the Loans and Certificate Earnings on the Lessor
Investment Amounts on each Payment Date (to the extent such
interest and Certificate Earnings are not Property Costs with
respect to Construction Period Properties permitted to be funded
by Interest Payment Loans or increases to Lessor Investment
Amounts by capitalization thereof during a Construction Period)
and that such interest amount payable on the Loans shall at all
times equal the aggregate accrued interest on the principal
amount of Facility Loans and the Interest Component of maturing
Commercial Paper Notes (with the express understanding that any
interest on the Facility Loans or Interest Component of maturing
Commercial Paper Notes not paid with Lender Basic Rent payments
due to such capitalization of the interest on the Loans will be
paid by the proceeds of new Commercial Paper Notes or Facility
Loans); (ii) the amount and timing of Supplemental Rent payable
by the Lessee shall include amounts equal to the mandatory
prepayments of the Loans required pursuant to Section 2.4 of the
Loan Agreement which shall equal the amount of maturing
Commercial Paper Notes not repaid by the issuance of new
Commercial Paper Notes or Liquidity Loans to the extent set forth
in Section 5.6; (iii) if the
<PAGE>
Lessee elects the Purchase Option or becomes obligated to
purchase any Property under the Lease, the Loans, the Lessor
Investment Amounts, all interest, Certificate Earnings and
Facility Fees related to such Property and all other obligations
of the Lessee owing to the Lessor, the Facility Lender, the
Lenders and the Agent Bank relating thereto shall be paid in full
by the Lessee so that the aggregate Property Costs (including
amounts owing by the Construction Agent pursuant to the
Construction Agency Agreement with respect to Construction Period
Properties) shall at all times equal the sum of (x) the Facility
Loans, plus (y) the Interest Component and Principal Component of
outstanding Commercial Paper Notes (less any Deposited Funds)
plus (z) the Lessor Investment Amounts not previously prepaid;
(iv) if the Lessee properly elects the Remarketing Option with
respect to a Property and provided that no Lease Event of Default
has occurred and is continuing, Lessee shall only be required to
pay to the Lessor the Gross Proceeds of the sale of such
Property, the Residual Value Guarantee for such Property, any
amounts payable pursuant to Section 14 and any Rent with respect
to such Property (which aggregate amounts may be less than the
Property Balance under the Lease with respect to such Property)
with the express understanding that any remaining amount of the
Commercial Paper Notes shall be repaid with the proceeds of
Facility Loans; (v) upon a Lease Event of Default, the amounts
then due and payable by the Lessee under the Lease shall include
the Lease Balance which shall be sufficient to repay the
Commercial Paper Notes, Liquidity Loans and Lessor Investment
Amounts in full; and (vi) the amount of interest accruing on the
Loans for any period shall equal the sum of the interest accruing
on the Liquidity Notes and the Interest Component of the
Commercial Paper Notes outstanding during such period.
SECTION 7.
CONDITIONS PRECEDENT TO
ACQUISITIONS AND ADVANCES
SECTION 7.1. Conditions Precedent -- Documentation.
The obligation of the Lessor to acquire a Property on a Property
Closing Date, to make the initial Advance in respect of such
Property on the initial Funding Date with respect to such
Property, and to make any related Lessor Investment Amount
available on such Funding Date, the right and obligation of the
Facility Lender to make any Loans to Lessor on such Funding Date
to fund such Advances and the obligation of the Lenders to make
Direct Funding Loans under the Liquidity Agreement, are subject
to satisfaction of the following conditions precedent and to the
conditions precedent set forth in Section 7.2:
(a) the Agent Bank, the Lessor, and the Facility Lender
shall have received a fully executed counterpart of the
Acquisition Request, appropriately completed by Lessee,
in accordance with Section 3.5, and a fully executed
counterpart of the Funding Request, appropriately
completed by Lessee, in accordance with Section
<PAGE>
3.7;
(b) the Environmental Audit for such Property shall have
been delivered to and shall be satisfactory in form and
substance to the Agent Bank and the Lessor;
(c) on or prior to the Property Closing Date for the related
Property, the Agent Bank, the Lessor and the Facility
Lender shall have received an Appraisal of each Property
being acquired on such Property Closing Date reasonably
satisfactory to the Agent Bank and the Lessor;
(d) on or prior to the Property Closing Date for the related
Property, the Lessor shall have received a deed (a
"Deed") (in form and substance appropriate for recording
with the applicable Governmental Authorities, with
respect to such Property (and all Improvements located
thereon) being purchased on such Property Closing Date,
conveying fee simple title to such Property to the
Lessor, subject only to Permitted Exceptions;
(e) on or prior to the Property Closing Date for the related
Property, Lessee and the Lessor shall have delivered to
the Agent Bank and the Facility Lender a Construction
Agency Agreement Supplement with respect to such
Property fully executed by Construction Agent and the
Lessor;
(f) on or prior to the Property Closing Date for the related
Property, the Lessee and the Lessor shall have delivered
the original counterpart of the Lease Supplement and
Memorandum of Lease executed by the Lessee and the
Lessor with respect to such Property to the Agent Bank,
with a copy to the Facility Lender;
(g) on or prior to the Property Closing Date for the related
Property, the Lessor shall have delivered to the Agent
Bank a Mortgage executed by the Lessor with respect to
such Property;
(h) on or prior to the Property Closing Date for the related
Property, the Lessor shall have delivered to the Agent
Bank a Supplement to the Assignment of Leases executed
by the Lessor with respect to such Property;
(i) on or prior to the Property Closing Date for the related
Property, the Lessee shall have delivered to the Agent
Bank a consent to the Supplement to the Assignment of
Leases executed by the Lessee with respect to such
Property;
(j) on or prior to the Property Closing Date for the
Property, the Agent Bank, the Lessor and the Facility
Lender shall have received an opinion of counsel, which
counsel and whose opinion shall be reasonably
satisfactory to the Agent Bank and the Lessor and
qualified with respect to the laws of the jurisdiction
in which such Property is located as to the matters set
forth in Exhibit E attached hereto and made
<PAGE>
a part hereof by this reference;
(k) on or prior to the Property Closing Date for the related
Property, the Facility Lender shall have delivered to
the Agent Bank a Supplement to the Master Assignment
assigning to Agent Bank, for the benefit of the Lenders,
substantially all of the rights of Lessor to the
documents described in subparagraphs (e) through (i) and
a consent of the Lessee and Lessor to such assignment;
(l) on or prior to the Property Closing Date for the related
Property, the Lessee shall deliver, or cause to be
delivered, to the Agent Bank and the Lessor an ALTA
extended owner's (with respect to Lessor) and lender's
(with respect to Agent Bank) title insurance commitment
covering such Property in favor of the Agent Bank, the
Facility Lender and the Lessor reasonably satisfactory
in form and substance to the Agent Bank and Lessor, with
customary coverage over the general exceptions to such
policy and customary endorsements issued by the title
company and evidencing the first priority status of the
Mortgage, subject only to the exceptions noted therein;
(m) on or prior to the Property Closing Date for the related
Property, the Agent Bank shall have received evidence
satisfactory to it that each of the Deed, the Memorandum
of Lease, the Supplement to the Assignment of Leases,
the Consent to the Assignment, the Mortgage, the
Supplement to Master Assignment and the consent to
Master Assignment delivered on any Property Closing Date
shall have been or are being recorded with the
appropriate Governmental Authorities in the order in
which such documents are listed in this clause, and the
UCC Financing Statements with respect to the Property
being acquired shall have been or are being filed with
the appropriate Governmental Authorities, and that all
of the recording fees, filing fees, transfer taxes and
recording taxes with respect to the foregoing have been
paid; and
(n) Lessee shall have delivered to the Agent Bank, the
Lessor and the Facility Lender its duly completed
Property Closing Certificate substantially in the form
of Exhibit F attached hereto and made a part hereof by
this reference, as to the satisfaction of the conditions
precedent set forth in Section 7.2.
SECTION 7.2. Further Conditions Precedent. The
obligation of the Lessor to acquire a Property on a Property
Closing Date, to make an Advance on a Funding Date, to make
available any related Lessor Investment Amount on such Funding
Date, the right and obligation of Facility Lender to make any
related Loans on such Funding Date to fund such Advances and the
Lenders' obligation to make Direct Funding Loans under the
Liquidity Agreement, are subject to satisfaction of the following
conditions precedent and to satisfaction on or before the related
Property Closing Date of the conditions precedent set forth in
Section 7.1:
<PAGE>
(a) on such date the representations and warranties of
Guarantor, Lessee, contained herein and in each of the
other Operative Documents shall be true and correct in
all material respects as though made on and as of such
date, except to the extent such representations and
warranties relate solely to an earlier date, in which
case such representations and warranties shall have been
true and correct in all material respects as of such
earlier date;
(b) the other parties hereto shall have performed their
respective agreements contained herein and in the other
Operative Documents to be performed by them on or prior
to such date;
(c) there shall not have occurred and be continuing any
Facility Agreement Default or Facility Agreement Event
of Default and no Facility Agreement Default or Facility
Agreement Event of Default will have occurred after
giving effect to the acquisition of Land requested by
such Acquisition Request and/or the making of the
Advance requested by such Funding Request, as the case
may be;
(d) the Available Commitments, in the reasonable judgment of
the Construction Agent will be sufficient to complete
the Improvements on the Construction Period Properties
and the Advances being made and which have been made
with respect to the Construction Period Properties will
not exceed the Maximum Property Costs for the
Properties; and
(e) the Estimated Completion Date of such Property shall not
be after the last day of the Commitment Period or beyond
the Outside Completion Date.
Notwithstanding the foregoing, as more specifically set forth in
the Liquidity Agreement, the Facility Lender may, in compliance
with the Liquidity Agreement, continue to issue Commercial Paper
Notes in an amount sufficient to repay the Principal Component of
maturing Commercial Paper Notes and Facility Loans unless a
Material Lease Event of Default shall have occurred and be
continuing.
SECTION 8.
COMPLETION DATE CONDITIONS
The occurrence of the Completion Date with respect to any
Property shall be subject to the fulfillment to the reasonable
satisfaction of, or waiver by, the Agent Bank and the Lessor of
the following conditions precedent:
(a) Construction Completion. The construction of the
Improvements shall have been completed substantially in
accordance with the Plans and Specifications for such
Property and all applicable Requirements of Law, and
such Property shall be ready
<PAGE>
for occupancy and operation. Substantially all
fixtures, furniture, furnishings, equipment and other
property contemplated under such Plans and
Specifications to be incorporated into or installed in
such Property shall have been incorporated or installed,
free and clear of all Liens except for Permitted Liens.
(b) Lessee Certification. Lessee shall have furnished the
Lessor, the Facility Lender and the Agent Bank with a
certification of Lessee (substantially in the form of
Exhibit H attached hereto and made a part hereof by this
reference) to the effect that:
(i) all amounts owing to third parties for the
construction of the Improvements have been paid in
full (or are being contested in good faith or held
until completion of certain punch list items and
the amount being contested or held back does not
exceed ten percent (10%) of the related Property
Cost), and no litigation or proceedings are
pending, or to the best of Lessee's knowledge, are
threatened, against such Property or Lessee which
could have a Material Adverse Effect;
(ii) a certificate of occupancy (temporary or permanent)
and all other material Governmental Action required
for the construction and operation of such Property
have been obtained and are in full force and
effect;
(iii) such Property has available all services of
public facilities and other utilities necessary for
use and operation of the Facility and the other
Improvements for their intended purposes, including
(as applicable), without limitation, adequate
water, gas and electrical supply, storm and
sanitary sewerage facilities, telephone, other
required public utilities and means of access
between the Facility and public highways for
pedestrians and motor vehicles;
(iv) all material agreements, easements and other
rights, public or private, which are necessary to
permit the lawful use and operation of such
Property as the Lessee intends to use such 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 Lessee has no actual knowledge of any pending
modification or cancellation of any of the same;
and the use of such Property substantially as
intended does not depend on any variance, special
exception or other municipal approval, permit or
consent that has not been obtained and is in full
force and effect for its continuing legal use;
(v) all of the requirements and conditions set forth in
Section 8(a) hereof have been completed and
fulfilled;
<PAGE>
(vi) no changes or modifications were made to the
related Plans and Specifications after the related
Property Closing Date that have had a material
adverse effect on the current value, residual
value, operation, use or useful life of such
Property; and
(vii) upon the execution and delivery of a Lease
Supplement with respect to the Improvements, Lessee
will have unconditionally accepted such
Improvements subject to such Lease Supplement and
will have good and marketable title to a valid and
subsisting leasehold interest in the Property,
subject only to Permitted Exceptions.
(c) Lease Supplement. Lessee and Lessor shall have executed
and delivered to the Agent Bank a Lease Supplement with
respect to such Improvements.
SECTION 9.
REPRESENTATIONS
SECTION 9.1. Representations of the Lessor. Lessor
represents and warrants to each of the other parties hereto as
follows:
(a) Due Organization; etc. It is a limited partnership duly
organized and validly existing and in good standing
under the laws of the State of Delaware and has the
power and authority to enter into and perform its
obligations under the Operative Documents to which it is
or will be a party and each other agreement, instrument
and document to be executed and delivered by it in
connection with or as contemplated by each such
Operative Document to which it is or will be a party.
It is duly qualified to transact business in every
jurisdiction where the failure to qualify would have a
material adverse effect on its ability to perform its
obligations under the Operative Documents as
contemplated on the Initial Closing Date.
(b) Authorization; No Conflict. The execution, delivery and
performance of each Operative Document to which it is or
will be a party, has been duly authorized by all
necessary action on its part and on the part of its
general partner and neither the execution and delivery
thereof, nor the consummation of the transactions
contemplated thereby, nor compliance by it with any of
the terms and provisions thereof (i) does or will
require any approval or consent of any trustee or
holders of any of its indebtedness or obligations or
those of its general partner, (ii) does or will
contravene any current law, governmental rule or
regulation relating to it or its general partner, (iii)
does or will contravene or result in any breach of or
constitute any default under, or result in the creation
of any Lien upon any of it or its general partner's
property under its partnership agreement or any
Contractual Obligation of
<PAGE>
the Lessor or its general partner, or (iv) does or will
require any Governmental Action by any Governmental
Authority.
(c) Enforceability; etc. Each Operative Document to which
the Lessor is or will be a party has been, or on or
before any Closing Date on which such Operative Document
is to be signed will be, duly executed and delivered by
the Lessor and each such Operative Document to which the
Lessor is a party constitutes, or upon execution and
delivery will constitute, assuming the due
authorization, execution and delivery hereof and thereof
by the other parties hereto and thereto, a legal, valid
and binding obligation enforceable against the Lessor in
accordance with the terms thereof, except as such
enforceability may be limited or denied by (i)
applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws effecting creditors' rights
and the enforcement of debtors' obligations generally,
and (ii) general principles of equity, regardless of
whether enforcement is pursuant to a proceeding in
equity or at law.
(d) Litigation. There is no action or proceeding pending
or, to Lessor's knowledge, threatened to which it or, to
the best of its knowledge, its general partner is or
will be a party, before any Governmental Authority that,
if adversely determined, could reasonably be expected to
have a material adverse effect on the property,
operations or financial condition of the Lessor or, to
the best of its knowledge, its general partner.
(e) Assignment. It has not assigned or transferred any of
its right, title or interest in or under the Lease, the
Guaranty or the Construction Agency Agreement except in
accordance with the Operative Documents.
(f) Defaults. No Default or Event of Default under the
Operative Documents attributable to it has occurred and
is continuing.
(g) Securities Act. Neither the Lessor nor any Person
authorized by the Lessor to act on its behalf has
offered or sold any interest in the Lessor Investment
Amounts or the Notes, or in any similar security
relating to a Property, or in any security the offering
of which for the purposes of the Securities Act would be
deemed to be part of the same offering as the offering
of the aforementioned securities to, or solicited any
offer to acquire any of the same from, any Person other
than the parties hereto and neither the Lessor nor any
Person authorized by the Lessor to act on its behalf
will take any action which would subject the issuance or
sale of any interest in the Lessor Investment Amounts or
the Notes to the provisions of Section 5 of the
Securities Act or require the qualification of any
Operative Document under the Trust Indenture Act of
1939, as amended.
(h) Chief Place of Business. The Lessor's chief place of
business, chief executive office and office where the
documents, accounts and records relating to the
<PAGE>
transactions contemplated by this Participation
Agreement and each other Operative Document are kept are
located at 12 East 49th Street, New York, New York
10017.
(i) Federal Reserve Regulations. The Lessor is not engaged
principally in, and does not have as one of its
important activities, the business of extending credit
for the purpose of purchasing or carrying any margin
stock (within the meaning of Regulation U of the Board).
(j) Investment Company Act. The Lessor is not an
"investment company" or a company controlled by an
"investment company" within the meaning of the
Investment Company Act.
(k) General Partner. Credit Suisse is the sole general
partner of the Lessor.
SECTION 9.2. Representations of the Guarantor and the
Lessee. Each of the Guarantor and the Lessee represents and
warrants to each of the other parties hereto that:
(a) Corporate Existence and Power. Each of the Guarantor
and the Lessee is a corporation duly organized, validly
existing and in good standing under the laws of the
jurisdiction of its incorporation, is duly qualified
toxtransact business in every jurisdiction where each
Property is located (in the case of Lessee) and where
the failure to so qualify would reasonably be expected
to have or cause a Material Adverse Effect, and has all
corporate powers and all governmental licenses,
authorizations, consents and approvals required to carry
on its business as now conducted, except where the
failure to possess any such licenses, authorizations,
consents, or approvals would not reasonably be expected
to have or cause a Material Adverse Effect.
(b) Corporate and Governmental Authorization; No
Contravention. The execution, delivery and performance
by each of the Guarantor and the Lessee of this
Participation Agreement and the other Operative
Documents to which it is a party (i) are within its
corporate powers, (ii) have been duly authorized by all
necessary corporate action, (iii) require no
Governmental Action by or in respect of or filing with,
any Governmental Authority, (iv) do not contravene, or
constitute a default under, any Applicable Law or of the
certificate of incorporation or by-laws of the
Guarantor, Lessee, or of any material agreement,
judgment, injunction, order, decree or other instrument
binding upon the Guarantor, the Lessee or any of the
Guarantor's other Significant Subsidiaries, and (v) do
not result in the creation or imposition of any Lien on
any asset of the Guarantor, Lessee or any of the
Guarantor's other Significant Subsidiaries.
<PAGE>
(c) Binding Effect. This Participation Agreement
constitutes a valid and binding agreement of each of the
Guarantor and the Lessee enforceable in accordance with
its terms, and the other Operative Documents to which it
is, or will become a party, when executed and delivered
in accordance with this Participation Agreement, will
constitute valid and binding obligations of the
Guarantor or Lessee enforceable in accordance with their
respective terms, provided that the enforceability
hereof and thereof is subject in each case to general
principles of equity and to bankruptcy, insolvency and
similar laws affecting the enforcement of creditors'
rights generally.
(d) Financial Information. The consolidated balance sheet
of the Guarantor and its Consolidated Subsidiaries as of
January 28, 1996 and the related consolidated statements
of income, stockholders' equity and cash flows for the
Fiscal Year then ended, reported on by KPMG Peat
Marwick, LLP, copies of which have been delivered to
each of the Lenders and the Lessor fairly present, in
conformity with GAAP, the consolidated financial
position of the Guarantor and its Consolidated
Subsidiaries as of such date and their consolidated
results of operations and cash flows for such period.
(e) No Litigation. There is no action, suit or proceeding
pending, or to the knowledge of the Guarantor or Lessee,
threatened, against or affecting the Guarantor, Lessee
or any of their other Subsidiaries, before any court or
arbitrator or any Governmental Authority which would
reasonably be expected to have or cause a Material
Adverse Effect.
(f) Compliance with ERISA. (i) The Guarantor and each
member of the Controlled Group have fulfilled their
obligations under the minimum funding standards of ERISA
and the Code with respect to each Plan and are in
compliance in all material respects with the presently
applicable provisions of ERISA and the Code, and have
not incurred any liability to the PBGC or a Plan under
Title IV of ERISA.
(ii) Neither the Guarantor nor to the best of
Guarantor's knowledge and belief any member of the
Controlled Group is or ever has been obligated to
contribute to any Multiemployer Plan.
(g) Compliance with Laws; Payment of Taxes. The Guarantor,
the Lessee and each of their other Subsidiaries are in
compliance with all applicable Requirements of Law,
except where (i) such compliance is being contested in
good faith through appropriate proceedings or (ii) the
failure to be in compliance would not reasonably be
expected to have or cause a Material Adverse Effect.
There have been filed on behalf of the Guarantor and its
Subsidiaries all Federal, state and local income,
excise, property and other tax returns which are
required to be filed by them and all taxes shown due and
owing by such returns have been paid. The charges,
accruals and reserves on the books of the Guarantor and
its Subsidiaries in respect of taxes or other
governmental charges are, in the opinion of the
Guarantor, adequate. United States federal income tax
returns of the Guarantor and its Subsidiaries have
<PAGE>
been examined and closed through the fiscal year ended
February 3, 1991.
(h) Significant Subsidiaries. Each of the Guarantor's
Significant Subsidiaries is a corporation duly
organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation, is duly
qualified to transact business in every jurisdiction
where the failure to qualify would reasonably be
expected to have or cause a Material Adverse Effect, and
has all corporate powers and all governmental licenses,
authorizations, consents and approvals required to carry
on its business substantially as now conducted, except
where the failure to possess any such licenses,
authorizations, consents or approvals would not
reasonably be expected to have or cause a Material
Adverse Effect.
(i) Investment Company Act. Neither the Guarantor, the
Lessee nor any of the other Subsidiaries is an
"investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(j) Public Utility Holding Company Act. Neither the
Guarantor, the Lessee nor any of the other Subsidiaries
is a "holding company", or a "subsidiary company" of a
"holding company", or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding
company", as such terms are defined in the Public
Utility Holding Company Act of 1935, as amended.
(k) Ownership of Property; Liens. Each of the Guarantor and
its Significant Subsidiaries has title to its properties
sufficient for the conduct of its business, and none of
such property is subject to any Lien except Liens
permitted by the Operative Documents.
(l) No Default. Neither the Guarantor nor any of its
Consolidated Subsidiaries is in default under or with
respect to any agreement, instrument or undertaking to
which it is a party or by which it or any of its
property is bound which could reasonably be expected to
have or cause a Material Adverse Effect. No Default or
Event of Default has occurred and is continuing.
(m) Full Disclosure. All written information heretofore
furnished by the Guarantor or the Lessee to the Agent
Bank, the Placement Agent, the Issuing and Paying Agent,
any Lender or Lessor for purposes of or in connection
with this Participation Agreement or any transaction
contemplated hereby is, and all such information
hereafter furnished by the Guarantor or the Lessee to
the Agent Bank, or any Lender or Lessor will be, true
and correct in all material respects or based on what
the Guarantor or the Lessee in good faith believes to be
reasonable estimates on the date as of which such
information is stated or certified.
(n) Environmental Matters. (i) Neither the Guarantor nor
any Subsidiary is subject to any claim under the
Environmental Laws which could have or cause a Material
<PAGE>
Adverse Effect and neither the Guarantor nor any
Subsidiary has been designated as a potentially
responsible party under CERCLA or under any state
statute similar to CERCLA. None of the Properties has
been identified on any current or proposed (x) National
Priorities List under 40 C.F.R. 300, (y) CERCLIS list
or (z) any list arising from a state statute similar to
CERCLA.
(ii) No Hazardous Substances have been or are
being used, produced, manufactured, processed, treated,
recycled, generated, stored, disposed of, managed or
otherwise handled at, or shipped or transported to or
from the Properties or are otherwise present at, on, in
or under the Properties, or, to the best of the
knowledge of the Guarantor and Lessee, at or from any
adjacent site or facility, except for Hazardous
Substances, such as cleaning solvents, pesticides and
other materials used, produced, manufactured, processed,
treated, recycled, generated, stored, disposed of,
managed, or otherwise handled in minimal amounts in the
ordinary course of business in compliance with all
applicable Environmental Laws.
(iii) Each of the Guarantor and each of its
Subsidiaries and Affiliates, (x) has procured all
permits and authorizations required under the
Environmental Laws necessary for the conduct of its
business, and (y) is in compliance with all
Environmental Laws in connection with the operation of
the Properties and the Guarantor's and each of its
Subsidiary's and Affiliate's, respective businesses, in
each case set forth in either of clause (x) or (y) where
the failure to procure or non-compliance with which
would reasonably be expected to have or cause a Material
Adverse Effect.
(o) Capital Stock. All Capital Stock, debentures, bonds,
notes and all other securities of the Guarantor and its
Subsidiaries presently issued and outstanding are
validly and properly issued in accordance with all
Applicable Laws, including, but not limited to, the
"Blue Sky" laws of all applicable states and the federal
securities laws, except where the failure to have
complied with such laws would not reasonably be expected
to have or cause a Material Adverse Effect. The issued
shares of Capital Stock of the Lessee are owned by the
Guarantor free and clear of any Lien or adverse claim.
At least a majority of the issued shares of capital
stock of each of the Guarantor's other Significant
Subsidiaries is owned by the Guarantor free and clear of
any Lien or adverse claim.
(p) Margin Stock. Neither the Guarantor nor any of its
Subsidiaries is engaged principally, or as one of its
important activities, in the business of purchasing or
carrying any Margin Stock, and no part of the proceeds
of any Advance will be used for any purpose, including,
without limitation, to purchase or carry any Margin
Stock or to extend credit to others for the purpose of
purchasing or carrying any Margin Stock, which violates,
or which is inconsistent with, the provisions of
Regulation G, Regulation T, Regulation U or Regulation
X.
<PAGE>
(q) Insolvency. After giving effect to the execution and
delivery of the Operative Documents, the Guarantor will
not be "insolvent," within the meaning of such term as
used in O.C.G.A. 18-2-22 or as defined in 101 of
Title 11 of the United States Code or Section 2 of the
Uniform Fraudulent Transfer Act, or any other applicable
state law pertaining to fraudulent transfers, as each
may be amended from time to time, or be unable to pay
its debts generally as such debts become due, or have an
unreasonably small capital to engage in any business or
transaction, whether current or contemplated.
(r) Securities Act. Neither the Guarantor, the Lessee nor
any Person authorized by either of the Guarantor or
Lessee to act on its behalf has offered or sold any
interest in the Notes, the Commercial Paper Notes or in
any similar security relating to a Property, or in any
security the offering of which for the purposes of the
Securities Act would be deemed to be part of the same
offering as the offering of the aforementioned
securities to, or solicited any offer to acquire any of
the same from, any Person other than an "Accredited
Investor" (as such term is defined in the Securities
Act).
(s) Commercial Paper Notes. All Commercial Paper Notes
shall constitute exempt securities under Section 4(2) of
the Securities Act, no registration of the Commercial
Paper Notes under the Securities Act, nor qualification
of an indenture with respect to the Commercial Paper
Documents under the Trust Indenture Act of 1939, as
amended, will be required in connection with the offer,
issuance or sale of the Commercial Paper Notes.
SECTION 9.3. Representations of Guarantor and Lessee
on Property Closing Date. Each of the Guarantor and the Lessee
hereby represents and warrants as of each Property Closing Date,
as follows:
(a) Representations. The representations and warranties of
the Guarantor, Lessee and the Construction Agent and, to
the knowledge of Guarantor and Lessee, the Facility
Lender, set forth in the Operative Documents are true
and correct in all material respects. The Guarantor,
Lessee and the Construction Agent, and, to the knowledge
of the Guarantor and the Lessee, the Facility Lender are
in compliance with their respective obligations under
the Operative Documents and there exists no Default or
Event of Default under any of the Operative Documents.
No Default or Event of Default will occur under any of
the Operative Documents as a result of, or after giving
effect to, the Advance requested by the Funding Request
on such Property Closing Date.
(b) Property. The Property then being acquired consists of
(i) Land on which Facilities will be constructed
pursuant to the Construction Agency Agreement, and (ii)
existing Improvements on such Land. Such Property is
located in the continental United States or Canada.
<PAGE>
(c) Title. Upon the acquisition by purchase of such
Property on such Property Closing Date, the Lessor will
have good and marketable title to such Property in fee
simple, subject only to Permitted Exceptions. The
Lessor will at all times have good and marketable title
to all Improvements located on such Property, subject
only to Permitted Liens.
(d) Insurance. Lessee has obtained insurance coverage
covering such Property or is self-insured in a manner
which meets the requirements of the Construction Agency
Agreement and Article XIV of the Lease, and such
coverage is in full force and effect.
(e) Lease. Upon the execution and delivery of a Lease
Supplement to the Lease and Memorandum of Lease, (i)
Lessee will have unconditionally accepted the Land and
existing Improvements subject to such Lease Supplement
and will have good and marketable title to a valid and
subsisting leasehold interest in the Land and existing
Improvements, subject only to Permitted Exceptions, (ii)
no offset will exist with respect to any Rent or other
sums payable under the Lease and (iii) no Rent under the
Lease will have been prepaid.
(f) Protection of Interests. Upon recordation, each
Mortgage and each Supplement to the Assignment of Leases
delivered on such Property Closing Date will constitute
a valid and perfected first Lien on such Property and
all of the Lessor's right, title and interest in and to
the Improvements located thereon or to be constructed
thereon following the Property Closing Date subject only
to Permitted Exceptions.
(g) Property as Improved. The Property as improved in
accordance with the Plans and Specifications will comply
in all material respects with all Requirements of Law
(including, without limitation, all zoning and land use
laws and Environmental Laws) and Insurance Requirements.
The Plans and Specifications have been or will be
prepared in all material respects in accordance with
applicable Requirements of Law (including, without
limitation, all applicable Environmental Laws and
building, planning, zoning and fire codes) and upon
completion of the related Facility in accordance with
the Plans and Specifications, such Facility and the
other Improvements on the Property will not encroach in
any manner onto any adjoining land (except as permitted
by express written easements) and such Facility and
other Improvements and the use thereof by Lessee and its
agents, assignees, employees, invitees, lessees,
licensees and tenants will comply in all respects with
all applicable material Requirements of Law (including,
without limitation, all applicable Environmental Laws
and building, planning, zoning and fire codes).
(h) Flood Hazards. No portion of any Property being
acquired by the Lessor on such Property Closing Date is
located in an area identified as a special flood hazard
area by the Federal Emergency Management Agency or other
applicable agency, or if any such Property is located in
an area identified as a special flood hazard area by
<PAGE>
the Federal Emergency Management Agency or other
applicable agency, then flood insurance has been
obtained for such Property in accordance with Section XI
of the Lease and in accordance with the National Flood
Insurance Act of 1968, as amended.
(i) Environmental Matters. The Property is in compliance
with all Environmental Laws and there neither exists nor
has existed any Hazardous Condition, Hazardous Activity,
Release, threatened Release or violation of
Environmental Law which could give rise to an
Environmental Claim against Lessee or any Indemnitee
with respect to such Property.
(j) Conditions Precedent. All conditions precedent to be
performed and delivered by Lessee contained in this
Participation Agreement and in the other Operative
Documents relating to the acquisition of such Property
by the Lessor have been satisfied in full.
SECTION 9.4. Additional Representations of Guarantor
and Lessee. Each of Guarantor and the Lessee hereby represents
and warrants as of each Funding Date on which an Advance is made
as follows:
(a) Representations. The representations and warranties of
the Guarantor, Lessee and Construction Agent and, to the
knowledge of Guarantor and Lessee, the Facility Lender,
set forth in the Operative Documents (including the
representations and warranties set forth in Sections 9.2
and 9.3) are true and correct in all material respects
on and as of such Funding Date. The Guarantor, Lessee
and Construction Agent and, to the knowledge of
Guarantor and Lessee, the Facility Lender, are in
compliance with their respective obligations under the
Operative Documents and there exists no Default or Event
of Default under any of the Operative Documents. No
Default or Event of Default will occur under any of the
Operative Documents as a result of, or after giving
effect to, the Advance requested by the Funding Request
on such date.
(b) Improvements. Construction of the Improvements to date
has been performed in a good and workmanlike manner,
substantially in accordance with the Plans and
Specifications and in compliance in all material
respects with all Insurance Requirements and
Requirements of Law.
SECTION 9.5. Representations of Facility Lender.
Facility Lender represents and warrants to each of the other
parties hereto that:
(a) Corporate Status. It (i) is a duly organized and
validly existing corporation in good standing under the
laws of the state of its incorporation and has the
corporate power
<PAGE>
and authority to own its property and assets and to
transact the business in which it is engaged and (ii)
has duly qualified and is authorized to do business and
is in good standing in all jurisdictions where it is
required to be so qualified and where the failure to be
so qualified could have a material adverse effect on the
property, operations or financial condition of Facility
Lender.
(b) Corporate Power and Authority. It has the corporate
power and authority to execute, deliver and carry out
the terms and provisions of the Operative Documents to
which it is or will be a party, has taken all necessary
corporate action to authorize the execution, delivery
and performance of the Operative Documents to which it
is or will be a party, has duly executed and, assuming
the due authorization, execution and delivery hereof and
thereof by the other parties hereto and thereto,
delivered each Operative Document required to be
executed and delivered' by it and each such Operative
Document constitutes a legal, valid and binding
obligation enforceable against it in accordance with its
terms, except as such enforceability may be limited or
denied by (i) applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws effecting
creditors' rights and the enforcement of debtors'
obligations generally, and (ii) general principles of
equity, regardless of whether enforcement is pursuant to
a proceeding in equity or at law.
(c) No Violation. Neither the execution, delivery and
performance by it of the Operative Documents to which it
is or will be a party nor compliance with the terms and
provisions thereof, nor the consummation of the
transactions contemplated therein (i) will contravene
any Applicable Law, or (iii) will violate any provision
of its certificate of incorporation or by-laws.
(d) No Other Activities. It does not hold any assets,
conduct any business nor is it party to any Contractual
Obligation except as expressly contemplated by the
Operative Documents.
(e) Commercial Paper Documents. Each of the representations
and warranties of the Facility Lender set forth in the
Commercial Paper Documents are true and correct in all
material respects.
SECTION 9.6. Representations and Warranties of the
Agent Bank and the Lenders. Each of the Agent Bank and the
Lenders hereby represents and warrants to each of the other
Participants that:
(a) Corporate Existence and Power. It is, respectively, a
banking association or corporation duly organized,
validly existing and in good standing under the laws of
the jurisdiction of its organization and has all
corporate powers and all material governmental licenses,
authorizations and approvals required to perform its
obligations hereunder.
<PAGE>
(b) Binding Effect. This Participation Agreement and each
other Operative Document to which the Agent Bank or any
Lender is a party constitutes a valid and binding
agreement of it enforceable against it in accordance
with its terms, provided that the enforceability hereof
is subject in each case to general principles of equity
and to bankruptcy, insolvency and similar laws affecting
the enforcement of creditors' rights generally.
SECTION 10.
PAYMENT OF CERTAIN EXPENSES
Guarantor and Lessee agree, jointly and severally, for the
benefit of the Lessor, the Facility Lender, the Agent Bank, the
Issuing and Paying Agent, the Placement Agent and the Lenders, to:
SECTION 10.1. Transaction Expenses. (a) On the
Initial Closing Date (if statements are received in satisfactory
form within a reasonable time prior to such date and in any event
within thirty (30) days after receipt thereof), pay, or cause to
be paid, all reasonable fees, expenses and disbursements of the
respective counsel (including local counsel) for each of the
Lessor, the Facility Lender, the Issuing and Paying Agent, the
Placement Agent and the Agent Bank in connection with the
transactions contemplated by the Operative Documents and incurred
in connection with such Initial Closing Date, including all
Transaction Expenses (arising from the Initial Closing Date), and
all other expenses in connection with such Initial Closing Date,
including, without limitation, all expenses relating to title
insurance and all fees, taxes and expenses for the recording,
registration and filing of documents; and
(b) On each Property Closing Date and Funding Date (if
statements are received in satisfactory form within a reasonable
time prior to such date and in any event within thirty (30) days
after receipt thereof), pay, or cause to be paid, all reasonable
fees, expenses and disbursements of the respective counsel
(including local counsel) for each of the Lessor, the Facility
Lender, the Issuing and Paying Agent, the Placement Agent and the
Agent Bank in connection with the transactions contemplated by the
Operative Documents and incurred in connection with such Property
Closing Date or Funding Date, including all Transaction Expenses
(arising from such Property Closing Date or Funding Date), and all
other expenses in connection with such Property Closing Date or
Funding Date, including, without limitation, all expenses relating
to all Environmental Audits, each Appraisal, title insurance
policies, and all fees, taxes and expenses for the recording,
registration and filing of documents.
SECTION 10.2. Brokers' Fees and Stamp Taxes. Pay, or
cause to be paid, any brokers' fees and any and all stamp,
transfer and other similar taxes, fees and excises, if any,
including any interest and penalties, which are payable in
connection with the transactions contemplated by this
Participation Agreement and the other Operative Documents.
<PAGE>
SECTION 10.3. Certain Fees and Expenses. Pay or cause
to be paid (i) any and all Transaction Expenses of the Facility
Lender (or any successor (including, without limitation,
Transaction Expenses by or due to Agent Bank, Facility Lender or
Lenders pursuant to Sections 3.07, 3.09 and 4.01 of the Liquidity
Agreement) to the Facility Lender), the Lessor, the Lenders, the
Issuing and Paying Agent, the Placement Agent and the Agent Bank,
(ii) all Transaction Expenses incurred by the Facility Lender, the
Agent Bank, the Lenders or the Lessor in entering into any future
amendments or supplements with respect to any of the Operative
Documents, whether or not such amendments or supplements are
ultimately entered into, or giving or withholding of waivers of
consents hereto or thereto, which have been requested by Lessee or
Guarantor, (iii) all Transaction Expenses incurred by Lessor, the
Agent Bank, the Facility Lender or any Lender in connection with a
transfer made pursuant to Section 13.2 of this Participation
Agreement, and (iv) all Transaction Expenses incurred by the
Lessor, the Facility Lender, the Lenders or the Agent Bank in
connection with any Property Closing Date, Completion Date or any
purchase of any Property by the Lessee or other Person pursuant to
Articles XVI, XVII, XX or XXII of the Lease and any accompanying
purchase by the Construction Agent of any incompleted Improvements
thereon pursuant to the Construction Agency Agreement.
SECTION 11.
OTHER COVENANTS AND AGREEMENTS
SECTION 11.1. Covenants of Guarantor and Lessee.
Guarantor and Lessee hereby agree that so long as this
Participation Agreement is in effect:
(a) Information. The Guarantor will deliver to the Agent
Bank (in sufficient copies for each of the Lenders with
respect to deliveries pursuant to clauses (i), (ii),
(iii), (v) and (vi) below) and Lessor:
(i) as soon as available and in any event within ninety
(90) days after the end of each Fiscal Year, a
consolidated balance sheet of the Guarantor and its
Subsidiaries as of the end of such Fiscal Year and
the related consolidated statements of income,
stockholders' equity and cash flows for such Fiscal
Year, setting forth in each case in comparative
form the figures for the previous Fiscal Year, all
certified by KPMG Peat Marwick, LLP or other
independent public accountants of nationally
recognized standing, with such certification to be
free of material exceptions and qualifications not
reasonably acceptable to the Required Lenders;
(ii) as soon as available and in any event within forty-
five (45) days after the end of each of the first
three (3) Fiscal Quarters of each Fiscal Year, a
consolidated balance sheet of the Guarantor and its
Consolidated
<PAGE>
Subsidiaries as of the end of such Fiscal Quarter
and the related statement of income and statement
of cash flows for such Fiscal Quarter and for the
portion of the Fiscal Year ended at the end of such
Fiscal Quarter, setting forth in each case in
comparative form the figures for the corresponding
Fiscal Quarter (Fiscal Year only in the case of
balance sheets) and the corresponding portion of
the previous Fiscal Year, all certified (subject to
the absence of footnotes and to normal year-end
audit adjustments) as to fairness of presentation,
GAAP and consistency by the chief financial officer
or the chief accounting officer of the Guarantor;
(iii) simultaneously with the delivery of each set of
financial statements referred to in paragraphs (i)
and (ii) above, a certificate, substantially in the
form of Exhibit P (a "Compliance Certificate"), of
the chief financial officer or the chief accounting
officer of the Guarantor (x) setting forth in
reasonable detail the calculations required to
establish whether the Guarantor was in compliance
with the requirements of paragraphs (c) and (k) on
the date of such financial statements and (y)
stating whether any Event of Default exists on the
date of such certificate and, if any Event of
Default then exists, setting forth the details
thereof and the action which the Guarantor or
Lessee is taking or proposes to take with respect
thereto;
(iv) within five (5) Business Days after any of the
chief executive, chief financial, chief operating,
chief legal or chief accounting officer of the
Guarantor or Lessee becomes aware of the occurrence
of any Event of Default, a certificate of the chief
financial officer or the chief accounting officer
of the Guarantor or Lessee setting forth the
details thereof and the action which the Guarantor
or Lessee is taking or proposes to take with
respect thereto;
(v) promptly upon the mailing thereof to the
stockholders of the Guarantor generally, copies of
all financial statements, reports and proxy
statements so mailed;
(vi) promptly upon the filing thereof, copies of all
registration statements (other than the exhibits
thereto and any registration statements on Form S-8
or its equivalent) and annual, quarterly or monthly
reports which the Guarantor shall have filed with
the Securities and Exchange Commission;
(vii) if and when any member of the Controlled Group
(i) gives or is required to give notice to the PBGC
of any "reportable event" (as defined in Section
4043 of ERISA) with respect to any Plan which might
constitute grounds for a termination of such Plan
under Title IV of ERISA, or knows that the plan
administrator of any Plan has given or is required
to give notice of any such reportable event, a copy
of the notice of such reportable event given or
<PAGE>
required to be given to the PBGC; (ii) receives
notice of complete or partial withdrawal liability
under Title IV of ERISA, a copy of such notice; or
(iii) receives notice from the PBGC under Title IV
of ERISA of an intent to terminate or appoint a
trustee to administer any Plan, a copy of such
notice; and
(viii) from time to time such additional information
regarding the financial position or business of the
Guarantor or any of its Subsidiaries or any of the
Properties, as the Agent Bank, at the request of
any Lender, or Lessor may reasonably request,
including without limitation, information regarding
the Property Balance, Property Acquisition Costs,
Property Improvement Costs and the related amount
of the Loans and Lessor Investment Amounts
allocated to each Property .
(b) Inspection of Property, Books and Records. The
Guarantor will (i) keep, and cause each Subsidiary to
keep, proper books of record and account in which full,
true and correct entries in conformity with GAAP shall
be made of all dealings and transactions in relation to
its business and activities; and (ii) permit, and cause
each Subsidiary to permit, representatives of the Agent
Bank at the Lenders' expense prior to the occurrence of
a Default and at the Guarantor's expense after the
occurrence of a Default to visit and inspect any of
their respective properties, to examine and make
abstracts from any of their respective books and records
and to discuss their respective affairs, finances and
accounts with their respective officers, employees and
independent public accountants. The Guarantor and the
Lessee agree to cooperate and assist in such visits and
inspections, in each case at such reasonable times and
as often as may reasonably be requested.
(c) Ratio of Consolidated Funded Debt to Consolidated Total
Tangible Capital. The ratio of Consolidated Funded Debt
to Consolidated Total Tangible Capital will not exceed
0.60 to 1.00, calculated at the end of each Fiscal
Quarter.
(d) Negative Pledge. Neither the Guarantor nor any
Consolidated Subsidiary will create, assume or suffer to
exist any Lien on any asset now owned or hereafter
acquired by it, except:
(i) Liens existing on the date of this Participation
Agreement securing Indebtedness outstanding on the
date of this Participation Agreement in an
aggregate principal amount with respect to
Indebtedness for borrowed money and capital leases
not exceeding $99,036,000;
(ii) any Lien existing on any asset of any (i)
corporation or partnership at the time such
corporation or such partnership becomes a
Consolidated Subsidiary, or (ii) Subsidiary at the
time it becomes a Significant Subsidiary, and in
either case not created in contemplation of such
event;
<PAGE>
(iii) any Lien on any asset securing Indebtedness
incurred or assumed for the purpose of financing
all or any part of the cost of acquiring or
constructing such asset, that such Lien attaches to
such asset concurrently with or within eighteen
(18) months after the acquisition or completion of
construction thereof;
(iv) any Lien on any asset of any corporation existing
at the time such corporation is merged or
consolidated with or into the Guarantor or a
Consolidated Subsidiary and not created in
contemplation of such event;
(v) any Lien existing on any asset prior to the
acquisition thereof by the Guarantor or a
Consolidated Subsidiary and not created in
contemplation of such acquisition;
(vi) Liens securing Indebtedness owing by any Subsidiary
to the Guarantor;
(vii) any Lien arising out of the refinancing,
extension, renewal or refunding of any Indebtedness
secured by any Lien permitted by any of the
foregoing paragraphs of this Section, provided that
(x) such Indebtedness is not secured by any
additional assets, and (y) the amount of such
Indebtedness secured by any such Lien is not
increased;
(viii) Liens incidental to the conduct of its business
or the ownership of its assets which (x) do not
secure Indebtedness (other than Indebtedness
arising from operating leases which become capital
leases as required by GAAP) and (y) do not in the
aggregate materially detract from the value of its
assets or materially impair the use thereof in the
operation of its business;
(ix) any Lien on Margin Stock; and
(x) Liens not otherwise permitted by the foregoing
paragraphs of this Section securing Indebtedness in
an aggregate principal amount at any time
outstanding not to exceed twenty percent (20%) of
Consolidated Tangible Net Worth.
provided Liens permitted by the foregoing paragraphs (i)
through (x) shall at no time secure Indebtedness in an
aggregate amount greater than twenty-five (25%) of
Consolidated Tangible Net Worth.
(e) Maintenance of Existence. The Guarantor shall, and
shall cause each Subsidiary to, maintain its corporate
existence and carry on its business in substantially the
same manner and in substantially the same fields as such
business is now carried on and maintained, except as
permitted by clause (g) below; provided, however, that
(i)
<PAGE>
any Subsidiary may be reincorporated under the laws of
another state, and (ii) so long as no Event of Default
shall be in existence or be caused thereby, nothing in
this Participation Agreement shall prevent the
abandonment or termination of the existence, rights and
franchises, or the change in the business of any
Subsidiary which is not a Significant Subsidiary, if, in
the opinionxof the Board ofx Directors of the Guarantor,
such abandonment, termination or change is in the best
interest of the Guarantor and not disadvantageous in any
material respect to the Lenders.
(f) Dissolution. Neither the Guarantor nor any of its
Significant Subsidiaries shall suffer or permit
dissolution or liquidation either in whole orxin part
(except as permitted by clause (e) above) or redeem or
retire any shares of its own stock or that of any
Significant Subsidiary, except through corporate
reorganization to the extent permitted by clause (g)
below.
(g) Consolidations, Mergers and Sales of Assets. The
Guarantor will not, nor will it permit any Significant
Subsidiary to, consolidate with or merge into, or sell,
lease or otherwise transfer all or any substantial part
of its assets to, any other Person; provided that
(i) the Guarantor or the Lessee may consolidate with or
merge into another Person if (A) such Person is a
solvent corporation organized under the laws of the
United States of America or one of its states, (B) the
Guarantor or the Lessee is the corporation surviving
such merger or consolidation and (C) immediately after
giving effect to such merger or consolidation, no Event
of Default shall have occurred and be continuing, (ii)
Subsidiaries may consolidate with or merge into one
another or into any other Person if, in the case of a
merger or consolidation involving a Significant
Subsidiary, (A) such other Person is a solvent
corporation organized under the laws of the United
States of America or one of its states, (B) the Person
surviving such merger or consolidation is a wholly owned
Subsidiary and (C) immediately after giving effect to
such merger or consolidation no Event of Default shall
have occurred and be continuing, (iii) the Guarantor and
its Subsidiaries may sell, lease or otherwise transfer
assets among themselves, and (iv) the foregoing
limitation on the sale, lease or other transfer of
assets shall not prohibit, during any fiscal quarter, a
transfer of assets (in a single transaction or in a
series of related transactions) unless the aggregate
assets to be so transferred, when combined with all
other assets transferred during such Fiscal Quarter and
the immediately preceding three (3) Fiscal Quarters,
either (A) constituted more than ten percent (10%) of
Consolidated Total Assets at the end of such Fiscal
Quarter or (B) contributed more than ten percent (10%)
of Consolidated Operating Profits during such Fiscal
Quarter and the three (3) Fiscal Quarters immediately
preceding such Fiscal Quarter.
(h) Compliance with Laws; Payment of Taxes. The Guarantor
will, and will cause each of its Subsidiaries and each
member of the Controlled Group to, comply with
applicable laws (including but not limited to ERISA),
regulations and similar requirements of governmental
authorities (including but not limited to PBGC),
<PAGE>
except where the necessity of such compliance is being
contested in good faith through appropriate proceedings
or where the failure to so comply would not reasonably
be expected to have or cause a Material Adverse Effect.
The Guarantor will, and will cause each of its
Subsidiaries to, pay promptly when due all taxes,
assessments, governmental charges, claims for labor,
supplies, rent and other obligations which, if unpaid,
would become a lien against the property of the
Guarantor or any Subsidiary, except (i) liabilities
being contested in good faith and against which, if
requested by the Agent Bank, the Guarantor will set up
reserves in accordance with GAAP or (ii) where the
failure to so pay would not reasonably be expected to
have or cause a Material Adverse Effect.
(i) Environmental Matters. The Guarantor and its
Subsidiaries will not use, produce, manufacture,
process, treat, recycle, generate, store, dispose of,
manage at, any of its properties, or otherwise handle,
or ship or transport to or from any of its properties
any Hazardous Substances except for Hazardous Substances
used, produced, manufactured, processed, treated,
recycled, generated, stored, disposed, managed, or
otherwise handled in the ordinary course of business in
compliance in all material respects with applicable
Environmental Laws, and will take commercially
reasonable steps to prohibit any other Person from doing
any of the acts prohibited by the foregoing.
(j) Environmental Release. The Guarantor and the Lessee
each agree that upon obtaining knowledge of the
occurrence of a Release at or on any of its properties,
it will act promptly to investigate the extent of, and
to take appropriate remedial action to eliminate, such
Release, whether or not ordered or otherwise directed to
do so by any Governmental Authority.
(k) Debt of Subsidiaries. The Guarantor shall not permit
any Subsidiary to incur any Indebtedness except for (i)
Indebtedness owing to the Guarantor or another
Subsidiary and (ii) other Indebtedness which shall not
exceed in the aggregate for all Subsidiaries an amount
in excess of twenty percent (20%) of Consolidated Net
Worth.
(l) With respect to all properties (other than the
Properties subject to the Lease):
(i) Insurance. The Guarantor will maintain, and will
cause each of its Subsidiaries to maintain (either
in the name of the Guarantor or in such
Subsidiary's own name), with financially sound and
reputable insurance companies, insurance on all its
property in substantially such amounts and against
substantially such risks as are usually insured
against in the same general area by companies of
established repute and of similar size and
financial strength engaged in the same or similar
business;
(ii) Maintenance of Property. The Guarantor shall, and
shall cause each
<PAGE>
Significant Subsidiary to, maintain to the extent
commercially reasonable, all of its properties and
assets in good condition, repair and working order,
ordinary wear and tear excepted; and
(iii) Environmental Notices. The Guarantor shall
furnish to the Agent Bank and the Lessor prompt
written notice of all Environmental claims or
proceedings, pending, threatened or anticipated
notices of Environmental Violations, and Releases
at, on, in, under or in any way affecting all real
property owned or leased or otherwise used or
occupied by Guarantor or any Subsidiary or any
adjacent property, and all facts, events, or
conditions that could lead to any of the foregoing;
provided, that, no such notification will be
required, unless any of the foregoing facts, events
or conditions would reasonably be expected to have
or cause a Material Adverse Effect.
(m) Further Assurances. Guarantor and Lessee shall promptly
cause to be taken, executed acknowledged or delivered,
at the sole joint and several expense of Guarantor and
Lessee, all such further acts, conveyances, documents
and assurances as the other parties may from time to
time reasonably request in order to carry out and
effectuate the intent and purposes of this Participation
Agreement, the other Operative Documents, and the
transactions contemplated hereby and thereby (including
without limitation, the preparation, execution and
filing of all Uniform Commercial Code financing
statements and all other instruments necessary or
advisable to maintain and protect all Liens provided for
hereunder or under any other Operative Document).
SECTION 11.2. Cooperation with the Lessee. The Lessor,
the Facility Lender, the Agent Bank and Lenders shall, to the
extent reasonably requested by Lessee (but without assuming
additional liabilities on account thereof), at Lessee's expense,
cooperate with Lessee in connection with its covenants contained
herein including, without limitation, at any time and from time to
time, upon the request of Lessee, to promptly and duly execute and
deliver any and all such further instruments, documents and
financing statements and continuation statements related thereto)
as Lessee may reasonably request in order to perform such
covenants. Each of the Lessor, the Facility Lender, the Agent
Bank and Lenders agrees that, to the extent it shall obtain actual
knowledge of the occurrence of an Event of Default, a Loan
Agreement Event of Default or a Facility Agreement Event of
Default under the Operative Documents, it shall promptly notify
Lessee describing the same in reasonable detail.
SECTION 11.3. Release of Properties. If the Lessee
shall at any time purchase any Property pursuant to Section 16.2
of the Lease or exercise its Purchase Option with respect to any
Property under the Lease, or if all of the Properties shall be
sold in accordance with, and the Lessee otherwise satisfies each
of the obligations and conditions set forth in the Lease for the
release of a Property therefrom, then, upon application of the
proceeds of any such sale pursuant to Section 5 and all accrued
interest and any other payments due and owing from Lessee to the
Agent Bank, the Lenders, the Facility Lender or
<PAGE>
Lessor on such date, including without limitation pursuant to
Section 14 of this Agreement, such Property shall be released from
the Liens created by the Security Documents and the Agent Bank,
Lessor and the Facility Lender shall, at the expense of the
Lessee, execute and deliver such instruments as are legally
required in order to effectuate such release. In addition, upon
the termination of the Facility Lender Commitments and the payment
in full of all other amounts owing by the hereunder or under any
other Operative Document, the Properties shall be released from
the Liens created by the Security Documents. Upon request of the
Lessee or Lessor following any such release, the Agent Bank and
Facility Lender shall, at the sole cost and expense of the Lessee
or Lessor execute and deliver to the Lessor or the Lessee such
documents as the Lessee or Lessor shall reasonably request to
evidence such release.
SECTION 11.4. Discharge of Liens. (a) Each of the
Facility Lender and the Lessor hereby severally agrees that it
will not create or permit to exist at any time, and will, at its
own cost and expense, promptly take such action as may be
necessary duly to discharge, or to cause to be discharged, all
Lessor Liens on the Properties (and its rights under the Operative
Documents) attributable to it; provided, however, that such
Participants shall not be required to so discharge any such Lessor
Lien prior to any sale of the Properties while the same is being
contested in good faith by appropriate proceedings.
(b) The Agent Bank hereby severally agrees that it will not
create or permit to exist at any time, and will, at its own cost
and expense, promptly take such action as may be necessary duly to
discharge, or to cause to be discharged, all Agent's Liens on the
Properties attributable to it; provided, however, that the Agent
Bank shall not be required to so discharge any such Agent's Lien
prior to any sale of the Properties while the same is being
contested in good faith by appropriate proceedings.
SECTION 11.5. Notice of Credit Rating. Each of the
Agent Bank, the Lenders and the Lessor severally agrees that it
shall immediately notify the Guarantor and the Lessee in writing
in the event that its (or in the case of the Lessor, its general
partner's) long or short term debt rating is downgraded or
withdrawn by any Rating Agency or if such entity (or in the case
of the Lessor, its general partner) is placed on credit watch with
negative implications by any Rating Agency.
SECTION 11.6. Covenants of the Facility Lender and the
Lessor. Each of the Facility Lender and the Lessor hereby agrees,
severally and not jointly, that so long as this Participation
Agreement is in effect:
(a) Maintenance of Existence. It shall maintain its
corporate or partnership existence and qualification as
a foreign corporation or foreign limited partnership in
each state in which a Property is located.
(b) Certificate of Incorporation. Facility Lender shall not
allow an amendment to its Certificate of Incorporation
or other governing documents without the consent of
<PAGE>
the Lessee, Agent Bank and Lessor.
(c) Prepayment. Other than issuing new Commercial Paper
Notes at maturity or with the proceeds of Facility Loans
or Residual Loans under the Liquidity Agreement and
other than as provided in Section 5, the Facility Lender
will not prepay, redeem or refinance any Commercial
Paper Notes. Except as expressly required by the
Operative Documents or in connection with the issuance
of Commercial Paper Notes in accordance with the terms
of the Commercial Paper Documents, the Facility Lender
shall not voluntarily prepay the Liquidity Notes, or any
part thereof, without the written consent of Lessee;
provided, however, that subject to Section 5, Facility
Lender may prepay, or cause to be prepaid, all or any
portion of the Liquidity Notes at any time following an
Event of Default where any or all of the Participants
are exercising remedies. Except as permitted by the
Operative Documents, the Lessor shall not prepay any
Loans; provided, however, that subject to Section 5,
Lessor may prepay or cause to be prepaid all or any
portion of the Notes at any time following an Event of
Default where the Participants are exercising remedies.
(d) Indebtedness; Other Business. The Facility Lender shall
not contract for, create, incur or assume any
Indebtedness, or enter into any business or other
activity, other than pursuant to, under or as
contemplated by the Operative Documents.
(e) Change of Chief Place of Business. Each of the Lessor
and the Facility Lender, with respect to itself only,
shall give prompt notice to Lessee and the Agent Bank if
the Lessor's or the Facility Lender's chief place of
business or chief executive office, or the office where
the records concerning the accounts or contract rights
relating to a Property are kept, shall cease to be
located at the address set forth in Section 15.3 or if
it shall change its name, identity or corporate
structure.
(f) Subordination of Liens. During the Term, the Liens
created by the Security Documents related to each
Property shall be expressly made subject and subordinate
to the Lease related to such Property.
(g) No Voluntary Bankruptcy. Neither the Lessor (unless the
Lessee shall give its prior written consent) nor the
Facility Lender shall (A) commence any case, proceeding
or other action under any existing or future law of any
jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization, arrangement,
winding-up, liquidation, dissolution, composition or
other relief with respect to it or its debts, or (B)
seek appointment of a receiver, trustee, custodian or
other similar official for it or for all or any
substantial benefit of its creditors; and neither the
Lessor nor the Facility Lender shall take any action in
furtherance of, or indicating its consent to, approval
of, or acquiescence in, any of the acts set forth in
this paragraph.
<PAGE>
(h) No Sale of Properties. Neither the Lessor nor the
Facility Lender shall transfer any of their respective
interests in the Properties except as provided in the
Operative Documents.
(i) Rollover of Commercial Paper Documents. Except as
provided in Section 5 or in the Commercial Paper
Documents or as otherwise directed by Lessee, during the
Term, upon the maturity of the Commercial Paper Notes,
the Facility Lender shall, to the extent permitted under
the Operative Documents and otherwise commercially
feasible, issue new Commercial Paper Notes in accordance
with the terms of the Commercial Paper Documents.
(j) No Powers of Attorney. The Facility Lender shall not
grant any powers of attorney to any Person for any
purposes except (i) for the purpose of permitting any
Person to perform any ministerial or administrative
functions on behalf of the Facility Lender which are not
inconsistent with the terms of the Operative Documents,
(ii) to the Agent Bank for the purposes of the Security
Documents, or (iii) where provided for or permitted by
the Operative Documents.
(k) Same Business. Unless the Lessee otherwise consents in
writing, Lessor shall stay engaged in substantially the
same business (including engaging in the business of
leasing personal and real property as lessor, or acting
as agent, broker or advisor in leasing such property and
making, acquiring or servicing loans or other
investments or extensions of credit in connection
therewith or incidental thereto) as conducted on the
Initial Closing Date.
SECTION 11.7. No Bankruptcy Proceedings. The
Guarantor, Lessee, Construction Agent and each Participant hereby
agrees that it will not institute against, or join any other
Person in instituting against, the Facility Lender any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceeding,
or other proceeding under any Federal or state bankruptcy or
similar law, for one year and a day after the latest maturing
Commercial Paper Note is paid. Nothing in this Section 11.7 shall
preclude, or be deemed to estop, the Guarantor, Lessee,
Construction Agent or any Participant (i) from taking or omitting
to take any action prior to such date in (A) any case or
proceeding voluntarily filed or commenced by or on behalf of the
Facility Lender under or pursuant to any such law or (B) any
involuntary case or proceeding pertaining to the Facility Lender
which is filed or commenced by or on behalf of a Person other than
the Guarantor, Lessee, Construction Agent or any Participant under
or pursuant to any such law, or (ii) from commencing or
prosecuting any legal action which is not an involuntary case or
proceeding under or pursuant to any such law against the
Participant or any of its properties or otherwise exercising its
remedies under the Operative Documents.
SECTION 11.8. Notice of Claims Against Lessor. Lessor
shall promptly notify the Lessee and the Guarantor in writing in
the event that Lessor defaults in any obligation or any Claim is
asserted against Lessor (including any Environmental Claim) which,
exceeds $5,000,000 in any one instance or $10,000,000 in the
aggregate (other than defaults or Claims arising in connection
with the Operative Documents and the transactions contemplated
thereby). Upon
<PAGE>
receipt of such notice the Lessee may either:
(i) Replace the Lessor pursuant to Section 13.2; or
(ii) Require that the Lessor promptly execute, deliver
and record mortgages in form satisfactory to Lessee granting
to Lessee a Lien on the Properties to secure the performance
of all obligations of Lessor pursuant to the Lease and the
other Operative Documents, which Lien shall be second in
priority to the Mortgages. Each of the Participants hereby
acknowledges and agrees that any such Liens granted to the
Lessee hereunder shall constitute "Permitted Liens" pursuant
to clause (i) of such definition.
SECTION 12.
LESSEE DIRECTIONS
SECTION 12.1. Lessee Directions. The Lenders, the
Lessor, the Guarantor, the Agent Bank, the Facility Lender agree
that, so long as no Default or Event of Default exists:
(a) Lessee shall have the right to give all borrowing
notices pursuant to the Loan Agreement and the Liquidity
Agreement and all notices relating to the issuance of
the Commercial Paper Notes pursuant to the Commercial
Paper Documents;
(b) Lessee shall have the right to terminate or reduce the
Commitment pursuant to Section 4.02 of the Liquidity
Agreement and the Facility Lender Commitments pursuant
to Section 2.5 of the Loan Agreement (which commitments
shall be reduced proportionately and simultaneously);
provided that, following such reduction, the remaining
amount of the Available Commitments shall be sufficient,
in the reasonable judgment of the Construction Agent, to
complete construction of the Improvements with respect
to each Construction Period Property and Lessee shall
have the right to direct the Lessor to prepay the Loans
pursuant to Section 2.4 of the Loan Agreement to the
extent that Lessee makes a payment of Supplemental Rent
in the amount of such prepayment on the date of such
prepayment;
(c) Lessee shall have the right to give Extension Notices
and Extension Requests pursuant to Section 4.04 of the
Liquidity Agreement;
(d) Lessee shall have the right to replace a Non-Consenting
Lender pursuant to Section 4.05 of the Liquidity
Agreement;
(e) Lessee shall have the right to give "Notices of
Conversion" and "Notices of Continuation" pursuant to
Section 3.05 of the Liquidity Agreement;
<PAGE>
(f) Lessee shall have the right to approve any successor
"Agent Bank" to the extent permitted pursuant to Section
10.12 of the Liquidity Agreement;
(g) without limiting the foregoing clauses (a) through (f)
and in addition thereto, Lessee shall have the right to
exercise any other right of the Lessor under the Loan
Documents and the Facility Lender under the Liquidity
Agreement and Commercial Paper Documents upon not less
than three (3) Business Days' prior written notice from
Lessee to the Lessor, Agent Bank, and the Facility
Lender, unless such party objects to such exercise
within three (3) Business Days of receipt of such
notice; and
(h) Lessee shall have the right to give notices pursuant to
Appendix C of this Participation Agreement.
SECTION 13.
TRANSFER OF INTEREST
SECTION 13.1. Restrictions on and Effect of Transfer.
No Participant shall assign, convey or otherwise transfer
(including pursuant to a participation) all or any portion of its
right, title or interest in, to or under any of the Operative
Documents, any Note or Liquidity Note, except (x) with respect to
the Lenders, as provided in Section 10.04 of the Liquidity
Agreement, and (y) with respect to the Facility Lender and the
Lessor, with the prior written consent of the Agent Bank, the
Lenders (to the extent required by Section 10.04 of the Liquidity
Agreement) and Lessee, which consent, in the case of the Agent
Bank, shall not be unreasonably withheld; provided that, in the
event that an Event of Default has occurred and is continuing
pursuant to which the Participants have begun to exercise remedies
against the Lessee or Guarantor, the consent of the Lessee shall
not be required for any such transfer by the Lessor. Any transfer
made pursuant to the Operative Documents shall be subject to the
Security Documents and any transferee or assignee shall expressly
agree in writing to be bound by the terms of this Participation
Agreement.
SECTION 13.2. Replacement of Lessor or Facility Lender.
If the Lessor or Facility Lender (i) fails to approve a renewal of
the Lease pursuant to Article XXI of the Lease, (ii) defaults in
any of its material obligations pursuant to the Operative
Documents or, with respect to Facility Lender, any Facility
Agreement Event of Default shall occur, or with respect to Lessor,
any Loan Agreement Event of Default shall occur (which in either
case, does not arise out of, or is not attributable to, an Event
of Default), or (iii) in the case of the Lessor, (x) the Lessor or
its general partner suffer a downgrade or withdrawal or, in the
reasonable judgment of the Lessee, potential downgrade or
withdrawal, of its long or short term credit rating by any Rating
Agency or (y) Credit Suisse ceases to be the sole general partner
of Lessor, the Lessee shall be permitted to replace such Person at
any time; provided that (i) such replacement does not conflict
with any Requirement of Law, (ii) any replacement Lessor shall
purchase, at par, all Lessor Investment Amounts, all
<PAGE>
accrued and unpaid Certificate Earnings thereon and other amounts
owing to Lessor under the Operative Documents on or prior to the
date of replacement, (iii) the replacement Lessor or Facility
Lender shall be reasonably satisfactory to the Required Lenders,
(iv) the Guarantor and Lessee shall be obligated to pay any
Transaction Expenses arising in connection therewith, (v) the
replacement Lessor or Facility Lender shall agree in writing to be
subject to all of the terms and conditions of the Operative
Documents (including the renewal of the Lease contemplated by any
relevant Renewal Request) and this Participation Agreement and
(vi) as a condition precedent to such replacement, the Guarantor
or Lessee shall have provided written confirmation from each of
Moody's and S&P that immediately after having given effect to such
replacement, the Commercial Paper Notes shall not be rated lower
than the Commercial Paper Notes are rated immediately prior to
such replacement and such replacement shall not result in a
downgrade, withdrawal or qualification of the rating assigned to
the Commercial Paper Notes by Moody's or S&P. The Lessor and the
Facility Lender agree to cooperate with the Lessee in its efforts
to arrange replacements as contemplated by this Section 13.2.
SECTION 14.
INDEMNIFICATION
SECTION 14.1. General Indemnification. The Guarantor
and Lessee, jointly and severally, whether or not any of the
transactions contemplated hereby shall be consummated, hereby
assume liability for, and indemnify, protect, defend, save and
keep harmless each Indemnitee, on an After Tax Basis, from and
against any and all Claims that may be imposed on, incurred by or
asserted against such Indemnitee in any way relating to or arising
out of:
(a) any of the Operative Documents or any of the
transactions contemplated thereby, and any amendment,
modification or waiver in respect thereof; or
(b) the Properties or any part thereof or interest therein;
(c) the purchase, design, construction, preparation,
installation, inspection, delivery, non-delivery,
acceptance, rejection, ownership, management,
possession, operation, rental, lease, sublease,
repossession (whether by summary proceedings or
otherwise), maintenance, repair, alteration,
modification, addition, substitution, storage, transfer
of 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 of any
interest in the Properties 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: (l) personal injury, death or
property damage, including Claims or penalties arising
from any violation of law or in tort (strict liability
or otherwise), (2) latent or other defects, whether or
not discoverable, (3) any Claim based upon a violation
or alleged
<PAGE>
violation of the terms of any Applicable Law or any
restriction, easement, condition or covenant or other
matter affecting title to the Properties or any part
thereof, (4) the making of any Modifications in
violation of any Insurance Requirements, (5) any Claim
for patent, trademark or copyright infringement, and (6)
Claims arising from any public improvements with respect
to the Properties resulting in any change or special
assessments being levied against the Properties or any
Claim for utility "tap-in" fees;
(d) the offer, issuance, sale or delivery of the Commercial
Paper Notes, the Liquidity Notes or the Notes;
(e) the breach or alleged breach by the Guarantor or the
Lessee of any representation or warranty made by it or
deemed made by it in any Operative Document or any
certificate required to be delivered by any Operative
Document or the breach or alleged breach by the
Guarantor or the Lessee of any covenant or obligation
made by it in any Operative Document;
(f) the retaining or employment of any broker, finder or
financial advisor by the Guarantor or Lessee to act on
its behalf in connection with the Operative Documents,
or the authorization of any broker or financial adviser
retained or employed by the Guarantor or the Lessee so
to act, or the incurring of any fees or commissions by
the Lessee or the Guarantor to which the Indemnitees
might be subjected by virtue of their entering into the
transactions contemplated by the Operative Documents;
(g) the existence of any Lien on or with respect to the
Properties, any Basic Rent or Supplemental Rent, title
thereto, or any interest therein, including any Liens
which arise out of the possession, use, occupancy, con
struction, repair or rebuilding of any of the Properties
or by reason of labor or materials furnished or claimed
to have been furnished to the Lessee, or any of its
contractors or agents or by reason of the financing of
any personalty or equipment purchased or leased by the
Lessee or Modifications constructed by the Lessee,
except in all cases Permitted Liens;
(h) any act or omission by the Construction Agent under the
Construction Agency Agreement, and any breach of any
requirement, condition, restriction or limitation in any
Deed or other Operative Document; or
(i) any easement, license, right-of-way, covenant, re
striction or other document or agreement entered into by
Issuer at the request of Lessee;
provided, however, neither the Guarantor nor the Lessee shall be
required to indemnify any Indemnitee under this Section 14.1 for
any of the following: (1) any Claim to the extent that such Claim
resulted from the willful misconduct or gross negligence of such
Indemnitee, (2) any Claim to the extent resulting from Lessor
Liens which the Indemnitee is responsible for discharging
<PAGE>
under the Operative Documents, (3) any Claim to the extent di
rectly resulting from a breach of an Operative Document or Ap
plicable Law by such Indemnitee (except for a breach by the
Facility Lender that is arising out of or attributable to a breach
by the Lessee or Guarantor of any of its obligations under any of
the Operative Documents), and (4) any Claim related to the
Properties to the extent attributable to acts or events occurring
after the Expiration Date unless an Event of Default has occurred
and is continuing and the Participants are exercising remedies
against the Lessee or the Properties in respect of the Operative
Documents (in which event all of the foregoing provisions of this
Section 14.1 shall remain in full force and effect). It is
expressly understood and agreed that the indemnity provided for
herein shall survive the expiration or termination of the Lease
and the other Operative Documents and the payment by Lessee and
Guarantor of all amounts due thereunder for a period of three (3)
years (but shall continue in full force and effect following such
date with respect to any Claim asserted prior to such date), and
shall be separate and independent from any remedy under the Lease
or any other Operative Document; provided that, to the extent that
any Claim arises after such three (3) year period which was not
asserted during such three (3) year period due to a failure to
discover such Claim or for any other reason, the indemnity
provided for in this Section 14.1 shall be revived upon the
assertion of such Claim solely with respect to such Claim.
SECTION 14.2. Environmental Indemnity. In addition to,
and not in derogation of, the indemnities contained in Section
14.1 and 14.4 the Guarantor and the Lessee, jointly and severally,
hereby indemnify, hold harmless and defend each Indemnitee from
and against any and all Claims, 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 or at the direction of any Governmental
Authority, related to the Properties or the Lessee's use of the
Properties, arising directly or indirectly, in whole or in part,
out of
(i) the presence on or under any Property of any
Hazardous Substances, or any releases or discharges of
any Hazardous Substances on, under, from or onto any
Property or any other Hazardous Condition with respect
to any Property,
(ii) any Hazardous Activity, including, without
limitation, construction, carried on or undertaken on or
off any Property, and whether by the Lessee, or any
predecessor in title or any employees, Agent Bank,
contractors or subcontractors of the Lessee, or any
predecessor in title, or any other Persons, in
connection with the handling, treatment, removal,
storage, decontamination, clean-up, transport or
disposal of any Hazardous Substances that at any time
are located or present on or under any Property or that
at any time migrate, flow, percolate, diffuse or in any
way move onto or under any Property,
(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
<PAGE>
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 with respect to the Properties, or
any act or omission causing an environmental condition
with respect to the Properties that requires remediation
or would allow any governmental agency to record a lien
or encumbrance on the land records with respect to the
Properties,
(v) any residual contamination on or under any
Property, including any such contamination affecting any
natural resources, and to any such contamination of any
property or natural resources arising in connection with
the generation, use, handling, storage, transport or
disposal of any Hazardous Substances associated with
such Property and related to the residual contamination,
the obligation existing, irrespective of whether any of
such activities were or will be undertaken in accordance
with applicable laws, regulations, codes and ordinances,
(vi) in any case with respect to the matters
described in the foregoing clauses (i) through (v) that
arise or occur
(w) during the Term,
(x) at any time during which the Lessee or
any Affiliate thereof owns any interest in or
otherwise occupies, controls or possesses the
relevant Property or any portion thereof, or
(y) during any period after and during the
continuance of any Event of Default, or
(vii) a breach of the representations and
warranties of the Guarantor and the Lessee provided
herein;
provided, however, that neither the Guarantor nor the Lessee shall
be required to indemnify any Indemnitee under this Section 14.2
for any of the following: (1) any Claim to the extent that such
Claim resulted from the willful misconduct or gross negligence of
such Indemnitee, (2) any Claim to the extent proximately caused by
any action on the part of such Indemnitee or, to the extent such
Claim relates to or is attributable to, events occurring after the
Term where such Indemnitee is in control of the Property or
Properties, inaction on the part of such Indemnitee, and (3) any
Claim related to the Properties to the extent attributable to acts
or events occurring before or after the Term unless, in the case
of Claims attributable to acts or events occurring after the Term,
an Event of Default has occurred and is continuing and the
Participants are exercising remedies against the Lessee or the
Properties under the Operative Documents (in which event all of
the foregoing provisions of this Section 14.2 shall remain in full
force and effect), or the Claim arises out of a breach of the
representations and warranties of the Guarantor or Lessee
contained herein.
<PAGE>
It is expressly understood and agreed that the indemnity provided
for herein shall survive the expiration or termination of the
Lease and the other Operative Documents and the payment by Lessee
and Guarantor of all amounts due thereunder for a period of three
(3) years (but shall continue in full force and effect following
such date with respect to any Claim asserted prior to such date)
and shall be separate and independent from any remedy under the
Lease or any other Operative Document; provided that, to the
extent that any Claim arises after such three (3) year period
which was not asserted during such three (3) period due to a
failure to discover such Claim or for any other reason, the
indemnity provided for in this Section 14.2 shall be revived upon
the assertion of such Claim solely with respect to such Claim.
SECTION 14.3. Proceedings in Respect of Claims. With
respect to any amount that the Guarantor or the Lessee is
requested by an Indemnitee to pay by reason of Section 14.1 or
14.2, such Indemnitee shall, if so requested by the Guarantor or
the Lessee and prior to any payment, submit such additional
information to the Guarantor or the Lessee as the Guarantor or the
Lessee may reasonably request and which is in the possession of
such Indemnitee to substantiate properly the requested payment.
In case any action, suit or proceeding shall be brought against
any Indemnitee, such Indemnitee shall notify the Guarantor or the
Lessee of the commencement thereof, and the Guarantor or the
Lessee shall be entitled, at its expense, to participate in, and,
to the extent that the Guarantor or the Lessee desires to, assume
and control the defense thereof; provided, however, that the
Guarantor or the Lessee shall have acknowledged in writing its
obligation to fully indemnify such Indemnitee in respect of such
action, suit or proceeding and the Guarantor or the Lessee shall
keep such Indemnitee fully apprised of the status of such action,
suit or proceeding and shall provide such Indemnitee with all
information with respect to such action suit or proceeding as such
Indemnitee shall reasonably request, and, provided further, that
the Guarantor or the Lessee shall not be entitled to assume and
control the defense of any such action, suit or proceeding if and
to the extent that, (A) in the reasonable opinion of such In
demnitee, (x) such action, suit or proceeding involves any pos
sibility of imposition of criminal liability or any material risk
of material civil liability on such Indemnitee or will involve a
material risk of the sale, forfeiture or loss of, or the creation
of any Lien (other than a Permitted Lien) on the Properties or any
part thereof unless the Guarantor or the Lessee shall have posted
a bond or other security satisfactory to the relevant Indemnitees
in respect to such risk or (y) the control of such action, suit or
proceeding would involve an actual or potential conflict of
interest (in which case each Indemnitee may retain separate
counsel at the expense of Lessee and Guarantor), (B) such
proceeding involves Claims not fully indemnified by the Guarantor
or the Lessee which the Guarantor or the Lessee and the Indemnitee
have been unable to sever from the indemnified claim(s), or (C) an
Event of Default has occurred and is continuing. The Indemnitee
may participate in a reasonable manner at its own expense and
with its own counsel in any proceeding conducted by the Guarantor
or the Lessee in accordance with the foregoing. Neither the
Guarantor nor the Lessee shall enter into any settlement or other
compromise with respect to any Claim which is entitled to be
indemnified under Section 14.1 or 14.2 without the prior written
consent of the related Indemnitee, which consent shall not be un
reasonably withheld.
No Indemnitee shall enter into any settlement or other com
promise with respect to any
<PAGE>
Claim which is entitled to be indemnified under Section 14.1 or
14.2 without the prior written consent of the Lessee, which
consent shall not be unreasonably withheld, unless such Indemnitee
waives its right to be indemnified under Section 14.1 or 14.2 with
respect to such Claim.
Upon payment in full of any Claim by the Guarantor or the
Lessee pursuant to Section 14.1 or 14.2 to or on behalf of an
Indemnitee, the Guarantor or the Lessee, as the case may be,
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) to the extent of such payment, and
such Indemnitee shall execute such instruments of assignment and
conveyance, evidence of claims and payment and such other docu
ments, instruments and agreements as may be reasonably necessary
to preserve any such claims and otherwise cooperate with the
Guarantor and the Lessee and give such further assurances as are
reasonably necessary or advisable to enable the Guarantor or the
Lessee vigorously to pursue such claims.
Any amount payable to an Indemnitee pursuant to Section 14.1
or 14.2 shall be paid to such Indemnitee promptly upon receipt of
a written demand therefor from such Indemnitee, accompanied by a
written statement describing in reasonable detail the basis for
such indemnity and the computation of the amount so payable.
SECTION 14.4. End of Term Indemnity. In addition to
the indemnities provided in Sections 14.1 and 14.2, if the Lessee
elects the Remarketing Option set forth at Section 22.1 of the
Lease with respect to the Properties (which shall, for purposes of
this Section 14.4, include all Improvements thereon being
constructed pursuant to the Construction Agency Agreement and for
which the Completion Date has not occurred) subject to the Lease
and there is a Shortfall Amount with respect to such Properties,
then prior to the Expiration Date and as a condition to Lessee's
right to complete the Remarketing of such Property pursuant to
Section 22.1 of the Lease, Lessee shall cause to be delivered to
Lessor no later than the Expiration Date, at Lessee's sole cost
and expense, a report from an Appraiser in form and substance
reasonably satisfactory to the Required Lenders and the Lessor
(the "End of the Term Report") to establish the reason for any
impairment to the value of any of such Property which was sold for
an amount less than the Property Balance for such Property. On
the Expiration Date, the Lessee shall pay to Lessor an amount
equal to the Shortfall Amount that the End of the Term Report
demonstrates was the result of an impairment to the value in such
Property due to:
(a) extraordinary use, failure to maintain, to repair, to
restore, to rebuild or to replace, failure to comply
with all Requirements Laws, failure to use quality
workmanship, method of installation or removal or
maintenance, repair, rebuilding or replacement,
(excepting in each case ordinary wear and tear), or
(b) the existence of any Hazardous Activity, Hazardous
Substance or Environmental Violations occurring or
discovered after the Property Closing Date for such
Property (regardless of the Person so discovering any of
the foregoing), or
<PAGE>
(c) any restoration or rebuilding carried out by the Lessee
or any failure to reach Completion Date or to complete
any Modification, restoration or rebuilding, in either
case, by the Expiration Date,
(d) any grant, release, dedication, transfer, annexation or
amendment made pursuant to Section 12.2 of the Lease or
any release of a portion of the Property made pursuant
to Section 12.3 of the Lease; or
(e) the failure of the Lessor to have good and marketable
title to such Property free and clear of all Liens
(including Permitted Liens (other than Lessor Liens and
Agent's Liens)) and exceptions to title.
SECTION 14.5. General Tax Indemnity. (a)
Indemnification. Guarantor and Lessee, jointly and severally,
shall pay and assume liability for, and do hereby agree to
indemnify, protect and defend each Property and all Tax
Indemnitees, and hold them harmless against, all Impositions on an
After Tax Basis.
(b) Contests. If any claim shall be made against any
Tax Indemnitee or if any proceeding shall be commenced against any
Tax Indemnitee (including a written notice of such proceeding) for
any Imposition as to which the Lessee may have an indemnity
obligation pursuant to Section 14.5(a), or if any Tax Indemnitee
shall determine that any Imposition as to which the Lessee may
have an indemnity obligation pursuant to Section 14.5(a) may be
payable, such Tax Indemnitee shall promptly notify Lessee in
writing and shall not take any action with respect to such claim,
proceeding or Imposition without the written consent of Lessee
(such consent not to be unreasonably withheld or unreasonably
delayed) for thirty (30) days after the receipt of such notice by
Lessee; provided, however, that in the case of any such claim or
proceeding, if such Tax Indemnitee shall be required by law or
regulation to take action prior to the end of such thirty (30)-day
period, such Tax Indemnitee shall in such notice to Lessee, so
inform Lessee, and such Tax Indemnitee shall not take any action
with respect to such claim, proceeding or Imposition without the
consent of Lessee (such consent not to be unreasonably withheld or
unreasonably delayed) for ten (10) days after the receipt of such
notice by Lessee unless the Tax Indemnitee shall be required by
law or regulation to take action prior to the end of such ten (10)-
day period.
Lessee shall be entitled for a period of thirty (30) days
from receipt of such notice from the Tax Indemnitee (or such
shorter period as the Tax Indemnitee has notified Lessee is
required by law or regulation for the Tax Indemnitee to commence
such contest) to request in writing that such Tax Indemnitee
contest the imposition of such Tax, at Guarantor's and Lessee's
joint and several expense and the Tax Indemnitee shall, at the
joint and several expense of Guarantor and Lessee, in good faith
conduct and control such contest (including, without limitation,
by pursuit of appeals) related to the validity, applicability or
amount of such Impositions (provided, however, that (A) if such
contest involves a tax other than a tax on net income and can be
pursued independently from any other proceeding involving a tax
liability of such Tax Indemnitee, the Tax Indemnitee, at Lessee's
request, shall allow Guarantor or Lessee to conduct and control
such contest and (B) in the case of any contest, the Tax
Indemnitee may request Guarantor or Lessee to conduct and
<PAGE>
control such contest) by, in the sole discretion of the Person
conducting and controlling such contest, (l) resisting payment
thereof, (2) not paying the same except under protest, if protest
is necessary and proper, (3) if the payment be made, using
reasonable efforts to obtain a refund thereof in appropriate
administrative and judicial proceedings, or (4) taking such other
action as is reasonably requested by Guarantor or Lessee from time
to time.
The party controlling any contest shall consult in good faith
with the non-controlling party and shall keep the noncontrolling
party reasonably informed as to the conduct of such contest;
provided that, all decisions ultimately shall be made in the sole
discretion of the controlling party. The parties agree that a Tax
Indemnitee may at any time decline to take further action with
respect to the contest of any Imposition and may settle such
contest if such Tax Indemnitee shall waive its rights to any
indemnity from Lessee that otherwise would be payable in respect
of such claim (and any future claim by any taxing authority, the
contest of which is precluded by reason of such resolution of such
claim) and shall pay to Lessee any amount previously paid or
advanced by Lessee pursuant to this Section 14.5 by way of
indemnification or advance for the payment of an Imposition other
than expenses of such contest.
Notwithstanding the foregoing provisions of this Section
14.5, a Tax Indemnitee shall not be required to take any action
and neither Guarantor nor Lessee shall be permitted to contest any
Impositions in its own name or that of the Tax Indemnitee unless
(A) Lessee shall have agreed to pay and shall pay to such Tax
Indemnitee on demand and on an After Tax Basis all reasonable
costs, losses and expenses that such Tax Indemnitee actually
incurs in connection with contesting such Impositions, including,
without limitation, all reasonable legal, accounting and
investigatory fees and disbursements, (B) Tax Indemnitee shall
have reasonably determined that the action to be taken will not
result in any material danger of sale, forfeiture or loss of any
Property, or any part thereof or interest therein, will not
interfere with the payment of Rent, and will not result in risk of
criminal liability, (C) if such contest shall involve the payment
of the Imposition prior to the contest, Lessee shall provide to
the Tax Indemnitee an interest-free advance in an amount equal to
the Imposition that the Tax Indemnitee is required to pay (with no
additional net after-tax cost to such Tax Indemnitee), (D) in the
case of a claim that must be pursued in the name of a Tax
Indemnitee (or an Affiliate thereof), Lessee shall have provided
to such Tax Indemnitee an opinion of independent tax counsel
selected by the Lessee and reasonably satisfactory to Tax
Indemnitee stating that a reasonable basis exists to contest such
claim (or, in the case of an appeal of an adverse determination,
an opinion of such counsel to the effect that the position
asserted in such appeal will more likely than not prevail) and (E)
no Event of Default hereunder shall have occurred and be
continuing.
Each Tax Indemnitee shall at Lessee's expense supply Lessee
with such information and documents reasonably requested by Lessee
as are in such Tax Indemnitee's possession and as are necessary or
advisable for Lessee to participate in any action, suit or
proceeding to the extent permitted by this Section 14.5(b);
provided that, such Tax Indemnitee shall not be required to
disclose its tax return to Lessee to the extent that the
information deemed necessary or desirable by Lessee contained
therein is otherwise made available to the Lessee in a form which
will not hinder Lessee's contest of such action, suit or
proceeding.
<PAGE>
Notwithstanding anything contained herein to the contrary, a
Tax Indemnitee will not be required 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 14.5 with
respect to such claim and any related claim with respect to other
taxable years the contest of which is precluded or otherwise
materially adversely affected as a result of such waiver.
(c) Reimbursement for Tax Savings. If (x) a Tax
Indemnitee shall obtain a credit or refund of any Taxes paid by
Lessee pursuant to this Section 14.5 or (y) 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 Lessee pursuant to this Section 14.5 or any
payment made by a Tax Indemnitee to Lessee by reason of this
Section 14.5(c), such Tax Indemnitee at any time actually realizes
a reduction in any Taxes for which Lessee is not required to
indemnify such Tax Indemnitee pursuant to this Section 14.5 which
reduction in Taxes was not taken into account in computing such
payment by Lessee to or for the account of such Tax Indemnitee or
by the Tax Indemnitee to Lessee, then such Tax Indemnitee shall
promptly pay to Lessee on an After Tax Basis (xx) 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 (yy) an amount equal to such reduction in Taxes, as the
case may be; provided that no such payment shall be made so long
as an Event of Default shall have occurred and be continuing but
shall be paid promptly after cure of such Event of Default. Each
Tax Indemnitee agrees to take such actions as Lessee may
reasonably request (provided in the good faith judgment of the Tax
Indemnitee, such actions would not result in any adverse effect on
the Tax Indemnitee for which the Tax Indemnitee is not entitled to
indemnification from Lessee) and to otherwise 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 Lessee pursuant to this Section 14.5. The disallowance or
reduction of any credit, refund or other tax savings with respect
to which a Tax Indemnitee has made a payment to Lessee under this
Section 14.5(c) shall be treated as a Tax for which Lessee is
obligated to indemnify such Tax Indemnitee hereunder without
regard to the exclusions set forth in the definition of
Impositions.
(d) Payments. Any Imposition indemnifiable under this
Section 14.5 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 14.5 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 two (2)
Business Days prior to the date that the relevant Taxes are due.
Any payments made pursuant to Section 14.5 shall be made in
immediately available funds at such bank or to such account as
specified by the payee in written directions to the payor, or, if
no such direction shall have been given, by check of the payor
payable to the order of the payee by certified mail, postage
prepaid at its address as set forth in this Participation
Agreement. Upon the request of any Tax Indemnitee with respect to
a Tax that Lessee is required to pay, 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.
<PAGE>
(e) Reports. In the case of any report, return or
statement required to be filed with respect to any Taxes that are
subject to indemnification under this Section 14.5, Lessee shall
promptly notify the Tax Indemnitee of such requirement and, at
Lessee's expense (i) if Lessee is permitted (unless otherwise
requested by the Tax Indemnitee) by Applicable Law, timely file
such report, return or statement in its own name or (ii) if such
report, return or statement is required to be in the name of or
filed by such Tax Indemnitee or the Tax Indemnitee otherwise
requests that such report, return or statement be prepared for
filing by such Tax Indemnitee, prepare such report, return or
statement in such manner as shall be satisfactory to such Tax
Indemnitee and send the same to the Tax Indemnitee for filing no
later than fifteen (15) days prior to the due date therefor. 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 necessary to allow the Tax Indemnitee to file
such report, return or statement.
(f) Verification. At Lessee's request, the amount of
any indemnity payment by Lessee or any payment by a Tax Indemnitee
to Lessee pursuant to this Section 14.5 shall be verified and
certified by an independent public accounting firm mutually
acceptable to Lessee and the Tax Indemnitee. The costs of such
verification shall be borne by Lessee unless such verification
shall result in an adjustment in Lessee's favor of ten percent
(10%) of the payment as computed by the Tax Indemnitee, in which
case such fee shall be paid by the Tax Indemnitee. In no event
shall 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. Any information
provided to such accountants by any Person shall be and remain the
exclusive property of such Person and shall be deemed by the
parties to be (and the accountants will confirm in writing that
they will treat such information as) the private, proprietary and
confidential property of such Person, and no Person other than
such Person and the accountants shall be entitled thereto and all
such materials shall be returned to such Person. Such accounting
firm shall be requested to make its determination within thirty
(30) days of Lessee's request for verifications and the
computations of the accounting firm shall be final, binding and
conclusive upon Lessee and the Tax Indemnitee. The parties agree
that the sole responsibility of the independent public accounting
firm shall be to verify the amount of a payment pursuant to 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 14.6. Completion Guaranty. To the extent that
the Advances made pursuant to this Agreement are not sufficient to
complete the construction of any Improvements on any Property in
accordance with the Plans and Specification therefor, the
Guarantor and the Lessee hereby agree, jointly and severally, to
pay all costs necessary to complete such Improvements
substantially in accordance with such Plans and Specifications,
with the Construction Agent to use its commercially reasonable
efforts to cause such Improvement to be completed by the
Expiration Date.
SECTION 15.
<PAGE>
MISCELLANEOUS
SECTION 15.1. Survival of Agreements. The
representations, warranties, covenants, indemnities and agreements
of the parties provided for in the Operative Documents, and the
parties' obligations under any and all thereof, shall survive the
execution and delivery of this Participation Agreement, the
transfer of any Property to the Lessor, the construction of any
Improvements, any disposition of any interest of the Lessor in any
Property or any Improvements, the payment of the Notes and any
disposition thereof shall be and continue in effect
notwithstanding any investigation made by any party and the fact
that any party may waive compliance with any of the other terms,
provisions or conditions of any of the Operative Documents.
Except as expressly provided herein, it is expressly understood
and agreed that each of the indemnities provided for herein shall
survive the expiration or termination of the Lease and the other
Operative Documents and the payment by Lessee and Guarantor of all
amounts due thereunder for a period of three (3) years (but shall
continue in full force and effect following such date with respect
to any Claim asserted prior to such date) and shall be separate
and independent from any remedy under the Lease or any other
Operative Document; provided that, to the extent that any Claim
arises after such three (3) year period which was not asserted
during such three (3) period due to a failure to discover such
Claim or for any other reason, such indemnity shall be revived
upon the assertion of such Claim solely with respect to such
Claim.
SECTION 15.2. No Broker; etc. Each of the parties
hereto represents to the others that it has not retained or
employed any broker, finder or financial adviser, other than CS
First Boston, to act on its behalf in connection with this
Participation Agreement or the transactions contemplated herein,
nor has it authorized any broker, finder or financial adviser
retained or employed by any other Person so to act. Any party who
is in breach of this representation shall indemnify and hold the
other parties harmless from and against any liability arising out
of such breach of this representation.
SECTION 15.3. Notices. Unless otherwise specifically
provided herein, all notices, consents, directions, approvals,
instructions, requests and other communications required or
permitted by the terms hereof to be given to any Person shall be
given in writing by United States mail, by nationally recognized
courier service, by hand or by facsimile communication and any
such notice shall become effective five (5) Business Days after
being deposited in the mails, certified or registered with
appropriate postage prepaid or one (1) Business Day after delivery
to a nationally recognized courier service specifying overnight
delivery or, if delivered by hand, when received, or, if sent by
facsimile communication, when confirmed by electronic or other
means during business hours on a Business Day (or, if confirmed
after business hours or on a non-Business Day, on the next
Business Day) and shall be directed to the address of such Person
as indicated:
If to Guarantor, to it at:
<PAGE>
The Home Depot, Inc.
2455 Paces Ferry Road
Atlanta, Georgia 30339
Attn: Treasurer
Telephone No.: (770) 384-4522
Telecopy No.: (770) 384-5735
with a copy to:
L.A. Smith
Vice President/Legal
Telephone No.: (770) 431-2737
Telecopy No.: (770) 431-2752
If to Lessee, to it at:
Home Depot U.S.A., Inc.
2455 Paces Ferry Road
Atlanta, Georgia 30339
Attn: Treasurer
Telephone No.: (770) 384-4522
Telecopy No.: (770) 384-5735
with a copy to:
L.A. Smith
Vice President/Legal
Telephone No.: (770) 431-2737
Telecopy No.: (770) 431-2752
If to the Lessor, to it at:
12 East 49th Street
New York, New York 10017
Attn: Director
Telecopy No.: (212) 238-5331
Telephone No.: (212) 238-5323
<PAGE>
If to the Agent Bank, to it at:
Tower 49
12 East 49th Street
New York, New York 10017
Attn: Agency Administration
Telecopy No.: (212) 238-2586
Telephone No.: (212) 238-5073
If to a Lender, to it at the address set forth in Schedule 1.
If to Facility Lender, to it at:
HD Real Estate Funding Corp.
c/o JH Management Corporation
Room 520
One International Place
Boston, Massachusetts 02110
Attn: R. Douglas Donaldson
Telecopy No.: (617) 951-7050
Telephone No.: (617) 951-7690
If to Moody's or S&P, to it at the addresses set forth in the
Liquidity Agreement.
From time to time any party may designate a new address for
purposes of notice hereunder by notice to each of the other
parties hereto. The Lessee shall receive a copy of each notice
delivered pursuant to the Operative Documents and Lessee hereby
agrees to notify promptly Moody's and S&P of any termination of
the Lease or determination to cease issuing Commercial Paper Notes
pursuant to the terms of the Operative Documents.
SECTION 15.4. Counterparts. This Participation
Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall
be an original, but all such counterparts shall together
constitute but one and the same agreement.
SECTION 15.5. Amendments. No Operative Document nor
any of the terms thereof may be terminated, amended, supplemented,
waived or modified with respect to Guarantor, Lessee, the Lessor,
the Facility Lender, the Agent Bank or any Lender, except (a) in
the case of a termination, amendment, supplement, waiver or
modification to be binding on Guarantor, Lessee, the Lessor, the
Facility Lender, or the Agent Bank with the written agreement or
consent of such party, and (b) in the case of a termination,
<PAGE>
amendment, supplement, waiver or modification to be binding on the
Lenders, with the written agreement or consent of the Required
Lenders; provided, however, that
(1) no such termination, amendment, supplement, waiver
or modification shall without written agreement or consent of each
Participant (other than Facility Lender):
(x)(i) modify any of the provisions of this Section
15.5, change the definition of "Required Lenders" or modify
any provision of an Operative Document requiring action by
the Required Lenders; (ii) amend, modify, waive or supplement
any of the provisions of Sections 2.01, 4.06, 10.03 or
Article VI of the Liquidity Agreement or the representations
of such Participant in Section 9 or the covenants in Section
11 of this Participation Agreement; (iii) reduce, modify,
amend or waive any fees or indemnities in favor of any
Participant, including without limitation amounts payable
pursuant to Section 14 ((except that any Person (other than
the Facility Lender) may consent to any reduction,
modification, amendment or waiver of any indemnity payable to
it)); (iv) modify, postpone, reduce or forgive, in whole or
in part, any payment of Rent (other than pursuant to the
terms of any Operative Document), any Loan or Lessor
Investment Amount, the Lease Balance, Residual Value
Guarantee, amounts due pursuant to Section 22.2 of the Lease,
interest or Certificate Earnings or, subject to clause (iii)
above, any other amount payable under any Lease or this
Participation Agreement, or modify the definition or method
of calculation of Rent (other than pursuant to the terms of
any Operative Document), any Loan or Lessor Investment
Amount, Lease Balance, Shortfall Amount, Residual Value
Guarantee, Maximum Property Costs, or any other definition
which would affect the amounts to be advanced or which are
payable under the Operative Documents or any of the other
matters set forth above; or
(y) consent to any assignment of the Lease or the
Guaranty, releasing Lessee from its obligations in respect of
the payments of Rent and the Lease Balance or changing the
absolute and unconditional character of such obligation or
releasing the Guarantor from its obligations in respect of
the payments under the Guaranty or changing the absolute and
unconditional character of such obligation (with the express
understanding that any termination, amendment, supplement,
modification or waiver of the Guaranty or any provision
thereof is subject to the prior approval and confirmation of
Moody's and S&P as set forth therein); and
(2) no other termination, amendment, supplement, waiver
or modification shall, without the written agreement or consent of
the Lessor and the Required Lenders, be made to Sections 5 or 7 of
this Participation Agreement or the definition of "Lease Event of
Default".
Notwithstanding the foregoing, no termination, amendment,
supplement, waiver or modification to Sections 5 or 6 of this
Participation Agreement, any provision of the Operative Documents
described in clause (b)(1)(x)(iv) above (with the express
understanding that any amendment, supplement, modification, waiver
or termination of any provision of the Operative Documents
affecting the sufficiency or timely availability of payments of
Rent or other amounts due under the
<PAGE>
Lease or the Construction Agency Agreement to repay Commercial
Paper Notes in full as and
when maturing is subject to the confirmation of Moody's and S&P
described in this paragraph) or any provision of the Liquidity
Agreement, or any provision of the other Operative Documents
governing the obligation of the Lenders to fund Residual Loans
thereunder shall be effective unless, as a condition precedent
thereto, the Guarantor and the Lessee shall have provided written
confirmation from each of Moody's and S&P that immediately after
giving effect to such modification, waiver or termination, the
Commercial Paper Notes shall not be rated lower than such
Commercial Paper Notes are rated immediately prior to giving
effect thereto and such modification, waiver or termination shall
not result in a downgrade, withdrawal or qualification or the
rating assigned to the Commercial Paper Notes by Moody's and S&P.l
have received notice thereof and shall have agreed that such
action shall not result in a downgrade of the rating of the
Commercial Paper Notes.
SECTION 15.6. Usury. It is the intent of the parties
hereto not to violate any federal or state law, rule or regulation
pertaining either to usury or to the contracting for or charging
or collecting of interest, and each of the parties hereto agree
that, should any provision of this Participation Agreement or of
any of the Operative Documents, or any act performed hereunder or
thereunder, violate any such law, rule or regulation, then the
excess of interest contracted for or charged or collected over the
maximum lawful rate of interest shall be applied to the
outstanding principal indebtedness due to the Participants under
the applicable Operative Document.
SECTION 15.7. Confidentiality. Each Participant agrees
to exercise commercially reasonable efforts to keep any
information delivered or made available by the Guarantor or Lessee
to it which is clearly indicated or stated to be confidential
information (or when the circumstances under which such
information is delivered or when the content thereof would cause a
reasonable person to believe that such information is
confidential), confidential from anyone other than persons
employed or retained by such Participant who are or are expected
to become engaged in evaluating, approving, structuring or
administering any of the Operative Documents (such Persons to
likewise be under similar obligations of confidentiality with
respect to such information); provided, however that nothing
herein shall prevent any Participant from disclosing such
information (i) to any other Participant, (ii) upon the order of
any court or administrative agency, (iii) upon the request or
demand of any regulatory agency or authority having jurisdiction
over such Participant, (iv) which has been publicly disclosed, (v)
to the extent reasonably required in connection with any
litigation to which any Participant or its Affiliates may be a
party, (vi) to the extent reasonably required in connection with
the exercise of any remedy hereunder or under any other Operative
Document, (vii) to such Participant's legal counsel, independent
auditors and to such Participant's Affiliates, and (viii) to any
actual or proposed Participant, assignee or other transferee of
all or part of its rights hereunder which has agreed in writing to
be bound by the provisions of this Section 15.7; provided, that,
should disclosure of any such confidential information be required
by virtue of clause (ii) or (v) of the immediately preceding
provisos, any relevant Participant shall notify Lessee and
Guarantor of the same so as to allow the Lessee or Guarantor, at
Lessee's or Guarantor's sole cost and expense, to seek a
protective order or to take any other appropriate
<PAGE>
action; provided, further, that, no Participant shall be required
to delay compliance with any directive to disclose beyond the last
date such delay is legally permissible any such information so as
to allow the Lessee or Guarantor to effect any such action.
SECTION 15.8. Headings; etc. The Table of Contents and
headings of the various Articles and Sections of this
Participation Agreement are for convenience of reference only and
shall not modify, define, expand or limit any of the terms or
provisions hereof.
SECTION 15.9. Parties in Interest. Except as expressly
provided herein, none of the provisions of this Participation
Agreement are intended for the benefit of any Person except the
parties hereto.
SECTION 15.10. GOVERNING LAW. THIS PARTICIPATION
AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY THE LAWS OF THE
STATE OF GEORGIA (EXCLUDING ANY OTHER CONFLICT-OF-LAW OR CHOICE-OF-
LAW RULES WHICH MIGHT LEAD TO THE APPLICATION OF THE INTERNAL LAWS
OF ANY OTHER JURISDICTION) AS TO ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE.
SECTION 15.11. Severability. Any provision of this
Participation Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such
prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
SECTION 15.12. Further Assurances. The parties hereto
shall promptly cause to be taken, executed, acknowledged or
delivered, at the sole, joint and several expense of Guarantor and
the Lessee, all such further acts, conveyances, documents and
assurances as the other parties may from time to time reasonably
request in order to carry out and effectuate the intent and
purposes of this Participation Agreement, the other Operative
Documents, and the transactions contemplated hereby and thereby
(including, without limitation, the preparation, execution and
filing of any and all Uniform Commercial Code financing statements
and other filings or registrations which the parties hereto may
from time to time request to be filed or effected). Lessee will,
at its own expense and without need of any prior request from any
other party, to take such action as may be necessary (including
any action specified in the preceding sentence), or (if the Lessor
or Agent Bank shall so request) as so requested, in order to
maintain and protect all security interests provided for hereunder
or under any other Operative Document.
SECTION 15.13. WAIVER OF JURY TRIAL. TO THE EXTENT
PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT
<PAGE>
TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THE OPERATIVE DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
SECTION 15.14. Limitations on Recourse Against Lessor.
Notwithstanding anything contained in this Participation Agreement
or any other Operative Documents to the contrary, each of the
parties hereto agrees to look solely to Lessor's (or to any
partner thereof's) estate and interest in the Properties and the
Improvements thereon and rights under the Operative Documents for
the collection of any judgment requiring the payment of money by
Lessor in the event of liability by Lessor, and no other property
or assets of Lessor or any shareholder, owner or partner (direct
or indirect) in or of Lessor, or any director, officer, employee,
beneficiary, Affiliate of any of the foregoing shall be subject to
levy, execution or other enforcement procedure for the
satisfaction of the remedies of any party hereto against Lessor
under or with respect to the Operative Documents, the relationship
of Lessor and any other party hereto hereunder or any other
liability of Lessor to any other party hereto under the Operative
Documents; provided that, nothing herein shall limit recourse
against the Lessor or its partners for the gross negligence or
willful misconduct of such Persons or claims proximately caused by
Lessor's breach of its obligations pursuant to Sections 9.1, 11.2
(solely with respect to the first sentence thereof), 11.3, 11.4,
11.6(a), (g), (h) or 11.7 of this Participation Agreement;
provided further, that the foregoing proviso is intended to allow
a claim for damages against Lessor but shall not be construed as
creating a full recourse obligation on the part of Lessor (or any
partner thereof) to repay any of the Loans or any amounts relating
to the Loans arising under the Loan Agreement and the Notes.
SECTION 15.15. Limitation on Recourse Against Facility
Lender. The provisions of Section 3.11 of the Liquidity Agreement
are hereby incorporated herein by this reference and made a part
hereof and of each of the Operative Documents and each party
hereto agrees to be bound by the limitations set forth therein.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Participation Agreement to be duly executed by their respective
officers thereunto duly authorized as of the day and year first
above written.
THE HOME DEPOT, INC., as Guarantor
By:
Marshall L. Day
Senior Vice President and
Chief Financial Officer
Attest:
Lawrence A. Smith
Assistant Secretary
[CORPORATE SEAL]
<PAGE>
HOME DEPOT U.S.A., INC., as Lessee and
Construction Agent
By:
Marshall L. Day
Senior Vice President and
Chief Financial Officer
Attest:
Lawrence A. Smith
Assistant Secretary
[CORPORATE SEAL]
<PAGE>
HD REAL ESTATE FUNDING CORPORATION, as
Facility Lender
By:______________________________
Name:
Title:
CREDIT SUISSE LEASING 92A, L.P., a
Delaware limited partnership, as Lessor
BY: CREDIT SUISSE, its general
partner
By:_______________________________
Name:
Title:
By:_______________________________
Name:
Title:
CREDIT SUISSE, as Agent Bank
By:________________________________
Name:
Title:
By:_______________________________
Name:
Title:
[HERE LIST LENDERS]
<PAGE>
SCHEDULE I TO
PARTICIPATION AGREEMENT
Lenders and Their Addresses
1. Bank of America NT&SA
1230 Peachtree Street
Suite 3800
Atlanta, GA 30309
Attn: Michelle Kacergis
Telephone: 404-249-6906
Telecopier: 404-249-6938
2. The Bank of New York
One Wall Street
New York, NY 10286
Attn: Paula DiPonzio
Telephone: 212-635-7867
Telecopier: 212-635-1481/1483
3. Deutsche Bank AG
New York Branch
31 West 52nd Street
New York, NY 10019
Attn: David H. Kahn
Telephone: 212-469-8211
Telecopier: 212-469-7936
4. The First National Bank of Chicago
One First National Plaza
Suite 0088
Chicago, IL 60670
Attn: Stephanie Prince
Telephone: 312-732-7271
Telecopier: 312-732-2715
5. First Union National Bank of Georgia
999 Peachtree Street
12th Floor
Atlanta, GA 30309
Attn: Michael S. Murphy
<PAGE>
Telephone: 404-225-4258
Telecopier: 404-225-4355
6. Morgan Guaranty Trust
60 Wall Street
New York, NY 10260
Attn: Kathryn Sayko-Yapes
Telephone: 212-648-9036
Telecopier: 212-648-5014
7. NationsBank, N.A. (South)
600 Peachtree Street, NE
Atlanta, GA 30308-2212
Attn: Kathryn W. Robinson
Telephone: 404-607-5887
Telecopier: 404-607-6467
8. SunTrust Bank, Atlanta
25 Park Place, NE
23rd Floor
Atlanta, GA 30303
Attn: Sharon Judge
Telephone: 404-588-7077
Telecopier: 404-588-8833
10. The Toronto Dominion Bank
909 Fannin, Suite 1700
Houston, TX 77010
Attn: David G. Parker, Manager - Credit
Administration
Telephone: 713-653-8248
Telecopier: 713-653-9921
11. Union Bank of Switzerland
New York Branch
299 Park Avenue
33rd Floor
New York, NY 10171
<PAGE>
Attn: Robert W. Casey
Telephone: 212-821-3329
Telecopier: 212-821-3383
12. Wachovia Bank of Georgia
191 Peachtree Street
Atlanta, GA 30308
Attn: Theresa St. Luce
Telephone: 404-332-4061
Telecopier: 404-332-5016
<PAGE>
APPENDIX 1
to
Operative Documents
DEFINITIONS AND INTERPRETATION
I. RULES OF INTERPRETATION
A. General Rules of 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 legal
representatives, successors and assigns but, if applicable, only
if such legal representatives, 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 Requirement of Law or Applicable Law
means such Requirement of Law or 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 Requirement of Law or Applicable Law means that
provision of such Requirement of Law or 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;
<PAGE>
(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" means "to but
excluding".
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. Legal Representation of the Parties. The Operative Documents
were negotiated by the parties with the benefit of legal representation
and any rule of construction or interpretation otherwise requiring the
Operative Document to be construed or interpreted against any party
shall not apply to any construction or interpretation hereof or
thereof.
E. Defined Terms. Unless a clear contrary intention appears,
terms defined herein have the respective indicated meanings when used
in each Operative Document.
II. DEFINITIONS
"Acceleration" is defined in Section 5 of the Loan Agreement.
"Acquisition Request" is defined in Section 3.5 of the
Participation Agreement.
"Actual Knowledge" means the actual knowledge of any senior
financial or legal officer of the Guarantor or Lessee charged with
compliance with the Operative Documents.
"Administration Agreement" means that certain agreement dated as
of the Initial Closing Date between the Facility Lender and the
Administrative Agent.
"Administrative Agent" shall mean Credit Suisse, as
"Administrative Agent" pursuant to the Administration Agreement, and
any successor thereto.
"Advance" means an advance of funds by the Lessor pursuant to
Section 3 of the Participation Agreement to pay Property Acquisition
Costs or Property Improvements Costs.
<PAGE>
"Affiliate" means, when used with respect to any Person, any other
Person directly or indirectly Controlling or Controlled by or under
direct or indirect common control with such Person.
"After Tax Basis" means, with respect to any payment to be
received, the amount of such payment increased so that, after deduction
of the amount of all taxes required to be paid by the recipient
calculated at the then maximum marginal rates generally applicable to
large, publicly-held corporations (less any tax savings realized and
the present value of any tax savings projected to be realized by the
recipient as a result of the payment of the indemnified amount) with
respect to the receipt by the recipient of such amount, such increased
payment (as so reduced) is equal to the payment otherwise required to
be made.
"Agent Bank" means Credit Suisse, as "Agent Bank" for the Lenders
pursuant to the Liquidity Agreement, or any successor or additional
Agent Bank appointed in accordance with the terms of the Liquidity
Agreement.
"Agent's Liens" means any Lien, true lease or sublease or
disposition of title arising as a result of (a) any claim against the
Agent Bank not resulting from the transactions contemplated by the
Operative Documents, (b) any act or omission of the Agent Bank which is
not required by the Operative Documents or is in violation of any of
the terms of the Operative Documents, (c) any claim against the Agent
Bank with respect to Taxes or Transaction Expenses against which
neither Lessee nor Guarantor is required to indemnify Agent Bank
pursuant to the Participation Agreement or (d) any claim against the
Agent Bank arising out of any transfer by the Agent Bank of all or any
portion of the interest of the Agent Bank in the Properties or the
Operative Documents other than the transfer of title to, any security
interest in, or possession of any Properties by the Agent Bank pursuant
to and in accordance with the Lease or the Participation Agreement or
pursuant to the exercise of the remedies set forth in Article XVII of
the Lease or pursuant to the Security Documents.
"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, all Governmental Authorities, and applicable
judgments, 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 Properties and the Improvements thereon) and any
restrictive covenant or deed restriction or easement of record
affecting the Properties or the Improvements thereon.
"Appraisal" means, with respect to each Property, an appraisal,
prepared by an Appraiser of such Property as if improved in accordance
with the Plans and Specifications, which in the judgment of the Agent
Bank and counsel to the Agent Bank, complies with all of the provisions
of
<PAGE>
the Financial Institutions Reform, Recovery and Enforcement Act of
1989, as amended, the rules and regulations adopted pursuant thereto,
and all other applicable Requirements of Law and will appraise the
estimated fair market value of such Property as built in accordance
with the Plans and Specifications and as of the Completion Date.
"Appraiser" means (i) CB Commercial Real Estate Group, Inc.
Appraisal Services, and (ii) any other reputable MAI appraiser selected
by the Agent Bank on behalf of the Lenders.
"Appurtenant Rights" means (i) all agreements, easements, rights
of way or use, rights of ingress or egress, privileges, appurtenances,
tenements, hereditaments and other rights and benefits at any time
belonging or pertaining to the Land or the Improvements, including,
without limitation, the use of any streets, ways, alleys, vaults or
strips of land adjoining, abutting, adjacent or contiguous to the Land
and (ii) all permits, licenses and rights, whether or not of record,
appurtenant to the Land.
"As Built Value" means the fair market value set forth in the
applicable Appraisal with respect to any Property upon completion of
the Improvements thereon.
"Assignment of Leases" is defined in Appendix 2 to the
Participation Agreement.
"Available Commitments" means the sum of the Available Facility
Lender Commitments and the Available Lessor Commitment.
"Available Facility Lender Commitments" means as to the Facility
Lender at any time, an amount equal to the excess, if any, of (a) the
amount of the Facility Lender Commitments over (b) the aggregate
principal amount of the Notes then outstanding.
"Available Lessor Commitment" means an amount equal to the excess,
if any, of (i) the amount of the Lessor's Commitment over (ii) the
aggregate amount of the Lessor Investment Amounts then outstanding.
"Bankruptcy Code" is defined in Section 5(e) of the Loan
Agreement.
"Base Rate" is defined in the Liquidity Agreement.
"Basic Rent" means, the sum of (i) the Lender Basic Rent and (ii)
the Lessor Basic Rent, calculated as of the applicable Payment Date on
which Basic Rent is due.
"Basic Term Expiration Date" means the date five (5) years from
the Initial Closing Date.
"Blended Rate" is defined in Section 2.6 of the Loan Agreement.
<PAGE>
"Business Day" means (i) except as set forth in clause (ii) below,
any day excluding (w) Saturday, (x) Sunday, and (y) any day on which
banks in New York, New York, Chicago, Illinois or Atlanta, Georgia are
authorized by law to close, and (ii) with respect to all notices and
determinations in connection with, and all payments of principal of and
interest on, Eurodollar Loans and Lessor Investment Amounts accruing
Certificate Earnings at the Adjusted LIBOR Rate, any day which is a
Business Day described in (i) above and which is also a day for trading
by and between banks in U.S. dollar deposits in the interbank
Eurodollar market.
"Capital Lease" means, as applied to any Person, any lease of any
property (whether real, personal or mixed) by that Person as lessee
which, in conformity with GAAP, is, or is required to be, accounted for
as a capital lease on the balance sheet of such Person.
"Capital Stock" means any nonredeemable capital stock of the
Guarantor or any Consolidated Subsidiary (to the extent issued to a
Person other than the Guarantor), whether common or preferred.
"Capitalized Lease Obligations" means all obligations under
Capital Leases of any Person, in each case, taken at the amount thereof
accounted for as liabilities in accordance with GAAP.
"Cash Collateral Account" is defined in the Liquidity Agreement.
"Casualty" means any damage or destruction of all or any portion
of a Property as a result of a fire or other casualty.
"CERCLA" means the Comprehensive Environmental Response
Compensation and Liability Act, 42 U.S.C. 9601 et. seq. and its
implementing regulations and amendments.
"CERCLIS" means the Comprehensive Environmental Response
Compensation and Liability Inventory System established pursuant to
CERCLA.
"Certificate Earnings" is defined in Section 4.1 of the
Participation Agreement.
"Certificate Earnings Rate" is defined in Appendix 3 to the
Participation Agreement.
"Certifying Party" is defined in Section 26.1 of the Lease.
"Claims" means any and all obligations, liabilities, losses,
actions, suits, judgments, penalties, fines, claims, demands,
settlements, costs and expenses (including, without limitation,
reasonable legal fees and expenses) of any nature whatsoever.
"Closing Date" means the Initial Closing Date and each Property
Closing Date.
"Code" means the Internal Revenue Code of 1986.
<PAGE>
"Commercial Paper Documents" means, (i) the Commercial Paper
Notes, (ii) the Issuing and Paying Agency Agreement, (iii) the
Liquidity Agreement, (iv) the Security Agreement, (v) the Liquidity
Notes, (vi) the Private Placement Letter of Understanding, (vii) the
Private Placement Memorandum, and (viii) the Administration Agreement.
"Commercial Paper Notes"shall mean the Commercial Paper Notes
issued by the Facility Lender pursuant to the Commercial Paper
Documents in an aggregate face amount not to exceed $291,000,000.
"Commitment Period" means the period from and including the
Initial Closing Date to, but not including, the Scheduled Commitment
Termination Date or such earlier date on which the Commitment or the
Total Commitments shall terminate as provided in the Operative
Documents.
"Commitment" shall have the meaning set forth in the Liquidity
Agreement.
"Completed Property" is defined in Exhibit H to the Participation
Agreement.
"Completion" means, with respect to a Construction Period
Property, such time as (i) substantial completion of the Improvements
on such Construction Period Property has been achieved in accordance
with the Plans and Specifications and in compliance in all material
respects with all Requirements of Law, Insurance Requirements and the
Construction Agency Agreement and (ii) such Facility is open for
commercial operation.
"Completion Date" means, with respect to a Construction Period
Property, the date on which Completion for the Facility on such
Property has occurred and the conditions set forth in Section 8 of the
Participation Agreement are satisfied with respect to such Facility.
"Compliance Certificate" has the meaning set forth in Section
11.1(a) of the Participation Agreement.
"Condemnation" means any condemnation, requisition, confiscation,
seizure or other taking or sale of the use, occupancy, or title to any
Property or any part thereof, wholly or partially (temporarily or
permanently), by or on account of any actual or threatened eminent
domain proceeding or other taking of action by any Person having the
power of eminent domain, including an action by a Governmental
Authority to change the grade of, or widen the streets adjacent to any
Property or alter the pedestrian or vehicular traffic flow to any
Property so as to result in change in access to such Property, or by or
on account of an eviction by paramount title or a transfer made in lieu
of any such proceeding or action. A "Condemnation" shall be deemed to
have occurred on the earliest of the dates that use, occupancy or title
is taken.
"Consent to Assignment" is defined in Appendix 2 to the
Participation Agreement.
<PAGE>
"Consent to Construction Agency Agreement Assignment" is defined
in Appendix 2 to the Participation Agreement.
"Consent to Master Assignment" is defined in Appendix 2 to the
Participation Agreement.
"Consolidated Funded Debt" means at any date the Indebtedness of
the Guarantor and its Consolidated Subsidiaries consisting of (i) the
types of Indebtedness described in clauses (i), (ii), (iii) and (iv) of
the definition of Indebtedness contained in this Appendix 1, (ii) an
amount equal to 800.00% of the aggregate of all obligations under
operating leases for the Fiscal Year following the last Fiscal Year for
which audited financial statements have been supplied to the Lenders
and the Lessor as contained in the Guarantor's Annual Report on Form
10K, and (iii) Guaranties of Indebtedness of other Persons of the types
described in clauses (i) and (ii) above, determined on a consolidated
basis as of such date.
"Consolidated Net Worth" means at any time, Stockholders' Equity,
as set forth or reflected on the most recent consolidated balance sheet
of the Guarantor and its Consolidated Subsidiaries, prepared in
accordance with GAAP.
"Consolidated Operating Profits" means, for any period, the
Operating Profits of the Guarantor and its Consolidated Subsidiaries.
"Consolidated Subsidiary" means at any date any Subsidiary or
other entity the accounts of which, in accordance with GAAP, would be
consolidated with those of Guarantor in its consolidated financial
statements as of such date.
"Consolidated Tangible Net Worth" means, at any time,
Stockholders' Equity, less the sum of the value, as set forth or
reflected on the most recent consolidated balance sheet of the
Guarantor and its Consolidated Subsidiaries, prepared in accordance
with GAAP, of:
(A) Any surplus resulting from any write-up of assets
subsequent to January 30, 1994;
(B) All assets which would be treated as intangible
assets for balance sheet presentation purposes under GAAP, including
without limitation goodwill (whether representing the excess of cost
over book value of assets acquired, or otherwise), trademarks,
tradenames, copyrights, patents and technologies, and unamortized debt
discount and expense;
(C) To the extent not included in (B) of this
definition, any amount at which shares of Capital Stock of the
Guarantor appear as an asset on the balance sheet of the Guarantor and
its Consolidated Subsidiaries;
(D) Loans or advances to stockholders, directors,
officers or employees; and
<PAGE>
(E) To the extent not included in (B) of this
definition, deferred expenses.
"Consolidated Total Assets" means, at any time, the total assets
of the Guarantor and its Consolidated Subsidiaries, determined on a
consolidated basis, as set forth or reflected on the most recent
consolidated balance sheet of the Guarantor and its Consolidated
Subsidiaries, prepared in accordance with GAAP.
"Consolidated Total Tangible Capital" means, at any time, the sum
of (i) Consolidated Tangible Net Worth, and (ii) Consolidated Funded
Debt.
"Construction Agency Agreement" means the Construction Agency
Agreement, dated as of the Initial Closing Date, between the Lessor and
the Construction Agent.
"Construction Agency Agreement Assignment" is defined in Appendix
2 to the Participation Agreement.
"Construction Agency Agreement Supplement" means a supplement to
the Construction Agency Agreement executed by the Construction Agent
and the Lessor on each Property Closing Date.
"Construction Agency Event of Default" means a "Construction
Agency Event of Default" as defined in Section 5.1 of the Construction
Agency Agreement.
"Construction Agent" means Home Depot U.S.A., Inc., as
Construction Agent under the Construction Agency Agreement.
"Construction Budget" means the cost of constructing and
developing the Improvements on any Construction Period Property as
determined by the Construction Agent in its reasonable, good faith
judgment.
"Construction Commencement Date" means, with respect to a
Construction Period Property, the date on which construction of the
Facility on such Construction Period Property commences pursuant to the
Construction Agency Agreement.
"Construction Documents" has the meaning specified in Section 2.6
of the Construction Agency Agreement.
"Construction Period" means, with respect to a Property, the
period commencing on the Property Closing Date of such Property and
ending on the Completion Date for such Property.
<PAGE>
"Construction Period Property" means, at any date of
determination, any Property as to which the Construction Period has
commenced, and not ended, on or prior to such date.
"Contractual Obligation" with respect to any Person means any
indenture, mortgage, deed of trust, conditional sale contract,
receivables purchase or transfer agreement, loan agreement, credit
agreement or other agreement or instrument to which such Person is a
party or by which it or its properties may be bound or affected.
"Control" means (including the correlative meanings of the terms
"controlling," "controlled by" and "under common control with"), as
used with respect to any Person, 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.
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated)
under common control which, together with the Guarantor, are treated as
a single employer under Section 414 of the Code.
"Deed" is defined in Section 7.1(d) of the Participation
Agreement.
"Default" means any event or condition which, with the lapse of
time or the giving of notice, or both, would constitute an Event of
Default.
"Deposited Funds" has the meaning set forth in the Liquidity
Agreement.
"Direct Funding Loan" has the meaning set forth in the Liquidity
Agreement.
"Dollars" and "$" mean dollars in lawful currency of the United
States of America.
"End of Term Report" is defined in Section 14.4 of the
Participation Agreement.
"Environmental Audit" means a report and any addenda thereto of a
phase one environmental audit, and if necessary or reasonably prudent,
a phase two environmental audit of each Property to be acquired by the
Lessor on a Property Closing Date.
"Environmental Claim" means any Claim arising out of or
attributable to, any Environmental Violation, any Release, any
Hazardous Condition or Hazardous Activity.
"Environmental Law" means, whenever enacted or promulgated, any
Federal, state, county or local law, statute, ordinance, rule,
regulation, license, permit, authorization, approval, covenant,
criteria, guideline, administrative or court order, judgment, decree,
injunction, code or requirement or an agreement with a Governmental
Authority:
(x) relating to pollution (or the cleanup, removal, remediation or
encapsulation
<PAGE>
thereof, or any other response thereto), or the regulation or
protection of human health, safety, natural resources or the
environment, including air, water, vapor, surface water,
groundwater, drinking water, land (including surface or
subsurface), plant, aquatic and animal life, or
(y) concerning exposure to, or the use, containment,
storage, recycling, treatment, generation, discharge, emission,
Release or threatened Release, transportation, processing,
handling, labeling, containment, production, disposal or
remediation of any Hazardous Substance, Hazardous Condition or
Hazardous Activity,
in each case as amended and as now or hereafter in effect, and any
common law or equitable doctrine (including, without limitation,
injunctive relief and tort doctrines such a negligence, nuisance,
trespass and strict liability) that may impose liability or obligations
for injuries (whether personal or property) or damages due to or
threatened as a result of the presence of, exposure to, or ingestion
of, any Hazardous Substance, whether such common law or equitable
doctrine is now or hereafter recognized or developed. Applicable laws
include, but are not limited to, CERCLA; the Resource Conservation and
Recovery Act of 1976, 42 U.S.C. 6901 et seq.; the Federal Water
Pollution Control Act, 33 U.S.C. 1251 et seq.; the Clean Air Act, 42
U.S.C. 7401 et seq.; the National Environmental Policy Act, 42
U.S.C. 4321; the Refuse Act, 33 U.S.C. 401 et seq.; the Hazardous
Materials Transportation Act of 1975, 49 U.S.C. 1801-1812; the Toxic
Substances Control Act, 15 U.S.C. 2601 et seq.; the Federal
Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. 136 et seq.;
the Safe Drinking Water Act, 42 U.S.C. 300f et seq.; and the
Occupational Safety and Health Act of 1970, each as amended and as now
or hereafter in effect, and their state and local counterparts or
equivalents, including any regulations promulgated thereunder.
"Environmental Violation" means any activity, occurrence or
condition that violates or results in noncompliance with any
Environmental Law.
"Equipment" means equipment, apparatus, furnishing, fittings and
personal property of every kind and nature whatsoever purchased, leased
or otherwise acquired by using the proceeds of the Loans or the Lessor
Investment Amounts by the Construction Agent or the Lessee and now or
subsequently attached to, contained in or used or usable in any way in
connection with any operation or letting of a Property, including but
without limiting the generality of the foregoing, all screens, storm
doors and windows, heating, electrical, and mechanical equipment,
lighting, plumbing, ventilation, air conditioning and air-cooling
apparatus, refrigerating, and incinerating equipment, escalators,
elevators, loading and unloading systems, sprinkler systems and other
fire prevention and extinguishing apparatus and materials, security
systems, motors, engines, pipes, pumps, tanks, conduits, appliances
and, fixtures of every kind and description; provided, however, that
"Equipment" does not include any inventory acquired by the Construction
Agent or the Lessee in connection with a Property.
<PAGE>
"ERISA" means the Employee Retirement Income Security Act of 1974.
"Estimated Completion Date" means, with respect to any Property,
the date that Lessee reasonably estimates will be the Completion Date
for the Facility to be built on such Property, as set forth in the
related Acquisition Request.
"Eurodollar Loans" is defined in the Liquidity Agreement.
"Event of Default" means (i) a Lease Event of Default or
Construction Agency Event of Default or (ii) a Loan Agreement Event of
Default or (iii) a Facility Agreement Event of Default, which in the
case of (ii) or (iii), is attributable to Lessee or Guarantor.
"Excepted Payments" means, with respect to the Lessor and the
Facility Lender:
(a) all indemnity payments (including indemnity payments
made pursuant to Section 14 of the Participation Agreement) to
which such Participant or any of its respective successors,
assigns, shareholders, partners, Affiliates, agents, officers,
directors or employees is entitled;
(b) any amounts (other than Basic Rent or amounts payable by
the Lessee as the Purchase Option Price, Property Balance, Lease
Balance or Residual Value Guaranty) payable under any Operative
Document to reimburse such Participant or any of its respective
successors, assigns, shareholders, partners Affiliates (including
the reasonable expenses of such Participant incurred in connection
with any such payment) for performing or complying with any of the
obligations of the Lessee under and as permitted by any Operative
Document;
(c) as to the Lessor, any amount payable to the Lessor by
any transferee (other than the Lessee or a designee of the Lessee
pursuant to the Lease) of the interest of the Lessor as the
purchase price of the Lessor's Investment Amounts in the
Properties (or a portion thereof);
(d) any insurance proceeds (or payments with respect to
risks self-insured or policy deductibles) under liability policies
other than such proceeds or payments payable to such Participant
successors, assigns, shareholders, partners;
(e) as to the Lessor, any insurance proceeds under policies
maintained by Lessor;
(f) Transaction Expenses or other amounts or expenses paid
or payable to or for the benefit of such Participant;
<PAGE>
(g) as to the Lessor, all right, title and interest of the
Lessor to any Property or any portion thereof or any other
property to the extent any of the foregoing has been released from
the Liens of the Mortgages, the Assignment of Leases and the
Construction Agency Agreement Assignment pursuant to the terms
thereof following the payment of the Loans to the Facility Lender
and all amounts due and owing to the Agent Bank and the Lenders
under the Facility Agreement and the Security Agreement;
(h) with respect to the Facility Lender, any payments
received from the Guarantor pursuant to the Guaranty; provided
that, such amounts shall be applied in accordance with Section 5
of the Participation Agreement; and
(i) any payments in respect of interest to the extent
attributable to payments referred to in clauses (a) through (h)
above.
"Excepted Rights" means, as to Lessor and Facility Lender:
(a) the exclusive right of such Participant to (i) retain
all Excepted Payments owing to it, (ii) to demand, collect or
commence any action at law to obtain such payments and to enforce
any judgment with respect thereto (whether pursuant to the
Guaranty or otherwise), and (iii) all of its respective rights
under the Participation Agreement and with respect to Lessor, the
Loan Agreement, and
(b) all Shared Rights.
"Excess Proceeds" means the excess, if any, of the aggregate of
all awards, compensation or insurance proceeds payable in connection
with a Casualty or Condemnation over the Property Balance paid by the
Lessee pursuant to Articles XV and XVI of the Lease with respect to
such Casualty or Condemnation.
"Expiration Date" means the Basic Term Expiration Date or the
scheduled expiration of the then current Renewal Term, if any.
"Expiration Date Property Cost" means the aggregate amount of the
Property Costs for all Properties as of the Expiration Date.
"Expiration Date Purchase Option" is defined in Section 22.2 of
the Lease.
"Extension Effective Date" is defined in Section 2.5 of the Loan
Agreement.
"Facility" means Improvements located in the continental United
States or Canada constituting (i) a Support Facility or (ii) a retail
store, in either case, used in the ordinary course of business of
Lessee and its Affiliates as such business is conducted on the Initial
Closing Date.
<PAGE>
"Facility Agreement Default" has the meaning set forth in the
Liquidity Agreement.
"Facility Agreement Event of Default" has the meaning set forth in
the Liquidity Agreement.
"Facility Fee" has the meaning set forth in the Liquidity
Agreement.
"Facility Lender" means HD Real Estate Funding Corp., a Delaware
corporation, and its successors and assigns.
"Facility Lender Commitment Percentage" means, with respect to the
Advances pursuant to the Total Commitments, ninety-seven percent (97%).
"Facility Lender Commitments" means collectively, the Tranche A
Loan Commitment and the Tranche B Loan Commitment.
"Facility Lender Financing Statements" means UCC financing
statements appropriately completed and executed for filing in the
applicable jurisdictions in order to protect the Facility Lender's
interest under the Security Documents.
"Facility Lender Property Balance" means with respect to any
Property an amount equal to the product of outstanding principal amount
of the Loans, and all accrued and unpaid interest thereon multiplied by
a fraction, the numerator of which is the Property Cost allocable to
such Property and the denominator of which is the aggregate Property
Costs for all Properties.
"Facility Lender Tranche A Commitment Percentage" means eighty-six
and six-tenths of one percent (86.6%).
"Facility Lender Tranche B Commitment Percentage" means thirteen
and four-tenths of one percent (13.4%).
"Facility Loans" has the meaning set forth in the Liquidity
Agreement.
"Fee Letter" means the letter agreement between Guarantor and
Credit Suisse dated as of February 16, 1996.
"Financing Statements" means collectively, the Lessor Financing
Statements, the Facility Lender Financing Statements and the Lender
Financing Statements.
"Fiscal Quarter" means any fiscal quarter of the Guarantor.
"Fiscal Year" means any fiscal year of the Guarantor.
<PAGE>
"Fixtures" means all fixtures relating to the Improvements,
including all components thereof, located in or on the Improvements,
together with all replacements, modifications, alterations and
additions thereto.
"Force Majeure Event" means with respect to any Property any event
(the existence or potentiality of which was not known and could not
have been discovered through the exercise of reasonable due diligence
by Lessee prior to the related Property Closing Date) beyond the
control of the Construction Agent, including, but not limited to,
strikes, lockouts, adverse soil conditions, acts of God, adverse
weather conditions, inability to obtain labor or materials, government
activities, civil commotion and enemy action; but excluding any event,
cause or condition that results from the Construction Agent's financial
condition or failure to pay or any event, cause or condition which
could be remedied through the exercise of commercially reasonable
efforts or the reasonable expenditure of funds.
"Funding Date" means any Business Day on which Lessor Investment
Amounts and/or Loans are (subject to the satisfaction and/or waiver of
the applicable conditions precedent) funded pursuant to the
Participation Agreement, the Loan Agreement and/or the other Operative
Documents.
"Funding Request" is defined in Section 3.7 of the Participation
Agreement.
"GAAP" means United States generally accepted accounting
principles (including principles of consolidation), in effect from time
to time, consistently applied.
"Governmental Action" means all permits, authorizations,
registrations, consents, approvals, waivers, exceptions, variances,
orders, judgments, written interpretations, decrees, licenses,
exemptions, publications, filings, notices to and declarations of or
with, or required by, any Governmental Authority, or required by any
Requirement of Law or Applicable Law, and shall include, without
limitation, all environmental and operating permits and licenses that
are required for the full use, occupancy, zoning and operation of any
Property (or any part thereof).
"Governmental Authority" means any nation or government, any
state, county, provincial, municipality or other political subdivision
thereof and any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.
"Gross Proceeds" is defined in Section 22.1 of the Lease.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any
Indebtedness or other obligation of any other Person and, without
limiting the generality of the foregoing, any obligation, direct or
indirect, contingent or otherwise, of such Person (i) to secure,
purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation of such other Person (whether
arising by virtue of partnership arrangements, by agreement to keep-
well, to purchase assets,
<PAGE>
goods, securities or services, to provide collateral security, to take-
or-pay, or to maintain financial statement conditions or otherwise) or
(ii) the extent that such an arrangement would be considered to be a
guaranty under GAAP, entered into for the purpose of assuring in any
other manner the obligee of such Indebtedness or other obligation of
the payment thereof or to protect such obligee against loss in respect
thereof (in whole or in part), provided that the term Guarantee shall
not include endorsements for collection or deposit in the ordinary
course of business. The term "Guarantee" used as a verb has a
corresponding meaning. For purposes hereof, the amount of any
Guarantee shall be deemed to be equal to the lesser of (i) any stated
amount of the guarantee or (ii) the outstanding amount of the
obligation directly or indirectly guaranteed.
"Guarantor" means The Home Depot, Inc., a Delaware corporation.
"Guaranty" means the Guaranty, dated as of the Initial Closing
Date, issued by the Guarantor.
"Hazardous Activity" means any activity, process, procedure or
undertaking that directly or indirectly (i) produces, generates or
creates any Hazardous Substance; (ii) causes or results in (or
threatens to cause or result in) the Release of any Hazardous Substance
into the environment (including air, water vapor, surface water,
groundwater, drinking water, land (including surface or subsurface),
plant, aquatic and animal life); (iii) involves the containment or
storage of any Hazardous Substance; or (iv) would be regulated as
hazardous waste treatment, storage or disposal within the meaning of an
Environmental Law.
"Hazardous Condition" means any condition that violates or
threatens to violate, or that results in or threatens noncompliance
with, any Environmental Law.
"Hazardous Substance" means any of the following: (i) any
petroleum or petroleum product, explosives, radioactive materials,
asbestos, formaldehyde, polychlorinated biphenyls, lead and radon gas;
(ii) any substance, material, product, derivative, compound or mixture,
mineral, chemical, waste, gas, medical waste, or pollutant, in each
case whether naturally occurring, man-made or the by-product of any
process, that is toxic, harmful or hazardous to the environment or
human health or safety; or (iii) any substance, material, product,
derivative, compound or mixture, mineral, chemical, waste, gas, medical
waste or pollutant that would support the assertion of any claim under
any Environmental Law, whether or not defined as hazardous as such
under any Environmental Law.
"Impositions" means any and all liabilities, losses, expenses and
costs of any kind whatsoever for fees, taxes, levies, imposts, duties,
charges, assessments or withholdings of any nature whatsoever ("Taxes")
(including, without limitation, (i) real and personal property taxes,
including personal property taxes on any property covered by the Lease
that is classified by Governmental Authorities as personal property,
and real estate or ad valorem taxes in the nature of property taxes;
(ii) sales taxes, use taxes and other similar taxes (including rent
taxes and
<PAGE>
intangibles taxes); (iii) any excise taxes; (iv) real estate transfer
taxes, conveyance taxes, stamp taxes and documentary recording taxes
and fees; (v) taxes that are or are in the nature of franchise, income,
value added, gross receipts, privilege and doing business taxes,
license and registration fees; and (vi) assessments on any Property,
including all assessments for public improvements or benefits, whether
or not such improvements are commenced or completed within the Term),
and in each case all interest, additions to tax and penalties thereon,
which at any time may be levied, assessed or imposed by any Federal,
state, city, county or local authority upon or with respect to (a) any
Tax Indemnitee, any Property or any part thereof or interest therein,
or Lessee or any sublessee or user of any Property; (b) the financing,
refinancing, demolition, construction, substitution, subleasing,
assignment, control, condition, occupancy, servicing, maintenance,
repair, ownership, possession, purchase, rental, lease, activity
conducted on, delivery, insuring, use, operation, improvement,
transfer, return or other disposition of such Property or any part
thereof or interest therein; (c) the Notes, the Commercial Paper Notes,
the Liquidity Notes or other indebtedness with respect to any Property
or any part thereof or interest therein or transfer thereof; (d) the
rentals, receipts or earnings arising from any Property or any part
thereof or interest therein; (e) the Operative Documents or any payment
made or accrued pursuant thereto; (f) the income or other proceeds
received with respect to any Property or any part thereof or interest
therein upon the sale or disposition thereof; (g) any contract
(including the Construction Agency Agreement) relating to the
construction, acquisition or delivery of the Improvements or any part
thereof or interest therein; (h) the issuance of the Notes, the
Liquidity Notes or the Commercial Paper Notes; or (i) otherwise in
connection with the transactions contemplated by the Operative
Documents.
Except as provided below, the term "Imposition" shall not mean or
include:
(i) Taxes and impositions (other than Taxes that are, or are
in the nature of, sales, use, rental, value added, transfer or
property taxes) that are imposed on a Tax Indemnitee by a United
States Governmental Authority that are based on or measured by the
net income (including taxes based on capital gains and minimum
taxes) of such Person; provided that this clause (i) shall not be
interpreted to prevent a payment from being made on an After Tax
Basis if such payment is otherwise required to be so made;
(ii) Taxes and impositions (other than Taxes that are, or are
in the nature of, sales, use, rental, value added, transfer or
property taxes) that are imposed by any state or local
jurisdiction or taxing authority within any state or local
jurisdiction or any foreign Governmental Authority and that are
based upon or measured by the income or receipts (including any
minimum taxes, withholding taxes or taxes on or measured by
capital, net worth, excess profits or items of tax preference or
taxes that are capital stock, franchise or doing business taxes)
except that this clause (ii) shall not apply to (and thus shall
not exclude) any such Taxes imposed on a Tax Indemnitee by the
state (or any local taxing authority thereof or therein) or any
foreign Governmental Authority where any Property is located,
possessed or used under the Lease to the extent attributable to
such Property; provided that this clause (ii) shall not be
interpreted to prevent a payment from being made
<PAGE>
on an After Tax Basis if such payment is otherwise required to be
so made; (iii) any Tax or imposition to the extent, but only to
such extent, it relates to any act, event or omission that occurs
after the termination of the Lease (but not any Tax or imposition
that relates to any period prior to the termination of the Lease)
and redelivery or sale of the applicable Property in accordance
with the terms of the Lease (but not any Tax or imposition that
relates to any period prior to such termination and redelivery or
sale);
(iv) any Tax or imposition for so long as, but only for so
long as, it is being contested in accordance with the provisions
of Section 14.5 of the Participation Agreement, provided, that the
foregoing shall not limit the Lessee's obligation under Section
14.5 of the Participation Agreement to advance to such Tax
Indemnitee amounts with respect to Taxes that are being contested
in accordance with Section 14.5 of the Participation Agreement or
any expenses incurred by such Tax Indemnitee in connection with
such contest;
(v) any Taxes or impositions imposed upon the Lessor with
respect to any voluntary transfer, sale, financing or other
voluntary disposition by the Lessor (other than a transfer
contemplated and permitted by the Operative Documents, including,
without limitation, any transfer in connection with (1) the
exercise by the Lessee of its Purchase Option or its Remarketing
Option, (2) the occurrence of an Event of Default, (3) a Casualty
or Condemnation affecting any Property, or (4) any sublease,
modification or addition to any Property by the Lessee) of any
interest in any Property or any interest in, or created pursuant
to, the Operative Documents;
(vi) Taxes imposed on or with respect to or payable by any
Tax Indemnitee based on, measured by or imposed with respect to
any fees received by such Tax Indemnitee;
(vii) any Taxes imposed against or payable by a Tax
Indemnitee resulting from, or that would not have been imposed but
for, the gross negligence (or negligence with respect to the
handling of funds) or willful misconduct of such Tax Indemnitee;
or
(viii) Taxes imposed on or payable by a Tax Indemnitee to
the extent such Taxes would not have been imposed but for a breach
by the Tax Indemnitee or any Affiliate thereof of any
representations, warranties or covenants set forth in the
Operative Documents (unless such breach is caused by the Lessee's
breach of its representations, warranties or covenants set forth
in the Operative Documents).
"Improvements" means all buildings, structures, Fixtures,
Equipment, and other improvements of every kind existing at any time
and from time to time (including (i) those constructed pursuant to the
Construction Agency Agreement and those described on Schedule 1 to any
Lease Supplement, and (ii) those purchased with amounts advanced by the
Participants
<PAGE>
pursuant to the Participation Agreement) on or under the Land, together
with any and all appurtenances to such buildings, structures or
improvements, including sidewalks, utility pipes, conduits and lines,
parking areas and roadways, and including all Modifications and other
additions to or changes in the Improvements at any time.
"Indebtedness" of any Person means at any date, without
duplication, (i) all obligations of such Person for borrowed money,
(ii) all obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments, (iii) all obligations of such
Person to pay the deferred purchase price of property or services,
except trade accounts payable arising in the ordinary course of
business, (iv) the Capitalized Lease Obligations of such Person, (v)
all obligations of such Person to reimburse any bank or other Person in
respect of amounts payable under a banker's acceptance, (vi) all
Redeemable Preferred Stock of such Person (in the event such Person is
a corporation), (vii) all obligations of such Person to reimburse any
bank or other Person in respect of amounts that have actually been paid
under a letter of credit or similar instrument, (viii) all Indebtedness
of others secured by a Lien on any asset of any Person, whether or not
such Indebtedness is assumed by such Person (provided, that, for
purposes of this clause (viii), non-recourse Indebtedness in excess of
the value of the asset securing such Indebtedness shall not be
counted), and (ix) all Indebtedness of others Guaranteed by such
Person.
"Indemnitee" means the Lessor, the Agent Bank, the Facility
Lender, the Issuing and Paying Agent, the Lenders and their respective
successors, assigns, directors, shareholders, partners, officers,
employees, agents and Affiliates.
"Initial Closing Date" is defined in Section 2 of the
Participation Agreement.
"Insurance Requirements" means all terms and conditions of any
insurance policy either required by the Lease to be maintained by the
Lessee or required by the Construction Agency Agreement to be
maintained by the Construction Agent, and all requirements of the
issuer of any such policy; provided however, that in the event the
Lessee is entitled to self-insure certain risks in lieu of maintaining
the insurance coverages required under Article XIV of the Lease,
"Insurance Requirements" means the standard terms of any insurance
policies (including without limitation, casualty and general liability)
and all requirements commonly prescribed by the issuers of such
policies which otherwise would be required to be maintained by the
Lessee absent the permitted self-insurance.
"Interest Component" shall have the meaning set forth in the
Liquidity Agreement.
"Interest Payment Loan" means any Loan made to fund the payment of
interest accruing on the Loans allocated to the Property Acquisition
Costs and Property Improvements Cost with respect to a Construction
Period Property pursuant to Section 2.2 of the Loan Agreement.
"Interest Period" shall have the meaning set forth in the
Liquidity Agreement.
<PAGE>
"Issuing and Paying Agency Agreement" means that certain Issuing
and Paying Agency Agreement, dated as of the Initial Closing Date,
between the Facility Lender and the Issuing and Paying Agent Bank.
"Issuing and Paying Agent Bank" means The First National Bank of
Chicago, a national banking association.
"Land" means a parcel of real property described on Schedule 1 of
a Lease Supplement together with all Appurtenant Rights attached
thereto.
"Lease" or "Lease Agreement" means the Lease dated as of the
Initial Closing Date between the Lessor and the Lessee, together with
any Lease Supplements thereto.
"Lease Balance" means, as of any date of determination, an amount
equal to the aggregate sum, without duplication (and with the express
understanding that repayments by the Lessee or Guarantor of the
Facility Loans and the Commercial Paper Notes shall automatically
reduce the outstanding principal amount of the Loans), of the
outstanding principal amount of the Loans, all accrued and unpaid
interest on the Loans, the outstanding Lessor Investment Amounts, all
Facility Loans, all accrued and unpaid interest on the Facility Loans,
the Principal Component and Interest Component with respect to all
Commercial Paper Notes and all accrued and unpaid Certificate Earnings
on the Lessor Investment Amounts.
"Lease Commencement Date" means, with respect to any Land and any
existing Improvements thereon, the Property Closing Date with respect
to such Land and, with respect to any Improvements to be constructed
thereon pursuant to the Construction Agency Agreement, the Completion
Date with respect to such Improvements.
"Lease Default" means any event or condition which, with the lapse
of time or the giving of notice, or both, would constitute a Lease
Event of Default.
"Lease Event of Default" is defined in Section 17.1 of the Lease.
"Lease Supplement" means each Lease Supplement substantially in
the form of Exhibit A to the Lease together with all attachments and
schedules thereto.
"Lease Termination Date" shall mean, with respect to any Property,
the last day of the Term (whether occurring by reason of a termination
or expiration thereof).
"Lender Basic Rent" means an amount equal to the interest due on
the Loans, which Lender Basic Rent shall be payable as part of Basic
Rent, on any Payment Date as provided in Section 3.1(a) of the Lease
(but not including interest on the Loans allocated to the Construction
Period Properties funded by an Interest Payment Loan or interest on
overdue amounts under
<PAGE>
Section 2.6(b) of the Loan Agreement or otherwise).
"Lender Financing Statements" means the UCC financing statements
appropriately completed and executed for filing in the applicable
jurisdictions in order to protect the Lenders' interest under the
Master Assignment.
"Lenders" shall have the meaning set forth in the Liquidity
Agreement.
"Lessee" means Home Depot U.S.A., Inc., a Delaware corporation.
"Lessor" means Credit Suisse Leasing 92A, L.P., a Delaware limited
partnership.
"Lessor Basic Rent" means an amount equal to the amount of accrued
but unpaid Certificate Earnings, which Lessor Basic Rent shall be
payable as part of Basic Rent, on any Payment Date in connection with
the Lessor Investment Amounts (but not including Certificate Earnings
funded pursuant to Section 4.1(d) of the Participation Agreement).
"Lessor's Commitment" means the commitment of Lessor to invest
Lessor Investment Amounts in the Properties in an aggregate amount not
to exceed $9,000,000.
"Lessor's Commitment Percentage" means three percent (3%).
"Lessor Financing Statements" means UCC financing statements
appropriately completed and executed for filing in the applicable
jurisdiction in order to protect the Lessor's interest under the Lease
to the extent the Lease is a security agreement.
"Lessor Investment Amounts" is defined in Section 3.2 of the
Participation Agreement.
"Lessor Lien" means any Lien, true lease or sublease or
disposition of title arising as a result of (a) any claim against the
Lessor or Facility Lender not resulting from the transactions
contemplated by the Operative Documents, (b) any act or omission of the
Lessor or Facility Lender which is not required by the Operative
Documents or is in violation of any of the terms of the Operative
Documents, (c) any claim against the Lessor or Facility Lender with
respect to Taxes or Transaction Expenses against which neither Lessee
nor Guarantor is required to indemnify Lessor or Facility Lender
pursuant to the Participation Agreement or (d) any claim against the
Lessor or Facility Lender arising out of any transfer by the Lessor or
Facility Lender of all or any portion of the interest of the Lessor or
Facility Lender in the Properties or the Operative Documents other than
the transfer of title to or possession of any Properties by the Lessor
or Facility Lender pursuant to and in accordance with the Lease, the
Loan Agreement or the Participation Agreement or pursuant to the
exercise of the remedies set forth in Article XVII of the Lease.
"Lessor Property Balance" means with respect to any Property, an
amount equal to the
<PAGE>
outstanding principal amount of the Lessor Investment Amounts, and all
accrued and unpaid Certificate Earnings thereon multiplied by a
fraction, the numerator of which is the Property Costs allocable to
such Property and the denominator of which is the aggregate Property
Costs for all Properties.
"Lien" means any mortgage, deed of trust, pledge, security
interest, encumbrance, lien, easement, servitude or charge of any kind,
including, without limitation, any irrevocable license, conditional
sale or other title retention agreement, any lease in the nature
thereof, or any other right of or arrangement with any creditor to have
its claim satisfied out of any specified property or asset with the
proceeds therefrom prior to the satisfaction of the claims of the
general creditors of the owner thereof, whether or not filed or
recorded, or the filing of, or agreement to execute as "debtor", any
financing or continuation statement under the Uniform Commercial Code
of any jurisdiction or any federal, state or local lien imposed
pursuant to any Environmental Law.
"Limited Recourse Amount" means, with respect to any Property, an
amount equal to the Property Balance of such Property less the Residual
Value Guarantee with respect to such Property.
"Liquidity Agreement" means the Liquidity Agreement, dated as of
the Initial Closing Date, among the Facility Lender, the Lenders,
Deutsche Bank AG, New York Branch, as Documentation Agent and the Agent
Bank.
"Liquidity Facility" is the loan facility established pursuant to
the Liquidity Agreement.
"Liquidity Loans" has the meaning set forth in the Liquidity
Agreement.
"Liquidity Notes" means the "Notes" as such term is defined in the
Liquidity Agreement.
"Loan" means a Tranche A Loan or a Tranche B Loan.
"Loan Agreement" means the Loan Agreement, dated as of the Initial
Closing Date, between the Lessor, as borrower, and the Facility Lender,
as lender.
"Loan Agreement Default" means any event, act or condition which
with notice or lapse of time, or both, would constitute a Loan
Agreement Event of Default.
"Loan Agreement Event of Default" is defined in Section 5 of the
Loan Agreement.
"Loan Documents" means the Loan Agreement, the Notes and the
Security Documents securing the Notes.
"Loan Termination Date" means the fifth (5th) anniversary of the
Initial Closing Date, as
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such date may be extended from time to time pursuant to Section 2.5 of
the Loan Agreement.
"Margin Stock" means "margin stock" as defined in Regulations G,
T, U or X of the Board of Governors of the Federal Reserve System,
together with all official rulings and interpretations issued
thereunder.
"Marketing Period" means the period commencing on the date which
is six (6) months prior to the Expiration Date and ending on the
Expiration Date.
"Master Assignment" is defined in Appendix 2 to the Participation
Agreement.
"Material Adverse Effect" means, with respect to an event or
circumstance, that such event or circumstance could be reasonably
expected to
(i) have a material adverse effect on the financial
condition, business, assets or operations of Guarantor and its
Consolidated Subsidiaries taken as a whole;
(ii) have a material adverse effect on the Lessee's, the
Guarantor's or the Construction Agent's ability to perform its
respective obligations under the Operative Documents to which it
is a party;
(iii) have a material adverse effect on the title,
priority or perfection of the Agent Bank's, the Facility Lender's
or the Lessor's interest on any Property;
(iv) have a material adverse effect on the validity, legality
or enforceability of any material provision of any Operative
Document or on the rights or remedies of any of the Participants
under the Operative Documents;
(v) have a material adverse effect on the value, utility or
remaining useful life of the Properties taken as a whole; or
(vi) result, or be reasonably likely to result in, criminal
liability or material civil liability to any Indemnitee.
"Material Lease Event of Default" means any Lease Event of
Default: (i) arising pursuant to (x) Section 17.1(a) or (b) of the
Lease, or (y) caused by a Construction Agency Event of Default arising
pursuant to Section 5.1(a) of the Construction Agency Agreement
(payment default); (ii) Section 17.1(h) or (i) of the Lease (bankruptcy
default); or (iii) Section 17.1(f) (to the extent that the entire
amount of such Indebtedness has matured or has been accelerated by the
holders thereof) or Section 17.1(g) of the Lease (cross-acceleration).
"Maturity Date" has the meaning set forth in the Liquidity
Agreement.
<PAGE>
"Maximum Property Costs" means the lesser of (x) $300,000,000 and
(y) the amount of the Total Commitments then in effect.
"Modifications" is defined in Section 11.1 of the Lease.
"Moody's" means Moody's Investors Service, Inc.
"Mortgage" means, with respect to any Property, (i) a Mortgage and
Security Agreement substantially in the form attached as Exhibit N-1 to
the Participation Agreement, (ii) a Deed of Trust and Security
Agreement substantially in the form attached as Exhibit N-2 to the
Participation Agreement, or (iii) a Deed to Secure Debt substantially
in the form attached as Exhibit N-3, in each case modified as local law
and custom may indicate (subject to approval by the Agent Bank, which
approval shall not be unreasonably withheld) and made by the Lessor in
favor of the Facility Lender (and assigned to the Agent Bank for the
benefit of the Lenders) in order to create a first priority mortgage
lien on such Property.
"Multiemployer Plan" shall have the meaning set forth in Section
4001(a)(3) of ERISA.
"Net Income" means, as applied to any Person for any period, the
aggregate amount of net income of such Person, after taxes, for such
period, as determined in accordance with GAAP.
"Net Proceeds" means all amounts paid in connection with any
Casualty or Condemnation, and all interest earned thereon, less the
expense of claiming and collecting such amounts, including all costs
and expenses in connection therewith for which the Agent Bank, Facility
Lender, the Issuing and Paying Agent or the Lessor is entitled to be
reimbursed pursuant to the Operative Documents.
"Notes" means the collective reference to the Tranche A Note and
the Tranche B Note.
"Officer's Certificate" means a certificate signed by any
individual holding the office of vice president or higher, which
certificate shall certify as true and correct the subject matter being
certified to in such certificate.
"Operating Profits" means, as applied to any Person for any
period, the operating income of such Person for such period, as
determined in accordance with GAAP.
"Operative Documents" means the following:
(a) the Issuing and Paying Agency Agreement;
(b) the Participation Agreement;
(c) the Loan Agreement;
(d) the Notes;
(e) the Lease and each Lease Supplement;
<PAGE>
(f) the Assignment of Leases and each Supplement to the
Assignment of Lease;
(g) each Consent to Assignment;
(h) the Guaranty;
(i) the Mortgages;
(j) the Financing Statements;
(k) the Construction Agency Agreement and each Construction
Agency Agreement Supplement;
(l) the Construction Agency Agreement Assignment;
(m) the Consent to Construction Agency Agreement Assignment;
(n) the Funding Requests;
(o) the Acquisition Requests;
(p) the Liquidity Agreement;
(q) the Liquidity Notes;
(r) the Commercial Paper Notes;
(s) the Master Assignment and each Supplement to Master
Assignment;
(t) each Consent to Master Assignment;
(u) the Construction Documents;
(v) the Security Agreement;
(w) each other Commercial Paper Document; and
(x) the Fee Letter.
"Outside Completion Date" means, with respect to a Property, but
subject to Force Majeure Events, the date eighteen (18) months after
the Construction Commencement Date; provided that such date may be
extended upon the request of the Construction Agent, but in no event
after the last day of the Commitment Period.
"Overdue Rate" means the Base Rate plus one percent (1%) per
annum.
"Participant Balance" means, as of any date of determination, (i)
with respect to the Facility Lender, an amount equal to the sum of the
outstanding Loans (as such Loans are automatically reduced by any
repayment of the Facility Loans or the aggregate outstanding face
amount of the Commercial Paper Notes), (ii) with respect to the Lessor,
an amount equal to the sum of the outstanding Lessor Investment
Amounts, and (iii) with respect to any Lender, an amount equal to the
sum of the outstanding Facility Loans owed to such Lender, in each
case, together with all accrued and unpaid interest or yield thereon,
and all unpaid fees and other amounts owing to such Participant under
the Operative Documents.
"Participants" means the Lenders, the Agent Bank, the Lessor and
the Facility Lender, collectively.
"Participation Agreement" means the Participation Agreement dated
as of June 25, 1996 among the Lessee, the Guarantor, the Lessor, the
Facility Lender, the Construction Agent, the
<PAGE>
Lenders and the Agent Bank.
"Payment Date" means (a) any Scheduled Payment Date and (b) any
date on which interest is payable pursuant to of the Loan Agreement,
whether in connection with any prepayment of the Loans or otherwise.
"Payment Period" shall mean the period commencing on any Payment
Date and ending on the next Payment Date.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Percentage" has the meaning set forth in the Liquidity Agreement.
"Permitted Amount" means, as of any date of determination,
Properties having an aggregate Property Cost of sixty percent (60%) of
the maximum Lease Balance at any time outstanding since the inception
of the Term, provided that, in the event that Lenders holding more than
forty percent (40%) of the Commitments elect not to consent to an
extension of the Liquidity Facility, the Permitted Amount shall be
decreased by the amount necessary to allow the termination of the
Percentage of Commitment held by such Non-Consenting Lenders (and the
repayment of any amounts outstanding thereunder due to such Lenders),
subject to the approval of the Agent Bank (such consent not to be
unreasonably withheld).
"Permitted Exceptions" means:
(a) Liens of the types described in clauses (a), (b), (e)
and (h) of the definition of Permitted Liens;
(b) Liens for Taxes not yet due and payable; and
(c) all encumbrances, exceptions, restrictions, easements,
rights of way, servitudes, encroachments and irregularities in
title which do not constitute Liens and which, in the reasonable
assessment of the Construction Agent, do not materially impair the
value of the Property or the use of the Property for its intended
purpose.
"Permitted Liens" means:
(a) the respective rights and interests of the parties to
the Operative Documents as provided in the Operative Documents;
(b) the rights of any sublessee or assignee under a sublease
or an assignment expressly permitted by the terms of the Lease;
<PAGE>
(c) Liens for Taxes that either are not yet due and payable
or are being contested in accordance with the provisions of
Section 13.1 of the Lease.
(d) Liens arising by operation of law, materialmen's,
mechanics', worker's, repairmen's, employees', carriers',
warehousemen's and other like Liens relating to the construction
of the Improvements or in connection with any Modifications or
arising in the ordinary course of business for amounts that either
are not more than thirty (30) days past due or are being
diligently contested in good faith by appropriate proceedings, so
long as such proceedings satisfy the conditions for the
continuation of proceedings to contest Taxes set forth in Section
13.1 of the Lease;
(e) Liens of any of the types referred to in clause (d)
above that have been bonded for not less than the full amount in
dispute (or as to which other security arrangements satisfactory
to the Lessor have been made), which bonding (or arrangements)
shall comply with applicable Requirements of Law, and has
effectively stayed any execution or enforcement of such Liens;
(f) Liens arising out of judgments or awards with respect to
which appeals or other proceedings for review are being prosecuted
in good faith and for the payment of which adequate reserves have
been provided as required by GAAP or other appropriate provisions
have been made, so long as such proceedings have the effect of
staying the execution of such judgments or awards and satisfy the
conditions for the continuation of proceedings to contest Taxes
set forth in Section 13.1 of the Lease;
(g) Permitted Exceptions;
(h) easements, rights of way and other encumbrances on title
to real property pursuant to Section 12.2 of the Lease; and
(i) Lessor Liens.
"Person" means any individual, corporation, partnership, joint
venture, limited liability company, association, joint-stock company,
trust, unincorporated organization, governmental authority or any other
entity.
"Placement Agent" means CS First Boston.
"Plan" means at any time an employee pension benefit plan which is
covered by Title IV of ERISA or subject to the minimum funding
standards under Section 412 of the Code and is either (i) maintained by
a member of the Controlled Group for employees of any member of the
Controlled Group or (ii) maintained pursuant to a collective bargaining
agreement or any other arrangement under which more than one employer
makes contributions and to which a member of the Controlled Group is
then making or accruing an obligation to make contributions or has
within
<PAGE>
the preceding five (5) plan years made contributions.
"Plans and Specifications" means, with respect to a Property, the
plans and specifications for the Facility to be constructed on such
Property.
"Principal Component" shall have the meaning set forth in the
Liquidity Agreement.
"Property" means (i) as of the relevant Property Closing Date, a
parcel of Land (including all Appurtenant Rights attached thereto)
acquired by the Lessor pursuant to the provisions of the Participation
Agreement and all of the Improvements then located on or under the
related Land, and (ii) as of the Completion Date, the Land and
Improvements described in clause (i) together with any Improvements
constructed thereon in accordance with the Construction Agency
Agreement, or thereafter constructed thereon.
"Property Acquisition Cost" means the cost to Lessor to purchase a
Property on a Property Closing Date, including any Soft Costs related
thereto.
"Property Balance" means an amount equal to the Lease Balance
multiplied by a fraction the numerator of which is the Property Cost
allocable to such Property and the denominator of which is the
aggregate Property Cost for all the Properties.
"Property Closing Certificate" is defined in Section 7.1(n) of the
Participation Agreement.
"Property Closing Date" means each date on which the Lessor
purchases any Property.
"Property Cost" means with respect to a Property the aggregate
amount of the Property Acquisition Cost and Property Improvements Cost
allocated to such Property pursuant to the Operative Documents, as
reduced from time to time in accordance with the terms thereof;
provided that, Property Improvements Cost shall not be deemed to be
included in the Property Cost with respect to any Property unless the
Completion Date has occurred with respect thereto.
"Property Improvements Cost" means with respect to any Property
the cost to the Lessor to construct any Improvements, Fixtures or
Modifications to be used on such Property pursuant to the Construction
Agency Agreement and in accordance with the Plans and Specifications
therefor and the Operative Documents (including interest on Loans and
Certificate Earnings on Lessor Investment Amounts during the
Construction Period applied to such cost and funded by an Interest
Payment Loan or a Lessor Investment Amount pursuant to Section 4.1(d)
of the Participation Agreement), including any Soft Costs related
thereto, which amount shall at all times equal the outstanding
principal amount of the Loans allocated thereto plus the Lessor
Investment Amounts allocated thereto.
"Purchase Notice" is defined in Section 20.1 of the Lease.
<PAGE>
"Purchase Option" is defined in Section 20.1 of the Lease.
"Purchase Option Price" is defined in Section 20.1 of the Lease.
"Rating Agencies" means collectively, S&P, Moody's, Duff & Phelps
Inc., Fitch's Investors' Services Inc. and any other nationally
recognized rating service.
"Redeemable Preferred Stock" of any Person means any preferred
stock issued by such Person (i) required (by the terms of the governing
instruments or at the option of the holder) to be mandatorily redeemed
for cash at any time prior to the Maturity Date (by sinking fund or
similar payments or otherwise) or (ii) redeemable at the option of the
holder thereof at any time prior to the Maturity Date.
"Release" means any release, pumping, pouring, emptying,
injecting, escaping, leaching, dumping, seepage, spill, leak, flow,
discharge, disposal or emission of a Hazardous Substance.
"Remarketing Option" is defined in Section 22.1 of the Lease.
"Renewal Effective Date" is defined in Section 21.1 of the Lease.
"Renewal Request" is defined in Section 21.1 of the Lease.
"Renewal Response Date" is defined in Section 21.1 of the Lease.
"Renewal Term" means any of the two-year periods (not to exceed
five) which immediately follow the end of the Basic Term with respect
to which Lessee has requested an extension of the Term pursuant to
Section 21 of the Lease, and such requests have been granted pursuant
to such Section 21.
"Rent" means, collectively, the Basic Rent and the Supplemental
Rent.
"Replacement Property" is defined in Section 16.3 of the Lease.
"Requesting Party" is defined in Section 26.1 of the Lease.
"Required Lenders" shall have the meaning set forth in the
Liquidity Agreement.
"Required Modification" is defined in Section 11.1 of the Lease.
"Requirement of Law" means all Federal, foreign, state, county,
provincial, municipal and other governmental statutes, treaties, laws,
rules, orders, regulations, ordinances, judgments, decrees and
injunctions affecting any Property, the Improvements or the demolition,
construction,
<PAGE>
use or alteration thereof, whether now or hereafter enacted and in
force, including any that require repairs, modifications or alterations
in or to any Property or in any way limit the use and enjoyment thereof
(including all building, zoning and fire codes and the Americans with
Disabilities Act of 1990, 42 U.S.C. 1201 et. seq. and any other
similar Federal, state or local laws or ordinances and the regulations
promulgated thereunder) and any that may relate to environmental
requirements (including all Environmental Laws), and all permits,
certificates of occupancy, licenses, authorizations and regulations
relating thereto, and all covenants, agreements, restrictions and
encumbrances contained in any instruments which are either of record or
known to Lessee affecting any Property, the Appurtenant Rights and any
easements, licenses or other agreements entered into pursuant to
Section 12.2 of the Lease.
"Residual Loans" shall have the meaning set forth in the Liquidity
Agreement.
"Residual Value Guarantee" means, (i) with respect to all of the
Properties, (x) the Lease Balance multiplied by (y) eighty-four percent
(84%), and (ii) with respect to any individual Property, (x) the
Property Balance of such Property, multiplied by (y) eighty-four
percent (84%).
"S&P" means Standard & Poor's Ratings Group, a division of McGraw-
Hill, Inc.
"Scheduled Commitment Termination Date" means the fifth (5th)
anniversary of the Initial Closing Date.
"Scheduled Payment Date" means (a) as to any Lessor Basic Rent
relating to Lessor Investment Amounts having an Interest Period of
three months or less, the last day of such Interest Period, and as to
any Lessor Investment Amount having an Interest Period longer than
three (3) months, each day which is three (3) months, or a whole
multiple thereof, after the first (1st) day of such Interest Period and
the last day of such Interest Period, and (b) as to any Lender Basic
Rent (x) the date of the maturity of any Commercial Paper Notes, and
(y) the date on which any interest is due on any Facility Loans
pursuant to the terms of the Liquidity Agreement.
"Securities Act" means the Securities Act of 1933, as amended,
together with the rules and regulations promulgated thereunder.
"Security Agreement" shall have the meaning set forth in the
Liquidity Agreement.
"Security Documents" means the collective reference to the
Mortgages, the Assignment of Leases, the Security Agreement, the UCC
Financing Statements, the Construction Agency Agreement Assignment and
all other security documents hereafter delivered to the Facility Lender
and assigned to the Agent Bank pursuant to the Master Assignment
granting a Lien on any asset or assets of any Person to secure the
obligations and liabilities of the Lessor under the Loan Agreement
and/or under any of the other Operative Documents or given by the
Facility Lender to secure its obligations pursuant to the Liquidity
Agreement and/or under the other Operative
<PAGE>
Documents.
"Shared Rights" shall mean the right of the Lessor to retain the
right, but not to the exclusion of the Agent Bank and Facility Lender,
(i) to receive from the Lessee all notices, certificates and other
documents and all information that the Lessee is permitted or required
to give or furnish to the "Lessor" pursuant to the Lease, the
Participation Agreement or any other Operative Document, (ii) to
inspect the Properties and otherwise exercise rights of the "Lessor"
under Section 27.1 of the Lease, (iii) to retain all rights with
respect to insurance that Article XIV of the Lease specifically confers
upon the "Lessor," (iv) to provide such insurance as the Lessee shall
have failed to maintain or as the Lessor may desire, (v) to enforce
(other than pursuant to Article XVII) compliance by the Lessee with the
provisions of Articles VII, VIII, IX, X, XI and XIV of the Lease, and
(vi) to perform for the Lessee under Article XVIII of the Lease.
"Shortfall Amount" shall have the meaning set forth in Section
22.4 of the Lease.
"Significant Casualty" means a Casualty that in the reasonable,
good faith judgment of a Lessee (as evidenced by an Officer's
Certificate) either (a) renders the related Property (including parking
facilities) unsuitable for continued use as commercial property of the
type of such Property immediately prior to such Casualty or (b) is so
substantial in nature that restoration of such Property to
substantially its condition as existed immediately prior to such
Casualty assuming the Lessee was in compliance with the Lease would be
impracticable or impossible.
"Significant Condemnation" means (i) a Condemnation that involves
a taking of Lessor's entire title to the related Land or use of an
entire Property which is reasonably expected to continue beyond the
Expiration Date, or (ii) a Condemnation that in the reasonable, good
faith judgment of Lessee (as evidenced by an Officer's Certificate)
either (a) renders the related Property unsuitable for continued use as
commercial property of the type of such Property immediately prior to
such Condemnation or (b) is such that restoration of such Property to
substantially its condition as existed immediately prior to such
Condemnation assuming the Lessee was in compliance with the Lease would
be impracticable or impossible.
"Significant Event" means (i) a Significant Casualty, (ii) a
Significant Condemnation or (iii) an Environmental Violation with
respect to a Property which in the reasonable, good faith judgment of
the Construction Agent or the Lessee, as the case may be, (as evidenced
by an Officer's Certificate delivered within thirty (30) days of such
event) is reasonably likely to result in Environmental Claims to
Lessee, Guarantor or a Participant and/or remediation costs aggregating
in excess of $3,000,000.
"Significant Subsidiary" means any Consolidated Subsidiary with
respect to which, as of the most recently completed Fiscal Quarter,
either (i) the Guarantor's and its other Subsidiaries' investments in
and advances to the Consolidated Subsidiary exceed ten percent (10%) of
Total Assets, or (ii) the Guarantor's and its other Subsidiaries'
proportionate share of Total Assets (after
<PAGE>
intercompany eliminations) of the Consolidated Subsidiary exceeds ten
percent (10%) of Total Assets; provided, however, that if there are two
or more Subsidiaries with respect to which, as of the most recently
completed Fiscal Quarter, either (i) the Guarantor's and its other
Subsidiaries investments in and advances to each such Consolidated
Subsidiary exceed five percent (5%) and are less than ten percent (10%)
of Total Assets, but the aggregate of such investments in and advances
to such Subsidiaries exceeds fifteen percent (15%) of Total Assets, or
(ii) the Guarantor's and its other Subsidiaries' proportionate share of
Total Assets (after intercompany eliminations) of each such
Consolidated Subsidiary exceeds five percent (5%) and is less than ten
percent (10%) of Total Assets, but the aggregate proportionate share of
Total Assets of such Subsidiaries exceeds fifteen percent (15%) of
Total Assets, then in either case, each such Consolidated Subsidiary
shall constitute a Significant Subsidiary.
"Soft Costs" means the costs to Lessor of acquiring and improving
any Property or Properties consisting of title, survey, engineering,
architectural, legal and similar professional fees and expenses as well
as transfer and recording taxes, financing costs and fees and similar
types of expenses.
"Stockholders' Equity" means, at any time, the stockholders'
equity of the Guarantor and its Consolidated Subsidiaries, as set forth
or reflected on the most recent consolidated balance sheet of the
Guarantor and its Consolidated Subsidiaries prepared in accordance with
GAAP, but excluding any Redeemable Preferred Stock of the Guarantor or
any of its Consolidated Subsidiaries. Stockholders' Equity generally
would include, but not be limited to (i) the par or stated value of all
outstanding Capital Stock, (ii) capital surplus, (iii) retained
earnings, and (iv) various deductions such as (A) purchases of treasury
stock, (B) valuation allowances, (C) receivables due from an employee
stock ownership plan, (D) employee stock ownership plan debt
guarantees, and (E) translation adjustments for foreign currency
transactions.
"Subsidiary" means 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 the
Guarantor.
"Supplement to the Assignment of Leases" means each Supplement to
the Assignment of Leases to be delivered on a Property Closing Date
substantially in the form of Exhibit D to the Participation Agreement.
"Supplement to Master Assignment" means each Supplement to the
Master Assignment to be delivered on a Property Closing Date
substantially in the form of Exhibit L to the Participation Agreement.
"Supplemental Rent" means all amounts, liabilities and obligations
(other than Basic Rent) which the Lessee assumes or agrees to pay to
Lessor or any other Person under the Lease, or under any of the other
Operative Documents, including, without limitation, payments of the
Residual
<PAGE>
Value Guarantee, the Shortfall Amount and payments pursuant to Sections
16.2 or 17.6 of the Lease, Articles XX or XXII of such Lease and
Sections 5, 6, 10 and 14 of the Participation Agreement (including
without limitations optional and mandatory prepayments of the Loans
pursuant to Section 2.4 of the Loan Agreement and Section 5.6 of the
Participation Agreement).
"Support Facility" shall mean any warehouse, office building or
distribution facility constructed for use by the Lessee in the ordinary
course of business.
"Tax Indemnitee" means the Lessor, the Facility Lender, the Agent
Bank, the Issuing and Paying Agent, each Lender and their respective
successors, assigns, directors, shareholders, partners, officers,
employees, agents and Affiliates.
"Taxes" is defined in the definition of Impositions.
"Term" is defined in Section 2.3 of the Lease.
"Termination Date" is defined in Section 16.2(a) of the Lease.
"Termination Notice" is defined in Section 16.1 of the Lease.
"Total Assets" means the total assets of the Guarantor and its
Consolidated Subsidiaries, determined as of the most recently completed
Fiscal Quarter in accordance with GAAP.
"Total Commitments" means collectively, the Facility Lender
Commitments and the Lessor's Commitment.
"Tranche A Balance" means for the Facility Lender, as of any date
of determination, an amount equal to the sum of the outstanding Tranche
A Loans, together with all accrued and unpaid interest thereon.
"Tranche A Facility Loan" shall have the meaning set forth in the
Liquidity Agreement.
"Tranche A Loan" is defined in Section 2.1 of the Loan Agreement.
"Tranche A Loan Commitment" means the Tranche A Loan Commitment of
the Facility Lender in the amount equal to the Tranche A Maximum
Amount.
"Tranche A Maximum Amount" shall have the meaning set forth in the
Liquidity Agreement.
"Tranche A Note" is defined in Section 2.3 of the Loan Agreement.
<PAGE>
"Tranche A Property Balance" means, with respect to any Property,
that portion of the Property Balance for such Property allocated to
Tranche A Loans.
"Tranche B Balance" means for the Facility Lender, as of any date
of determination an amount equal to the sum of the Tranche B Loans
outstanding on such date, together with all accrued and unpaid interest
thereon.
"Tranche B Facility Loan" shall have the meaning set forth in the
Liquidity Agreement.
"Tranche B Loan" is defined in Section 2.1 of the Loan Agreement.
"Tranche B Loan Commitment" means the Tranche B Loan Commitment of
the Facility Lender in the amount equal to the Tranche B Maximum
Amount.
"Tranche B Maximum Amount" shall have the meaning set forth in the
Liquidity Agreement.
"Tranche B Note" is defined in Section 2.3 of the Loan Agreement.
"Tranche B Property Balance" with respect to any Property means
that portion of the Property Balance for such Property allocated to
Tranche B Loans.
"Transaction Expenses" means:
(a) all reasonable costs and expenses incurred, from time to
time, in connection with the preparation, execution and delivery
of the Operative Documents and the consummation and performance of
the transactions contemplated thereby, including without
limitation, appraiser's fees, fees of environmental inspectors,
the reasonable fees, out-of-pocket expenses and disbursements of
counsel (including local counsel, appraiser's fees, fees of
environmental inspectors) in negotiating the terms of the
Operative Documents and any amendments thereto, preparing for the
closing under, and rendering opinions in connection with, such
transactions and in rendering other services customary for counsel
representing parties to transactions of the types involved in the
transactions contemplated by the Operative Documents and rating
agency fees and reasonable fees of advisors to the Facility Lender
(including the agreed-upon fees and expenses of JH Management
Corporation);
(b) any other reasonable fees, out-of-pocket expenses,
disbursements or costs (including any indemnities) incurred from
time to time by any party to the Operative Documents or any of the
other transaction documents on account of the transactions
contemplated by the Operative Documents, not including overhead or
similar expenses;
(c) any and all Taxes and fees incurred in recording or filing any
Operative Document or any other transaction document, any deed,
declaration, mortgage,
<PAGE>
security
(a) agreement, notice or financing statement with any public office,
registry or governmental agency in connection with the transactions
contemplated by the Operative Documents; and
(d) any and all costs and expenses (including any
indemnities), including reasonable attorneys' fees and
disbursements, actually incurred from time to time, by any party
to the Operative Documents, in connection with the enforcement of
the Operative Documents or any part thereof.
"UCC Financing Statements" means collectively the Facility Lender
Financing Statements, the Lessor Financing Statements, and the Lender
Financing Statements.
"Unfunded Vested Liabilities" means, with respect to any Plan at
any time, the amount (if any) by which (i) the present value of all
vested nonforfeitable benefits under such Plan exceeds (ii) the fair
market value of all Plan assets allocable to such benefits, all
determined as of the then most recent valuation date for such Plan, but
only to the extent that such excess represents a potential liability of
a member of the Controlled Group to the PBGC or the Plan under Title IV
of ERISA.
"Uniform Commercial Code" and "UCC" means the Uniform Commercial
Code as in effect in any applicable jurisdiction.
"Voting Power" means, with respect to securities issued by any
Person, the combined voting power of all securities of such Person
which are issued and outstanding at the time of determination and which
are entitled to vote in the election of directors of such Person, other
than securities having such power only by reason of the happening of a
contingency.
<PAGE>
APPENDIX 2
to
Participation Agreement
dated as of June 25, 1996
INITIAL CLOSING DATE CONDITIONS PRECEDENT
A. The occurrence of the Initial Closing Date is subject to the
following conditions precedent:
(a) Operative Documents. Each of the Operative Documents to be
entered into on the Initial Closing Date shall have been duly
authorized, executed and delivered by the parties thereto, and shall be
in full force and effect, including (i) this Participation Agreement,
(ii) the Lease, (iii) the Construction Agency Agreement, (iv) the Loan
Agreement, (v) the Notes, (vi) the Liquidity Agreement, (vii) the
Liquidity Notes, (viii) the Assignment of Leases and Rents (together
with all supplemental assignments, the "Assignment of Leases"), from
the Lessor to the Facility Lender, and consented to by Lessee pursuant
to that certain Lessee's Consent, dated as of the Initial Closing Date
(the "Consent to Assignment") by Lessee, in favor of the Facility
Lender, in each case, substantially in the respective forms set forth
as Exhibit J to the Participation Agreement and made a part hereof by
this reference, with such modifications thereto as local law or custom
may indicate and are agreed to by the participants, (ix) the Assignment
of Construction Agency Agreement dated as of the Initial Closing Date
(the "Construction Agency Agreement Assignment"), from the Lessor to
the Facility Lender, and consented to by Lessee pursuant to that
certain Consent, dated as of the Initial Closing Date (the "Consent to
Construction Agency Agreement Assignment"), in each case in the
respective forms set forth as Exhibit K to the Participation Agreement
and made a part hereof by this reference, (x) the Guaranty, (xi) the
Issuing and Paying Agency Agreement, (xii) the Security Agreement, and
(xiii) the Master Assignment (together with all supplemental
assignments, the "Master Assignment") from the Facility Lender to the
Agent Bank for the benefit of the Lenders, and consented to by the
Lessor and Lessee pursuant to that certain Lessor's and Lessee's
Consent, dated as of the Initial Closing Date (the "Consent to Master
Assignment") by the Lessor and the Lessee in favor of the Agent Bank
for the benefit of the Lenders, in each case, substantially in the form
of Exhibit L to the Participation Agreement and made a part hereof by
this reference.
(b) No Default. No Facility Agreement Default or Facility
Agreement Event of Default shall exist (both before and after giving
effect to the transactions contemplated by the Operative Documents),
and the Lessor, Lessee, the Agent Bank, the Lenders and the Facility
Lender shall each have received a fully executed copy of each of the
Operative Documents (other than the Notes, the Liquidity Notes and the
Lease of which the Agent Bank shall receive the originals and the
Lessor, the Lessee and the Facility Lender shall have received copies).
<PAGE>
(c) Recordation of Documents. The Operative Documents (or
memoranda thereof), any supplements thereto and any financing
statements in connection therewith required under the Uniform
Commercial Code shall have been recorded, registered and filed, if
necessary, in such manner as to enable Lessee's counsel to render its
opinion referred to in clause (e) below.
(d) Taxes. All taxes, fees and other charges in connection with
the execution, delivery, recording, filing and registration of the
Operative Documents shall have been paid or provisions for such payment
shall have been made to the satisfaction of the Lessor, Facility Lender
and the Agent Bank.
(e) Opinion of Counsel. King & Spalding, counsel to Guarantor
and Lessee, shall have issued to the Lessor, the Agent Bank, the
Lenders and the Facility Lender its opinion to the effect and in the
form set forth on Exhibit C attached to the Participation Agreement and
made a part hereof by this reference.
(f) Governmental Approvals. All necessary (or, in the reasonable
opinion of the Lessor or the Agent Bank or any of their respective
counsel advisable) Governmental Actions, in each case required by any
Requirement of Law, shall have been obtained or made and be in full
force and effect.
(g) Litigation. No action or proceeding shall have been
instituted, nor shall any action or proceeding be threatened, before
any Governmental Authority, nor shall any order, judgment or decree
have been issued or proposed to be issued by any Governmental Authority
(i) to set aside, restrain, enjoin or prevent the full performance of
this Participation Agreement, any other Operative Document or any
transaction contemplated hereby or thereby or (ii) which could have a
Material Adverse Effect.
(h) Requirements of Law. The transactions contemplated by the
Operative Documents do not and will not violate any applicable
Requirement of Law and do not and will not subject the Lessor, the
Facility Lender, the Agent Bank or any Lender to any adverse regulatory
prohibitions or constraints.
(i) Officer's Certificate of Guarantor and Lessee. The Lessor,
the Facility Lender, the Lenders and the Agent Bank shall each have
received an Officer's Certificate, dated as of the Initial Closing
Date, of each of Guarantor and Lessee stating that (i) each and every
representation and warranty of Guarantor or Lessee, as the case may be,
contained in the Operative Documents to which it is a party is true and
correct on and as of the Initial Closing Date; (ii) no Default or Event
of Default has occurred and is continuing under any Operative Document;
(iii) each Operative Document to which Guarantor or Lessee, as the case
may be, is a party is in full force and effect with respect to it; and
(iv) Guarantor or Lessee, as the case may be, has duly performed and
complied with all covenants, agreements and conditions contained herein
or in any Operative Document required to be performed or complied with
by it on or prior to the Initial Closing Date.
<PAGE>
(j) Guarantor and Lessee's Resolutions and Incumbency
Certificate, etc. The Lessor, the Facility Lender, the Lenders and the
Agent Bank shall each have received (i) a certificate of the Secretary
or an Assistant Secretary of each of Guarantor and Lessee attaching and
certifying as to (A) the resolutions of the Board of Directors duly
authorizing the execution, delivery and performance by Guarantor or
Lessee, as the case may be, of each Operative Document to which it is
or will be a party, (B) its certificate of incorporation and bylaws, in
each case certified as of a recent date by the Secretary of State of
Delaware, and (C) the incumbency and signature of persons authorized to
execute and deliver on its behalf the Operative Documents to which it
is a party, and (ii) a good standing certificate from the appropriate
officer of the state in which such Person is incorporated and the state
in which such Person's principal place of business is located.
(k) Closing Date. The Initial Closing Date shall occur on or
prior to June 30, 1996.
(l) No Material Adverse Change. As of the Initial Closing Date,
there shall not have occurred any material adverse change in the
consolidated assets, liabilities, operations, business or financial
condition of Guarantor from that set forth in Guarantor's audited
financial statements for the fiscal year ended January 28, 1996.
(m) Officer's Certificate of Facility Lender. Lessee, Guarantor,
the Agent Bank, the Lenders and the Lessor shall have received an
Officer's Certificate of the Facility Lender, dated as of the Initial
Closing Date, stating that (i) each and every representation and
warranty of the Facility Lender contained in the Operative Documents to
which it is a party is true and correct on and as of the Initial
Closing Date, (ii) each Operative Document to which the Facility Lender
is a party is in full force and effect with respect to it, and (iii)
the Facility Lender has duly performed and complied with all covenants,
agreements and conditions contained herein or in any Operative Document
required to be performed or complied with by it on or prior to the
Initial Closing Date.
(n) Facility Lender's Resolutions and Incumbency Certificate.
etc. Lessee, Guarantor, the Agent Bank, the Lenders and the Lessor
shall have received a certificate of the Secretary or an Assistant
Secretary of the Facility Lender attaching and certifying as to (A) the
resolutions of the Board of Directors duly authorizing the execution,
delivery and performance by the Facility Lender of each Operative
Document to which it is or will be a party, (B) its articles of
incorporation, certified as of a recent date by the Secretary of State
of the State of its incorporation, (C) its by-laws and (D) the
incumbency and signature of persons authorized to execute and deliver
on its behalf the Operative Documents to which it is a party.
(o) Opinions of Counsel to Facility Lender. Ropes & Gray,
counsel to the Facility Lender and Hunton & Williams, special counsel
to the Facility Lender, shall have issued to Lessee, Guarantor, the
Lessor, the Issuing and Paying Agent, the Agent Bank and the Lenders
their opinion to the effect and in the form set forth on Exhibit G
attached to the Participation Agreement and made a part hereof by this
reference.
<PAGE>
(p) Officer's Certificate of Lessor. Lessee, Guarantor, the
Agent Bank, the Lenders and the Facility Lender shall have received an
Officer's Certificate of the Lessor, dated as of the Initial Closing
Date, stating that (i) each and every representation and warranty of
the Lessor contained in the Operative Documents to which it is a party
is true and correct on and as of the Initial Closing Date, (ii) each
Operative Document to which the Lessor is a party is in full force and
effect with respect to it, and (iii) the Lessor has duly performed and
complied with all covenants, agreements and conditions contained herein
or in any Operative Document required to be performed or complied with
by it on or prior to the Initial Closing Date.
(q) Lessor's Partnership Certificate, etc. Lessee, Guarantor,
the Agent Bank, the Lenders and the Facility Lender shall have received
a certificate of the Secretary or an Assistant Secretary of the Lessor
attaching and certifying as to (A) the resolutions of the Board of
Directors of such general partner and other evidence of partner
approval duly authorizing the execution, delivery and performance by
the Lessor of each Operative Document to which it is or will be a
party, (B) its certificate of limited partnership, certified as of a
recent date by the Secretary of State of the State of its organization,
(C) its partnership agreement and (D) the incumbency and signature of
persons authorized to execute and deliver on its behalf the Operative
Documents to which it is a party.
(r) Opinion of Counsel to Lessor. Hunton & Williams, counsel to
the Lessor, shall have issued to Lessee, the Guarantor, the Facility
Lender, the Lenders and the Agent Bank their opinion to the effect and
in the form set forth on Exhibit I attached to the Participation
Agreement and made a part hereof by this reference.
(s) Rating of Commercial Paper Notes; Commercial Paper Documents.
Moody's and/or
S&P shall have issued a rating of the Commercial Paper Notes as of the
Initial Closing Date satisfactory to the Agent Bank and the Lenders.
Each of the Commercial Paper Documents shall have been executed and
delivered by the parties thereto and all conditions precedent to the
issuance of the Commercial Paper Notes under the Commercial Paper
Documents shall have been satisfied or waived.
<PAGE>
APPENDIX 3
to
Participation Agreement
dated as of June 25, 1996
PRICING PROVISIONS FOR LESSOR INVESTMENT AMOUNTS
(Capitalized terms shall have the meaning ascribed to them in
Annex X of this Appendix 3 to the Participation Agreement or in
Appendix 1 of the Participation Agreement and the rules of usage
set forth therein shall apply hereto.)
SECTION A. Lessor's Commitment. a. Lessor
Investment Amounts shall initially accrue Certificate Earnings at
the Base Rate or, provided that the Lessee shall have given the
Lessor by 12:00 noon at least three (3) Business Days' prior
written notice of any request therefor, the Adjusted LIBOR Rate.
The Lessor Investment Amounts may thereafter, at the option of
the Lessee, be converted to or continued as either Base Rate
Amounts or Eurodollar Amounts.
<PAGE>
SECTION 2. Conversions and Continuations. (a)
Provided that no Lease Event of Default has occurred and is
continuing, the Lessee shall have the option, subject to the
provisions of this Appendix 3 and of the Participation Agreement,
to convert on any Business Day all or any part of the outstanding
amount of Lessor Investment Amounts made pursuant to a single
Advance from one Type of Lessor Investment Amount into another
Type and to continue any Eurodollar Amount for a designated
Investment Period; provided that conversions of Eurodollar
Amounts shall only be permitted on the last day of an Investment
Period applicable thereto unless accompanied by payment pursuant
to Section 6. Each such conversion or continuation shall be
effected by the Lessee, in the case of a conversion, by giving at
least three (3) Business Days' prior written notice or telephonic
notice (confirmed in writing promptly thereafter) (each, a
"Notice of Conversion") of each proposed conversion to the Lessor
and, in the case of a continuation, by giving notice (in writing
or by telephone confirmed in writing promptly thereafter) (each,
a "Notice of Continuation") at least three (3) Business Days
prior to the Business Day on which the Investment Period in
respect of such Lessor Investment Amounts to be continued will
expire. Each Notice of Conversion and Notice of Continuation
shall be irrevocable, shall be substantially in the form attached
hereto as Exhibit A to this Appendix 3 and shall specify the
Lessor Investment Amounts to be converted or continued, the Type
of Lessor Investment Amounts to be converted into and, if such
Lessor Investment Amounts are to be converted into or continued
as Eurodollar Amounts, the Investment Period to be applicable
thereto. If the Lessee shall fail to continue any Eurodollar
Amounts in accordance with the provisions contained in this
Section 2, the Lessor will forthwith so notify the Lessee,
whereupon each such Eurodollar Amounts will automatically, on the
last day of the then existing Investment Period therefor, convert
into a Base Rate Amount.
(b) If a Lease Event of Default occurs and is
continuing, then (A) each Eurodollar Amount automatically shall
convert into a Base Rate Amount on the last day of the
<PAGE>
Investment Period applicable thereto, and the Lessee shall not
have the right to continue such Lessor Investment Amounts as
Eurodollar Amounts or select a succeeding Investment Period with
respect thereto and any such selection of a succeeding Investment
Period theretofore made pursuant to the terms hereof shall be
null and void, and (B) the obligation of the Lessor to make, or
to convert Lessor Investment Amounts into, Eurodollar Amount
shall be suspended; provided, however, that each Eurodollar
Amount automatically shall be converted into a Base Rate Amount
immediately upon the Lease Balance being declared to be due and
payable, or becoming due and payable, pursuant to Article XVII of
the Lease.
SECTION 3. Certificate Earnings. (a) Each Base
Rate Amount shall accrue Certificate Earnings from the date of
the Advance made by Lessor of such funds until due and payable at
a rate per annum equal to the Base Rate in effect from time to
time plus the Applicable Margin.
(b) Each Eurodollar Amount shall accrue Certificate
Earnings from the date of the Advance made by Lessor of such
funds or converted to or continued as a Eurodollar Amount until
due and payable at a rate per annum equal to (i) the Applicable
Margin plus (ii) the relevant Adjusted LIBOR Rate for Eurodollar
Amounts for the Investment Period specified.
(c) Subject to Section 4.1(d) of the Participation
Agreement, accrued Certificate Earnings in respect of each Base
Rate Amount shall be payable, as Lessor Basic Rent, monthly in
arrears on the last Business Day of each calendar month, on any
prepayment or conversion (on the amount prepaid or converted), at
maturity (whether by acceleration or otherwise), and after such
maturity, on demand. Subject to Section 4.1(d) of the
Participation Agreement, accrued Certificate Earnings in respect
of each Eurodollar Amount shall be payable, as Lessor Basic Rent,
in arrears on the last Business Day of each Investment Period
applicable to such Eurodollar Amount (and with respect to any
Investment Period of six (6) months, the date which is three (3)
months after the commencement of such Investment Period), on any
prepayment or conversion (on the amount prepaid or converted), at
maturity (whether by acceleration or otherwise), and after such
maturity, on demand.
(d) The Lessor, upon determining the Adjusted LIBOR
Rate for any Investment Period, shall promptly notify the Lessee
thereof by telephone or in writing.
SECTION 4. Increased Cost, etc. (a)(i) Except as
to taxes, levies, imposts, deductions, charges, withholdings or
other Impositions as provided in Section 14.5 of the
Participation Agreement, if after the date hereof, a Change of
Law or compliance by Lessor (or its Applicable Investment Office)
with any official request or directive (whether or not having the
force of law) of any Authority:
<PAGE>
(x) shall subject Lessor (or its Applicable
Investment Office) to any tax, duty or other charge on its
Eurodollar Amounts or its obligation to make Advances that
are Eurodollar Amounts, or shall change the basis of
taxation of payments to Lessor (or its Applicable Investment
Office) of its Eurodollar Amounts or the Certificate
Earnings thereon or any other amounts due under this
Appendix 3 to the Participation Agreement or the
Participation Agreement in respect of its Eurodollar Amounts
or its obligation to make Advances that are Eurodollar
Amounts (except for changes in the rate of tax on the
overall net income or gross receipts of Lessor or its
Applicable Investment Office imposed by the jurisdiction in
which Lessor's principal executive office or Applicable
Investment Office is located); or
(y) shall impose, modify or deem applicable any
reserve, special deposit or similar requirement (including,
without limitation, any such requirement imposed by the
Board of Governors of the Federal Reserve System, but
excluding with respect to any Eurodollar Amount any such
requirement included in the calculation of the Adjusted
LIBOR Rate) against assets of, deposits with or for the
account of, or credit extended by, Lessor (or its Applicable
Investment Office); or
(z) shall impose on Lessor (or its Applicable
Investment Office) or on the United States market or the
London interbank market any other condition affecting its
Eurodollar Amounts or its obligation to make Advances that
are Eurodollar Amounts;
and the result of any of the foregoing is to increase the cost to
Lessor (or its Applicable Investment Office) of making or
maintaining any Eurodollar Amount, or to reduce the amount of any
sum received or receivable by Lessor (or its Applicable
Investment Office) under this Appendix 3, the Participation
Agreement, or under any other Operative Document with respect to
Eurodollar Amounts by an amount reasonably determined by Lessor
to be material, then, within fifteen (15) days after demand,
which demand shall be accompanied by an explanation of the nature
of the costs and a reasonably detailed calculation thereof, by
Lessor, the Lessee shall pay to Lessor such additional amount or
amounts as will compensate Lessor for such increased cost or
reduction; provided that no such amount may be claimed by Lessor
which is attributable to periods prior to the date which is sixty
(60) days preceding the date on which the officer of the Lessor
having primary responsibility for asset liability management
shall have obtained actual knowledge of such demand.
(ii) If Lessor shall have determined that after the
date hereof the adoption of any applicable law, rule or
regulation regarding capital adequacy, or any change therein, or
any change in the official interpretation or official
administration thereof, or compliance by Lessor (or its
Applicable Investment Office) or any Person controlling Lessor
with any request or directive regarding capital adequacy (whether
or not having the force of law) of any Governmental Authority,
has or would have the effect of reducing the rate of return on
such Lessor's or such controlling Person's capital as a
consequence of its obligations hereunder to a level below that
<PAGE>
which Lessor or such controlling Person could have achieved but
for such adoption, change or compliance (taking into
consideration Lessor's or such controlling Person's policies with
respect to capital adequacy) by an amount reasonably determined
by Lessor or such controlling Person to be material, then from
time to time, within fifteen (15) days after demand, which demand
shall be accompanied by an explanation of the nature of the costs
and a reasonably detailed calculation thereof, by Lessor or such
controlling Person, the Lessee shall pay to Lessor additional
amount or amounts as will compensate Lessor or such controlling
Person for such reduction; provided that no such amount may be
claimed by Lessor which is attributable to periods prior to the
date which is sixty (60) days preceding the date on which the
officer of the Lessor having primary responsibility for asset
liability management shall have obtained actual knowledge of such
demand.
(b) Notice. Lessor will promptly notify the Lessee of
any event of which its officer having primary responsibility for
asset liability management has knowledge, which occurs or is
expected to occur after the date hereof, which will entitle
Lessor to compensation pursuant to this Section and will
designate a different Applicable Investment Office if such
designation will avoid the need for, or reduce the amount of,
such compensation and will not, in the reasonable judgment of
Lessor, be otherwise materially disadvantageous to Lessor. A
certificate of Lessor claiming compensation under this Section
and setting forth in reasonable detail the additional amount or
amounts to be paid to it hereunder, the reasonably detailed
calculations required above and the date on which the officers of
the Lessor having primary responsibility for asset liability
management obtained knowledge of such event shall constitute
rebuttable presumptive evidence of the amounts to be paid in the
absence of manifest error. In determining such amount, Lessor
may use any reasonable averaging and attribution methods.
(c) Unavailability or Inadequacy of Adjusted LIBOR
Rate. If, with respect to any Eurodollar Amount, the Lessor
determines that, for any reason, (i) appropriate quotations are
not available to it in the London interbank market for purposes
of determining the Adjusted LIBOR Rate, or (ii) the Adjusted
LIBOR Rate for any Investment Period for such Lessor Investment
Amounts will not adequately reflect the cost to Lessor of making,
funding or maintaining their Eurodollar Amounts for such
Investment Period, the Lessor shall forthwith so notify the
Lessee whereupon (x) each such Eurodollar Amount will
automatically, on the last day of the then existing Investment
Period therefor, convert into a Base Rate Amount and (y) the
obligation of the Lessor to make, or to convert Lessor Investment
Amounts into, Eurodollar Amounts shall be suspended until the
Lessor shall notify the Lessee that the circumstances causing
such suspension no longer exist.
(d) Illegality. If, after the date hereof, a Change
in Law shall occur or compliance by Lessor (or its Applicable
Investment Office) with any request or directive (whether or not
having the force of law) of any Authority shall make it unlawful
or impossible for Lessor (or its Applicable Investment Office) to
make, maintain or fund its Eurodollar Amounts and Lessor shall so
notify the Lessee whereupon until Lessor notifies the Lessee that
the circumstances giving rise to such suspension no longer exist,
the obligation of such Lessor to make Eurodollar Amounts
<PAGE>
shall be suspended. Before giving any notice to the Lessee
pursuant to this Section 4(d), Lessor shall designate a different
Applicable Investment Office if such designation will avoid the
need for giving such notice and will not, in the reasonable
judgment of Lessor, be otherwise materially disadvantageous to
Lessor. If by reason of any such Change of Law the Lessor may
not lawfully continue to maintain and fund any of its outstanding
Eurodollar Amounts to maturity and shall so specify in such
notice, the Lessee shall immediately prepay in full the then
outstanding amount of each Eurodollar Amount of Lessor, together
with accrued Certificate Earnings thereon. Concurrently with
prepaying each such Eurodollar Amount, the Lessee shall receive a
Base Rate Amount in an equal amount from Lessor, and Lessor shall
make such a Base Rate Amount.
SECTION 5. Investment Periods. At the time the
Lessee gives any written notice of a request for an Advance as a
Eurodollar Amount pursuant to Section 1 or Notice of Conversion
in respect of Eurodollar Amounts (in the case of the initial
Investment Period applicable thereto) or any Notice of
Continuation prior to 12:00 noon (New York City time) on the
third (3rd) Business Day prior to the expiration of an Investment
Period applicable to such Eurodollar Amounts (in the case of
subsequent Investment Periods), the Lessee shall have the right
to elect, by giving the Lessor written notice (or telephonic
notice confirmed in writing promptly thereafter), the investment
period (each, an "Investment Period") applicable to such Advance
of Eurodollar Amounts, which Investment Period shall, at the
option of the Lessee, be one (1), two (2), three (3) or six (6)
months; provided, that: (i) the initial Investment Period for any
Eurodollar Amount shall commence on the date of any conversion of
such Lessor Investment Amount from a Base Rate Amount and each
Investment Period occurring thereafter in respect of such Lessor
Investment Amount shall commence on the last day of the next
preceding Investment Period in respect of such Lessor Investment
Amount; (ii) if any Investment Period would otherwise expire on a
day which is not a Business Day, such Investment Period shall
expire on the next succeeding Business Day; provided, however,
that if any Investment Period would otherwise expire on (x) a day
which is not a Business Day but is a day of the month after which
no further Business Day occurs in such month, such Investment
Period shall expire on the next preceding Business Day or (y) a
Business Day for which there is no numerically corresponding
Business Day in the applicable subsequent calendar month, such
Investment Period shall expire on the last Business Day of such
applicable subsequent calendar month; (iii) no Investment Period
shall extend beyond the Expiration Date and (iv) there may be no
more than five (5) separate Investment Periods in respect of
Eurodollar Amounts from Lessor outstanding at any one time.
SECTION 6. Compensation. In addition to the
amounts required to be paid by the Lessee pursuant to Section 4
hereof, the Lessee shall pay to Lessor, upon demand by such
Lessor, such amount or amounts as the Lessor reasonably
determines is or are necessary to compensate it for any loss,
cost or expense incurred by reason of the liquidation or
redeployment of deposits or funds required by Lessor to fund or
continue such Eurodollar Amounts by it as a result of any
payment, prepayment or conversion of a Eurodollar Amount for any
reason (including, without limitation, by reason of an
acceleration of
<PAGE>
the payment of the Lease Balance pursuant to Article XVII of the
Lease) on a date other than the last day of an Investment Period
applicable to such Eurodollar Amount.
SECTION 7. Calculation of Certain Fees and Other
Amounts. In determining the Applicable Margin to be paid by the
Lessee pursuant to Sections 3(a) and (b), the Lessor shall refer
on each Performance Pricing Determination Date to the Guarantor's
most recent financial statements delivered to the Lessor pursuant
to Section 11.1(a)(i) of the Participation Agreement (together
with the Compliance Certificate delivered in connection
therewith, the "Audited Statement") and Section 11.1(a)(ii)
thereof (together with the Compliance Certificate delivered in
connection therewith, the "Unaudited Statements"); provided,
that, should any relevant Audited Statements or Unaudited
Statements be delivered on a date later than a Performance
Pricing Determination Date, any necessary changes in the
Applicable Margin to be paid shall not be effective, except to
the extent hereinafter provided to the contrary within this
Section 7, until the next succeeding Performance Pricing
Determination Date (as such term is hereinafter defined);
provided, further, that, should the Audited Statements reflect a
Leverage Ratio other than the ratio determined by the Unaudited
Statements for the third Fiscal Quarter, then (i) should the
Audited Statements reveal that the Lessee should have paid
Certificate Earnings and fees at a higher rate for the period
from the last Performance Pricing Determination Date to the next
Performance Pricing Determination Date then the Lessee shall
immediately pay to the Lessor such amounts as are necessary to
cause the Lessor to have received the appropriate return, and
(ii) should the Audited Statements reveal that the Lessee should
have paid Certificate Earnings and fees at a lower rate for the
period from the last Performance Pricing Determination Date to
the next Performance Pricing Determination Date, then, so long as
no Lease Default or Lease Event of Default shall be in existence,
the Lessor shall promptly pay to the Lessee such amounts as are
necessary to cause the Lessor to have received the appropriate
return. For purposes hereof, "Performance Pricing Determination
Date" shall mean each date that occurs 45 days after the end of
each of the first 3 Fiscal Quarters, and 90 days after the end of
the last Fiscal Quarter, of the Guarantor. All determinations
hereunder shall be made by the Lessor. Notwithstanding the
foregoing, for purposes of determining the amounts to be paid by
the Lessee pursuant to Section 3 until the Performance Pricing
Determination Date which occurs on or about July 30, 1996, the
Leverage Ratio shall conclusively be presumed to be greater than
.25 but less than .35.
SECTION 8. Prepayments on Non-Business Days.
Except as provided in Section 5, whenever any payment to be made
hereunder shall be stated to be due on a day which is not a
Business Day, the due date thereof shall be extended to the next
succeeding Business Day and Certificate Earnings shall be payable
at the applicable rate during such extension.
SECTION 9. Prepayments. The Lessor Investment Amounts
shall be subject to prepayment and repayment at the times and in
the amounts set forth in Sections 5.2, 5.3, 5.5, 5.8 and 5.9 of
the Participation Agreement and shall be applied to the Lessor
Investment Amounts as set forth therein and herein. No such
prepayment in respect of any Eurodollar Amounts shall be
<PAGE>
made on a day which is not the expiration date of an Investment
Period applicable to such Lessor Investment Amount unless
accompanied by all compensation and payments pursuant to Section
6.
SECTION 10. Facility/Commitment Fees.
Facility/Commitment fees shall be paid to the Lessor as provided
in the letter agreement between Credit Suisse and Guarantor,
dated as of February 16, 1996.
<PAGE>
ANNEX X
Definitions
Unless otherwise defined herein, capitalized terms
shall have the meaning ascribed to them in Appendix 1 to the
Participation Agreement and the rules of usage set forth therein
shall apply hereto. For purposes of this Appendix 3, the
following terms shall have the following meanings:
"Adjusted LIBOR Rate" applicable to any Investment
Period means a rate per annum equal to the quotient obtained
(rounded upwards, if necessary, to the next higher 1/100 of 1%)
by dividing (i) the applicable LIBOR Rate by (ii) a percentage
equal to 100% minus the maximum stated rate of all reserve
requirements (including, without limitation, any marginal
emergency, supplemental, special or other reserves) that would be
applicable to any member bank of the Federal Reserve System
during such Investment Period in respect of eurocurrency or
eurodollar funding, lending or liabilities.
"Agent Bank" shall mean Credit Suisse, a Swiss bank
operating through its New York branch.
"Applicable Investment Office" shall mean Lessor's
Domestic Investment Office in the case of a Base Rate Amount and
Lessor's Eurodollar Investment Office in the case of a Eurodollar
Amount.
"Applicable Margin" shall have the meaning set forth in
the letter agreement between Credit Suisse and Guarantor, dated
as of February 16, 1996.
"Audited Statements" shall have the meaning set forth
in Section 7 of Appendix 3 to the Participation Agreement.
"Authority" shall have the meaning set forth in the
Liquidity Agreement.
<PAGE>
"Base Rate" means, on any date, a rate equal to the
higher of (a) the Federal Funds Rate plus one-half of one percent
(0.5%) per annum or (b) the rate of interest per annum from time
to time publicly announced by the Lessor (or its affiliates) as
its base lending rate for commercial loans made in the United
States, each as in effect on such date. The base lending rate is
not necessarily the lowest rate of interest charged by the Lessor
(or its affiliates) in connection with extensions of credit.
"Base Rate Amount" shall mean any Lessor Investment
Amount which is accruing Certificate Earnings as provided in
Section 3(a) of Appendix 3 to the Participation Agreement.
"Change of Law" shall have the meaning set forth in the
Liquidity Agreement.
"Domestic Investment Office" shall mean the office of
Lessor specified as "Domestic Investment Office" opposite its
name on Annex 1 to Appendix 3 to the Participation Agreement, or
such other office as Lessor may from time to time specify in
writing to the Lessee.
"Eurodollar Investment Office" shall mean the office of
Lessor specified as "Eurodollar Investment Office" opposite its
name on Annex 1 to Appendix 3 to the Participation Agreement, or
such other office as Lessor may from time to time specify to the
Lessee
"Eurodollar Amounts" shall mean any Lessor Investment
Amount which is accruing Certificate Earnings as provided in
Section 3(b) of Appendix 3 to the Participation Agreement.
"Federal Funds Rate" shall mean the weighted average of
the rate on the overnight Federal funds transactions with members
of the Federal Reserve System only arranged by Federal funds
brokers as published by the Federal Reserve Bank of New York from
time to time, or, if not so published at any time, the rate then
used by first class banks in extending overnight loans to other
first class banks.
"Governmental Authority" shall have the meaning set
forth in the Liquidity Agreement.
"Investment Period" shall have the meaning specified in
Section 5 of Appendix 3 to the Participation Agreement.
"Lessee's Payment Office" shall mean the offices of
Lessee at 2455 Paces Ferry Road, Atlanta, Georgia 30339, or such
other office as the Lessee may designate in writing to the
Lessor.
"Lessor" shall mean Credit Suisse Leasing 92A, L.P.
<PAGE>
"Lessor Investment Amounts" shall mean all Investments
made to the Lessee by the Lessor pursuant to Section 3 of the
Participation Agreement and Appendix 3 to the Participation
Agreement.
"Leverage Ratio" shall have the meaning set forth in
the Liquidity Agreement.
"LIBOR Rate" shall mean, with respect to each
Investment Period for a Eurodollar Amount, the per annum rate of
interest for amounts comparable to the outstanding principal
amount of the Eurodollar Amounts for which an interest rate is
then being determined with maturities comparable to the
Investment Period to be applicable to such Eurodollar Amounts,
determined as of 11:00 A.M. (London Time) on the date which is
two Business Days prior to the commencement of such Investment
Period and which: (i) appears page 4750 of the Telerate Screen as
of such time and date provided that if more than one such offered
rate appears on page 4750 of the Telerate Screen, the "London
Interbank Offered Rate" will be the arithmetic average (rounded
upward, if necessary, to the next higher 1/100th of 1%) of such
offered rates or (ii) if no such rate appears on such page 4750,
is the rate of interest then offered to prime banks in the London
interbank Eurodollar market by the Lessor (or its affiliates) for
Dollar Deposits.
"Notice of Continuation" shall have the meaning
specified in Section 2 of Appendix 3 to the Participation
Agreement.
"Notice of Conversion" shall have the meaning specified
in Section 2 of Appendix 3 of the Participation Agreement.
"Performance Pricing Determination Date" shall have the
meaning set forth in Section 7 of Appendix 3 to the Participation
Agreement.
"Type" shall mean any type of Lessor Investment Amount,
i.e., whether a Base Rate Amount or a Eurodollar Amount made
pursuant to the Participation Agreement.
"Unaudited Statements" shall have the meaning set forth
in Section 7 of Appendix 3 to the Participation Agreement.
<PAGE>
EXHIBIT A
NOTICE OF CONVERSION/CONTINUATION
To: Credit Suisse Leasing 92A, L.P.
12 East 49th Street
New York, New York 10017
Attn: Director
Pursuant to Section 2 of Appendix 3 of the Participation
Agreement dated as of June 25, 1996 ("Participation Agreement"), among
The Home Depot, Inc., as Guarantor, Home Depot U.S.A., Inc, as Lessee
and Construction Agent (the "Lessee"), HD Real Estate Funding Corp., as
Facility Lender, the financial institutions named therein, as Lenders,
Credit Suisse, as Agent Bank and Lender, and Credit Suisse Leasing 92A,
L.P., as Lessor, this notice represents a request, on behalf of the
Lessee to [convert $__________ in the amount of [Eurodollar/Base Rate]
Amounts to [Eurodollar/Base Rate] Amounts on ___________, ____, [for
Eurodollar Amounts only: and with an Investment Period of
______________________ months/days expiring on ______________, ____] or
[continue as [Eurodollar/Base Rate] Amounts $______________ in the
amount of presently outstanding [Eurodollar/Base Rate] Amounts
commencing on ________________, 19__, and with an Investment Period of
_________________ months/ expiring on _______________, ____.]
The Lessee hereby represents and warrants that no Event of
Default exists on the date hereof or will exist on the proposed
[conversion] [continuation] date.
Terms defined in the Participation Agreement and not
otherwise defined are used herein as therein defined.
DATED:_____________________
HOME DEPOT U.S.A., INC.
By:_________________________________
Title:______________________________
<PAGE>
ANNEX 1 TO APPENDIX 3
TO PARTICIPATION AGREEMENT
Lessor's Domestic Lending Office
Credit Suisse
12 East 49th Street
New York, NY 10017
Attn: Conrad Meyer
Telephone: 212-238-2064
Telecopier: 212-238-5073
ABA/Acct. No.: 026009179
Further credit to: Credit Suisse Account No.
904996-02
Attn: Loan Dept.
Ref: Home Depot
Lessor's Eurodollar Investment Office
Same as above.
<PAGE>
EXHIBIT A
TO PARTICIPATION AGREEMENT
FORM OF ACQUISITION REQUEST
TO: Credit Suisse, as Agent Bank
Credit Suisse Leasing 92A, L.P., as Lessor,
HD Real Estate Funding Corp., as Facility Lender
Each Lender party to the Participation Agreement
referred to below
Reference is hereby made to the Participation Agreement dated as
of June 25, 1996 (as heretofore amended, the "Participation Agreement")
among The Home Depot, Inc. (the "Guarantor"), Home Depot U.S.A., Inc.
(the "Lessee"), HD Real Estate Funding Corp. (the "Facility Lender"),
Credit Suisse, as Agent Bank, and the Lenders party thereto.
Capitalized terms not otherwise defined herein are used herein as
defined in Appendix 1 attached to the Participation Agreement, which
Appendix is made a part hereof by this reference.
Lessee hereby requests the acquisition by the Lessor of the Land
described on Schedule A hereto on [INSERT REQUESTED PROPERTY CLOSING
DATE] by purchase of fee title from [INSERT NAME OF SELLER] for a
Property Acquisition Cost of $____________.
Enclosed herewith is the proposed form of Deed to be used to
effect such acquisition.
[Lessee hereby notifies you that the Estimated Completion Date for
such Property is ________, 199__.]
In connection with such requested acquisition, Lessee hereby
represents and warrants to you as follows:
(a) on the requested Property Closing Date the
representations and warranties of Guarantor and Lessee contained
in each of the Operative Documents shall be true and correct in
all material respects as though made on and as of such date,
except to the extent such representations or warranties relate
solely to an earlier date, in which case such representations and
warranties shall have been true and correct in all material
respects on and as of such earlier date;
(b) the conditions precedent to the acquisition of such Land
by the Lessor set
<PAGE>
forth in Section 7 of the Participation Agreement have been
satisfied;
<PAGE>
(c) there has not occurred and is not continuing any
Facility Agreement Default or Facility Agreement Event of
Default and no Facility Agreement Default or Facility
Agreement Event of Default shall have occurred after giving
effect to such acquisition; and
(d) the Available Commitments will be sufficient, in
the reasonable judgment of the Construction Agent, to
complete the Improvements on each Property.
Lessee has caused this Acquisition Request to be executed
and delivered by its duly authorized officer this
________________ [TO BE DELIVERED NOT LATER THAN 1:00 P.M. ON THE
BUSINESS DAY OF THE REQUESTED PROPERTY CLOSING DATE].
HOME DEPOT U.S.A., INC.
By:________________________________
__
Title:_____________________________
____
<PAGE>
SCHEDULE A
DESCRIPTION OF LAND
<PAGE>
EXHIBIT B
TO PARTICIPATION AGREEMENT
FORM OF FUNDING REQUEST
TO: Credit Suisse, as Agent Bank
Credit Suisse Leasing 92A, L.P., as Lessor,
HD Real Estate Funding Corp., as Facility Lender
Each Lender party to the Participation Agreement
referred to below
Reference is hereby made to the Participation Agreement dated as
of June 25, 1996 (as heretofore amended, the "Participation Agreement")
among The Home Depot, Inc. (the "Guarantor"), Home Depot U.S.A., Inc.
(the "Lessee"), HD Real Estate Funding Corp. (the "Facility Lender"),
Credit Suisse, as Agent Bank, and the Lenders party thereto.
Capitalized terms not otherwise defined herein are used herein as
defined in Appendix 1 attached to the Participation Agreement, which
Appendix is made a part hereof by this reference.
Lessee hereby notifies you that:
(i) Lessee requests the making of an Advance in the amount
of $_________ on [INSERT REQUESTED FUNDING DATE];
(ii) the Advance will be allocated among the Properties and
their respective Property Acquisition Costs and Property
Improvements Cost as set forth on Schedule A hereto; and
(iii) Lessee requests that ____% of the Advance be funded
with proceeds of Loans and that ____% of the Advance be funded by
Lessor Investment Amounts.
In connection with such requested Advance, Lessee hereby
represents and warrants to you as follows:
(a) on the requested Funding Date the representations and
warranties of Guarantor and Lessee contained in each of the
Operative Documents shall be true and correct in all material
respects as though made on and as of such date, except to the
extent such representations or warranties relate solely to an
earlier date, in which case such representations and warranties
shall have been true and correct in all material respects on and
as of such earlier date;
<PAGE>
(b) there has not occurred and is not continuing any
Facility Agreement Default or Facility Agreement Event of
Default and no Default or Event of Default will have
occurred after giving effect to the making of the Advance;
(c) the Available Commitments will be sufficient, in
the reasonable judgment of the Construction Agent, to
complete the Improvements on each Property; and
(d) all of the conditions precedent to such Advance
set forth in Section 7 of the Participation Agreement have
been satisfied.
Please wire transfer the proceeds of the Advance to
______________.
Lessee has caused this Funding Request to be executed and
delivered by its duly authorized officer this ________________
[TO BE DELIVERED NOT LATER THAN 1:00 P.M. ON THE BUSINESS DAY OF
THE REQUESTED FUNDING DATE].
HOME DEPOT U.S.A., INC.
By:________________________________
_
Title:_____________________________
___
<PAGE>
SCHEDULE A
ALLOCATION OF ADVANCE
Property Property
Property Acquisition
Costs
Improvements
Costs
$ $
<PAGE>
EXHIBIT C
TO PARTICIPATION AGREEMENT
[Letterhead of King & Spalding]
June 28, 1996
Credit Suisse, as Agent Bank and Lender CS First Boston
Tower 49 55 East 52nd Street
12 East 49th Street Park Avenue Plaza
New York, New York 10017 New York, New York
10055
And each of the Lenders named in Moody's
Investor Service, Inc.
Annex A attached hereto Structured
Finance Group
99 Church Street, Fourth
Floor
Credit Suisse Leasing 92A, L.P., as Lessor New York,
New York 10007
12 East 49th Street
New York, New York 10017 Standard & Poor's
Ratings Group
25 Broadway - 13th Floor
HD Real Estate Funding Corp., as Facility Lender New York,
New York 10004
c/o J H Management Corporation Attention:
Commercial Paper Department
One International Place
Room 520
Boston, Massachusetts 02110
Re: $300,000,000 Commercial Paper/Lease Program
To the Addressees:
We have acted as counsel to Home Depot U.S.A., Inc., a
Delaware corporation (the "Lessee"), and The Home Depot, Inc., a
Delaware corporation (the "Guarantor"), in connection with
transactions contemplated by the Participation Agreement, dated
as of June 25, 1996 (the "Participation Agreement"), among the
Guarantor, the Lessee, HD Real Estate Funding Corp., as Facility
Lender, the financial institutions named therein, as Lenders,
Credit Suisse, as Agent Bank and Lender, and Credit Suisse
Leasing 92A, L.P., as Lessor. Capitalized terms used herein and
not otherwise defined herein shall have the respective meanings
assigned to such terms in Appendix 1 to the Participation
Agreement. The opinions expressed below are furnished to you
pursuant to subsection A.(e) of Appendix 2 to the Participation
Agreement.
In connection with this opinion, we have reviewed the
following documents (the
<PAGE>
documents described in items (1) - (6) collectively, the
"Opinion Documents"):
(1) the Participation Agreement;
<PAGE>
(2) the Lease, dated as of June 25, 1996 (the "Lease"), by
and between the Lessee and the Lessor;
(3) the Guaranty, dated as of June 25, 1996 (the
"Guaranty") made by the Guarantor in favor of each of
the Participants;
(4) the Construction Agency Agreement, dated as of June 25,
1996 (the "Construction Agency Agreement");
(5) the Consent to Assignment of Lease, Consent to
Assignment of Construction Agency Agreement and Consent
to Master Assignment, each dated as of June 25, 1996;
(6) the side letter between the Lessee and Credit Suisse
with respect to the Administration Agreement and the
indemnity agreement from Lessee and Guarantor in favor
of CS First Boston; and
(7) each of the other Operative Documents listed on Annex B
attached hereto.
We have also examined and relied on originals, or copies
certified or otherwise identified to our satisfaction as being
true copies, of such corporate documents and records of the
Lessee and the Guarantor and such other instruments and
certificates of public officials, officers and representatives of
the Lessee, the Guarantor and other Persons as in our judgment
are necessary or appropriate to enable us to render the opinions
expressed below.
In rendering this opinion, we have assumed: (a) the
genuineness of all signatures on all
<PAGE>
documents that we examined (except the signatures of officers or
representatives of the Lessee and the Guarantor), (b) the
authenticity of all documents submitted to us as originals and
(c) the conformity to authentic originals of documents submitted
to us as certified, conformed or photostatic copies.
In rendering this opinion, we have also relied upon the
representations and warranties as to factual matters contained in
and made pursuant to the Participation Agreement and the other
Operative Documents and such certificates as we have deemed
necessary or appropriate to enable as to render the opinions
expressed below. Whenever our opinion herein is qualified by the
phrase "to our knowledge," it is intended to indicate that the
current actual awareness of those attorneys within this firm who
have participated in the representation of the Lessee and the
Guarantor in connection with the transactions described herein is
not inconsistent with that
portion of the opinion which such phrase qualifies; our use of
such phrase shall not indicate that we have made, and, in fact we
have not made, an independent investigation concerning the
subject matter of the opinion that is so qualified or concerning
the accuracy or veracity of the representations or warranties or
statements of fact contained in the Participation Agreement, any
other Operative Document, the information regarding the Lessee or
the Guarantor contained or incorporated by reference in the
Private Placement Memorandum or the written statements and cer
tificates on which we have relied. We have not made any indepen
dent review or investigation of orders, judgments, or decrees by
which the Lessee or the Guarantor is or may be bound, nor have we
made any independent investigation as to the existence of
actions, suits, investigations or proceedings, if any, pending or
threatened against the Lessee or the Guarantor, and we have made
no searches of any litigation dockets or any other public
records.
In rendering this opinion, we have also made such
investigations of law as we have deemed appropriate as a basis
for such opinions. The opinions expressed herein are limited
exclusively to United States federal law, the General Corporation
Law of the State of Delaware (the "Delaware GCL") and the
internal laws of the State of Georgia (the "State").
In rendering this opinion we have relied on the following
additional assumptions:
(a) (i) Each Person who is a party to any of the
Operative Documents (other than the Lessee and Guarantor) is
duly organized or formed, validly existing and in good
standing under the laws of its jurisdiction of incorporation
or formation; (ii) each of the Operative Documents has been
duly authorized, executed and delivered by each such Person
(other than the Lessee and Guarantor); (iii) each Operative
Document constitutes the legal, valid and binding obligation
of such Person (other than the Lessee and the Guarantor),
enforceable against it (other than the Lessee and the
Guarantor) in accordance with its respective terms; and (iv)
that each such Person (other than the Lessee and
<PAGE>
Guarantor) has the requisite corporate or other
organizational power and authority to perform its
obligations under such Operative Documents.
(b) The Lessor has valid title to or an interest
in the property purported to be conveyed pursuant to the
Lease and, in each case, has the unrestricted right to
convey, lease or grant a lien on or security interest in
such property as contemplated by the applicable Opinion
Document.
(c) Each party to the Opinion Documents and the
other Operative Documents has received adequate
consideration for its execution and delivery of such
agreement and the covenants and agreements made by it
thereunder and the proceeds of the Commercial Paper Notes,
Facility Loans and Loans will be utilized solely for the
purposes required by the Operative Documents.
(d) In the event that any party to any Opinion
Document seeks to maintain any action, suit or proceeding in
the courts of the State to enforce any provision of any of
the Opinion Documents, such person, if required at such time
to hold a certificate of authority to transact business in
the State, will have obtained such a certificate prior to
commencing such action, suit or proceeding.
With respect to our opinion regarding the enforceability of
the Opinion Documents set forth below, we exclude any opinion as
to the validity, enforceability or legal effect of any provision
of any of the Operative Documents if and to the extent that such
provision requires or permits (i) a rate of interest or charge
for the use of money payable by any party thereto, including
without limitation, loan origination fees, discount points,
expenses and other fees and charges (including amounts payable to
any Participant for payment in reimbursement of the Participant's
costs and expenses or otherwise to defray any Participant's costs
and expenses) whether or not denominated as interest, which
exceeds under any circumstances, whether by reason of prepayment,
acceleration or otherwise, five percent (5%) per month, or to the
extent that such charges or interest constitute precomputed
interest within the meaning of O.C.G.A. 7-4-2(b), (ii) the
payment by any obligor thereunder of interest on unpaid interest
unless the requirements of O.C.G.A. 7-4-17 are satisfied, (iii)
the payment by any obligor thereunder of interest at a higher
rate after default to the extent that such payment is determined
to be a penalty or forfeiture, or (iv) purport to avoid or cure
any breach of any applicable usury law (i.e., any "usury savings
provision").
We express no opinion as to whether the legal relationship
purported to be created by any such Operative Document will be
respected for tax, accounting, financial reporting or any
regulatory purposes. We express no opinion as to any matters re
garding state or federal tax or, except as specifically set forth
below, securities law. In addition to the foregoing, we express
no
<PAGE>
opinion as to whether the Lease creates a leasehold estate or
usufruct under the laws of the State but we confirm to you that
the Lease is in a proper form to create either a leasehold estate
or a usufruct under the laws of the State.
On the basis of the foregoing, and in reliance thereon, and
subject to the limitations, qualifications and exceptions set
forth below, we are of the opinion that:
1. Each of the Lessee and the Guarantor is a
corporation validly existing and in good standing under the
laws of the State of Delaware. Based solely upon the
Certificate of Existence dated June 21, 1996 relating to the
Lessee and the Certificate of Existence dated June 21, 1996
relating to the Guarantor, each provided by the Secretary of
State of the State, each of the Lessee and the Guarantor is
duly qualified as a foreign corporation authorized to do
business in, and is in good standing with the Secretary of
State of, the State.
2. Each of the Lessee and the Guarantor has all
requisite corporate power and authority to execute and
deliver the Opinion Documents to which it is a party and to
perform its obligations thereunder.
3. The Opinion Documents to which the Lessee is a
party have been duly authorized by all requisite corporate
action on the part of Lessee and have been duly executed and
delivered by authorized officers of the Lessee. The Opinion
Documents to which the Guarantor is a party have been duly
authorized by all requisite corporate action on the part of
Guarantor and have been duly executed and delivered by
authorized officers of the Guarantor.
4. Each of the Opinion Documents constitutes the
legal, valid and binding obligation of the Lessee or the
Guarantor party thereto, enforceable against each such party
in accordance with its respective terms, except that:
a. No opinion is expressed (x) with respect to the
Lease, as to the validity, enforceability or legal
effect of (i) any provisions allowing the Lessor, the
Facility Lender or any assignee thereof to forcibly
dispossess the tenant, (ii) any provision purporting to
relieve Lessor, the Facility Lender, or any assignee
thereof of any obligation to mitigate damages, or (iii)
any remedy specified by the Lease as being available
following the occurrence of a Lease Event of Default
thereunder by the Lessee or the Guarantor, including
without limitation, any right to collect any specified
amount of rent or other damages from the Lessee or the
Guarantor; however, it is our opinion that the Lease
and Applicable Law do afford remedies and procedures to
the Lessor, the Facility Lender, or any assignee
thereof thereunder necessary to obtain possession of
the Properties and to collect some measure of damages
from the Lessee, so long as such remedies and
procedures are exercised in compliance with applicable
laws and judicial decisions of this State relating to
the exercise of such remedies and procedures or (y)
with respect to any other Opinion Document, as to the
validity, enforceability or legal effect of certain
waivers, remedies and other provisions thereof which
may not be enforceable, but the inclusion of such
provision does not render such Opinion Document invalid
and the remedies available under such Opinion
Documents, in our opinion, are adequate for the
practical realization of the benefits intended to be
provided thereby;
b. The enforceability of the Opinion Documents is
subject to and limited by the effect of (i) bankruptcy,
insolvency, reorganization and moratorium laws, laws
relating to fraudulent obligations or conveyances, and
other similar laws from time to time in effect relating
to or affecting the enforcement of creditors' rights
and remedies generally, and (ii) general principles of
equity (whether asserted in an action at law or in
equity), including concepts of materiality, good faith
and fair dealing, and unconscionability, and equitable
relief (including the enforceability by specific
performance of any particular provision of the Opinion
Documents) which are subject to the discretion of the
court from which such relief may be sought;
c. With respect to the validity, enforceability and legal
effect of the environmental indemnity and hold harmless
agreements set forth in the Participation Agreement, we have
relied upon the opinion of the United States District Court for
the Western District of New York in Purolator Products Corp. v.
Allied-Signal, Inc., 772 F. Supp. 124 (W.D.N.Y. 1991), and the
majority line of cases cited in such opinion at 772 F. Supp. 129.
These cases maintain that liability under the Comprehensive
Environmental Response, Compensation, and Liability Act
("CERCLA"), 42 U.S.C. 9601 et seq., may be transferred between
responsible private parties through private contractual
agreements, although liability to the government may not be
transferred. See also, AM International, Inc. v. International
Forging Equipment, 982 F.2d 989 (6th Cir. 1993) (reversing
district court ruling that indemnity agreement does not bar
CERCLA contribution claim against another liable party); but see,
CPC International, Inc. v. Aerojet-General Corporation, 759
F. Supp. 1269 (W.D. Mich. 1991) (state cross-claim against site
owners was not barred by pre-CERCLA stipulation and consent order
holding owners harmless). In addition, we have relied on the
opinion of the United States Bankruptcy Court for the Southern
District of Georgia, Savannah
<PAGE>
Division, in In re: Diamond Manufacturing Company,
Inc., 164 B.R. 189 (Bankr.
S.D. Ga. 1994), which cites the Purolator majority case
law with approval and states that as no Georgia case
law has interpreted indemnification provisions relating
to liability under Georgia's hazardous waste statutes,
cases construing the CERCLA indemnification provisions
are persuasive authority in such context. Finally, we
note that CERCLA and other environmental laws have
sometimes been interpreted to impose independent
liability on indemnified parties for action or inaction
which may or may not be found to be negligence, wilful
misconduct or a violation of law, see, e.g., United
States v. Fleet Factors Corp., 901 F.2d 1550 (11th Cir.
1990), cert. denied, 111 S. Ct. 752 (1991), order
amended and superseded by statute, 819 F. Supp. 1079
(S.D. Ga. 1993); O'Neil v. Q.L.C.R.I., 750 F. Supp. 551
(D.R.I. 1990), and we note that such liability may not
be subject to indemnification or reimbursement as a
matter of public policy, although we are aware of no
case law on this subject in the State.
d. Each of the Participation Agreement, the Guaranty,
the Construction Agency Agreement and, except as
limited therein, the Lease provides, that it shall be
construed in accordance with the substantive laws of
the State. We believe that a Georgia court or a
federal court sitting in the State as a forum state and
applying Georgia conflict of laws rules under diversity
jurisdiction (in either case, a "Georgia Court") should
give effect to the designation by the parties of the
statutory law of the State as the governing law with
respect substantive issues arising under such Opinion
Documents (except for the matters expressly allocated
to local law under the terms of the Lease) unless it
were determined that (1) the State has no substantial
relationship to the parties or the transaction
contemplated by such Opinion Documents, (2) application
of the law of the State would be contrary to a
fundamental policy of a state which has a materially
greater interest than the State in the determination of
a particular issue and which state would be the state
of the applicable law in the absence of an effective
choice of law by the parties, or (3) the substantive
law of another state applies to the particular issue in
dispute, such as title to real property, the internal
affairs of corporations or the mandatory choice of law
rules which cannot be varied by the parties pursuant to
Section 1-105(2) of the Uniform Commercial Code. Since
choice of law issues are decided on a case-by-case
basis depending on the factual circumstances of the
particular transaction, however, we are unable to
conclude with certainty that a Georgia Court would give
effect to the choice of the substantive law of the
State as the governing law. Nevertheless based on case
law in the State and the facts of the transaction
contemplated by such Opinion Documents, we believe
that, in a <PAGE>
properly presented case, a Georgia Court should
conclude that the State has a substantial relationship
to the parties and the transaction contemplated
thereby.
Without limiting the qualifications set forth in
clauses a. through d. above, no opinion is expressed herein
with respect to (i) those provisions of the Opinion
Documents requiring payment by any party of costs of
collection, including reasonable attorneys' fees, to the
extent that the party entitled thereto fails to comply with
O.C.G.A. 13-1-11 or to the extent such costs are
unconscionable or disproportionate to the services rendered;
(ii) those provisions of Section 17.4 of Lease (which will
need to be expanded in the Lease Supplement and Memorandum
of Lease to be recorded in the State); (iii) those provi
sions of the Opinion Documents in derogation of O.C.G.A.
13-4-4 and authorities of similar import regarding
departure from contractual terms, waivers and the like;
(iv) those provisions of the Opinion Documents providing
indemnification or reimbursement to, or waiver of claims
against, any Indemnitee or any other party where the claim
to be indemnified, reimbursed or waived results from the
negligence or wilful misconduct of or violation of law by
such Indemnitee or where such indemnification, reimbursement
or waiver would violate public policy; (v) those provisions
of the Opinion Documents which could be construed to relieve
any party from the responsibilities and liabilities of a
"mortgagee in possession" under the laws of the State; (vi)
those provisions of the Opinion Documents permitting the
unilateral or ex parte appointment of a receiver, to the
extent the appointment of a receiver is governed by
applicable statutory requirements; (vii) those provisions of
the Opinion Documents purporting to allow the acceleration
of the maturity of the rental obligations of the Lessee
without notice to the Lessee or the Guarantor; (viii) those
provisions of the Opinion Documents which could be construed
to relieve any party from the responsibility and liability
of a seller to a "vendee in possession" under the laws of
the State or that purport to constitute a waiver of the
rights of a "vendee in possession;" (ix) the provisions of
any Operative Document other than the Opinion Documents (to
the extent incorporated by reference therein or attached as
an exhibit thereto) except as otherwise expressly set forth
herein; (x) the validity, enforceability or legal effect of
those provisions of the Opinion Documents that purport by
their terms to obligate any party to bear the legal and
other expenses of another party in litigation in which the
party obligated to bear such costs prevails; (xi) provisions
relating to rights of set-off, except to the extent
exercised in accordance with Applicable Law; (xii)
provisions which constitute waivers or advance consents that
have the effect of waiving statutes of limitation,
marshaling of assets or similar requirements; (xiii) pro
visions providing that enumerated remedies are not exclusive
or that a party has the right to pursue multiple remedies
without regard to other remedies elected or that all
remedies are cumulative; (xiv) the application or
applicability of the laws of any jurisdiction other than the
State to any of the Opinion Documents; (xv) the provisions
purporting to waive the right to trial by jury or to consent
to the jurisdiction of the State or any particular venues;
and (xvi) provisions requiring any party to act "reasonably"
which may be so vague as to be unenforceable.
5. No order, consent, approval, license,
authorization, recording, registration, declaration, filing
or exemption of any governmental authority or agency is
required as of the date hereof pursuant to any statute or
regulation of the United States of America or the State in
connection with the execution, delivery and performance of
any Opinion Document by the Lessee or Guarantor except as
contemplated by the Opinion Documents.
6. The execution and delivery by the Lessee and the
Guarantor of the Opinion Documents to which the Lessee and
the Guarantor are a party and the performance by each of the
Lessee and the Guarantor of its respective obligations
thereunder on or prior to the date hereof (a) does not
conflict with, result in a breach or violation of or
constitute a default under any law, statute, rule or
regulation (including, without limitation, Regulations G, T,
U and X of the Board of Governors of the Federal Reserve
System), of the United States of America or the State or any
governmental or regulatory body of either thereof or the
Delaware GCL, (b) will not result in a breach of the
certificate of incorporation or by-laws of either the
Guarantor or the Lessee and (c) does not result in a breach
or violation of, or constitute a default under, or result in
the creation or imposition of (or the obligation to create
or impose) any Lien upon any of the property or assets of
the Lessee or the Guarantor under, any indenture, mortgage,
contract or other instrument to which either the Lessee or
the Guarantor is a party or by which either of them or their
property may be bound which was listed as an Exhibit to the
Guarantor's Annual Report on Form 10-K filed with the
Securities and Exchange Commission for the Guarantor's
fiscal year ended January 28, 1996 or which would be
required to be listed as an Exhibit to the Guarantor's
Annual Report on Form 10-K for the current fiscal year if
such report were filed on the date hereof.
7. Neither the Lessee nor the Guarantor is (a) an
"investment company," or a company "controlled" by an
"investment company," within the meaning of the Investment
Company Act of 1940, or (b) a "holding company" as defined
in, or otherwise subject to regulation under, the Public
Utility Holding Company Act of 1935.
8. There is no action, suit, investigation,
litigation or proceeding to which the Guarantor or the
Lessee is a party pending or, to our knowledge, threatened
before any court, governmental agency or arbitrator that
purports to affect the legality, validity or enforceability
of any Operative Document or the consummation of the
transactions contemplated thereby.
<PAGE>
9. Assuming (i) the Commercial Paper Notes are and
will continue to be issued/offered and sold in strict
compliance with the terms of the Operative Documents and
(ii) the continuing compliance by all parties with all the
terms of the Operative Documents, offers and sales of the
Commercial Paper Notes will be exempt from registration
under the Securities Act of 1933.
10. It is not necessary to register the offer and sale
of the Notes or the Liquidity Notes under the Securities Act
of 1933, or to qualify the Loan Agreement or the Liquidity
Agreement under the Trust Indenture Act of 1939.
This opinion has been rendered solely for your benefit, and
for the benefit of your assignees, in connection with the
Operative Documents and the transactions contemplated thereby,
and it may not be relied upon, referred to, or otherwise used by
any other person or for any other purpose without our express
written consent in each instance. Our opinion is limited to the
matters expressly stated herein, and no opinion is implied or may
be inferred beyond the matters so stated. The opinions set forth
herein are as of the date hereof, and we make no undertaking to
supplement such opinions if, after the date hereof, facts or
circumstances come to our attention or changes in the law occur
that could affect our opinions.
Very truly yours,
KING & SPALDING
<PAGE>
Annex A
Lenders
Bank of America NT&SA
The Bank of New York
Deutsche Bank AG, New York Branch
The First National Bank of Chicago
First Union National Bank of Georgia
Morgan Guaranty Trust Co. of New York
NationsBank, N.A. (South)
SunTrust Bank, Atlanta
Toronto Dominion (Texas), Inc.
Union Bank of Switzerland
Wachovia Bank of Georgia, N.A.
<PAGE>
Annex B
Operative Documents
1. Participation Agreement, dated as of June 25, 1996, by and among
Lessee, Guarantor, Lessor, Facility Lender, Agent Bank and the
Lenders.
2. Assignment of Lease, dated as of June 25, 1996, by Lessor in favor
of the Facility Lender.
3. Construction Agency Agreement Assignment, dated as of June 25,
1996, by lessor in favor of the Facility Lender.
4. Loan Agreement, dated as of June 25, 1996, by and between Facility
Lender and Lessor.
5. Tranche A Note and Tranche B Note, each dated as of June [28,]
1996, made by Lessor in favor of Facility Lender.
6. Liquidity Agreement, dated as of June 25, 1996, by and among
Facility Lender, Agent Bank, the Documentation Agent and the
Lenders.
7. Security Agreement, dated as of June 25, 1996, among Lessor,
Facility Lender and Agent Bank.
8. Master Assignment, dated as of June 25, 1996, made by Facility
Lender in favor of Agent Bank.
9. Issuing and Paying Agency Agreement, dated as of June 25, 1996, by
and among the Issuing and Paying Agent, Facility Lender, Agent
Bank and Administrative Agent.
10. Private Placement Letter of Understanding, dated as of June 25,
1996, by and between the Placement Agent and the Facility Lender.
11. Private Placement Memorandum, dated as of June 28, 1996.
12. Administration Agreement dated as of June 25, 1996, between the
Facility Lender and the Administrative Agent.
<PAGE>
EXHIBIT D
TO PARTICIPATION AGREEMENT
FORM OF SUPPLEMENT TO ASSIGNMENT OF LEASE
SUPPLEMENT, dated as of __________________ (this "Supplement"), to
the ASSIGNMENT OF LEASE, dated as of June 25, 1996 (the "Assignment of
Lease"), made by CREDIT SUISSE LEASING 92A, L.P., (the "Lessor"), as
assignor in favor of HD REAL ESTATE FUNDING CORP., a Delaware
corporation (the "Facility Lender"), as assignee.
The parties hereto agree as follows:
1. The Property. In accordance with the Assignment of Lease, the
Lessor has executed this Supplement to subject the Lease between the
Lessor, as lessor, and Home Depot U.S.A., Inc., as lessee, as
supplemented by the Lease Supplement executed as of even date herewith
with respect to the Property described on Schedule 1, to the Assignment
of Lease. The description of the Property is attached hereto as
Schedule 2 and made a part hereof by this reference.
2. Integrated Assignment. Following the execution and delivery of
this Supplement, this Supplement, and all supplements previously
delivered under the Assignment of Lease, shall constitute a part of the
Assignment of Lease, a copy of which is attached hereto as Exhibit A
and made a part hereof by this reference.
3. Confirmation. Except as expressly supplemented hereby, the
provisions of the Assignment of Lease are and shall remain in full
force and effect. Further, the Lessor hereby reaffirms its obligations
under the Assignment of Lease.
IN WITNESS WHEREOF, the Lessor has caused this Supplement to be
duly executed as of the day and year first above written.
CREDIT SUISSE LEASING 92A, L.P., a
Delaware limited partnership
BY: CREDIT SUISSE, its general partner
By:______________________________________
Name:
Title:
<PAGE>
By:______________________________________
Name:
Title:
[ADD APPROPRIATE FORM
OF NOTARY BLOCK]
Exhibit A
to Supplement
[Copy of Assignment of Lease]
<PAGE>
Schedule 1
[Description of Property]
<PAGE>
LESSEE'S CONSENT
HOME DEPOT U.S.A., INC. (the "Lessee") hereby consents and
agrees to all of the terms of the Assignment of Lease dated as of
June 25, 1996 (as amended, supplemented or otherwise modified
from time to time, the "Assignment"), made by Credit Suisse
Leasing 92A, L.P. (the "Lessor"), as assignor to HD Real Estate
Funding Corp., a Delaware corporation ("Facility Lender"), as
assignee and further agrees as follows:
1. Acknowledgments. Confirmations and Agreements. The
Lessee acknowledges, confirms and agrees that: (a) the Lessee has
the right, power and authority to enter into this Consent (this
"Consent"); (b) the Lease, dated as of June 25, 1996, between the
Lessee and the Lessor (the "Lease"; capitalized terms used
herein, and not otherwise defined herein, shall have the meaning
assigned thereto in the Lease) is in full force and effect and
enforceable against Lessee in accordance with its terms; (c)
neither the Lessee nor, to the Lessee's knowledge, the Lessor is
in default in the observance or performance of any condition or
agreement to be observed or performed by the Lessee or the
Lessor, respectively, thereunder; (d) no Basic Rent has been paid
by the Lessee in advance; (e) no Rent has been waived, released,
reduced, discounted or otherwise discharged or compromised by the
Lessor; and (f) the Lessee has not received notice of any other
assignment of the Lessor's interest in the Lease other than as
permitted by the Operative Documents.
<PAGE>
2. Consent. (a) The Lessee, as lessee under the Lease,
consents to the Assignment and each of the terms thereof, and
agrees to pay and deliver to the Facility Lender (or its designee
or assignee) all Rent and other sums payable under the Lease
without any offset, deduction, defense, abatement, deferment,
diminution or counterclaim, and the Lessee will not assert any
offset, deduction, defense (other than the defense of payment to
the Facility Lender (or its designee or assignee)), abatement,
deferment, diminution or counterclaim in any proceeding brought
under the Assignment or with respect to the transactions
contemplated therein or herein; provided, that the Lessee shall
not pay or deliver to the Facility Lender any amounts
representing Excepted Payments. The Lessee will not, for any
reason whatsoever, seek to recover from the Facility Lender (or
its designee or assignee) any moneys paid to the Facility Lender
(or its designee or assignee) by virtue of the Assignment. The
Lessee agrees (i) to deliver to the Facility Lender (or its
designee or assignee) and the Lessor, at their addresses set
forth in the Participation Agreement or at such other addresses
as the Facility Lender or the Lessor, as the case may be, may
designate, duplicate originals or copies of all notices,
undertakings, demands, statements, documents and other
communications which the Lessee is required or permitted to
deliver pursuant to the Lease or the Assignment; (ii) that,
subject to the Excepted Rights, any
<PAGE>
notice delivered or declaration made to the Lessee by the
Facility Lender (or its designee or assignee) pursuant to the
Lease shall be effective as a notice given or declaration made to
the Lessee by the Lessor as lessor under the Lease; (iii) that
the Facility Lender (and its designee or assignee) shall not by
reason of the Assignment be subject to any liability or
obligation under the Lease; and (iv) that (other than with
respect to Excepted Payments and Excepted Rights) any waiver,
consent or approval by the Lessor under the Lease shall not be
valid unless approved in writing by the Facility Lender (or its
designee or assignee).
(b) The Lessee hereby agrees that upon a Lease Event
of Default, the Facility Lender (or its designee or
assignee) shall have the right to deliver a notice of
default under the Lease, which shall be effective for all
purposes under the Lease as if sent by the Lessor.
(c) To the extent that Lessee, in good faith, is
unable to determine whether a payment pursuant to the Lease
constitutes an Excepted Payment, it shall be entitled to
deposit such amount in the Collateral Account, with such
dispute to be resolved by the Participants.
3. Amendment or Termination of the Lease or the Assignment;
Facility Lender's Designation. The Lessee agrees that it will
not, except in accordance with the express terms of the Lease and
except with respect to Excepted Rights and Excepted Payments,
unilaterally or by agreement, subordinate, amend, supplement,
modify, extend (except in accordance with the express terms of
the Lease), discharge, waive or terminate the Lease or this
Consent or any provision of any thereof without the Facility
Lender's prior written consent, and that any attempted
subordination, amendment, supplement, modification, extension,
discharge, waiver or termination without such consent shall be
null and void. In the event that the Lease shall be amended or
supplemented as herein permitted, the Lease, as so amended or
supplemented, shall continue to be subject to the provisions of
the Assignment and this Consent without the necessity of any
further act by any of the parties hereto. Nothing in this
Section 3 shall be construed as limiting or otherwise affecting
in any way (i) the Lessor's Excepted Rights or (ii) the Facility
Lender's right to receive directly the Excepted Payments.
4. Continuing Obligations of the Lessor and the Lessee.
Neither the execution and delivery of the Assignment, nor any
action or inaction on the part of the Facility Lender shall
impair or diminish any obligations of the Facility Lender or the
Lessee under the Lease, and shall not impose on the Facility
Lender (or its designee or assignee) any such obligations, nor
shall it impose on the Facility Lender (or its designee or
assignee) a duty to produce Rent or cause the Facility Lender to
be a mortgagee in possession for any purpose.
<PAGE>
5. Severability. If any provision or provisions, or if any
portion of any provision or provisions, in this Consent is found
by a court of law of competent jurisdiction to be in violation of
any local, state or Federal ordinance, statute, law,
administrative or judicial decision, or public
policy, and if such court should declare such portion, provision
or provisions to be illegal, invalid, unlawful, void or
unenforceable as written, then it is the intent of the Lessee
that such portion, provision or provisions shall be given force
to the fullest possible extent that they are legal, valid and
enforceable, that the remainder of this Consent shall be
construed as if such illegal, invalid, unlawful, void or
unenforceable portion, provision or provisions were not contained
herein, and that the rights, obligations and interests of the
Lessor, the Facility Lender and the Lessee under the remainder of
this Consent shall continue in full force and effect.
<PAGE>
IN WITNESS WHEREOF, the Lessee has caused this Consent to be duly
executed as of ____ day of June, 1996.
HOME DEPOT U.S.A., INC.
By:________________________________
Marshall L. Day
Senior Vice President and
Chief Financial Officer
Attest:___________________________
Lawrence A. Smith
Assistant Secretary
[CORPORATE SEAL]
Signed, sealed and delivered
this _______ day of _____________,
1996 in the presence of:
________________________________
Unofficial Witness
________________________________
Notary Public
My Commission Expires:
_______________________________
[NOTARIAL SEAL]
<PAGE>
EXHIBIT E TO
PARTICIPATION AGREEMENT
__________________, 19___
To the Parties listed on
Schedule I attached hereto:
Ladies and Gentlemen:
We have acted as special counsel in the State of
____________________ (the "State") in connection with the transactions
contemplated by (i) that certain Participation Agreement (the
"Participation Agreement") dated as of June __, 1996, made by and among
Home Depot U.S.A., Inc., a Delaware corporation ("Lessee"), The Home
Depot, Inc., a Delaware corporation (the "Guarantor"), HD Real Estate
Funding Corp., a Delaware corporation (the "Facility Lender"), Credit
Suisse Leasing 92-A, L.P., a Delaware limited partnership (the
"Lessor"), Credit Suisse, as Agent Bank (the "Agent Bank") and the
financial institutions which are or may become parties thereto, as
lenders and (ii) each of the Other Agreements (as hereinafter defined).
All capitalized terms used herein and not otherwise defined herein
shall have the meanings set forth in Appendix 1 to the Participation
Agreement.
As such counsel, we have reviewed each of the following:
1. The Participation Agreement;
2. The Lease;
3. The form of the Lease Supplement(s) with
respect to the Properties located in the State
(the "Lease Supplements");
4. The Loan Agreement;
5. The Notes
6. The Mortgage with respect to the Property
located in the State (the "Mortgage");
7. The Construction Agency Agreement;
8. The form of the Construction Agency Agreement Supplement
with respect to the Property located in the State (the
"Construction Supplement")
9. The Assignment of Construction Agency Agreement and the
form of Supplement thereto with respect to the Property
located in the State (the "Construction Assignment
Supplement");
10. The Assignment of Leases and the form
of the Supplement thereto with respect to the
Property in the State;
<PAGE>
11. The Master Assignment and the form of
the Supplement thereto with respect to the
Property located in the State;
12. The Security Agreement;
13. The Liquidity Agreement;
14. The Liquidity Notes;
15. The form of Special Power of Attorney by Lessor in
favor of Lessee; and
16. The Financing Statements (the "Financing
Statements") and the Memorandum of Lease (the "Memorandum
of Lease"), in each case, described on Schedule II hereto
and to be filed in the Recordation offices (as defined
below).
For the purposes of this opinion, the documents identified
immediately above as: (a) documents Nos. (2) through and including (16)
are hereinafter referred to collectively as the "Other Agreements" and
(b) documents Nos. (2) through and including (6), (9) through and
including (12), and (16) are hereinafter referred to collectively as
the "Collateral Documents." The Participation Agreement and the Other
Agreements are referred to collectively as the "Agreements."
We have also examined such other records, documents, instruments,
certificates and materials and made such inquiries and considered such
matters and questions of law as we have deemed necessary to enable us
to render the opinions set forth below.
Based upon the foregoing and subject to the assumptions and
qualifications set forth below, it is our opinion that:
Qualification
1. Assuming the only business transacted by the
Lessor within the State is the ownership of the
Property and the leasing of the same to the Lessee,
neither the Lessor nor any partner thereof is
required under State law to qualify as a foreign
corporation or otherwise, in order to transact such
business in the State, or to execute, deliver,
perform or comply with the Agreements to which it
is a party. [If qualification is necessary, please
advise as to the cost and procedure for
qualification.]
<PAGE>
2. Assuming that the only business
transacted by the Facility Lender within the
State is the making of the Loans to the
Lessor and the holding of Collateral located
within the State to secure repayment thereof,
the Facility Lender is not required under
State law to qualify as a foreign corporation
or lender or otherwise in order to transact
such business in the State. [If
qualification is necessary, please advise as
to the cost and procedure for qualification.]
3. The Agent Bank is not required to be
qualified to do business, or file any
designation for service of process, or file
any reports in the State, or comply with any
statutory or regulatory requirement
applicable only to financial institutions
chartered or qualified to do business in the
State solely by reason of the execution and
delivery of any of the Agreements or any such
entity's participation in the transactions
contemplated thereby. [Cure provision: If it
were determined that such qualification and
filing were required, the validity of the
Agreement would not be affected thereby, but
any such entity not so qualified would be
precluded from enforcing its rights in the
courts of the State until such time as such
entity is qualified to transact business in
the State.]
4. Each of the Facility Lender and (as
assignee thereof) the Agent Bank meets all of
the requirements for a [mortgagee] under the
laws of the State in order to validly
execute, deliver, perform and comply with the
terms of the Agreements and no co-trustee,
license, residency requirement or other
requirements are applicable to the Agent
Bank.
Validity and Priority
5. Assuming due authorization, execution
and delivery of the Agreements (other than
the Lease, the Lease Supplement, the
Memorandum of Lease and the Special Power of
Attorney) by the respective parties thereto,
the Collateral Documents are and will be, the
legal, valid and binding obligations of the
parties thereto, enforceable against the
parties thereto in accordance with their
respective terms, subject to applicable
bankruptcy, insolvency, moratorium,
reorganization and similar laws affecting
creditors' rights generally, and subject, as
to enforceability, to general principles of
equity (regardless of whether enforcement is
sought in a proceeding in equity or at law).
6. Assuming due authorization, execution and
delivery by the respective parties thereto, the
Lease (including the Memorandum of Lease) and the
Lease Supplements are and will be, the legal,
valid and binding obligations of the parties
thereto, enforceable against the parties thereto
in accordance with their respective terms, subject
to applicable bankruptcy, insolvency, moratorium,
reorganization and similar laws affecting
creditors' rights generally, and principles of
equity (regardless of whether enforcement is
sought in a proceeding in equity or at law).
7. The Memorandum of Lease: (a) is in proper
form so as to comply with the recording
requirements of the State, (b) contains all
information required by the State for a Memorandum
of Lease and (c) upon recordation in the county
where the applicable Property is located, will
give constructive notice of the existence of the
applicable Lease and the Lease
<PAGE>
Supplement and the purchase options in favor
of the Lessee contained therein and of the rights
of Lessor thereunder.
8. The Security Agreement is in a form
sufficient to create and constitute a valid
security interest in favor of the Agent Bank,
under Article 9 of the UCC in the UCC Collateral
(as defined below) thereunder.
9. The Mortgage, together with the Master
Assignment (and the Supplement thereto) and
the Assignment of Lease (and the Supplement
thereto) (collectively, the "Mortgage
Documents") are in a form sufficient to
(i) create and constitute a valid security
interest in favor of the Agent Bank, as
assignee of the Facility Lender, under
Article 9 of the Uniform Commercial Code, as
adopted in the State (the "UCC"), in those
items and types of personal property which
are subject to the provisions of Article 9 of
the UCC (the "UCC Collateral"), (ii) be
accepted, upon payment of applicable
recording taxes, for recording by the
[describe officer who will accept instruments
for recordation] where the Mortgage Documents
will be recorded; and (iii) create and
constitute in favor of the Agent Bank, as
assignee of the Facility Lender, a valid lien
upon so much of the property conveyed thereby
as constitutes real property, including any
fixtures annexed thereto, in the State. The
recordation of the Mortgage Documents in the
[insert appropriate offices] (collectively,
the "Recordation Offices"), and the filing of
the Financing Statements in the [Name of
office for statewide UCC filing] (the "State
Corporation Commission") and the Recordation
Offices are the only recording, registration
or filing necessary to perfect, publish
notice of and preserve the lien of and
security interest in the real property,
including any fixtures annexed thereto, as
created by the Mortgage Documents except that
continuation statements relating to the
Financing Statements must be filed within
[six] months prior to the expiration of each
[five] year period following the original
filing of such Financing Statements in order
to continue the perfection of the security
interests created by the Mortgage Documents.
10. The Financing Statements are in proper
form for filing in the State. The due filing
and indexing of the Financing Statements
among the financing statements records of
[insert appropriate offices] will be
sufficient to perfect the security interest
created by the Mortgage, the Assignment of
Leases (and the Supplement), the Master
Assignment (and the Supplement), the Security
Agreement, the Lease and the Lease Supplement
in those items and types of the UCC
Collateral in which a security interest may
be perfected by the filing of a financing
statement in the state under the UCC (the
"F/S Collateral"). No further filing or
refiling or any other action is necessary
under the UCC to perfect or maintain such
perfection, except that a continuation
statement must be filed within the period of
[six] months prior to the expiration of
[five] years from the date of each original
filing and within the period of six months
prior to the expiration of each succeeding
period of five years from the date of such
original filing to maintain the effectiveness
of the filings referred to in this paragraph.
11. The courts of the State will enforce and
give effect to those provisions in the
Agreements which stipulate that such
documents shall be governed by and shall be
construed in accordance with, the laws of the
state of Georgia, except to the extent
<PAGE>
that the laws of the State or any other
state in which any of the Property is located
shall govern the effect of real estate
interests created, transferred or reserved
and the perfection and the effect of
perfection or non-perfection of liens and
security interests.
12. The Special Power of Attorney: (a) is in
proper form so as to comply with the
recording requirements of the State, and (b)
is in a form sufficient to create and
constitute a valid special power of attorney
in favor of Lessee under the laws of the
State.
Legality
13. Neither the execution and delivery of
the Agreements by, nor the fulfillment of or
the compliance with the provisions thereof
(including the making of the Loans by the
Facility Lender to the Lessor) by the
respective parties thereto, (i) results in a
violation of, or contravenes any State
statute, law, rule, code, ordinance or
regulation, in each case applicable to the
respective party; or (ii) requires any
approval, consent, license or withholding of
objection on the part of, or filing or
registration with, any governmental authority
or regulatory body in the State.
Taxation
14. Except for federal, state and local
franchise, withholding and income taxes, no
taxes, fees or other charges imposed by the
State, __________ County or any other local
governmental entity are payable by Agent
Bank, Facility Lender, the Lenders, Lessor,
Guarantor or Lessee solely as a result of (i)
the issuance of the Notes or the Liquidity
Notes, or the making of the Loans or the
Facility Loans, (ii) the acquisition by
Lessor of the Property situated in the State,
(iii) the leasing of the Property situated in
the State by Lessor to Lessee pursuant to the
Lease and Lease Supplement, as evidenced by
the recordation of the Memorandum of Lease
and (iv) the mortgaging of the Property
situated in the State by Lessor to Facility
Lender pursuant to the Mortgage and (v)
(except for nominal filing or recording fees
payable at the time of filing or recording)
the execution, and delivery, recordation or
filing (where applicable) of the Agreements
and all other instruments delivered in
connection with the transactions contemplated
thereby. [Please detail any intangible tax
or other recording taxes and other costs of
filing].
Our examination of the law relevant to our opinions given
herein is limited to the laws of the State. We have not made an
independent review of the laws of any other state and we express
no opinion as to any matters governed by the laws of any other
state.
Very truly yours,
___________________________________
By: ______________________________
<PAGE>
Schedule I
Addressees
Home Depot U.S.A., Inc.
The Home Depot, Inc.
HD Real Estate Funding Corp.
Credit Suisse Leasing 92-A, L.P.
Credit Suisse, as Agent Bank
Lenders from time to time party to the
Operative Documents
Schedule II
Financing Statements; Memoranda of Lease
[List all Lessor, Facility Lender and Agent Bank UCCs]
<PAGE>
EXHIBIT F
TO PARTICIPATION AGREEMENT
FORM OF PROPERTY CLOSING CERTIFICATE
TO: Credit Suisse, as Agent Bank
Credit Suisse Leasing 92A, L.P., as Lessor,
HD Real Estate Funding Corp., as Facility Lender
Each Lender party to the Participation Agreement
referred to below
Reference is hereby made to the Participation Agreement
dated as of June 25, 1996 (as heretofore amended, the
"Participation Agreement") among The Home Depot, Inc. (the
"Guarantor"), Home Depot U.S.A., Inc. (the "Lessee"), HD Real
Estate Funding Corp. (the "Facility Lender"), Credit Suisse, as
Agent Bank, and the Lenders party thereto. Capitalized terms not
otherwise defined herein are used herein as defined in Appendix 1
attached to the Participation Agreement, which Appendix is made a
part hereof by this reference.
Lessee hereby certifies to you that as of _________, 199_
(the "Property Closing Date") with respect to the Property
described on Schedule A hereto:
(a) the representations and warranties of Guarantor
and Lessee contained in each of the Operative Documents
shall be true and correct in all material respects as though
made on and as of such date, except to the extent such
representations or warranties relate solely to an earlier
date, in which case such representations and warranties
shall have been true and correct in all material respects on
and as of such earlier date;
(b) there has not occurred and is not continuing any
Facility Agreement Default or Facility Agreement Event of
Default and no Facility Agreement Default or Facility
Agreement Event of Default will have occurred after giving
effect to the making of the acquisition of the Property on
the Property Closing Date;
(c) the Available Commitments will be sufficient, in
the reasonable judgment of the Construction Agent, to
complete the Improvements on each Construction Period
Property and the Advances being made and which have been
made with respect to the Construction Period Properties will
not exceed the Maximum Property Losts for the
<PAGE>
Properties;
(d) Guarantor and Lessee have performed all agreements
contained in the Operative Documents to be performed by them
on or before the Property Closing Date;
(e) title to the Property to be acquired on the
Property Closing Date conforms to the representations and
warranties set forth in Section 9.3 of the Participation
Agreement; and
(f) the Estimated Completion Date for the Property to
be acquired on the Property Closing Date is not after the
last day of the Commitment Period or the Outside Completion
Date.
Lessee has caused this Property Closing Certificate to be
executed and delivered by its duly authorized officer as of the
Property Closing Date.
HOME DEPOT U.S.A., INC.
By:________________________________
_
Title:_____________________________
___
<PAGE>
SCHEDULE A
PROPERTY DESCRIPTION
<PAGE>
EXHIBIT G
TO PARTICIPATION AGREEMENT
[Letterhead of Ropes & Gray]
Each of the parties listed in Annex A attached hereto
Re: HD Real Estate Funding Corp.
Ladies and Gentlemen:
We have acted as counsel to HD Real Estate Funding Corp., a
Delaware corporation (the "Company"), in connection with the
execution and delivery by the Company of the agreements and
documents listed on Schedule I attached hereto (the "Company
Documents"). Capitalized terms which are not defined herein have
the meanings assigned to such terms in the Liquidity Agreement,
defined in Schedule I attached hereto.
We are familiar with the corporate proceedings taken by the
Company in connection with the Company Documents and the
transactions contemplated thereby. We have examined originals or
copies, certified or otherwise identified to our satisfaction, of
each of the Company Documents. We have also examined such
corporate records, certificates and other documents and such
questions of law as we have considered necessary or appropriate
as a basis for the opinions hereinafter expressed.
We express no opinion as to the laws of any jurisdiction
other than the Federal law of the United States of America, the
laws of The Commonwealth of Massachusetts and, to the extent
applicable to the opinions expressed herein, the General
Corporation Law of the State of Delaware.
With your approval, we have relied, as to certain matters of
fact, on information obtained from public officials, officers of
the Company, and other sources believed by us to be reliable, and
we have assumed that the signatures (other than those of the
Company) on all documents examined by us are genuine and that all
documents submitted to us as copies conform with the originals,
which assumptions we have not independently verified.
Based upon and subject to the foregoing, we are of the
opinion that:
1. (i) The Company is a corporation duly incorporated,
validly existing and in good standing under the laws of the State
of Delaware, and (ii) the Company has all requisite corporate
<PAGE>
power and authority to execute and deliver the Company Documents
and the Commercial Paper Notes and to perform its obligations
under the Company Documents and the Commercial Paper Notes.
2. The execution and delivery by the Company of the
Company Documents and the Commercial Paper Notes and the
performance by the Company of its obligations under the Company
Documents and the Commercial Paper Notes have been duly
authorized by all necessary corporate action (including any
necessary stockholder action) on the part of the Company and do
not violate or require any consent of or notice to any Person
under (i) any provision of the Certificate of Incorporation or By-
Laws of the Company, (ii) any agreement or instrument known to us
to which it is bound, other than the Company Documents, (iii) any
provision of the laws of The Commonwealth of Massachusetts or of
the General Corporation Law of the State of Delaware except for
compliance with "blue sky" or state securities laws (as to which
no opinion is expressed herein), or (iv) any applicable Federal,
Massachusetts or Delaware order or judgment applicable to the
Company and known to us. The Company Documents have been duly
executed and delivered by a duly authorized officer of the
Company on behalf of the Company and the Commercial Paper Notes
when completed and issued in accordance with the Issuing and
Paying Agency Agreement will have been duly executed and
delivered by a duly authorized officer of the Company on behalf
of the Company.
3. Based solely upon inquiry of officers of the Company
and without investigating court dockets or other governmental
records, there is no action, suit, proceeding, inquiry or
investigation at law or in equity pending before or by any court,
regulatory agency, public board or body nor, to the best of our
knowledge, is there any action, suit, proceeding, inquiry, or
investigation threatened against the Company (i) that would
affect the existence of the Company or the titles of its officers
to their respective offices, (ii) seeking to restrain or enjoin
the issuance, sale or delivery of the Commercial Paper Notes or
the execution and delivery by the Company of the Company
Documents, (iii) contesting the powers or authority of the
Company with respect to the execution and delivery by the Company
of the Company Documents or the Commercial Paper Notes or the
performance by the Company of the Company Documents or the
Commercial Paper Notes, or (iv) contesting or affecting any
action on the part of the Company contemplated by any of the
Company Documents or the Commercial Paper Notes.
4. The outstanding common stock of the Company is
beneficially owned (within the meaning of the Investment Company
Act of 1940, as amended, after given effect to the attribution
rules set forth in Section 3(c)(1)(A) and (B) thereof) by not
more than 5 persons.
<PAGE>
In rendering the foregoing opinion, it is expressly
understood that no opinion is expressed herein with respect to
(i) any authorization, consent, approval, license, exemption of
or filing or registration with any court or government
department, commission, board, bureau, agency or instrumentality
that is or may be required as a result of the type of assets that
the Company may own, in which the Company may invest or in which
the Company may have any right or interest, (ii) any United
States Federal laws affecting bank regulatory matters, and (iii)
except as expressly set forth in paragraph 4 above, the
Investment Company Act of 1940, as amended.
This opinion is solely for the benefit of the addressees
hereof, except that a copy of this opinion may be delivered to
Moody's Investors Service, Inc., Standard & Poor's Ratings
Services and Hunton & Williams, each of which may rely upon this
opinion to the same extent as if such opinion were addressed to
it. Each permitted assignee or participant of any Lender may
also rely on this opinion to such extent.
Very truly yours,
Ropes & Gray
<PAGE>
ANNEX A
Credit Suisse, as Agent Bank and Lender
Credit Suisse Leasing 92A, L.P., as Lessor
The Home Depot, Inc., as Guarantor
Home Depot U.S.A., Inc., as Lessee
The First National Bank of Chicago, as Issuing and Paying Agent
CS First Boston Corporation
Bank of America NT&SA
The Bank of New York
Deutsche Bank AG, New York Branch
The First National Bank of Chicago
First Union National Bank of Georgia
Morgan Guaranty Trust Co. of New York
Nationsbank, N.A. (South)
SunTrust Bank, Atlanta
Toronto Dominion (Texas), Inc.
Union Bank of Switzerland
Wachovia Bank of Georgia
<PAGE>
AGREEMENTS
1. The Participation Agreement dated as of June 25, 1996 by and among
the Corporation, as Facility Lender, The Home Depot, Inc., as
Guarantor, Home Depot U.S.A., Inc., as Lessee and Construction
Agent, Credit Suisse Leasing 92A, L.P., as Lessor, Credit Suisse,
as Agent Bank and Lender, and other financial institutions listed
on the signature pages to the Participation Agreement, or that may
hereafter become party to the Participation Agreement, as Lenders.
2. The Administration Agreement dated as of June 25, 1996 by and
between the Corporation and Credit Suisse, as Administrative
Agent.
3. The Loan Agreement dated as of June 25, 1996 by and between the
Corporation as lender and Credit Suisse Leasing 92A, L.P. as
borrower.
4. The Security Agreement dated as of June 25, 1996 by and between
the Corporation, Credit Suisse, and Credit Suisse Leasing 92A,
L.P.
5. The Liquidity Agreement dated as of June 25, 1996 by and between
the Corporation, as Borrower, the Financial Institutions Parties
To the Liquidity Agreement, as Lenders, Deutsche Bank AG, New York
Branch, as Documentation Agent and Credit Suisse, as Agent Bank.
6. The proposed Tranche A and Tranche B Notes (the "Notes") to be
issued by this Corporation to the Lender(s) pursuant to the terms
and conditions of the Liquidity Agreement.
7. The Facilitation Agreement dated as of June 25, 1996 by and
between the Corporation, J. H. Management Corporation, Credit
Suisse and The Home Depot, Inc.
8. The Issuing and Paying Agency Agreement dated as of June 25, 1996
between the Corporation and The First National Bank of Chicago, as
Issuing and Paying Agent.
9. The Master Assignment dated as of June 25, 1996 from the
Corporation, as Assignor to
<PAGE>
Credit Suisse, as Assignee.
10. The Assignment of Lease dated as of June 25, 1996 from Credit
Suisse Leasing, L.P., as assignor, to the Corporation, as
assignee.
11. The Assignment of Construction Agency Agreement dated as of June
25, 1996 between the Corporation and Credit Suisse Leasing 92A,
L.P.
12. The Private Placement Letter of Understanding dated June 25, 1996
between the Corporation and CS First Boston Corporation.
<PAGE>
[Letterhead of Hunton & Williams]
FILE: 51053.000002
June 28, 1996
To each of the Persons Listed
on Schedule A Attached Hereto
Re: The Home Depot, Inc./Commercial Paper/Lease Program
Ladies and Gentlemen:
We have acted as special counsel to CS First Boston
Corporation ("CS First Boston"), in connection with the
transactions contemplated by the Participation Agreement, dated
as of June 25, 1996 ("Participation Agreement"), among The Home
Depot, Inc., as Guarantor (the "Guarantor"), Home Depot U.S.A.,
Inc., as Lessee (the "Lessee"), HD Real Estate Funding Corp., as
Facility Lender (the "Facility Lender"), the financial
institutions named therein, as Lenders, Credit Suisse, as Agent
Bank and Lender (the "Agent Bank"), and Credit Suisse Leasing
92A, L.P., as Lessor (the "Lessor"). Capitalized terms used
herein and not otherwise defined herein shall have the respective
meanings assigned to such terms in Appendix 1 to the
Participation Agreement.
The opinions expressed below are furnished to you pursuant
to Section A(o) of Appendix 2 of the Participation Agreement.
Although we have not acted as counsel to the Facility Lender, we
are delivering this opinion at the request of CS First Boston in
connection with the transactions contemplated by the Operative
Documents. In arriving at the opinions expressed below, we have
examined the following documents:
<PAGE>
(a) the Participation Agreement.
(b) the Assignment of Lease, dated as of June 25,
1996, between Lessor and Facility Lender.
(c) the Construction Agency Agreement Assignment,
dated as of June 25, 1996, between Lessor and Facility
Lender.
<PAGE>
(d) the Loan Agreement, dated as of June 25, 1996,
between Facility Lender and Lessor.
(e) the Liquidity Agreement, dated as of June 25,
1996, among Facility Lender, Agent Bank, Lenders and
Documentation Agent.
(f) each of the Liquidity Tranche A Notes and
Liquidity Tranche B Notes, dated as of the date hereof
and executed by Facility Lender.
(g) the Security Agreement, dated as of June 25, 1996,
among Lessor, Facility Lender and Agent Bank.
(h) the Master Assignment, dated as of June 25, 1996,
between Facility Lender and Agent Bank.
(i) the Issuing and Paying Agency Agreement, dated as
of June 25, 1996, among Issuing and Paying Agent,
Facility Lender, Agent Bank and Administrative Agent.
(j) the Private Placement Letter of Understanding,
dated as of June 25, 1996, between CS First Boston and
Facility Lender.
(k) the Administration Agreement, dated as of June 25,
1996, between Facility Lender and Administrative Agent.
<PAGE>
(l) the Commercial Paper Notes.
The documents listed in paragraphs (a) through (l) above are
herein referred to as the "Facility Lender Documents."
We have also examined and relied on the originals, or copies
certified or otherwise identified to our satisfaction, of each of
the other Operative Documents, and such corporate documents and
records of the Facility Lender and such other instruments and
certificates of public officials, officers and representatives of
the Facility Lender and other Persons as we have deemed necessary
or appropriate for the purposes of this opinion.
In arriving at the opinions expressed below, we have made
such investigations of law, in each case as we have deemed
appropriate as a basis for such opinions. As to questions of
fact relevant to such opinions, we have relied upon
representations in the Facility Lender Documents and the other
Operative Documents and certificates and statements of the
Facility Lender and public officials, and we have not undertaken
to determine independently, and we do not assume any
responsibility for, the accuracy or completeness of any such
factual assertions.
In rendering the opinions expressed below, we have assumed
the correctness of (and express no opinion as to matters
addressed by) the opinions expressed in the opinion letter of
Ropes & Gray, as counsel to the Facility Lender, dated as of the
date hereof and addressed to us and to each of you, and we
believe you and we are justified in relying on such opinion. We
have also assumed, without independent investigation or inquiry,
(a) the authenticity of all documents submitted to us as
originals, (b) the execution and genuineness of all signatures on
all documents that we examined, (c) the due authorization,
execution and delivery of the Facility Lender Documents and the
other Operative Documents by each of the parties thereto, (d) the
legality, validity and binding effect of the Facility Lender
Documents and the other Operative Documents as to each of the
parties thereto other than the Facility Lender, (e) the
continuing compliance by all parties with all the terms of the
Operative Documents and (f) the conformity to authentic originals
of documents submitted to us as certified, conformed or
photostatic copies.
We have further assumed that (a) no discretionary act
of the Facility Lender or on its behalf will be taken after the
Initial Closing Date if such act might result in a violation of
law
<PAGE>
or breach or default under any agreement, decree, writ, judgment
or court order, (b) the Facility Lender will obtain all permits
and governmental approvals and take all other actions which are
both (i) relevant to performance of the Facility Lender Documents
or consummation of the transactions contemplated thereby, and
(ii) required in the future under applicable law.
With respect to the Facility Lender Documents listed in
(a) through (h), our opinion expressed in paragraph 4 below is
subject to the limitations that we express no opinion as to the
provisions of any Facility Lender Document which (a) permit or
require interest or a charge for the use of money (whether or not
denominated as interest and including all fees, premium,
prepayment or late charges, reimbursement of expenses and other
amounts), payable by any party thereto, that exceeds, for any
reason including acceleration of the maturity of the relevant
obligation, a rate of 5% per month, (b) permit or require the
payment by any person of interest on interest unless the
requirements of the Official Code of Georgia Annotated
("O.C.G.A.") 7-4-17 are satisfied, (c) permit or require the
payment by any obligor of a higher rate of interest after default
than before or the payment of a fee or charge in connection with
a prepayment of principal, to the extent any such payment is
determined to be a penalty or forfeiture, or (d) purport to avoid
or cure any breach of any applicable usury law (i.e., any "usury
savings" provision).
For the purpose of rendering this opinion, we have made such
additional legal and factual inquiries as we deemed necessary
under the circumstances. We have not examined any records of any
court, administrative tribunal or other similar entity in
connection with our opinion. For purposes of this opinion, the
term "Applicable Law" shall mean those laws, rules and
regulations of the State of New York, the State of Georgia and
the federal laws of the United States of America which, in our
experience, are normally applicable to transactions of the type
contemplated by the Facility Lender Documents.
Based upon the foregoing and subject to the qualifications
set forth below, we are of the opinion that:
1. The Commercial Paper Notes when issued and paid
for pursuant to the terms of the Issuing and Paying Agency
Agreement will constitute the legal, valid and binding
obligations of the Facility Lender enforceable in accordance with
their terms.
<PAGE>
2. Neither the execution and delivery of the Facility
Lender Documents by the Facility Lender, nor the consummation by
the Facility Lender of the transactions contemplated thereby will
violate any Applicable Law.
3. No consent, approval, authorization, filings or
order of any court or governmental agency, body or official is
required for the consummation by the Facility Lender of the
transactions contemplated by the Operative Documents, other than
such consent, approvals, authorizations, filings or order of any
court or governmental agency, body or official (i) as may be re
quired under the state securities or Blue Sky laws of any
jurisdiction in connection with the offer and sale of the
Commercial Paper Notes and (ii) that have been made or obtained
on or prior to the date hereof.
4. Each of the Facility Lender Documents constitutes
a legal, valid and binding obligation of the Facility Lender
enforceable against the Facility Lender in accordance with its
terms.
5. Assuming that the Commercial Paper Notes are
offered and sold by the Facility Lender in accordance with the
terms of the Issuing and Paying Agency Agreement and the Private
Placement Letter of Understanding, the Facility Lender 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.
Our opinions expressed above in paragraphs 1 and 4 are
subject to:
A. the effect of applicable bankruptcy, insolvency,
moratorium, reorganization, fraudulent transfer and other
similar laws affecting the rights and remedies of creditors,
B. general principles of equity, whether applied by a
court of law or equity,
C. the fact that certain provisions of the Facility Lender
Documents may not be
enforceable, but the inclusion of such provisions does not render
any Facility Lender Document invalid and the remedies available
under the Facility Lender Documents, in
<PAGE>
our opinion, are adequate for the practical realization of
the benefits intended to be provided thereby,
D. the effect and possible unenforceability of
contractual provisions providing for choice of governing
law,
E. the possible unenforceability of provisions
requiring indemnification for, or providing exculpation,
release or exemption from liability for, action or inaction,
to the extent such action or inaction involves negligence or
willful misconduct or to the extent otherwise contrary to
public policy,
F. the possible unenforceability of provisions of
waivers or advance consents that have the effect of waiving
statutes of limitation, marshalling of assets or similar
requirements, or as to the jurisdiction of courts, the venue
of actions, the right to jury trial or, in certain cases,
notice,
G. the possible unenforceability of provisions that
waivers or consents by a party may not be given effect
unless in writing or in compliance with particular
requirements or that a person's course of dealing, course of
performance, or the like or failure or delay in taking
actions may not constitute a waiver of related rights or
provisions or that one or more waivers may not under certain
circumstances constitute a waiver of other matters of the
same kind, and the possible unenforceability of provisions
permitting modifications of an agreement only in writing,
H. the effect of course of dealing, course of
performance, or the like that would modify the terms of any
agreement or the respective rights or obligations of the
parties under an agreement,
I. the possible unenforceability of provisions that
enumerated remedies are not exclusive or that a party has
the right to pursue multiple remedies without regard to
other remedies elected or that all remedies are cumulative,
<PAGE>
J. with respect to Facility Lender Documents listed
in (a) through (h), the effect of O.C.G.A. 13-1-11 on
provisions relating to attorneys fees,
K. the possible unenforceability of provisions that
determinations by a party or a party's designee are
conclusive,
L. the possible unenforceability of provisions that
the provisions of an agreement are severable,
M. the possible unenforceability of provisions
permitting the exercise, under certain circumstances, of
rights without notice or without providing opportunity to
cure failures to perform, and
N. the effect of agreements as to rights of set off
otherwise than in accordance with applicable law.
We call to your attention that the appointment of a
receiver of property located in the State of Georgia may only be
obtained in compliance with applicable laws and regulations of
the State of Georgia, notwithstanding contrary agreements in the
Facility Lender Documents, and that judicial precedent exists in
the State of Georgia to the effect that a requirement that a
party act "reasonably" may be so vague as to be unenforceable.
We express no opinion herein as to (a) the provisions
of Sections 11.6(g) of the Participation Agreement, (b) any
provisions of the Loan Agreement or any other Facility Lender
Document purporting to create a "trust" or (c) any Operative
Document, including any Operative Document attached or to be
attached as an exhibit or schedule to any Facility Lender
Document, other than the Facility Lender Documents.
We express no opinion as to the laws of any jurisdiction
other than the laws of the State of New York, the Federal laws of
the United States of America, and, solely with respect to
paragraph 4 as it applies to the Facility Lender Documents listed
in items (a) through (h), the laws of the State of Georgia. We
express no opinion as to any ERISA, federal or state tax laws,
any federal or state environmental laws, any federal or state
banking laws, any land use, zoning or safety laws, or any
regulations under any of the foregoing.
<PAGE>
This opinion is furnished to you solely in connection with
the Operative Documents and the transactions contemplated thereby
and may not be used, circulated, quoted, relied upon or otherwise
referred to for any other purpose without our prior written
consent.
Our opinions are limited to the matters stated herein, and
no opinion is implied or may be inferred beyond the matters
expressly stated herein. We do not undertake to advise you of
any changes in the opinions expressed herein from matters that
may hereafter arise or be brought to our attention or to revise
or supplement such opinions should the present laws of the
jurisdictions mentioned herein be changed by legislative action,
judicial decision or otherwise.
Very truly yours,
DM:DK:ED:GS
<PAGE>
Schedule A
CS First Boston Corporation
Park Avenue Plaza
55 East 52nd Street
New York, New York 10055
Credit Suisse (Agent Bank and Lender)
Tower 49
12 East 49th Street
New York, New York 10017
Each of the Lenders named in
Annex A attached hereto
Credit Suisse Leasing 92A, L.P. (Lessor)
12 East 49th Street
New York, New York 10017
The Home Depot, Inc. (Guarantor)
2455 Paces Ferry Road
Atlanta, Georgia 30330
Home Depot U.S.A., Inc. (Lessee)
2455 Paces Ferry Road
Atlanta, Georgia 30330
The First National Bank of Chicago (Issuing and Paying Agent)
One First National Plaza, Suite 0439
Chicago, Illinois 60670
Moody's Investor Service, Inc.
Structured Finance Group
99 Church Street, Fourth Floor
New York, New York 10007
Standard & Poor's Ratings Group
25 Broadway - 13th Floor
New York, New York 10004
Attention: Commercial Paper Department
<PAGE>
Annex A
Lenders
Bank of America NT&SA
The Bank of New York
Deutsche Bank AG, New York Branch
The First National Bank of Chicago
First Union National Bank of Georgia
Morgan Guaranty Trust Co. of New York
NationsBank, N.A. (South)
SunTrust Bank, Atlanta
Toronto Dominion (Texas), Inc.
Union Bank of Switzerland
Wachovia Bank of Georgia
<PAGE>
EXHIBIT H
TO PARTICIPATION AGREEMENT
FORM OF COMPLETION DATE CERTIFICATE
TO: Credit Suisse, as Agent Bank
Credit Suisse Leasing 92A, L.P., as Lessor,
HD Real Estate Funding Corp., as Facility Lender
Each Lender party to the Participation Agreement
referred to below
Reference is hereby made to the Participation Agreement
dated as of June 25, 1996 (as heretofore amended, the
"Participation Agreement") among The Home Depot, Inc. (the
"Guarantor"), Home Depot U.S.A., Inc. (the "Lessee"), HD Real
Estate Funding Corp. (the "Facility Lender"), Credit Suisse, as
Agent Bank, and the Lenders party thereto. Capitalized terms not
otherwise defined herein are used herein as defined in Appendix 1
attached to the Participation Agreement, which Appendix is made a
part hereof by this reference. This Certificate is being
delivered pursuant to Section 8(b) of the Participation Agreement
with respect to the Property described on Schedule A attached
hereto (the "Completed Property").
Lessee hereby certifies to you that as of __________, 199__
(the "Completion Date"):
(i) all amounts owing to third parties for the
construction of the Improvements on the Completed Property
have been paid in full (or are being contested in good faith
or held until completion of certain punch list items and the
amount being contested or held back does not exceed ten
percent (10%) of the related Property Cost), and no
litigation or proceedings are pending, or to the best of
Lessee's knowledge, are threatened, against such Property or
Lessee which could have a Material Adverse Effect;
(ii) a Certificate of Occupancy (temporary or
permanent) and all material Governmental Action required for
the construction and operation of the Completed Property
have been obtained and are in full force and effect;
(iii) the Completed Property has available all
services of public facilities and other utilities necessary
for use and operation of the Facility and the other
Improvements
<PAGE>
on the Completed Property for their intended purposes,
including (as applicable), without limitation, adequate
water, gas and electrical supply, storm and sanitary sewerage
facilities, telephone, other required public utilities and
means of access between the Facility and public highways for
pedestrians and motor vehicles;
(iv) all material agreements, easements and other
rights, public or private, which are necessary to permit the
lawful use and operation of the Completed Property as the
Lessee intends to use such 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
Lessee has no actual knowledge of any pending modification
or cancellation of any of the same; and the use of the
Completed Property does not depend on any variance, special
exception or other municipal approval, permit or consent
that has not been obtained and is in full force and effect
for its continuing legal use;
(v) all of the requirements and conditions set forth
in Section 8(a) of the Participation Agreement with respect
to the Completed Property have been completed and fulfilled;
(vi) no changes or modifications were made with respect
to the related Plans and Specifications after the related
Property Closing Date that have had a material adverse
effect on the current value, residual value, operation, use
or useful life of such Completed Property;
(vii) upon the execution and delivery of a Lease
Supplement with respect to the Improvements constructed on
the Completed Property, Lessee will have unconditionally
accepted such Improvements subject to such Lease Supplement
and will have good and marketable title to a valid and
subsisting leasehold interest in the Completed Property,
subject only to Permitted Exceptions; and
(viii) the representations set forth in Section
9.3(g) of the Participation Agreement are true and correct
as to the Completed Property on the Completion Date.
Lessee has caused this Completion Date Certificate to be
executed and delivered by its duly authorized officer this
________________, 199__.
HOME DEPOT U.S.A., INC.
<PAGE>
By:________________________________
_
Title:_____________________________
___
<PAGE>
SCHEDULE A
Description of Property
<PAGE>
EXHIBIT I
TO PARTICIPATION AGREEMENT
[Letterhead of Hunton & Williams]
June 28, 1996
To each of the Persons Listed
on Schedule A Attached Hereto
Re: The Home Depot, Inc./Commercial Paper/Lease
Program
Ladies and Gentlemen:
We have acted as special counsel to Credit Suisse
Leasing 92A, L.P., a Delaware limited partnership (the "Lessor"),
in connection with the transactions contemplated by the
Participation Agreement, dated as of June 25, 1996 (the
"Participation Agreement"), among The Home Depot, Inc., as
Guarantor, Home Depot U.S.A., Inc., as Lessee, HD Real Estate
Funding Corp., as Facility Lender, the financial institutions
named therein as Lenders, Credit Suisse as Agent Bank and a
Lender, and the Lessor. Capitalized terms used herein and not
otherwise defined herein shall have the respective meanings
assigned to such terms in Appendix 1 to the Participation
Agreement. The opinions expressed below are furnished to you
pursuant to Section A(r) of Appendix 2 of the Participation
Agreement.
As such counsel and for purposes of this opinion
letter, we have reviewed the following documents;
(1) the Participation Agreement;
(2) the Loan Agreement dated as of June 25,
1996 (the "Loan Agreement"), between the Lessor
and the Facility Lender;
(3) the Tranche A Note and the Tranche B
Note, each dated June 28, 1996 made by the Lessor;
(4) the Lease dated as of June 25, 1996 (the
"Lease") between the Lessor and the Lessee;
(5) the Assignment of Lease dated June 25,
1996 (the "Lease Assignment") made by the Lessor
to the Facility Lender;
<PAGE>
(6) the Construction Agency Agreement dated
as of June 25, 1996 (the "Construction Agency
Agreement"), between the Lessor and the Lessee;
(7) the Construction Agency Assignment dated
as of June 25, 1996 (the "Construction Agency
Assignment") between the Lessor and the Facility
Lender;
(8) the Consent to Master Assignment dated
as of June 25, 1996 (the "Master Assignment
Consent") made by, among others, the Lessor; and
(9) the Security Agreement dated as of June
25, 1996 (the "Security Agreement") among the
Facility Lender, the Agent Bank and the Lessor.
(The agreements, instruments and other documents described at
items (1) through (9) are referred to in this opinion letter as
the "Transaction Documents.")
We have also examined and relied on the originals, or
copies certified or otherwise identified to our satisfaction, as
being true copies, of such other instruments and certificates of
public officials, officers and representatives of the Lessor and
other Persons as in our judgment are necessary or appropriate to
enable us to render the opinions expressed below.
In rendering the opinions expressed below we have
assumed the correctness of the opinions expressed in the opinion
letter of even date addressed to each of you and delivered by
Judith Levy, Legal Counsel of Credit Suisse, and we believe you
and we are justified in relying on such opinion. We have also
assumed (a) that each party to the Transaction Documents (other
than the Lessor) (i) is duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization,
(ii) has executed and delivered the Transaction Documents and all
other Operative Documents to be executed and delivered on the
Initial Closing Date pursuant to due authorization, and (iii) has
the requisite power to perform its obligations under the
Operative Documents in accordance with their respective terms and
has complied with all laws applicable to it that affect the
transactions contemplated by the Operative Documents or its
ability to enforce its rights thereunder, (b) the genuineness of
all signatures, (c) the authenticity of all documents submitted
to us as originals and the conformity to authentic originals of
all documents submitted to us as certified, conformed or
photostatic copies, and (d) that the Transaction Documents
constitute the legal, valid and binding obligations of each party
thereto (other than the Lessor), enforceable against each such
party in accordance with their respective terms.
We have further assumed that (a) no discretionary act
of the Lessor or on its behalf will be taken after the Initial
Closing Date if such act might result in a violation of law or
breach or default under any agreement, decree, writ, judgment or
court order, (b) the Lessor will obtain all permits and
governmental approvals and take all other actions which are both
(i) relevant to performance of the Transaction Documents or
consummation of the transactions contemplated thereby, and (ii)
required in the future under applicable law and (c) the Lessor
holds requisite right and title to the property purported to be
conveyed pursuant to the Lease or the Security Agreement.
<PAGE>
Our opinion expressed in paragraph 2 below is subject
to the limitations that we express no opinion as to the
provisions of any Transaction Document which (a) permit or
require interest or a charge for the use of money (whether or not
denominated as interest and including all fees, premium,
prepayment or late charges, reimbursement of expenses and other
amounts), payable by any party thereto, that exceeds, for any
reason including acceleration of the maturity of the relevant
obligation, a rate of 5% per month, (b) permit or require the
payment by any person of interest on interest unless the
requirements of the Official Code of Georgia Annotated
("O.C.G.A.") 7-4-17 are satisfied, (c) permit or require the
payment by any obligor of a higher rate of interest after default
than before or the payment of a fee or charge in connection with
a prepayment of principal, to the extent any such payment is
determined to be a penalty or forfeiture, or (d) purport to avoid
or cure any violation of any applicable usury law (i.e., any
"usury savings" provision).
In this opinion letter, we express no opinion as to any
federal or state securities laws or tax laws, any federal or
state banking laws, any federal or state environmental laws, any
land use or zoning laws, ERISA, or health or occupational safety
laws, nor do we express any opinion as to title to any property
or as to the perfection or priority of any lien or security
interest in any property.
As to factual matters material to the opinions
hereinafter expressed, we have relied upon the representations
and warranties contained in the Operative Documents and
certificates and statements of the Lessor and public officials.
We have made no independent investigation of any docket or other
public records for any purpose of this opinion letter.
In rendering the opinions expressed below, we have also
made such investigation of law as we have deemed appropriate as a
basis for such opinions. The opinions expressed below are
limited to the federal laws of the United States of America and
to the laws (excluding provisions as to conflicts of laws).
When our opinions expressed below are stated "to the best of
our knowledge," that knowledge is based upon the actual
knowledge, without inquiry, of the attorneys in this firm who are
currently involved in the legal representation of the Lessor in
connection with this transaction.
On the basis of the foregoing, and in reliance thereon,
and subject to the limitations, qualifications and exceptions set
forth below, we are of the opinion that:
1. The Security Agreement is in a form sufficient to
create a valid security interest in favor of the Agent Bank,
under Article 9 of the Uniform Commercial Code as in effect in
the State (the "UCC"), in such of the Collateral (as defined
thereunder) as consists of items and types of personal property,
a security interest in which may be created under Article 9 of
the UCC.
2. Each of the Transaction Documents constitutes the
legal, valid and binding obligation of the Lessor, enforceable
against the Lessor in accordance with its terms.
3. The execution and delivery of, and performance of
its obligations under, the Transaction Documents by the Lessor do
not and will not violate any law, rule or regulation of the State
of Georgia or the federal laws of the United States of America
which, in our experience, are normally applicable to transactions
of the type contemplated by the Transaction Documents.
<PAGE>
We hereby confirm that there is no action, suit or
proceeding of or before any court or administrative body pending
or overtly threatened against the Lessor.
Our opinions expressed above in paragraphs 1 and 2 are
subject to:
A. the effect of applicable bankruptcy, insolvency,
moratorium, reorganization, fraudulent transfer and other
similar laws affecting the rights and remedies of creditors,
B. general principles of equity, whether applied by a
court of law or equity,
C. the fact that certain provisions of the
Transaction Documents may not be enforceable, but the
inclusion of such provisions does not render any Transaction
Document invalid and the remedies available under the
Transaction Documents, in our opinion, are adequate for the
practical realization of the benefits intended to be
provided thereby,
D. the effect and possible unenforceability of
contractual provisions providing for choice of governing
law,
E. the possible unenforceability of provisions
requiring indemnification for, or providing exculpation,
release or exemption from liability for, action or inaction,
to the extent such action or inaction involves negligence or
willful misconduct or to the extent otherwise contrary to
public policy,
F. the possible unenforceability of provisions of
waivers or advance consents that have the effect of waiving
statutes of limitation, marshalling of assets or similar
requirements, or as to the jurisdiction of courts, the venue
of actions, the right to jury trial or, in certain cases,
notice,
G. the possible unenforceability of provisions that
waivers or consents by a party may not be given effect
unless in writing or in compliance with particular
requirements or that a person's course of dealing, course of
performance, or the like or failure or delay in taking
actions may not constitute a waiver of related rights or
provisions or that one or more waivers may not under certain
circumstances constitute a waiver of other matters of the
same kind, and the possible unenforceability of provisions
permitting modifications of an agreement only in writing,
H. the effect of course of dealing, course of
performance, or the like that would modify the terms of any
agreement or the respective rights or obligations of the
parties under an agreement,
I. the possible unenforceability of provisions that
enumerated remedies are not exclusive or that a party has
the right to pursue multiple remedies without regard to
other remedies elected or that all remedies are cumulative,
J. the effect of O.C.G.A. 13-1-11 on provisions
relating to attorneys fees,
<PAGE>
K. the possible unenforceability of provisions that
determinations by a party or a party's designee are
conclusive,
L. the possible unenforceability of provisions that
the provisions of an agreement are severable,
M. the possible unenforceability of provisions
permitting the exercise, under certain circumstances, of
rights without notice or without providing opportunity to
cure failures to perform, and
N. the effect of agreements as to rights of set off
otherwise than in accordance with applicable law.
We call to your attention that the appointment of a
receiver of property located in the State of Georgia may only be
obtained in compliance with applicable laws and regulations of
the State of Georgia, notwithstanding contrary agreements in the
Transaction Documents, and that judicial precedent exists in the
State of Georgia to the effect that a requirement that a party
act "reasonably" may be so vague as to be unenforceable.
With respect to our opinion expressed in paragraph 2
above, Section 552 of the Bankruptcy Reform Act of 1978 (Title
11, United States Code) (the "Bankruptcy Code"), may limit the
creation of a security interest in property acquired by the
debtor after commencement of a case under the Bankruptcy Code
pursuant to an agreement entered into prior to the commencement
of such case.
We express no opinion herein as to (a) the provisions
of Sections 11.6(g) and 11.7 of the Participation Agreement, (b)
any provisions of the Loan Agreement or any other Transaction
Document purporting to create a "trust" or (c) any Operative
Document, including any Operative Document attached or to be
attached as an exhibit or schedule to any Transaction Document,
other than the Transaction Documents.
This opinion is furnished by us at the request of the
Lessor, solely for your benefit in connection with the
transactions contemplated by the Operative Documents and may not
be used, circulated, quoted, relied upon or otherwise referred to
for any other purpose without our prior written consent.
The opinions expressed herein are limited to the
matters stated herein, and no opinion is implied or may be
inferred beyond the matters expressly stated herein. We do not
undertake to advise you of any changes in the opinions expressed
herein due to matters that may hereafter arise or be brought to
our attention nor to revise or supplement such opinions should
the present laws of the jurisdictions mentioned herein be changed
by legislative action, judicial decision or otherwise.
Very truly yours,
DM:DK:ED:GS
<PAGE>
Schedule A
CS First Boston Corporation
Park Avenue Plaza
55 East 52nd Street
New York, NY 10055
Credit Suisse (Agent Bank)
Tower 49
12 East 49th Street
New York, New York 10017
Each of the Lenders named in
Annex A attached hereto
Credit Suisse Leasing 92A, L.P. (Lessor)
12 East 49th Street
New York, New York 10017
The Home Depot, Inc. (Guarantor)
2455 Paces Ferry Road
Atlanta, Georgia 30330
Home Depot U.S.A., Inc. (Lessee)
2455 Paces Ferry Road
Atlanta, Georgia 30330
The First National Bank of Chicago (Issuing and Paying Agent)
One First National Plaza, Suite 0439
Chicago, Illinois 60670
Moody's Investor Service, Inc.
Structured Finance Group
99 Church Street, Fourth Floor
New York, New York 10007
Standard & Poor's Ratings Group
25 Broadway - 13th Floor
New York, New York 10004
Attention: Commercial Paper Department
<PAGE>
Annex A
Lenders
Bank of America NT&SA
The Bank of New York
Deutsche Bank AG, New York Branch
The First National Bank of Chicago
First Union National Bank of Georgia
Morgan Guaranty Trust Co. of New York
NationsBank, N.A. (South)
SunTrust Bank, Atlanta
Toronto Dominion (Texas), Inc.
Union Bank of Switzerland
Wachovia Bank of Georgia
<PAGE>
EXHIBIT J
TO PARTICIPATION AGREEMENT
ASSIGNMENT OF LEASE
dated as of June 25, 1996
from
CREDIT SUISSE LEASING 92A, L.P., as assignor
to
HD REAL ESTATE FUNDING CORP., as assignee
<PAGE>
ASSIGNMENT OF LEASE
THIS ASSIGNMENT OF LEASE, dated as of June 25, 1996 (this
"Assignment"), made by CREDIT SUISSE LEASING 92A, L.P., a
Delaware limited partnership (the "Lessor"), as assignor to HD
REAL ESTATE FUNDING CORP., a Delaware corporation (the "Facility
Lender"), as assignee.
Preliminary Statement
Pursuant to that certain Loan Agreement dated as of even
date herewith by and between the Facility Lender, as lender and
the Lessor, as borrower (as hereafter amended, modified or
supplemented, the "Loan Agreement"), the Facility Lender has
agreed to make Loans to the Lessor from the proceeds of certain
commercial paper notes issued by, and backstop liquidity loans
made to, the Facility Lender in an aggregate principal amount not
to exceed $291,000,000, upon the terms and subject to the
conditions set forth therein, to be evidenced by the notes
("Notes") issued by the Lessor under the Loan Agreement.
It is a condition, among others, to the obligation of the
Facility Lender to make its Loans to the Lessor under the Loan
Agreement that the Lessor shall have executed and delivered, and
the Lessee shall have consented to, this Assignment to the
Facility Lender.
In order further to secure payment of all the amounts advanced
under the Loan Agreement, the Notes and the other Security Documents,
the Lessor and the Facility Lender have agreed to enter into,
execute, and deliver this Assignment.
NOW, THEREFORE, in consideration of the foregoing, the parties
hereto agree as follows:
1. Defined Terms. Capitalized terms used but not otherwise
defined in this Assignment shall have the respective meanings
specified in Appendix 1 attached to the Participation Agreement and
made a part hereof by this reference; and the rules of interpretation
set forth in such Appendix 1 shall apply to this Assignment.
2. Assignment. The Lessor hereby irrevocably assigns,
transfers, sets over and conveys to the Facility Lender all the
following described property relating to or arising in connection
with the Properties, whether now owned or held or hereafter acquired,
exclusively and without any reservation
thereof unto the Facility Lender, excluding, in each case, Excepted
Payment and Excepted Rights:
<PAGE>
(a) All of the estate, right, title, interest, benefits,
powers and privileges of the Lessor, as lessor, under the Lease
(including all Lease Supplements) including, but not by way of
limitation except as set forth in the following proviso, (i) the
immediate and continuing right to make claim for, receive,
collect and receipt for all rents, income, revenues, issues,
profits, insurance proceeds, condemnation awards, sales proceeds
and other sums payable to or receivable by the Lessor under the
Lease, or pursuant to any provisions thereof, whether as rent or
as the purchase price or termination payment for any interest in
any Property or otherwise (including, without limitation, the
Residual Value Guarantee, the Purchase Option Price, the
Property Balance and any sales proceeds payable to the Lessor
pursuant to the Lease) (collectively, the "Lease Rents"),
including all cash, securities or letters of credit delivered or
deposited pursuant thereto to secure performance by the Lessee
of its obligations under the Lease, (ii) the right to declare
the Lease to be in default under Section 17.1 thereof, (iii) the
right to exercise remedies under or with respect to the Lease,
(iv) the right to make all waivers and agreements on behalf of
the Lessor under the Lease provided for or permitted under such
Lease, (v) the right to give all notices, consents, releases and
other instruments provided under the Lease, (vi) the right to
give all notices of default and to take all action upon the
happening of a Lease Default or a Lease Event of Default,
including the commencement, conduct and consummation of
proceedings as shall be permitted under any provision of the
Lease, or by law or in equity, (vii) the right to receive all
notices sent to the Lessor under the Lease, (viii) the Lessor's
interest under the Lease in the Lessee's tangible and intangible
property used or arising in connection with any Property,
including, but not limited to, permits, licenses, contract
rights and prepaid expenses, and (ix) the right to do any and
all other things whatsoever which the Lessor is or any lessor
is, or may be entitled to do under the Lease, in each case the
Lessor hereby agrees that any action taken by the Facility
Lender (or its designee) pursuant to this Assignment shall be
exclusive, and no party relying on such action of the Facility
Lender (or such designee) pursuant hereto shall be required to
obtain the concurrence or consent of the Lessor to such action
or to a request for such action; provided, however, that in each
case the Lessor shall retain, and the foregoing assignment shall
in no event include, the Excepted Payments, and the Lessor shall
retain, and the rights and powers assigned herein shall in no
event include the Excepted Rights.
(b) All of the estate, right, title, interest, benefits,
powers and privileges of the Lessor, to and under all other
leases, subleases or licenses of each Property, any license,
concession, management, mineral or other agreements of a similar
kind that permit the use or occupancy of any Property or any
part thereof for any purpose in return for any payment, or
permit the extraction or taking of any gas, oil, water or other
minerals from any Property or any part thereof in return for
payment of any fee, rent or royalty, now or hereafter entered
into by <PAGE>
the Lessor (collectively, the "Other Leases"), together with all
estate, rights, title, interest, benefits, powers and privileges
of the Lessor, as lessor, under the Other Leases including,
without limitation, the immediate and continuing right to make
claim for, receive, collect and receipt for all charges, fees,
income, issues, profits, receipts, rents, revenues or royalties
payable under any of the Other Leases (collectively, the "Other
Lease Rents") and all estate, right, title and interest of the
Lessor thereunder, including all cash, securities or letters of
credit delivered or deposited thereunder to secure performance
by the Lessee of its obligations thereunder; provided, however,
that the Lessor shall retain, and the Other Lease Rents shall in
no event include, the Excepted Payments, and the rights and
powers assigned herein shall in no event include the Excepted
Rights.
(c) All of the estate, right, title, interest, benefits,
powers and privileges of the Lessor, to and under all agreements
or contracts for the sale or other disposition of all or any
part of any Property, now or hereafter entered into by the
Lessor (collectively, the "Contracts"), together with all
estate, right, title, interest, benefits, powers and privileges
of the Lessor under the Contracts including, without limitation,
the immediate and continuing right to make claim for, receive,
collect and receipt for all charges, fees, income, issues,
profits, receipts, rents, revenues or royalties payable under
any of the Contracts (collectively, the "Contract Rents" and,
together with the Rent and the Other Lease Rents, the "Rents")
and all right, title and interest of the Lessor thereunder,
including all cash, securities or letters of credit deposited
thereunder to secure performance by the obligors of their
obligations thereunder; provided, however, that the Lessor shall
retain, and the Contract Rents shall in no event include, the
Excepted Payments, and the rights and powers assigned herein
shall in no event include the Excepted Rights.
(d) All of the right, title and interest of the Lessor in
and to all claims and rights to the payment of money at any time
arising in connection with any repudiation, rejection or breach
of the Lease by the Lessee or a trustee or receiver of the
Lessee (or any Other Lease by any lessee thereunder, trustee or
receiver of any such lessee) under any insolvency statute, law
or regulation, including, without limitation, all rights to
recover damages arising out of such breach or rejection, all
rights to charges payable by the Lessee or such trustee or
receiver (or by such lessee, trustee or receiver) in respect of
any Property or any portions thereof following rejection,
repudiation or disaffirmance of the Lease or following the
entry of an order for relief under any insolvency statute, law
or regulation in respect of the Lessee (or such lessee) and all
rentals and other charges outstanding under the Lease (or Other
Lease) as of the date of entry of such order for relief;
provided, however, that the Lessor shall retain all rights with
respect to the Excepted Payments, and the rights and powers
assigned herein shall in no event include the Excepted Rights.
<PAGE>
Upon the respective Property Closing Date with respect to each
Property, the Lessor shall execute and deliver a supplement to this
Assignment in the form of Exhibit A attached hereto and made a part
hereof by this reference, appropriately completed, pursuant to which
the Lessor shall acknowledge and agree that such Property will be
governed by the terms of this Assignment. Following the execution
and delivery of a supplement to this Assignment as provided above,
such supplement and all supplements previously delivered under this
Assignment, shall constitute a part of this Assignment.
3. Receipt of Rents. The Lessor hereby irrevocably designates
the Facility Lender (or its designee or assignee) to receive all
payments of the Lease Rents, the Other Lease Rents and the Contract
Rents and any other sums payable to the Lessor under the Lease, any
Other Lease or any Contract other than those constituting Excepted
Payments. The Lessor agrees to direct (and hereby directs) the
Lessee, each other lessee and each contracting party to deliver to
the Facility Lender (or its designee or assignee), at its address set
forth herein or at such other address or to such other Person as the
Facility Lender shall designate, all such payments and sums on
account of the Lease Rents, and Other Lease Rents and the Contract
Rents, and no delivery thereof by the Lessee, any other lessee or any
contracting party shall be of any force or effect unless made to the
Facility Lender (or its designee or assignee), as herein provided.
4. Delivery of Lease; Receipt of Notices. Upon execution and
delivery thereof to the Lessor, the Lessor shall deliver to the
Facility Lender (or its designee or assignee) the original of the
Lease and of each Lease Supplement. The Lessor hereby designates the
Facility Lender (or its designee or assignee) to receive (in addition
to, and not to the exclusion of, the Lessor) duplicate originals or
copies of all notices, undertakings, demands, statements, documents,
financial statements and other communications which the Lessee, any
other lessee or any contracting party is required or permitted to
give, make, deliver to or serve pursuant to the Lease, any Other
Lease or any Contract. The Lessor agrees to direct (and hereby
directs) the Lessee, each other lessee and each contracting party to
deliver to the Facility Lender (or its designee or assignee), at its
address set forth herein or at such other address or to such other
Person as the Facility Lender shall designate, duplicate originals or
copies of all such notices, undertakings, demands, statements,
documents, financial statements and other communications, and no
delivery thereof by the Lessee, any other lessee or any contracting
party shall be of any force or effect unless made to the Lessor and
also made to the Facility Lender (or its designee), as herein
provided. The Lessor further agrees that upon receipt by the Lessor
of any such notices, undertakings, demands, statements, documents,
financial statements and other communications, the Lessor shall
promptly deliver copies thereof to the Facility Lender unless the
Lessor shall reasonably believe that the Facility Lender has already
received such copies.
5. Irrevocability; Supplemental Instruments. The Lessor agrees
that this Assignment and the designation and direction to the Lessee
set forth in Sections 1 and 2 of this Assignment are irrevocable
<PAGE>
and that it will not take any action as lessor under the Lease or
otherwise which is inconsistent with this Assignment and that any
action, assignment, designation or direction inconsistent herewith
shall be void. The Lessor will from time to time execute and deliver
all instruments of further assurance and do such further acts as may
be necessary or proper to carry out more effectively the purpose of
this Assignment.
6. The Lessor Remains Liable. While the assignment made hereby
is present, direct and continuing, it has been made for the purpose
of providing the Facility Lender with security for the performance of
the Lessor's obligations under the Loan Agreement and the Notes and
the execution and delivery hereof shall not impair or diminish in any
way the obligations of the Lessor under the Lease or impose any of
such obligations on the Facility Lender. This Assignment shall not
operate to cause the Facility Lender (or its designee or assignee) to
be regarded as a mortgagee in possession. Neither the Facility
Lender nor its designee or assignee shall be responsible or liable
for performing any of the obligations of the Lessor under the Lease,
any Other Lease or any Contract, for any waste by Lessee or others,
for any dangerous or defective conditions of any Property, for
negligence in the management, upkeep, repair or control of any
Property or any other act or omission by any other Person. Nothing
contained herein shall operate or be construed to (i) obligate the
Facility Lender (or its designee or assignee) to assume the
obligations of the Lessor under the Lease, any Other Lease or any
Contract, to perform any of the terms and conditions contained in the
Lease, any Other Lease or any Contract or otherwise to impose any
obligation upon the Facility Lender with respect to any Lease, any
Other Lease or any Contract or (ii) place upon the Facility Lender
(or its designee or assignee) any responsibility for the operation,
control, care, management or repair of any Property or any part
thereof.
7. Lessee's Consent. The Lessor and the Facility Lender hereby
consent to the provisions of each Lessee's Consent attached to this
Assignment and agree to be bound thereby. Nothing in this Section
shall be construed as limiting or otherwise affecting in any way (i)
the Lessor's Excepted Rights or (ii) the Lessor's right to receive
directly the Excepted Payments.
8. Absolute Assignment. The Lessor has, subject to and in
accordance with the terms and conditions of this Assignment, assigned
and transferred unto the Facility Lender all of the Lessor's right,
title and interest other than with respect to Excepted Rights and
Excepted Payments in and to Lease Rents, Other Lease Rent and
Contract Rent now or hereafter arising from the Lease, any Other
Lease or any Contract heretofore or hereafter made or agreed to by
the Lessor, it being intended to establish an absolute transfer and
assignment, subject to and in accordance with the terms and
conditions of this Assignment, of all such Lease Rents, the Lease,
the Other Leases and the Contracts to the Facility Lender and not
merely to grant a security interest therein. The Facility Lender (or
its designee or assignee) may other than with respect to Excepted
Rights and Excepted Payments in the
<PAGE>
Lessor's name and stead exercise the Lessor's rights under the Lease.
Nothing in this Section shall be construed as limiting or otherwise
affecting in any way (i) the Lessor's Excepted Rights or (ii) the
Lessor's right to receive directly the Excepted Payments.
9. Ongoing Right to Collect Rents; Receivers. If
notwithstanding the terms of this Assignment, a petition or order for
sequestration of rents, or the appointment of a receiver or some
similar judicial action or order is deemed required under applicable
state law to allow the Facility Lender to continue to collect the
moneys described in paragraphs 2(a), (b), (c) and (d) of this
Assignment, then it is agreed by the Lessor that any proof of claim
or similar document filed by the Facility Lender in connection with
the breach or rejection of the Lease by the related Lessee thereunder
or the trustee of any lessee under any federal or state insolvency
statute shall for the purpose of perfecting the Facility Lender's
rights conferred in said paragraph (d) be deemed to constitute action
required under such state law.
10. Amendment. This Assignment may not be amended or otherwise
modified except by a writing signed by the Lessor and the Facility
Lender (and its designee or assignee) in accordance with the terms of
the Participation Agreement.
11. Notices. All notices, demands, requests, consents,
approvals and other instruments under this Assignment shall be made
in accordance with the notice provisions of the Participation
Agreement.
12. Successors and Assigns. All covenants, agreements,
representations and warranties in this Assignment by the Lessor and
the Facility Lender shall bind, and shall inure to the benefit of and
be enforceable by, their respective successors and assigns, whether
or not so expressed. The Lessor expressly acknowledges and agrees
that the Facility Lender shall assign its right, title and interest
hereunder to the Agent Bank pursuant to the Master Assignment and
that the Agent Bank shall be entitled to exercise the rights and
remedies of the Facility Lender hereunder.
13. Severability. If any provision or provisions, or if any
portion of any provision or provisions, in this Assignment is found
by a court of law of competent jurisdiction to be in violation of any
local, state or Federal ordinance, statute, law, administrative or
judicial decision, or public policy, and if such court should declare
such portion, provision or provisions to be illegal, invalid,
unlawful, void or unenforceable as written, then it is the intent of
the parties hereto that such portion, provision or provisions shall
be given force to the fullest possible extent that they are legal,
valid and enforceable, that the remainder of this Assignment shall be
construed as if such illegal, invalid, unlawful, void or
unenforceable portion, provision or provisions were not contained
therein, and that the rights, obligations and interests of the
Lessor, the Facility Lender and the Lessee under the remainder of
this Assignment shall continue in full force and effect.
<PAGE>
14. GOVERNING LAW. THIS ASSIGNMENT AND THE RIGHTS AND
OBLIGATIONS OF THE LESSOR UNDER THIS ASSIGNMENT SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF GEORGIA, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES,
EXCEPT AS TO MATTERS RELATING TO THE CREATION OF LIENS AND THE
EXERCISE OF REMEDIES WITH RESPECT THERETO, WHICH SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE IN WHICH THE
APPLICABLE PROPERTY IS LOCATED.
15. Counterparts. This Assignment may be executed in any
number of counterparts, each of which shall be an original, but all
of which together shall constitute one and the same instrument.
16. Limitation on Recourse Against Lessor. Notwithstanding
anything contained in this Assignment to the contrary, Facility
Lender agrees to look solely to Lessor's (or to any partner
thereof's) estate and interest in the Properties and rights under the
Operative Documents for the collection of any judgment requiring the
payment of money by Lessor in the event of liability by Lessor, and
no other property or assets of Lessor or any shareholder, owner or
partner (direct or indirect) in or of Lessor, or any director,
officer, employee, beneficiary, Affiliate of any of the foregoing
shall be subject to levy, execution or other enforcement procedure
for the satisfaction of Facility Lender's remedies against Lessor
under or with respect to this Assignment, the relationship of Lessor
and Facility Lender hereunder or Facility Lender's use of the
Properties or any other liability of to Lessor to Facility Lender;
provided that, nothing herein shall limit recourse against the Lessor
or its partners for the gross negligence or willful misconduct of
such Persons or claims proximately caused by Lessor's breach of its
obligations pursuant to Sections 9.1, 11.2 (solely with respect to
the first sentence thereof), 11.3, 11.4, 11.6(a), (g), (h) or 11.7 of
the Participation Agreement; provided further, that the foregoing
proviso is intended to allow a claim for damages against Lessor but
shall not be construed as creating a full recourse obligation on the
part of Lessor (or any partner thereof) to repay any of the Loans or
any amounts relating to the Loans arising under the Loan Agreement
and the Notes.
<PAGE>
IN WITNESS WHEREOF, the Lessor has caused this Assignment to be
duly executed as of the day and year first above written.
Witnessed by: CREDIT
SUISSE LEASING 92A, L.P.,
as Lessor, a Delaware general
partnership
Name:________________________________
BY: CREDIT SUISSE, its general
partner
Name:________________________________
By:______________________________
Name:
Title:
By:______________________________
Name:
Title:
<PAGE>
EXHIBIT A
FORM OF SUPPLEMENT TO ASSIGNMENT OF LEASE
SUPPLEMENT, dated as of __________________ (this "Supplement"), to
the ASSIGNMENT OF LEASE, dated as of June 25, 1996 (the "Assignment of
Lease"), made by CREDIT SUISSE LEASING 92A, L.P., (the "Lessor"), as
assignor in favor of HD REAL ESTATE FUNDING CORP., a Delaware corporation
(the "Facility Lender"), as assignee.
The parties hereto agree as follows:
1. The Property. In accordance with the Assignment of Lease, the
Lessor has executed this Supplement to subject the Lease between the
Lessor, as lessor, and Home Depot U.S.A., Inc., as lessee, as supplemented
by the Lease Supplement executed as of even date herewith with respect to
the Property described on Schedule 1, to the Assignment of Lease. The
description of the Property is attached hereto as Schedule 2 and made a
part hereof by this reference.
2. Integrated Assignment. Following the execution and delivery of
this Supplement, this Supplement, and all supplements previously delivered
under the Assignment of Lease, shall constitute a part of the Assignment
of Lease, a copy of which is attached hereto as Exhibit A and made a part
hereof by this reference.
3. Confirmation. Except as expressly supplemented hereby, the
provisions of the Assignment of Lease are and shall remain in full force
and effect. Further, the Lessor hereby reaffirms its obligations under
the Assignment of Lease.
IN WITNESS WHEREOF, the Lessor has caused this Supplement to be duly
executed as of the day and year first above written.
CREDIT SUISSE LEASING 92A, L.P., a Delaware
limited partnership
BY: CREDIT SUISSE, its general partner
By:______________________________________
Name:
Title:
<PAGE>
By:______________________________________
Name:
Title:
[ADD APPROPRIATE FORM
OF NOTARY BLOCK]
<PAGE>
Exhibit A
to Supplement
[Copy of Assignment of Lease]
<PAGE>
Schedule 1
[Description of Property]
<PAGE>
EXHIBIT B
LESSEE'S CONSENT
HOME DEPOT U.S.A., INC. (the "Lessee") hereby consents and
agrees to all of the terms of the Assignment of Lease dated as of
June 25, 1996 (as amended, supplemented or otherwise modified
from time to time, the "Assignment"), made by Credit Suisse
Leasing 92A, L.P. (the "Lessor"), as assignor to HD Real Estate
Funding Corp., a Delaware corporation ("Facility Lender"), as
assignee and further agrees as follows:
1. Acknowledgments. Confirmations and Agreements. The
Lessee acknowledges, confirms and agrees that: (a) the Lessee has
the right, power and authority to enter into this Consent (this
"Consent"); (b) the Lease, dated as of June 25, 1996, between the
Lessee and the Lessor (the "Lease"; capitalized terms used
herein, and not otherwise defined herein, shall have the meaning
assigned thereto in the Lease) is in full force and effect and
enforceable against Lessee in accordance with its terms; (c)
neither the Lessee nor, to the Lessee's knowledge, the Lessor is
in default in the observance or performance of any condition or
agreement to be observed or performed by the Lessee or the
Lessor, respectively, thereunder; (d) no Basic Rent has been paid
by the Lessee in advance; (e) no Rent has been waived, released,
reduced, discounted or otherwise discharged or compromised by the
Lessor; and (f) the Lessee has not received notice of any other
assignment of the Lessor's interest in the Lease other than as
permitted by the Operative Documents.
<PAGE>
2. Consent. (a) The Lessee, as lessee under the Lease,
consents to the Assignment and each of the terms thereof, and
agrees to pay and deliver to the Facility Lender (or its designee
or assignee) all Rent and other sums payable under the Lease
without any offset, deduction, defense, abatement, deferment,
diminution or counterclaim, and the Lessee will not assert any
offset, deduction, defense (other than the defense of payment to
the Facility Lender (or its designee or assignee)), abatement,
deferment, diminution or counterclaim in any proceeding brought
under the Assignment or with respect to the transactions
contemplated therein or herein; provided, that the Lessee shall
not pay or deliver to the Facility Lender any amounts
representing Excepted Payments. The Lessee will not, for any
reason whatsoever, seek to recover from the Facility Lender (or
its designee or assignee) any moneys paid to the Facility Lender
(or its designee or assignee) by virtue of the Assignment. The
Lessee agrees (i) to deliver to the Facility Lender (or its
designee or assignee) and the Lessor, at their addresses set
forth in the Participation Agreement or at such other addresses
as the Facility Lender or the Lessor, as the case may be, may
designate, duplicate originals or copies of all notices,
undertakings, demands, statements, documents and other
communications which the Lessee is required or permitted to
deliver pursuant to the Lease or the Assignment; (ii) that,
subject to the Excepted Rights, any
<PAGE>
notice delivered or declaration made to the Lessee by the
Facility Lender (or its designee or assignee) pursuant to the
Lease shall be effective as a notice given or declaration made to
the Lessee by the Lessor as lessor under the Lease; (iii) that
the Facility Lender (and its designee or assignee) shall not by
reason of the Assignment be subject to any liability or
obligation under the Lease; and (iv) that (other than with
respect to Excepted Payments and Excepted Rights) any waiver,
consent or approval by the Lessor under the Lease shall not be
valid unless approved in writing by the Facility Lender (or its
designee or assignee).
(b) The Lessee hereby agrees that upon a Lease Event
of Default, the Facility Lender (or its designee or
assignee) shall have the right to deliver a notice of
default under the Lease, which shall be effective for all
purposes under the Lease as if sent by the Lessor.
(c) To the extent that Lessee, in good faith, is
unable to determine whether a payment pursuant to the Lease
constitutes an Excepted Payment, it shall be entitled to
deposit such amount in the Collateral Account, with such
dispute to be resolved by the Participants.
3. Amendment or Termination of the Lease or the Assignment;
Facility Lender's Designation. The Lessee agrees that it will
not, except in accordance with the express terms of the Lease and
except with respect to Excepted Rights and Excepted Payments,
unilaterally or by agreement, subordinate, amend, supplement,
modify, extend (except in accordance with the express terms of
the Lease), discharge, waive or terminate the Lease or this
Consent or any provision of any thereof without the Facility
Lender's prior written consent, and that any attempted
subordination, amendment, supplement, modification, extension,
discharge, waiver or termination without such consent shall be
null and void. In the event that the Lease shall be amended or
supplemented as herein permitted, the Lease, as so amended or
supplemented, shall continue to be subject to the provisions of
the Assignment and this Consent without the necessity of any
further act by any of the parties hereto. Nothing in this
Section 3 shall be construed as limiting or otherwise affecting
in any way (i) the Lessor's Excepted Rights or (ii) the Facility
Lender's right to receive directly the Excepted Payments.
4. Continuing Obligations of the Lessor and the Lessee.
Neither the execution and delivery of the Assignment, nor any
action or inaction on the part of the Facility Lender shall
impair or diminish any obligations of the Facility Lender or the
Lessee under the Lease, and shall not impose on the Facility
Lender (or its designee or assignee) any such obligations, nor
shall it impose on the Facility Lender (or its designee or
assignee) a duty to produce Rent or cause the Facility Lender to
be a mortgagee in possession for any purpose.
<PAGE>
5. Severability. If any provision or provisions, or if any
portion of any provision or provisions, in this Consent is found
by a court of law of competent jurisdiction to be in violation of
any local, state or Federal ordinance, statute, law,
administrative or judicial decision, or public
policy, and if such court should declare such portion, provision
or provisions to be illegal, invalid, unlawful, void or
unenforceable as written, then it is the intent of the Lessee
that such portion, provision or provisions shall be given force
to the fullest possible extent that they are legal, valid and
enforceable, that the remainder of this Consent shall be
construed as if such illegal, invalid, unlawful, void or
unenforceable portion, provision or provisions were not contained
herein, and that the rights, obligations and interests of the
Lessor, the Facility Lender and the Lessee under the remainder of
this Consent shall continue in full force and effect.
<PAGE>
IN WITNESS WHEREOF, the Lessee has caused this Consent to be
duly executed as of ____ day of June, 1996.
HOME DEPOT U.S.A., INC.
By:___________________________
Marshall L. Day
Senior Vice President and
Chief Financial Officer
Attest:_____________________
Lawrence A. Smith
Assistant Secretary
[CORPORATE SEAL]
Signed, sealed and delivered
this _______ day of _____________,
1996 in the presence of:
________________________________
Unofficial Witness
________________________________
Notary Public
My Commission Expires:
_______________________________
[NOTARIAL SEAL]
<PAGE>
EXHIBIT K
TO PARTICIPATION AGREEMENT
ASSIGNMENT OF CONSTRUCTION AGENCY AGREEMENT
THIS ASSIGNMENT OF CONSTRUCTION AGENCY AGREEMENT, dated as
of June 25, 1996, is entered into by and between (i) CREDIT
SUISSE LEASING 92A, L.P., a Delaware limited partnership (the
"Lessor"), and (ii) HD REAL ESTATE FUNDING CORP. (herein,
together with its successors and assigns, called the "Facility
Lender").
Unless the context shall otherwise require, capitalized
terms used and not defined herein shall have the meanings
assigned thereto in Appendix 1 to the Loan Agreement, dated as of
even date herewith, between the Lessor and the Facility Lender
(as hereafter amended, modified or supplemented, the "Loan
Agreement") which Appendix 1 is made a part hereof by this
reference for all purposes hereof; and the rules of
interpretation set forth in Appendix 1 to the Loan Agreement
shall apply to this Assignment of Construction Agency Agreement.
FOR VALUE RECEIVED, and to secure the performance by the
Lessor of all of its obligations under the Loan Agreement and the
other Loan Documents, the Lessor does hereby quitclaim, sell,
assign, transfer and set over unto the Facility Lender, its
successors and assigns, all of its right, title and interest in
and to the following (referred to collectively herein as the
"Collateral"):
(1) that certain Construction Agency Agreement, dated
as of June 25, 1996 between the Lessor and Home Depot
U.S.A., Inc., as Construction Agent (as it may hereafter be
supplemented, modified or amended, the "Construction Agency
Agreement"); and
(2) the Construction Documents (as defined in the
Construction Agency Agreement);
provided, however, that neither the Facility Lender nor any
assignee of the Facility Lender shall have any obligation or
liability of any kind under or with respect to the Construction
Agency Agreement or any Construction Document, either before or
after its exercise of any rights hereby granted to it, and the
Lessor agrees to save and hold the Facility Lender and any
assignee of the Facility Lender harmless of and from, and to
indemnify it against, any and all such obligations and
liabilities, contingent or otherwise.
<PAGE>
This assignment shall inure to the benefit of the Facility
Lender and its successors and assigns, and shall be binding upon
the Lessor and its successors and assigns, and shall continue in
full force and effect until all obligations, liabilities and
indebtedness of any kind now or hereafter due to the Facility
Lender from the Lessor under or with respect to the Loan Agreement
or any of the other Loan Documents, or which are otherwise secured
hereby, whether now existing or hereafter arising or incurred
(collectively, the "Liabilities"), have been fully paid, performed
and satisfied, and the Facility Lender Commitments have
terminated, at which time this assignment will terminate. The
Facility Lender will not exercise any of its rights hereunder
until there occurs a Loan Agreement Event of Default.
The Facility Lender shall not have the right to undertake
completion of the construction or directly to enforce the provisions
of the Construction Agency Agreement or any Construction Document
until a Loan Agreement Event of Default shall have occurred under the
Loan Agreement and the Lessee shall have been given the right to cure
such Loan Agreement Event of Default as provided by the Loan
Agreement. During the continuance of any such Loan Agreement Event
of Default, the Facility Lender may, without affecting any other
right or remedy available to it, exercise its rights under this
Assignment as provided herein in any manner permitted by law. If any
notice to the Lessor is required by law, such notice shall be deemed
commercially reasonable if given at least thirty (30) days prior to
the date of intended action.
This Assignment may be effectively waived, modified, amended or
terminated only by a written instrument executed by the Facility
Lender or its assignee. Any waiver by the Facility Lender shall be
effective only with respect to the specific instance described
therein. Delay or course of conduct shall not constitute a waiver of
any right or remedy of the Facility Lender or its assignee.
This Assignment shall be binding upon, and inure to the benefit
of, the parties hereto. The Lessor acknowledges and agrees that the
Facility Lender is assigning its right, title and interest herein to
the Agent Bank pursuant to the Master Assignment.
THIS ASSIGNMENT HAS BEEN DELIVERED IN, AND SHALL IN ALL RESPECTS
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF GEORGIA (EXCLUDING ANY OTHER CONFLICT-OF-LAW OR CHOICE-OF-
LAW RULES WHICH MIGHT LEAD TO THE APPLICATION OF THE INTERNAL LAWS OF
ANY OTHER JURISDICTION).
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed and delivered this
assignment as of the date first above written, under seal.
CREDIT SUISSE LEASING 92A, L.P.,
a Delaware limited partnership
BY: CREDIT SUISSE, its general partner
By:_____________________________________
Name:________________________________
Title:_________________________________
By:_____________________________________
Name:________________________________
Title:_________________________________
<PAGE>
CONSENT AND ACKNOWLEDGMENT BY LESSEE
The undersigned hereby acknowledges receipt of a counterpart
original of, and consents to, the foregoing Assignment.
The foregoing is furnished for good and valuable consideration the
receipt and sufficiency of which are hereby acknowledged by each of the
undersigned, and each of the undersigned understands and intends that the
Facility Lender and its assignees will rely on the foregoing and that the
undersigned will be legally bound by the foregoing. This Consent and
Acknowledgment shall inure to the benefit of the Facility Lender and its
successors and assigns.
IN WITNESS WHEREOF, the undersigned has executed and delivered this
Consent and Acknowledgment under seal as of June 25, 1996, pursuant to
proper authority duly granted.
HOME DEPOT U.S.A., INC.
By:___________________________________
Marshall L. Day
Senior Vice President and
Chief Financial Officer
<PAGE>
EXHIBIT L TO THE
PARTICIPATION AGREEMENT
MASTER ASSIGNMENT
dated as of June 25, 1996
from
HD REAL ESTATE FUNDING CORP., ASSIGNOR
to
CREDIT SUISSE, as Agent, ASSIGNEE
<PAGE>
MASTER ASSIGNMENT
THIS MASTER ASSIGNMENT, dated as of June 25, 1996 (this "Master
Assignment"), made by HD REAL ESTATE FUNDING CORP., a Delaware limited
partnership (the "Assignor"), to CREDIT SUISSE, as Agent Bank (the
"Assignee").
Preliminary Statement
Pursuant to that certain Liquidity Agreement dated as of even date
herewith by and among the Assignor, Assignee and the Lenders named
therein (the "Liquidity Agreement"), the Assignee has agreed to make
Facility Loans to the Assignor in an aggregate principal amount not to
exceed the Commitment upon the terms and subject to the conditions set
forth therein, to be evidenced by the notes ("Facility Notes") issued
by the Assignor under the Liquidity Agreement.
It is a condition, among others, to the obligation of the Assignee
to make its Facility Loans to the Assignor under the Liquidity
Agreement that the Assignor shall have executed and delivered, and the
Lessee shall have consented to, this Master Assignment to the Assignee.
In order further to secure payment of all the amounts advanced
under the Loan Agreement, the Notes and the other Security Documents,
the Assignor and the Assignee have agreed to enter into, execute, and
deliver this Master Assignment.
NOW, THEREFORE, in consideration of the foregoing, the parties
hereto agree as follows:
1. Defined Terms. Capitalized terms used but not otherwise
defined in this Master Assignment shall have the respective meanings
specified in Appendix 1 attached hereto and made a part hereof by this
reference; and the rules of interpretation set forth in such Appendix 1
shall apply to this Master Assignment.
2. Assignment. The Assignor hereby irrevocably assigns,
transfers, sets over and conveys to the Assignee for its benefit and
the benefit of the Lenders all its right, title and interest in and to
the following described property whether now owned or held or hereafter
acquired, exclusively and without any reservation thereof unto the
Assignee, excluding, in each case Excepted Payments and Excepted Rights
of the Assignor:
<PAGE>
(a) All of the estate, right, title, interest, benefits,
powers and privileges of the Assignor, as lessor, under the
Mortgages and the Loan Agreement including, but not by way of
limitation, (i) the immediate and continuing right to make claim
for, receive, collect and receipt for all rents, income, revenues,
issues, profits, insurance proceeds, condemnation awards, sales
proceeds and other sums payable to or receivable by the Assignor
under the Mortgages and the Loan Agreement, or pursuant to any
provisions thereof, (collectively, the "Sales Proceeds"), (ii) the
right to declare the Loan Agreement to be in default under Section
5 thereof, and to accelerate the Notes, (iii) the right to
exercise remedies under or with respect to the Mortgages and the
Loan Agreement, (iv) the right to make all waivers and agreements
on behalf of the Assignor under the Mortgages and the Loan
Agreement provided for or permitted thereunder, (v) the right to
give all notices, consents, releases and other instruments
provided under the Mortgages and the Loan Agreement, (vi) the
right to give all notices of default and to take all action upon
the happening of a Loan Agreement Default or a Loan Agreement
Event of Default, including the commencement, conduct and
consummation of proceedings as shall be permitted under any
provision of the Loan Agreement or any Mortgage, or by law or in
equity, (vii) the right to receive all notices sent to the
Assignor under the Loan Agreement and the Mortgages, and (viii)
the right to do any and all other things whatsoever which the
Assignor is or may be entitled to do under the Mortgages and the
Loan Agreement. The Assignor hereby agrees that any action taken
by the Assignee (or its designee) pursuant to this Master
Assignment shall be exclusive, and no party relying on such action
of the Assignee (or such designee) pursuant hereto shall be
required to obtain the concurrence or consent of the Assignor to
such action or to a request for such action; provided, however,
that the Assignor shall retain, and the foregoing assignment shall
in no event include, the Excepted Payments or Excepted Rights of
the Assignor.
(b) All of the estate, right, title, interest, benefits,
powers and privileges of the Assignor, to and under (i) the
Assignment of Leases (including all such matters described in
Section 2 thereof) and (ii) the Construction Agency Agreement
Assignment (the Assignment of Leases and the Construction Agency
Agreement Assignment shall hereinafter be collectively referred to
as the "Assignments"); including, without limitation, the
immediate and continuing right to make claim for, receive, collect
and receipt for all charges, fees, income, issues, profits,
receipts, rents, revenues or royalties payable under the
Assignments (collectively, the "Lease Proceeds"); provided,
however, that the Assignor shall retain, and the foregoing
assignment shall in no event include, the Excepted Payments and
Excepted Rights of the Assignor.
<PAGE>
(c) All of the estate, right, title, interest, benefits,
powers and privileges of the Assignor, to and under all agreements
or contracts for the sale or other disposition of all or any part
of any Property, now or hereafter entered into by the Assignor
(collectively, the "Contracts"), together with all estate, right,
title, interest, benefits, powers and privileges of the Assignor
under the Contracts including, without limitation, the immediate
and continuing right to make claim for, receive, collect and
receipt for all charges, fees, income, issues, profits, receipts,
rents, revenues or royalties payable under any of the Contracts
(collectively, the "Contract Proceeds" and, together with the
Sales Proceeds and the Lease Proceeds, the "Proceeds") and all
right, title and interest of the Assignor thereunder, including
all cash, securities or letters of credit deposited thereunder to
secure performance by the obligors of their obligations
thereunder; provided, however, that the Assignor shall retain, and
the foregoing assignment shall in no event include, the Excepted
Payments and Excepted Rights of the Assignor.
(d) All of the right, title and interest of the Assignor in
and to all claims and rights to the payment of money at any time
arising in connection with any repudiation, rejection or breach of
the Mortgages or the Loan Agreement by the Lessor or a trustee or
receiver of the Lessor (or any Contract by any party thereunder,
trustee or receiver of any such party) under any insolvency
statute, law or regulation, including, without limitation, all
rights to recover damages arising out of such breach or rejection,
all rights to charges payable by the Lessor or such trustee or
receiver (or by such lessee, trustee or receiver) following
rejection, repudiation or disaffirmance of the Mortgages or the
Loan Agreement by the Lessor or following the entry of an order
for relief under any insolvency statute, law or regulation in
respect of the Lessor (or such party) and all rentals and other
charges outstanding under the Mortgages or the Loan Agreement by
the Lessor as of the date of entry of such order for relief,
provided, however, that the Assignor shall retain all rights with
respect to the Excepted Payments and Excepted Rights of the
Assignor.
Upon the respective Property Closing Date with respect to each
Property, the Assignor shall execute and deliver a supplement to this
Master Assignment in the form of Exhibit A attached hereto and made a
part hereof by this reference, appropriately completed, pursuant to
which the Assignor shall acknowledge and agree that such Property (and
the Supplement to the Assignment of Leases and the Mortgage entered
into in connection therewith) will be governed by the terms of this
Master Assignment. Following the execution and delivery of a
supplement to this Master Assignment as provided above, such supplement
and all supplements previously delivered under this Master Assignment,
shall constitute a part of this Master Assignment.
<PAGE>
3. Receipt of Rents. The Assignor hereby irrevocably designates
the Assignee (as Assignor's assignee) to receive all payments (other
than those constituting Excepted Payments) of the Proceeds and any sums
payable to the Assignor under the Assignments, the Mortgages or the
Loan Agreement. Assignor agrees to direct (and hereby directs) the
Lessee, each other lessee and each contracting party to deliver to the
Assignee (as Assignor's assignee), at its address set forth herein or
at such other address or to such other Person as the Assignee shall
designate, all such payments and sums on account of the Proceeds, and
no delivery thereof by the Lessee, any other lessee or any contracting
party shall be of any force or effect unless made to the Assignee (as
Assignor's assignee), as herein provided.
4. Delivery of Lease, Receipt of Notices. Upon execution and
delivery thereof to the Assignor, the Assignor shall deliver to the
Assignee (as Assignor's assignee) the original of the Lease and of each
Lease Supplement. The Assignor hereby designates the Assignee (as
Assignor's assignee) to receive (in addition to, and not to the
exclusion of, the Assignor) duplicate originals or copies of all
notices, undertakings, demands, statements, documents, financial
statements and other communications which the Lessee, any other lessee
or any contracting party is required or permitted to give, make,
deliver to or serve pursuant to the Assignments, the Mortgages or the
Loan Agreement. The Assignor agrees to direct (and hereby directs) the
Lessee, the Lessor, each other lessee and each contracting party to
deliver to the Assignee (as Assignor's assignee), at its address set
forth herein or at such other address or to such other Person as the
Assignee shall designate, duplicate originals or copies of all such
notices, undertakings, demands, statements, documents, financial
statements and other communications, and no delivery thereof by the
Lessee, the Lessor, any other lessee or any contracting party shall be
of any force or effect unless made to the Assignor and also made to the
Assignee (or its designee), as herein provided. The Assignor further
agrees that upon receipt by the Assignor of any such notices,
undertakings, demands, statements, documents, financial statements and
other communications, the Assignor shall promptly deliver copies
thereof to the Assignee unless the Assignor shall reasonably believe
that the Assignee has already received such copies.
5. Irrevocability: Supplemental Instruments. The Assignor
agrees that this Master Assignment and the designation and direction to
the Lessee set forth in Sections 1 and 2 of this Master Assignment are
irrevocable and that it will not take any action under the Assignments,
the Mortgages or the Loan Agreement or otherwise which is inconsistent
with this Master Assignment and that any action, assignment,
designation or direction inconsistent herewith shall be void. The
Assignor will from time to time execute and deliver all instruments of
further assurance and do such further acts as may be necessary or
proper to carry out more effectively the purpose of this Master
Assignment.
<PAGE>
6. Validity. The Assignor represents and warrants (on a
continuing basis) and covenants to the Assignee that (i) the Assignor
has not assigned or executed any assignment of, and will not assign or
execute any assignment of the Assignor's interest in the Assignments
(or any of the obligations or rights assigned thereunder), the
Mortgages or the Loan Agreement or in any Contract, in any Proceeds or
in any other subject matter of this Master Assignment to anyone other
than the Assignee, and any assignment, designation or direction by the
Assignor inconsistent herewith shall be void, and (ii) the Assignor has
not done any act or executed any document that impairs the rights of
the Assignee to the Assignments (or any of the obligations or rights
assigned thereunder), the Mortgages or the Loan Agreement or the
Proceeds under this Master Assignment except as specifically provided
in the Operative Documents.
7. The Assignor Remains Liable. While the assignment made
hereby is present, direct and continuing, it has been made for the
purpose of providing the Assignee with security for the performance of
the Assignor's obligations under the Liquidity Agreement and the Notes
and the execution and delivery hereof shall not impair or diminish in
any way the obligations of the Assignor under the Lease or impose any
of such obligations on the Assignee. This Master Assignment shall not
operate to cause the Assignee (as Assignee's assignee) to be regarded
as a mortgagee in possession. Neither the Assignee nor Assignee's
assignee shall be responsible or liable for performing any of the
obligations of the Assignor under the Assignments, the Loan Agreement,
the Mortgages or any Contract, for any waste by Lessee, Lessor or
others, for any dangerous or defective conditions of any Property, for
negligence in the management, upkeep, repair or control of any Property
or any other act or omission by any other Person. Nothing contained
herein shall operate or be construed to (i) obligate the Assignee (as
Assignor's assignee) to assume the obligations of the Assignor under
the Assignments, the Loan Agreement, the Mortgages or any Contract, to
perform any of the terms and conditions contained in the Assignments,
the Loan Agreement, the Mortgages or any Contract or otherwise to
impose any obligation upon the Assignee with respect to the
Assignments, the Loan Agreement, the Mortgages or any Contract or (ii)
place upon the Assignee (as Assignor's assignee) any responsibility for
the operation, control, care, management or repair of any Property or
any part thereof.
8. Amendments, Lessee's Consent. The Assignor will not enter
into any agreement subordinating, amending, extending or terminating
the Assignments (or any of the obligations or rights assigned
thereunder), the Loan Agreement, the Mortgages or any Contract without
the prior written consent thereto of the Assignee (as Assignor's
assignee), and any such attempted subordination, amendment,
modification, extension or termination without such consent shall be
void. If the Assignments (or any of the obligations or rights assigned
thereunder), the Loan Agreement, the Mortgages or any Contract shall be
amended, it shall continue to be subject to the
<PAGE>
provisions hereof without the necessity of any further act by any of
the parties hereto. The Assignor and the Assignee hereby consent to
the provisions of each Consent attached to this Master Assignment and
agree to be bound thereby. Nothing in this Section shall be construed
as limiting or otherwise affecting in any way the Assignor's right to
receive directly the Excepted Payments of the Assignor.
9. Absolute Assignment. The Assignor has, subject to and in
accordance with the terms and conditions of this Master Assignment,
assigned and transferred unto the Assignee all of the Assignor's right,
title and interest (other than with respect to Excepted Rights and
Excepted Payments of the Assignor) in and to the Proceeds now or
hereafter arising from the Assignments, the Loan Agreement, the
Mortgages or any Contract heretofore or hereafter made or agreed to by
the Assignor, it being intended to establish an absolute transfer and
assignment, subject to and in accordance with the terms and conditions
of this Master Assignment, of all such Proceeds, the Assignments, the
Loan Agreement, the Mortgages and the Contracts to the Assignee and not
merely to grant a security interest therein. The Assignee (as
Assignor's assignee) may (other than with respect to Excepted Rights
and Excepted Payments of the Assignor) in the Assignor's name and stead
operate the Properties and rent, lease or let all or any portion of the
Properties to any party or parties at such rental and upon such terms
as the Assignee (as Assignor's assignee) shall, in its discretion,
determine. Nothing in this Section shall be construed as limiting or
otherwise affecting in any way the (i) Assignor's Excepted Rights and
(ii) Assignor's right to receive directly the Excepted Payments.
10. Ongoing Right to Collect Rents. If notwithstanding the terms
of this Master Assignment, a petition or order for sequestration of
rents, or the appointment of a receiver or some similar judicial action
or order is deemed required under applicable state law to allow the
Assignee to continue to collect the moneys described in paragraphs
2(a), (b), (c) and (d) hereof or of the Assignments, then it is agreed
by the Assignor that any proof of claim or similar document filed by
the Assignee in connection with the breach or rejection of the Lease by
the Lessee thereunder or the trustee of any lessee under any federal or
state insolvency statute shall for the purpose of perfecting the
Assignee's rights conferred in said paragraphs (d) be deemed to
constitute action required under such state law.
11. Amendment. This Master Assignment may not be amended or
otherwise modified except by a writing signed by the Assignor and the
Assignee in accordance with the terms of the Participation Agreement.
<PAGE>
12. Notices. All notices, demands, requests, consents, approvals
and other instruments under this Master Assignment shall be made in
accordance with the notice provisions of the Participation Agreement.
13. Successors and Assigns. All covenants, agreements,
representations and warranties in this Master Assignment by the
Assignor and the Assignee shall bind, and shall inure to the benefit of
and be enforceable by, their respective successors and assigns, whether
or not so expressed.
14. Severability. If any provision or provisions, or if any
portion of any provision or provisions, in this Master Assignment is
found by a court of law of competent jurisdiction to be in violation of
any local, state or Federal ordinance, statute, law, administrative or
judicial decision, or public policy, and if such court should declare
such portion, provision or provisions to be illegal, invalid, unlawful,
void or unenforceable as written, then it is the intent of the parties
hereto that such portion, provision or provisions shall be given force
to the fullest possible extent that they are legal, valid and
enforceable, that the remainder of this Master Assignment shall be
construed as if such illegal, invalid, unlawful, void or unenforceable
portion, provision or provisions were not contained therein, and that
the rights, obligations and interests of the Assignor, the Assignee and
the Lessee under the remainder of this Master Assignment shall continue
in full force and effect.
15. Non Recourse Nature. The terms and provisions of Section
3.11 of the Liquidity Agreement are hereby incorporated herein by
reference.
16. GOVERNING LAW. THIS MASTER ASSIGNMENT AND THE RIGHTS AND
OBLIGATIONS OF THE ASSIGNOR UNDER THIS MASTER ASSIGNMENT SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF GEORGIA, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES, EXCEPT AS TO MATTERS RELATING TO THE CREATION OF LIENS AND
THE EXERCISE OF REMEDIES WITH RESPECT THERETO, WHICH SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE IN WHICH THE
APPLICABLE PROPERTY IS LOCATED.
17. Counterparts. This Master Assignment may be executed in any
number of counterparts, each of which shall be an original, but all of
which together shall constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the Assignor has caused this Master Assignment
to be duly executed as of the day and year first above written.
Witnessed by: HD REAL ESTATE FUNDING CORP.,
as Assignor
Name:
____________________________
By:
Name: __________________________
____________________________ Name:
Title:
<PAGE>
EXHIBIT A
SUPPLEMENT, dated as of _______________ (this "Supplement"), to
the MASTER ASSIGNMENT, dated as of June 25, 1996 (the "Master
Assignment"), made by HD REAL ESTATE FUNDING CORP., (the "Assignor"),
in favor of CREDIT SUISSE, as Agent (the "Assignee").
The parties hereto agree as follows:
1. The Property. In accordance with the Assignments and the
Master Assignment, the Lessor has executed a Supplement to the
Assignment of Leases and a Supplement to the Construction Agency
Agreement, each dated as of even date herewith, to subject to the
Assignments, the Property described on Schedule 1 and made a part
hereof by this reference (and the Supplements with respect thereto).
The Lessor has also executed a Mortgage with respect to such Property,
dated as of even date herewith, in favor of the Assignor, such Mortgage
recorded on the date hereof in the real estate records of the county
where the Property is located.
2. Integrated Assignment. Following the execution and delivery
of this Supplement, this Supplement, and all supplements previously
delivered under the Assignment of Leases, shall constitute a part of
the Master Assignment, a copy of which is attached hereto as Exhibit A
and made a part hereof by this reference.
3. Confirmation. Except as expressly supplemented hereby, the
provisions of the Assignments are and shall remain in full force and
effect. Further, the Assignor hereby reaffirms its obligations under
the Master Assignment.
4. Defined Terms; Usage. All capitalized terms used herein and
not otherwise defined herein shall have the meanings set forth in the
Master Assignment and the rules of interpretation applicable thereto
shall apply to this Supplement.
IN WITNESS WHEREOF, the Assignor has caused this Supplement to be
duly executed as of the day and year first above written.
HD REAL ESTATE
FUNDING CORP., a Delaware limited
partnership
By: __________________________________
<PAGE>
Name:
Title:
[ADD APPROPRIATE FORM OF NOTARY BLOCK]
<PAGE>
Exhibit A
to Supplement
[Copy of Master Assignment]
<PAGE>
Schedule 1
[Description of Property]
<PAGE>
Schedule 2
[Description of Property]
<PAGE>
EXHIBIT M TO THE
PARTICIPATION AGREEMENT
SECURITY AGREEMENT
Dated as of
June 25, 1996
Among
HD REAL ESTATE FUNDING CORP.,
as Facility Lender
and
CREDIT SUISSE,
as Agent Bank
and
CREDIT SUISSE LEASING 92A, L.P.
as Lessor
<PAGE>
Table of Contents
Page
ARTICLE I
DEFINITIONS
SECTION 1.01 Special Definitions 5
ARTICLE II
CASH COLLATERAL ACCOUNT
SECTION 2.01 Creation of Cash Collateral Account 6
SECTION 2.02 General Account Provisions 6
SECTION 2.03 Deposit of Proceeds 7
SECTION 2.04 Payments from Collateral Only 7
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION
OF INCOME FROM THE COLLATERAL
SECTION 3.01 Distribution 9
SECTION 3.02 Payments to Lessor and Facility Lender 10
ARTICLE IV
REMEDIES OF AGENT BANK UPON EVENT OF DEFAULT
SECTION 4.01 Remedies Upon Default 10
SECTION 4.02 Remedies Cumulative 11
SECTION 4.03 Discontinuance of Proceedings 11
ARTICLE V
THE FACILITY LENDER AND THE AGENT BANK
SECTION 5.01 No Representations or Warranties as to
Properties or Documents 11
SECTION 5.02 No Segregation of Monies; No Interest 12
SECTION 5.03 Reliance; Agent Bank; Advice of Counsel 12
ARTICLE VI
MISCELLANEOUS
SECTION 6.01 Termination of Security Agreement 13
SECTION 6.02 Sale of Properties to Agent Bank Is Binding 13
SECTION 6.03 Security Agreement for Benefit of Facility
Lender, Agent Bank, Lessor and Lessee 13
SECTION 6.04 Notices 13
SECTION 6.05 Severability 14
SECTION 6.06 No Oral Modification or Continuing Waivers 14
SECTION 6.07 Successors and Assigns 14
SECTION 6.08 Headings 14
SECTION 6.09 Normal Commercial Relations 14
SECTION 6.10 Governing Law; Counterpart Form 14
<PAGE>
SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of June 25, 1996 (this "Security
Agreement"), among HD REAL ESTATE FUNDING CORP. (the "Facility
Lender"), and CREDIT SUISSE, as agent and collateral agent for the
Lenders (hereinafter, the "Agent Bank") and CREDIT SUISSE LEASING 92A,
L.P., (the "Lessor").
WHEREAS, the Facility Lender intends from time to time to
issue its Commercial Paper Notes in the U.S. commercial paper market;
WHEREAS, the Facility Lender, the Lenders, Deutsche Bank AG,
New York Branch and the Agent Bank have entered into the Liquidity
Agreement, pursuant to which the Lenders have committed to make
Facility Loans to the Facility Lender;
WHEREAS, the Facility Lender and Lessor have entered into the
Loan Agreement pursuant to which the Facility Lender has agreed to lend
the net proceeds of its issuance of Commercial Paper Notes and of
certain Facility Loans to the Lessor to finance the Lessor's purchase
and construction of the Properties in accordance with the terms of the
Operative Documents;
WHEREAS, upon completion of construction of the Construction
Period Properties, the Lessor has agreed to lease the same to the
Lessee pursuant to the Lease;
WHEREAS, in connection with the making of such loans by the
Facility Lender to the Lessor, the Lessor desires by this Security
Agreement and the other Security Documents to which it is a party,
among other things, to provide for the assignment, mortgage and pledge
by the Lessor to the Facility Lender, among other things, of certain of
the Lessor's right, title and interest in and to the Lessor Collateral
(as defined below);
WHEREAS, in connection with the making of such loans by the
Lenders to the Facility Lender, the Facility Lender desires by this
Security Agreement and the other Security Documents to which it is a
party, among other things, to provide for the assignment, mortgage and
pledge by the Facility Lender to the Agent Bank, among other things, of
the Lessor Collateral and the Facility Lender Collateral (as defined
below) and certain of the Facility Lender's right, title and interest
in and to the Properties, the Lease (except as qualified herein) and
all payments and other amounts received hereunder or thereunder (except
as otherwise excluded herein), in accordance with the terms hereof as
security for the Facility Lender's obligations to the Agent Bank and
the Lenders;
WHEREAS, all things have been done to make the Liquidity
Notes, when issued and executed by the Facility Lender and delivered
under the Liquidity Agreement, the legal, valid and binding obligations
of the Facility Lender;
WHEREAS, all things have been done to make the Notes, when
issued and executed by the Lessor and delivered under the Loan
Agreement, the legal, valid and binding obligations of the Lessor; and
WHEREAS, all things necessary to make this Security Agreement
the valid, binding and legal obligation of the Facility Lender, the
Lessor and the Agent Bank, for the uses and purposes herein set forth,
in accordance with its terms, have been done and performed and have
happened.
<PAGE>
NOW THEREFORE, (A) In order to secure performance by the
Lessor of the Obligations (as defined in the Mortgage), including,
without limitation, the prompt payment of the principal amount of and
interest on all Notes from time to time outstanding under the Loan
Agreement and all other amounts payable hereunder and under the Loan
Agreement and the performance and observance by the Lessor of all the
agreements, covenants and provisions herein, in the Loan Agreement and
in the Notes contained, for the benefit of the Lenders and the prompt
payment of all amounts from time to time owing under the Participation
Agreement to the Agent Bank and the Lenders and for the uses and
purposes and subject to the terms and provisions hereof, and in
consideration of the premises and of the covenants herein contained,
and of the acceptance of the Notes by the Facility Lender, and for
other good and valuable consideration the receipt and adequacy thereof
is hereby acknowledged, the Lessor does hereby grant, bargain, sell,
assign, transfer, convey, mortgage, pledge and confirm, unto the
Facility Lender, its successors and assigns, in the trust hereby
created, a first priority security interest in and lien on all right,
title and interest of the Lessor in, to and under the following
described property, rights and privileges, other than Excepted Payments
and Excepted Rights (which collectively, excluding Excepted Payments
and Excepted Rights, are hereinafter called the "Lessor Collateral"),
to wit: (1) this Security Agreement and in the Cash Collateral Account,
all cash, cash equivalents, instruments, investments and other
securities at any time on deposit in the Cash Collateral Account, all
present and future accounts, chattel paper, documents general
intangibles and instruments (each as defined in the Uniform Commercial
Code), (2) all other rights of the Lessor to receive the payment of
money including (without limitation) all moneys due and to become due
to the Lessor (other than Excepted Payments) under the Lease, the
Participation Agreement, the Guaranty or any other Operative Document,
and (3) all proceeds of any of the foregoing.
TO HAVE AND TO HOLD all and singular the aforesaid property
unto the Agent Bank, its successors and assigns, for the equal and
ratable benefit of the Lenders, without any priority of any one and for
the uses and purposes and subject to the terms and provisions set forth
in this Security Agreement.
It is expressly agreed that anything herein contained to the
contrary notwithstanding, the Lessor shall remain liable under the
Operative Documents to which it is party to perform all of the
obligations assumed by it thereunder, all in accordance with and
pursuant to the terms and provisions thereof, and neither the Facility
Lender nor the Agent Bank nor any Lender shall have any obligation or
liability under such Operative Documents by reason of or arising out of
the assignment hereunder, nor shall the Facility Lender, the Agent Bank
or the Lenders be required or obligated in any manner to perform or
fulfill any obligations of the Lessor under or pursuant to such
Operative Documents or, except as herein expressly provided, to make
any payment, or to make any inquiry as to the nature or sufficiency of
any payment received by it, or present or file any claim, or take any
action to collect or enforce the payment of any amounts which may have
been assigned to it or to which it may be entitled at any time or
times.
The Lessor does hereby irrevocably constitute the Agent Bank
(as assignee of the Facility Lender) the true and lawful attorney-in-
fact of the Lessor, with full power (in the name of the Lessor or
otherwise), other than with respect to Excepted Rights and Excepted
Payments, (i) to ask for, require, demand, and receive, any and all
monies and claims for monies (in each case including insurance and
requisition proceeds) due and to become due under or arising out of the
Operative Documents to which the Lessor is party, and all other
property which now or hereafter constitutes part of the Collateral,
(ii) to endorse any checks or other instruments or orders in connection
therewith and (iii) to file any claims or to take any action or to
institute any proceedings which the Agent Bank may deem to be necessary
or advisable in the premises. Under the Lease and Assignment of Lease,
the Lessee is directed to make all payments of Rent (other than
Excepted Payments) and all other amounts which are required to be paid
to or deposited
<PAGE>
with the Facility Lender pursuant to the Lease (other than Excepted
Payments) directly to the Agent Bank in accordance with the provisions
of Article II hereof, for application as provided in this Security
Agreement.
(B) In order to secure performance by the Facility Lender of
its obligations hereunder and the prompt payment of the principal
amount of and interest on all Liquidity Notes from time to time
outstanding under the Liquidity Agreement, all other amounts payable
hereunder, under the Liquidity Agreement and the performance and
observance by the Facility Lender of all the agreements, covenants and
provisions herein, in the Liquidity Agreement, the Liquidity Notes and
the other Operative Documents to which it is a party contained, for the
benefit of the Agent Bank and the Lenders and the prompt payment of all
amounts from time to time owing under the Participation Agreement to
the Agent Bank and the Lenders and for the uses and purposes and
subject to the terms and provisions hereof, and in consideration of the
premises and of the covenants herein contained, and of the acceptance
of the Liquidity Notes by the Lenders, and for other good and valuable
consideration the receipt and adequacy thereof is hereby acknowledged,
the Facility Lender does hereby grant, bargain, sell, assign, transfer,
convey, mortgage, pledge and confirm, unto the Agent Bank for the equal
and ratable benefit of the Agent Bank and the Lenders, in the trust
hereby created, a first priority security interest in and lien on all
right, title and interest of the Facility Lender in, to and under the
following described property, rights and privileges, other than
Excepted Payments and Excepted Rights (which collectively, excluding
Excepted Payments and Excepted Rights of the Lessor and the Facility
Lender, hereinafter called the "Facility Lender Collateral," which
together with the Lessor Collateral shall be referred to hereinafter as
the "Collateral"), to wit: (1) this Security Agreement and in the Cash
Collateral Account, all cash, cash equivalents, instruments,
investments and other securities at any time on deposit in the Cash
Collateral Account, all present and future accounts, chattel paper,
documents general intangibles and instruments (each as defined in the
Uniform Commercial Code), (2) the Lessor Collateral and all other
property pledged to the Facility Lender, or in which the Facility
Lender has been pledged a security interest, whether pursuant to
paragraph A above, the Mortgage, any other Operative Documents or
otherwise, (3) the Notes, and (4) all other rights of the Facility
Lender to receive the payment of money including (without limitation)
all moneys due and to become due to the Facility Lender (other than
Excepted Payments) under the Operative Documents (other than the
Guaranty) and all related instruments or documents to which the
Facility Lender is or will hereafter become a party (the "Granting
Clause Documents"), and (4) all proceeds of any of the foregoing. The
Facility Lender hereby presently transfers to the Agent Bank all rights
of the Facility Lender under this Security Agreement or with respect to
any of the foregoing pledged property or any other property of the
Facility Lender, except for Excepted Payments and Excepted Rights.
Concurrently with the delivery hereof, the Facility Lender is
delivering to the Agent Bank the Notes and the original executed
counterpart of the Lease which it received from the Lessor pursuant to
the Assignment of Lease (to which a chattel paper receipt is attached).
TO HAVE AND TO HOLD all and singular the aforesaid property
unto the Agent Bank, its successors and assigns, for the equal and
ratable benefit of the Lenders, without any priority of any one and for
the uses and purposes and subject to the terms and provisions set forth
in this Security Agreement.
It is expressly agreed that anything herein contained to the
contrary notwithstanding, the Facility Lender shall remain liable under
the Operative Documents to which it is party to perform all of the
obligations assumed by it thereunder, all in accordance with and
pursuant to the terms and provisions thereof, and neither the Agent
Bank nor any Lender shall have any obligation or liability under such
Operative Documents by reason of or arising out of the assignment
hereunder, nor shall the Agent Bank or the Lenders be required or
obligated in any manner to perform or fulfill any obligations of the
Facility Lender under or pursuant to such Operative Documents or,
except as herein
<PAGE>
expressly provided, to make any payment, or to make any inquiry as to
the nature or sufficiency of any payment received by it, or present or
file any claim, or take any action to collect or enforce the payment of
any amounts which may have been assigned to it or to which it may be
entitled at any time or times.
The Facility Lender does hereby irrevocably constitute the
Agent Bank the true and lawful attorney-in-fact of the Facility Lender,
with full power (in the name of the Facility Lender or otherwise),
other than with respect to Excepted Rights and Excepted Payments, (i)
to ask for, require, demand, and receive, any and all monies and claims
for monies (in each case including insurance and requisition proceeds)
due and to become due under or arising out of the Operative Documents
to which the Facility Lender is party, and all other property which now
or hereafter constitutes part of the Collateral, (ii) to endorse any
checks or other instruments or orders in connection therewith and (iii)
to file any claims or to take any action or to institute any
proceedings which the Agent Bank may deem to be necessary or advisable
in the premises.
Each of the Lessor and the Facility Lender agree that at any
time and from time to time, upon the written request of the Agent Bank,
each of the Lessor and the Facility Lender will promptly and duly
execute and deliver or cause to be duly executed and delivered any and
all such further instruments and documents as the Agent Bank may
reasonably deem desirable in obtaining the full benefits of the
assignment hereunder and of the rights and powers herein granted.
Each of the Lessor and the Facility Lender does hereby
severally warrant and represent (as to itself only) that it has not
assigned or pledged, and hereby covenants that it will not assign or
pledge, so long as this Security Agreement shall remain in effect, any
of its right, title or interest hereby assigned, to anyone other than
the Agent Bank for the benefit of the Lenders, and that it will not,
except as provided in this Security Agreement and any other Operative
Documents or except with the consent of the Agent Bank, accept any
payment from Lessee, enter into any agreement amending or
supplementing, the Assignment of Lease, the Lease, the Participation
Agreement or any other Operative Document to which it is party, execute
any waiver or modification of, or consent under, the terms of, or
(except with respect to its Excepted Payments and subject to its
Excepted Rights) exercise any rights, power or privileges under, the
Assignment of Lease, the Lease, the Participation Agreement or any
other Operative Document to which it is party, settle or compromise any
claim arising under the Assignment of Lease, the Lease, or the
Participation Agreement, or submit or consent to the submission of any
dispute, difference or other matter arising under or in respect to the
Assignment of Lease, the Lease, the Participation Agreement or any
other Operative Document to which it is party, to arbitration
thereunder.
Each of the Lessor and the Facility Lender does hereby
severally ratify and confirm each Operative Document to which it is
party and does hereby agree that it will not take or omit to take any
action, the taking or omission of which might result in an alteration
or impairment of any such Operative Document or this Security Agreement
or of any of the rights created by any such document or the assignment
hereunder.
IT IS HEREBY COVENANTED AND AGREED by and between the parties
hereto as follows:
ARTICLE I
DEFINITIONS
<PAGE>
SECTION 1.01 Special Definitions. Unless otherwise defined
herein, capitalized terms shall have the meaning ascribed to them in
Annex 1 of the Participation Agreement dated as of June 25, 1996, among
the Facility Lender, The Home Depot, Inc., Home Depot U.S.A., Inc., and
the Lenders named therein, and the rules of usage set forth therein
shall apply hereto. For all purposes of this Security Agreement the
following terms shall have the following meanings (such definitions to
be equally applicable to both the singular and plural forms of the
terms defined):
"Collateral" shall mean the collective reference to the
Lessor Collateral and the Facility Lender Collateral.
"Facility Lender Collateral" shall have the meaning set forth
in paragraph B of the Granting Clause.
"Granting Clause Documents" shall have the meaning specified
in paragraph B of the Granting Clause.
"Lessor Collateral" shall have the meaning set forth in
paragraph A of the Granting Clause.
"Security Agreement", "this Security Agreement", and "the
Security Agreement" shall mean this Security Agreement.
ARTICLE II
CASH COLLATERAL ACCOUNT
SECTION 2.01 Creation of Cash Collateral Account. (a)
Subject to the terms and conditions hereof, on or prior to the
Effective Date, the Facility Lender and the Lessor have established and
shall thereafter maintain with the Agent Bank the Cash Collateral
Account, pursuant to Section 5.03 of the Liquidity Agreement a special
purpose trust account to be governed by the provisions of this Security
Agreement and Section 5 of the Participation Agreement.
(b) The Cash Collateral Account shall be segregated by the
Agent Bank and the proceeds thereof applied only in accordance with the
terms of this Security Agreement and Section 5 of the Participation
Agreement. The amounts held from time to time in the Cash Collateral
Account shall bear interest at a rate equal to the prevailing money
market rate offered from time to time by the Agent Bank.
SECTION 2.02 General Account Provisions. (a) The functions
of the Agent Bank under this Security Agreement with respect to the
Cash Collateral Account shall be limited to making the withdrawals and
transfers specified herein and in Section 5 to the Participation
Agreement, and the Agent Bank shall have no obligation to the Lessor or
the Facility Lender, the Lenders or any third party to make any payment
to the extent that the Cash Collateral Account does not contain
sufficient funds therefor.
<PAGE>
(b) Neither the Lessor nor the Facility Lender shall make or
attempt to make any withdrawal or transfer from the Cash Collateral
Account except in strict adherence to the provisions of this Security
Agreement and Section 5 of the Participation Agreement.
(c) The Facility Lender hereby irrevocably constitutes and
appoints the Agent Bank, with full power of substitution, as its
attorney-in-fact, which power is coupled with an interest, in its name
or in the name of the Agent Bank to make withdrawals from the Cash
Collateral Account and apply such withdrawals, in accordance with the
provisions of this Security Agreement. The Facility Lender in the
exercise of its rights with respect to the Cash Collateral Account
shall not take any action or suffer to be done any act (other than by
the Agent Bank) which would impair the appointment referred to in this
Section 2.02, or the assignment and pledge otherwise referred to in
this Security Agreement. So long as no Facility Agreement Event of
Default shall have occurred and be continuing, the Facility Lender
shall not make any withdrawal from the Cash Collateral Account without
the prior written consent of the Agent Bank, and the Agent Bank may
make withdrawals from the Cash Collateral Account in accordance with
the provisions of this Security Agreement and Section 5 of the
Participation Agreement. Upon the occurrence and continuance of a
Facility Agreement Event of Default, the Facility Lender shall not make
any withdrawal from the Cash Collateral Account and the Agent Bank may
make withdrawals from the Cash Collateral Account for payment as
provided in Section 5 of the Participation Agreement.
(d) The Lessor hereby irrevocably constitutes and appoints
the Agent Bank, with full power of substitution, as its attorney-in-
fact, which power is coupled with an interest, in its name or in the
name of the Agent Bank to make withdrawals from the Cash Collateral
Account and apply such withdrawals, in accordance with the provisions
of this Security Agreement. The Lessor in the exercise of its rights
with respect to the Cash Collateral Account shall not take any action
or suffer to be done any act (other than by the Agent Bank) which would
impair the appointment referred to in this Section 2.02, or the
assignment and pledge otherwise referred to in this Security Agreement.
So long as no Loan Agreement Event of Default shall have occurred and
be continuing, the Lessor shall not make any withdrawal from the Cash
Collateral Account without the prior written consent of the Agent Bank,
and the Agent Bank may make withdrawals from the Cash Collateral
Account in accordance with the provisions of this Security Agreement
and Section 5 of the Participation Agreement. Upon the occurrence and
continuance of a Loan Agreement Event of Default, the Lessor shall not
make any withdrawal from the Cash Collateral Account and the Agent Bank
may make withdrawals from the Cash Collateral Account for payment as
provided in Section 5 of the Participation Agreement.
Each of the Lessor and the Facility Lender acknowledge and
agree that the Agent Bank shall have sole dominion and control over the
Cash Collateral Account.
SECTION 2.03 Deposit of Proceeds. In accordance with the
Assignment of Lease, the Construction Agency Agreement Assignment,
Section 5 of the Participation Agreement and the Master Assignment, the
Lessee shall deposit or cause to be deposited each installment of Basic
Rent, Supplemental Rent, and other amounts payable under the Lease,
(excluding, in each case, Excepted Payments and subject, in each case,
to Excepted Rights) into the Cash Collateral Account. At the
appropriate times, the Facility Lender and the Lessor shall instruct
all other Persons who may come to owe to the Facility Lender or the
Lessor amounts pursuant to the Lease and the Assignment of Lease or any
other Operative Document to pay such amounts (excluding, in each case,
Excepted Payments and subject, in each case, to Excepted Rights) into
the Cash Collateral Account, and each of the Lessor and the Facility
Lender shall use reasonable efforts to cause all such Persons to make
all such payments into the Cash Collateral Account.
<PAGE>
SECTION 2.04 Payments from Collateral Only. (a) Without
impairing any of the other rights, powers, privileges, liens or
security interests of the Facility Lender, the Lenders or the Agent
Bank under this Security Agreement or any other Operative Document,
each of the Facility Lender, the Agent Bank and the Lenders agrees
that, except as expressly provided in this Security Agreement, the Loan
Agreement, the Liquidity Agreement, the Participation Agreement, the
Issuing and Paying Agency Agreement or any other Operative Document,
(i) the obligation to make all payments of the principal amount of and
interest on the Notes, and the performance by the Lessor of every
obligation or covenant contained in this Security Agreement, the Loan
Agreement, the Mortgage, the Participation Agreement, or any of the
other Operative Documents, shall be payable only from the income and
proceeds of the Lessor to the extent included in the Lessor Collateral
or any other Collateral pledged by the Lessor under the Security
Documents and only to the extent that the Lessor shall have sufficient
income or proceeds to the extent included in the Lessor Collateral to
enable the Agent Bank to make such payments in accordance with the
terms of Section 5 of the Participation Agreement, and all of the
statements, representations, covenants and agreements made by the
Lessor contained in this Security Agreement, the Loan Agreement, the
Mortgage and any agreement referred to herein, unless expressly
otherwise stated, are made and intended only for the purpose of binding
the Lessor and establishing the existence of rights and remedies which
can be exercised and enforced against the Lessor; therefore, anything
contained in this Security Agreement, the Loan Agreement, the Mortgage
or such other agreements to the contrary notwithstanding, no recourse
shall be had with respect to this Security Agreement, the Loan
Agreement, the Mortgage or such other Operative Documents against the
Lessor, or against any officer, director, trustee, servant, partner,
shareholder or direct or indirect parent or controlling person or
persons of any of the Lessor; and (ii) neither the Lessor nor the Agent
Bank shall have any personal liability for any amounts payable
hereunder, under the Participation Agreement or any of the other
Operative Documents or under the Notes; provided, however, that this
Section 2.04(a) shall not be construed to prohibit any action or
proceeding against any party hereto for its own willful misconduct or
grossly negligent conduct for which it would otherwise be liable (but
only to the extent of the damages arising by reason thereof). These
provisions are not intended as any release or discharge of the
indebtedness represented by the Notes, the Mortgage and the Security
Agreement, and the indebtedness represented by this Security Agreement,
the Mortgage and the Notes shall remain in full force and effect as
fully as though these provisions were not contained in this Security
Agreement. The Lessor hereby acknowledges that the Agent Bank and the
Lenders have expressly reserved all their legal rights and remedies
against the Lessor Collateral, including, without limitation of the
generality of the foregoing, the right, in the event of the default in
the payment of principal amount of or interest on any Notes, or upon
the occurrence and continuation of any other Loan Agreement Event of
Default under this Security Agreement, to foreclose upon this Security
Agreement and/or to receive the proceeds from the Lessor Collateral and
otherwise to enforce any other right under the Loan Agreement, the
Mortgage or this Security Agreement.
(b) Without impairing any of the other rights, powers,
privileges, liens or security interests of the Lenders or the Agent
Bank under this Security Agreement, each of the Agent Bank and the
Lenders agrees that, except as expressly provided in this Security
Agreement, the Liquidity Agreement, the Participation Agreement, the
Issuing and Paying Agency Agreement or any other Operative Document,
(i) the obligation to make all payments of the principal amount of and
interest on the Commercial Paper Notes and the Liquidity Notes, and the
performance by the Facility Lender of every obligation or covenant
contained in this Security Agreement, the Liquidity Agreement, the
Participation Agreement, the Issuing and Paying Agency Agreement or any
of the other Operative Documents, shall be payable only from the income
and proceeds of the Facility Lender to the extent included in the
Facility Lender Collateral and the Guaranty and only to the extent that
the Facility Lender shall have sufficient income or proceeds to the
extent included in the Facility Lender Collateral to enable the Agent
Bank to make such payments in accordance
<PAGE>
with the terms of Section 5 of the Participation Agreement, and all of
the statements, representations, covenants and agreements made by the
Facility Lender contained in this Security Agreement, the Liquidity
Agreement or any other Operative Document, unless expressly otherwise
stated, are made and intended only for the purpose of binding the
Facility Lender and establishing the existence of rights and remedies
which can be exercised and enforced against the Facility Lender;
therefore, anything contained in this Security Agreement, the Liquidity
Agreement or such other agreements to the contrary notwithstanding, no
recourse shall be had with respect to this Security Agreement, the
Liquidity Agreement or such other agreements against the Facility
Lender or J H Management Corporation ("JHM"), or against any officer,
director, trustee, servant, partner, incorporation, employee, agent,
shareholder or direct or indirect parent or controlling person or
persons of any of the Facility Lender or JHM; and (ii) neither the
Facility Lender nor the Agent Bank nor JHM shall have any personal
liability for any amounts payable hereunder, under the Participation
Agreement or any of the other Operative Documents or under the
Liquidity Notes; provided, however, that this Section 2.04(b) shall not
be construed to prohibit any action or proceeding against any party
hereto for its own willful misconduct or fraudulent conduct for which
it would otherwise be liable (but only to the extent of the damages
arising by reason thereof). These provisions are not intended as any
release or discharge of the indebtedness represented by the Commercial
Paper Notes or the Liquidity Notes, the Security Agreement and the
other Operative Documents, and the indebtedness represented by this
Security Agreement, the Commercial Paper Notes, the Liquidity Notes and
the other Operative Documents shall remain in full force and effect as
fully as though these provisions were not contained in this Security
Agreement. The Facility Lender hereby acknowledges that the Agent Bank
and the Lenders have expressly reserved all their legal rights and
remedies against the Facility Lender Collateral, including, without
limitation of the generality of the foregoing, the right, in the event
of the default in the payment of principal amount of or interest on any
Commercial Paper Notes or Liquidity Notes, or upon the occurrence and
continuation of any other Facility Agreement Event of Default under
this Security Agreement, to foreclose upon this Security Agreement
and/or to receive the proceeds from the Facility Lender Collateral and
otherwise to enforce any other right under the Liquidity Agreement or
this Security Agreement.
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION
OF INCOME FROM THE COLLATERAL
SECTION 3.01 Distribution. Distributions of payments and
collateral proceeds shall be conducted in the manner set forth in
Section 5 of the Participation Agreement.
SECTION 3.02 Payments to Lessor and Facility Lender. Any
amounts distributed hereunder by the Agent Bank to the Lessor or the
Facility Lender shall be paid to the Lessor or the Facility Lender by
wire transfer of funds of the type received by the Agent Bank at such
office and to such account or accounts of such entity or entities as
shall be designated by notice from the Lessor or the Facility Lender to
the Agent Bank from time to time.
ARTICLE IV
<PAGE>
REMEDIES OF AGENT BANK UPON EVENT OF DEFAULT
SECTION 4.01 Remedies Upon Default. If any Facility
Agreement Event of Default shall have occurred:
The Agent Bank may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a
secured party under the Uniform Commercial Code (the "UCC") in
effect in the State of Georgia or in any other jurisdiction in
which any part of the Collateral is located at that time (whether
or not the UCC applies to the Collateral at issue), and the Agent
Bank may also, without notice except as specified below, sell the
Collateral or any part thereof in one or more parcels at public or
private sale, or at any of the Agent Bank's offices or elsewhere,
for cash, on credit or for future delivery, and upon such other
terms as the Security Agent may deem commercially reasonable. The
Lessor and the Facility Lender agree that, to the extent notice of
sale shall be required by law, at least ten days' notice to the
Lessor and the Facility Lender of the time a place of any public
sale or the time after which a private sale is to be made shall
constitute reasonable notification. The Agent Bank shall not be
obligated to make any sale of Collateral regardless of notice of
sale having been given. The Agent Bank may adjourn any public or
private sale from time to time by announcement at the time and
place fixed therefore and such sale may, without further notice,
be made at the time and place to which it was so adjourned. Any
provision of this Security Agreement, the Liquidity Agreement or
any other Operative Document to the contrary notwithstanding, if
(x) any Facility Agreement Event of Default that arises out of or
is attributable to a Lease Event of Default has occurred and is
continuing and (y) there are no other Facility Agreement Events of
Default under the Liquidity Agreement then existing (other than
Facility Agreement Events of Default that are based upon facts or
circumstances which arises out of or is attributable to a Lease
Event of Default), the Agent Bank shall not foreclose the lien of
this Security Agreement or any other Security Document on the
collateral hereunder or thereunder or otherwise exercise remedies
which would result in the exclusion of the Facility Lender or
Lessor from the collateral hereunder or thereunder or any part
thereof unless the Agent Bank is concurrently taking action under
the Lease to dispossess the Lessee, to terminate the Lease or to
effect any comparable remedy.
SECTION 4.02 Remedies Cumulative. Each and every right,
power and remedy given to the Agent Bank specifically or otherwise in
this Security Agreement shall be cumulative and shall be in addition to
every other right, power and remedy herein specifically given or now or
hereafter existing at law, or under the Uniform Commercial Code as in
effect in Georgia, or otherwise in equity or by statute, and each and
every right, power and remedy whether specifically herein given or
otherwise existing may be exercised from time to time and as often and
in such order as may be deemed expedient by the Agent Bank, and the
exercise or the beginning of the exercise of any power or remedy shall
not be construed to be a waiver of the right to exercise at the same
time or thereafter any other right, power or remedy. No delay or
omission by the Agent Bank in the exercise of any right, remedy or
power or in the pursuance of any remedy shall impair any such right,
power or remedy to be construed to be a waiver of any default on the
part of the Facility Lender or Lessee or to be an acquiescence therein.
SECTION 4.03 Discontinuance of Proceedings. In case the
Agent Bank shall have instituted any proceeding to enforce any right,
power or remedy under this Security Agreement by foreclosure, entry or
otherwise, and such proceedings
<PAGE>
shall have been discontinued or abandoned for any reason or shall have
been determined adversely to the Agent Bank, then and in every such
case the Facility Lender, the Agent Bank and Lessee shall, subject to
any determination in such proceedings, be restored to their former
positions and rights hereunder with respect to the Collateral, and all
rights, remedies and powers of the Agent Bank shall continue as if no
such proceedings had been instituted
ARTICLE V
THE FACILITY LENDER AND THE AGENT BANK
SECTION 5.01 No Representations or Warranties as to Properties or
Documents. NEITHER THE AGENT BANK NOR THE FACILITY LENDER NOR THE
LESSOR MAKES OR SHALL BE DEEMED TO HAVE MADE ANY REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, VALUE, COMPLIANCE WITH
SPECIFICATIONS, CONDITION, DESIGN, QUALITY, DURABILITY, OPERATION,
MERCHANTABILITY OR FITNESS FOR USE OR PURPOSE OF THE PROPERTIES OR ANY
PROPERTY, OR ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE
PROPERTIES OR ANY PROPERTY WHATSOEVER. Neither the Facility Lender nor
the Agent Bank nor the Lessor makes or shall be deemed to have made any
representations or warranty as to the validity, legality or
enforceability of this Security Agreement, the Loan Agreement, the
Notes, the Liquidity Agreement, the Participation Agreement, the
Liquidity Notes, the Lease, the Lease Supplement, or as to the
correctness of any statement contained in any thereof, except for the
representations and warranties of the (i) Facility Lender made under
the Liquidity Agreement, the Security Agreement, in Section 9.5 of the
Participation Agreement or in any other Operative Document and (ii) of
the Lessor made in Section 9.1 of the Participation Agreement. The
Agent Bank makes no representation or warranty hereunder whatsoever.
SECTION 5.02 No Segregation of Monies; No Interest. Any monies
paid to or retained by the Agent Bank pursuant to any provision hereof
and not then required to be distributed to the Lessee, Lessor or the
Facility Lender as provided in Section 5 of the Participation Agreement
need not be segregated in any manner except to the extent required by
law, and may be deposited under such general conditions as may be
prescribed by law, and the Agent Bank shall not be liable for any
interest thereon, provided, that any payments received or applied
hereunder by the Agent Bank shall be accounted for by the Agent Bank so
that any portion thereof paid or applied pursuant hereto shall be
identifiable as to the source thereof.
SECTION 5.03 Reliance; Agent Bank; Advice of Counsel. The Agent
Bank shall not incur any liability to anyone in acting upon any
signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond or other document or paper believed
by it to be genuine and believed by it to be signed by the proper party
or parties. The Agent Bank may accept a copy of a resolution of the
Board of Directors of any party to the Participation Agreement,
certified by the Secretary or an Assistant Secretary thereof as duly
adopted and in full force and effect, as conclusive evidence that such
resolution has been duly adopted and that the same is in full force and
effect. As to the aggregate unpaid principal amount of Liquidity Notes
outstanding as of any date, the Facility
<PAGE>
Lender may for all purposes hereof rely on a certificate signed by any
Vice President or other authorized corporate trust officer of the Agent
Bank. As to any fact or matter relating to Lessee or Lessor the manner
of ascertainment of which is not specifically described herein, the
Facility Lender and the Agent Bank may for all purposes hereof rely on
a certificate, signed by a duty authorized officer of Lessee or Lessor,
as to such fact or matter, and such certificate shall constitute full
protection to the Facility Lender and the Agent Bank for any action
taken or omitted to be taken by them in good faith in reliance thereon.
The Agent Bank shall assume, and shall be fully protected in assuming,
that the Facility Lender is authorized to enter into this Security
Agreement and to take all action to be taken by it pursuant to the
provisions hereof, and shall not inquire into the authorization of the
Facility Lender with respect thereto. In the administration of the
trusts hereunder, the Facility Lender and the Agent Bank each may
execute any of the trusts or powers hereof and perform its powers and
duties hereunder directly or through agents or attorneys and may, at
the expense of the Collateral, consult with counsel, accountants and
other skilled persons to be selected and retained by it, and the
Facility Lender and the Agent Bank shall not be liable for anything
done, suffered or omitted in good faith by them in accordance with the
written advice or written opinion of any such counsel, accountants or
other skilled persons acting within such person's area of competence
(so long as the Agent Bank or the Facility Lender, as the case may be,
shall have exercised reasonable care in selecting such persons).
ARTICLE VI
MISCELLANEOUS
SECTION 6.01 Termination of Security Agreement. Upon (or at any
time after) payment in full of the principal amount of and interest on
and all other amounts due under all Liquidity Notes and the Notes and
provided that (i) there shall then be no other amounts due to the Agent
Bank or the Lenders hereunder, under the Liquidity Agreement, under the
Liquidity Notes, under the Notes, under the Loan Agreement or under the
Participation Agreement or the other Operative Documents to or for the
benefit of the Agent Bank or the Lenders, (ii) the Commitment under the
Liquidity Agreement shall have been terminated, and (iii) there shall
be no Commercial Paper Notes outstanding, the Facility Lender shall
direct the Agent Bank to execute and deliver to or as directed in
writing by the Lessor an appropriate instrument terminating this
Security Agreement and releasing the Collateral, the Granting Clause
Documents and all funds on deposit in the Cash Collateral Account from
the assignment and pledge thereof hereunder, and the Agent Bank shall
execute and deliver such instrument as aforesaid and shall deliver all
funds on deposit in the Cash Collateral Account to the Lessor or to
such other Person to which the Agent Bank shall be legally required to
make such delivery; provided, however, that this Security Agreement and
the trusts created hereby shall earlier terminate and this Security
Agreement shall be of no further force or effect upon any sale or other
final disposition by the Agent Bank of all property part of the
Collateral and the final distribution by the Agent Bank of all monies
or other property or proceeds constituting part of the Collateral in
accordance with the terms hereof. Except as aforesaid otherwise
provided, this Security Agreement and the trusts created hereby shall
continue in full force and effect in accordance with the terms hereof.
SECTION 6.02 Sale of Properties to Agent Bank Is Binding. Any
sale or other conveyance of any Collateral the Agent Bank made pursuant
to the terms of this Security Agreement or the Lease shall be effective
to transfer or convey all right, title and interest of the Agent Bank,
the Facility Lender, the Lessor and such holders in and to such
Property
<PAGE>
or Properties. No purchaser or other grantee shall be required to
inquire as to the authorization, necessity, expediency or regularity of
such sale or conveyance or as to the application of any sale or other
proceeds with respect thereto by the Agent Bank.
SECTION 6.03 Security Agreement for Benefit of Facility Lender,
Agent Bank, Lessor and Lessee. Nothing in this Security Agreement,
whether express or implied, shall be construed to give any legal or
equitable right, remedy or claim under or in respect of this Security
Agreement to any person other than the Facility Lender, the Lessor, the
Lenders and the Agent Bank.
SECTION 6.04 Notices. All notices, demands, requests, consents,
approvals and other instruments under this Security Agreement shall be
made in accordance with the notice provisions of the Participation
Agreement.
SECTION 6.05 Severability. Any provision of this Security
Agreement which is prohibited or unenforceable in any jurisdiction,
shall, as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
SECTION 6.06 No Oral Modification or Continuing Waivers. No term
or provision of this Security Agreement or the Liquidity Notes may be
changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party or other person against whom
enforcement of the change, waiver, discharge or termination is sought;
and any waiver of the terms hereof or of any Liquidity Note shall be
effective only in the specific instance and for the specific purpose
given.
SECTION 6.07 Successors and Assigns. All covenants and
agreements contained herein shall be binding upon, and inure to the
benefit of, each of the parties hereto and the successors and assigns
of each, all as herein provided. Without limitation, "Lenders" shall
include any Person that holds an interest in any of the Loans from time
to time, as a party to the Liquidity Agreement, as assignee or subrogee
of any such party, or otherwise, except that neither of the Facility
Lender, nor the Lessee and their respective Affiliates shall be deemed
to be a Bank. The Facility Lender shall have no right to assign any
obligation under this Security Agreement without the prior written
consent of the Agent Bank.
SECTION 6.08 Headings. The headings of the various Articles and
Sections herein and in the table of contents hereto are for convenience
of reference only and shall not define or limit any of the terms or
provisions hereof.
SECTION 6.09 Normal Commercial Relations. Anything contained in
this Security Agreement to the contrary notwithstanding, the Agent Bank
or any Lender or any other Affiliate of the Agent Bank or such Lender
may conduct any banking or other financial transactions, and have
banking or other commercial relationships, with the Facility Lender,
fully to the same extent as if this Security Agreement were not in
effect, including without limitation the making of loans or
<PAGE>
other extensions of credit to the Facility Lender for any purpose
whatsoever, whether related to any of the transactions contemplated
hereby or otherwise.
SECTION 6.10 Governing Law; Counterpart Form. This Security
Agreement shall in all respects be governed by, and construed in
accordance with, the law of the State of Georgia, including all matters
of construction, validity and performance. This Security 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
<PAGE>.
IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be duly executed by their respective officers thereunto
duly authorized, as of the day and year first above written.
HD REAL ESTATE FUNDING CORP.
By:
Name:
Title:
CREDIT SUISSE,
as Agent Bank
By:
Name:
Title:
By:
Name:
Title:
CREDIT SUISSE LEASING 92A, L.P.,
as Lessor
By: CREDIT SUISSE, its general partner
By:
Name:
Title:
By:
Name:
Title:
<PAGE>
EXHIBIT N-1
TO PARTICIPATION AGREEMENT
MORTGAGE AND SECURITY AGREEMENT
dated as of _________ ___, 199_
from
CREDIT SUISSE LEASING 92A, L.P., Mortgagor
to
HD REAL ESTATE FUNDING CORP., Mortgagee
When recorded return to:
Hunton & Williams
200 Park Avenue
New York, New York 10166
Attention: J. Andrew Murphy, Esquire
<PAGE>
MORTGAGE AND SECURITY AGREEMENT
MORTGAGE AND SECURITY AGREEMENT, dated as of________, 199_
(as amended, supplemented or otherwise modified from time to
time, this "Mortgage"), made by CREDIT SUISSE LEASING 92A, L.P.,
a Delaware limited partnership (the "Mortgagor"), with an address
at 12 East 49th Street, New York, New York 10017, in favor of HD
REAL ESTATE FUNDING CORP., a Delaware corporation, with an
address at _________________________ _________________________,
(the "Mortgagee").
Preliminary Statement
Pursuant to the Loan Agreement and subject to the terms of
the other Operative Documents, the Mortgagee has agreed to make
Loans to the Mortgagor in an aggregate amount not to exceed TWO
HUNDRED NINETY-ONE MILLION AND NO/100 DOLLARS ($291,000,000) upon
the terms and subject to the conditions set forth therein, to be
evidenced by the Notes issued by the Mortgagor under the Loan
Agreement. The Notes bear interest as set forth in the Notes and
mature (if not sooner accelerated) on a date no later than
_______________.
It is a condition, among others, to the obligation of the
Mortgagee to make Loans to the Mortgagor under the Loan Agreement
that the Mortgagor shall have executed and delivered this
Mortgage to the Mortgagee.
<PAGE>
NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES, THIS
MORTGAGE WITNESSETH, that to secure (i)(A) payment when due of
the principal amount of and interest on the Loans, the Notes
(including, without limitation, interest accruing after the
maturity of the Loans and, the Notes, and interest accruing after
the filing of any petition in bankruptcy, or the commencement of
any insolvency, reorganization or like proceeding, relating to
the Mortgagor, Mortgagee or the Lessee, whether or not a claim
for post-filing or post-petition interest is allowed in such
proceeding), from time to time outstanding and all other
obligations and liabilities (including, without limitation, all
indemnities, costs, fees and expenses) from time to time payable
by, or on behalf of, the Mortgagor to Mortgagee pursuant to the
Operative Documents, whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter
incurred, and (B) all fees and expenses of the Mortgagee from
time to time payable under the Operative Documents, (ii) payment
when due of all amounts from time to time owing by the Lessee or
to or for the benefit of the Mortgagee as Lessor under the Lease
and for the benefit of Mortgagee pursuant to the Operative
Documents whether direct or indirect, absolute or contingent, due
or to become due, or now existing or hereafter incurred, (iii)
the
<PAGE>
performance and observance by the Mortgagor of all agreements
contained herein and in the other Operative Documents and (iv)
the payment, performance and observance by the Lessee of its
covenants and agreements contained in the Operative Documents
(collectively, the "Obligations") and subject to the terms and
provisions hereof, and in consideration of the premises and of
the covenants herein and in the other Operative Documents, the
Mortgagor, intending or to be legally bound, does hereby
mortgage, pledge, grant a security interest in, set over and
confirm unto the Mortgagee and its successors and assigns, for
the benefit of the Mortgagee, all of the Mortgagor's estate,
right, title, interest, property, claim and demand, now or
hereafter arising, in and or to the following property and
rights, excluding Excepted Rights and Excepted Payments:
(A) the parcel(s) of real property described on Schedule
A attached hereto and made a part hereof by this reference
(the "Land"); all buildings, structures, Fixtures, Equipment,
and other improvements of every kind existing at any time and
from time to time (including (i) those constructed pursuant
to the Construction Agency Agreement and those described on
Schedule 1 to any Lease Supplement, and (ii) those purchased
with amounts advanced by the Participants pursuant to the
Participation Agreement) on or under the Land, together with
any and all appurtenances to such buildings, structures or
improvements, including sidewalks, utility pipes, conduits
and lines, parking areas and roadways, and including all
Modifications and other additions to or changes in such
improvements at any time ("Improvements"); all agreements,
easements, rights of way or use, rights of ingress or egress,
privileges, appurtenances, tenements, hereditaments and other
rights and benefits at any time belonging or pertaining to
the Land or the Improvements, including, without limitation,
the use of any streets, ways, alleys, vaults or strips of
land adjoining, abutting, adjacent or contiguous to the Land
and all permits, licenses and rights, whether or not of
record, appurtenant to the Land ("Appurtenant Rights"; the
Land, Improvements, Appurtenant Rights, Fixtures and
Equipment being collectively referred to as the "Property");
(B) all the estate, right, title, claim or demand
whatsoever of the Mortgagor, in possession or expectancy, in
and to the Property or any part thereof;
(C) all right, title and interest of the Mortgagor in and
to all of the fixtures and fittings of every kind and nature
whatsoever, and all appurtenances and additions thereto and
substitutions or replacements thereof (together with, in each
case, attachments, components, parts and accessories)
currently owned or subsequently acquired by the Mortgagor and
now or subsequently attached to the Property (all of the
foregoing in this paragraph (C) being referred to as the
"Fixtures");
(D) all right, title and interest of the Mortgagor in and
to all of the equipment, apparatus, furnishings, fittings and
articles of personal property of every kind and nature
<PAGE>
whatsoever purchased or otherwise acquired with the proceeds
of the Notes or the Lessor Investment Amounts and all
appurtenances and additions thereto and substitutions or
replacements thereof (together with, in each case,
attachments, components, parts and accessories) currently
owned or subsequently acquired by Mortgagor and now or
subsequently attached to, or contained in or used or usable
in any way in connection with any operation or letting of the
Property, including but without limiting the generality of
the foregoing, all screens, awnings, shades, storm doors and
windows, electrical and mechanical equipment, lighting,
plumbing, ventilating, air conditioning and air-cooling
apparatus, refrigerating and incinerating equipment,
escalators, refrigerators, display cases, elevators, loading
and unloading systems, sprinkler systems and other fire
prevention and extinguishing apparatus and materials,
security systems, motors, engines, pipes, pumps, tanks,
conduits, appliances and fixtures of every kind and
description (all of the foregoing in this paragraph (D) being
referred to as the "Equipment");
(E) all right, title and interest of the Mortgagor in and
to all substitutes and replacements of, and all additions and
improvements to, the Improvements, the Fixtures and
Equipment, subsequently acquired by the Mortgagor or
constructed, assembled or placed by Mortgagor on the Land,
immediately upon such acquisition, release, construction,
assembling or placement, including, without limitation, any
and all building materials whether stored at the Property or
offsite acquired with the proceeds of the Notes or the Lessor
Investment Amounts, and, in each such case, without any
further mortgage, conveyance, assignment or other act by the
Mortgagor;
(F) all right, title and interest of the Mortgagor in and
to all unearned premiums under insurance policies now or
subsequently obtained relating to the Property and the
Mortgagor's interest in and to all proceeds of any such
insurance policies (including title insurance policies)
including the right to collect and receive such proceeds; and
all awards and other compensation, including the interest
payable thereon and the right to collect and receive the
same, made to the present or any subsequent owner of the
Property for the taking by eminent domain, condemnation or
otherwise, of all or any part of the Property or any easement
or other right therein;
(G) all right, title and interest of the Mortgagor in and
to (i) all consents, licenses, building permits, certificates
of occupancy and other governmental approvals relating to
construction, completion, occupancy, use or operation of the
Property or any part thereof and (ii) all Plans and
Specifications relating to the Property;
(H) all right, title and interest of the Mortgagor in and
to the Lease, including all powers, privileges, options and
other benefits of the Mortgagor as lessor thereunder, more
particularly described on Schedule B attached hereto and made
a part hereof by this reference and all Rent and all other
rents, payments, purchase prices, receipts, revenues,
<PAGE>
issues and profits payable under the Lease or pursuant to any
other lease with respect to the Property, including, without
limitation, (i) all rights to the Mortgagor to receive
proceeds of any indemnity, warranty or guaranty with respect
to the Lease, (ii) all claims of the Mortgagor for damages
arising out of or for breach of or default under the Lease,
(iii) all rights of the Mortgagor to exercise any security
now or hereafter payable to or receivable by the Mortgagor
under the Lease, (iv) the right of the Mortgagor to exercise
any election or option or to make any decision or
determination or to give or receive any notice, consent,
waiver or approval or to take any action under the Lease and
(v) the right of the Mortgagor to terminate, amend,
supplement or otherwise modify the Lease and to compel
performance and otherwise exercise all remedies thereunder;
(I) all rights, powers, privileges and other benefits of
the Mortgagor in Governmental Actions now or hereafter
obtained by the Mortgagor or the Lessee (or any Affiliates
thereof) from any Governmental Authority relating to the
ownership, operation, management and use of the Property, the
development and financing of the Property, the Improvements
and the Equipment, the construction and operation of the
Facility and any improvements, modifications or additions
thereto;
(J) the accounts established and maintained pursuant to
the Security Documents and all cash, cash equivalents,
instruments, investments and other securities deposited or
required to be deposited with the Mortgagor or the Mortgagee
pursuant to any provision of this Mortgage, the Lease, the
Security Documents and any other Operative Document;
(K) any and all other property that may from time to
time, by delivery or by writing of any kind, be subjected to
the lien hereof by the Mortgagor or by anyone with its
consent, or which may come into the possession or be subject
to the control of the Mortgagee pursuant to this Mortgage,
including, without limitation, all proceeds of any sales or
other dispositions of all or part of the Mortgaged Property,
any such property being hereby assigned to the Mortgagee and
subjected or added to the lien or estate created by this
Mortgage forthwith upon the acquisition thereof by the
Mortgagor, as fully as if such property were not owned by the
Mortgagor and were specifically described in this Mortgage
and subjected to the lien and security interest hereof; and
the Mortgagee is hereby authorized to receive any and all
such property as and for additional security hereunder;
(L) all the remainder or remainders, reversion or
reversions, rents, revenues, issues, profits, royalties,
income and other benefits derived from any of the foregoing,
all of which are hereby assigned to the Mortgagee, who is
hereby authorized to collect and receive the same, to give
proper receipts and acquittances therefor and to apply the
same to the payment of the Obligations in accordance with the
provisions of this Mortgage;
(M) all rights of the Mortgagor to the amounts paid or payable
by the Lessee to the
<PAGE>
Mortgagor under the Participation Agreement and the other
Operative Documents and all rights of the Mortgagor to
enforce payments of any such amounts thereunder;
(N) any right to restitution from the Lessee, or any
other Person in respect of any determination of invalidity of
any of the Lease, Security Documents, the Loan Agreement, the
Notes and the other Operative Documents; and
(O) all proceeds, both cash and noncash, of the
foregoing, including all proceeds of the insurance required
to be maintained by or on behalf of the Lessee pursuant to
the Lease and the other Operative Documents and all awards or
other compensation heretofore or hereafter made to the
Mortgagor, including any awards for severance damages, all of
which are hereby assigned to the Mortgagee, who is hereby
authorized, subject to the provisions of this Mortgage, to
collect and receive the proceeds thereof, to give proper
receipts and acquittances therefor and to apply the same to
the payment of the Obligations in accordance with the
provisions of this Mortgage and the other Operative
Documents;
(All of the foregoing property and rights and interests now
owned or held or subsequently acquired by the Mortgagor and
described in the foregoing clauses (A) through (O) are, excluding
Excepted Payments and Excepted Rights, collectively referred to
as the "Mortgaged Property"); PROVIDED THAT EXCLUDED from the
Mortgaged Property at all times and in all respects shall be (i)
all Excepted Payments and Excepted Rights, (ii) all inventory of
any lessee of the Mortgaged Property, and (iii) all equipment,
furnishings and fixtures purchased by any lessee of the Mortgaged
Property with funds not provided by the Mortgagee or Mortgagor;
TO HAVE AND TO HOLD the Mortgaged Property and the rights and
privileges hereby mortgaged unto the Mortgagee, its successors
and assigns for the uses and purposes set forth, until all
Obligations are fully paid and performed.
1. Definitions; Rules of Interpretation. Capitalized
terms used but not otherwise defined in this Mortgage shall
have the respective meanings specified in Appendix 1 attached
to this Mortgage and made a part hereof by this reference;
and the rules of interpretation set forth in Appendix 1
hereto shall apply to this Mortgage.
2. Other Covenants. At any time and from time to time,
upon the written request of the Mortgagee, and at the sole
expense of the Mortgagor (but only to the extent Mortgagor
has been reimbursed by the Lessee), the Mortgagor will
promptly and duly execute and deliver such further
instruments and documents and take such further actions as
the Mortgagee reasonably may request for the purposes of
obtaining or preserving the full benefits of this Mortgage
and of the rights and powers granted by this Mortgage.
<PAGE>
3. Default; Remedies/1
(a) If a Loan Agreement Event of Default has occurred and
is continuing and the Loans have been accelerated pursuant to
Section 5 of the Loan Agreement:
(i) the Mortgagee, in addition to all other remedies available
at law or in equity, shall have the right forthwith to enter upon
and take possession of the Mortgaged Property, and to let the
Mortgaged Property and receive the rents, issues and profits
thereof, to make repairs and to apply said rentals and profits,
after payment of all necessary or proper charges and expenses, on
account of the amounts hereby secured (subject to the Excepted
Payments and Excepted Rights); and
__________________
1/. Mortgage remedies are a matter of state law and vary from
jurisdiction to jurisdiction. Local counsel will be
consulted to be sure that the Mortgage covers all remedies
available under local law, and that any waivers or other
provisions required by state statutes to ensure
enforceability of particular remedies are included in the
Mortgage.
<PAGE>
(ii) the Mortgagee shall, as a matter of right, at the
option of the Mortgagee, be entitled to the appointment of a
receiver for the Mortgaged Property, and the Mortgagor hereby
consents to such appointment and waives notice of any
application therefor.
(b) If a Loan Agreement Event of Default has occurred and
is continuing and the Loans have been accelerated pursuant to
Section 5 of the Loan Agreement, the Mortgagee may proceed by an
action at law, suit in equity or other appropriate proceeding, to
protect and enforce its rights, whether for the foreclosure of
the lien of this Mortgage, or for the specific performance of any
agreement contained herein or for an injunction against the
violation of any of the terms hereof.
(c) The Mortgagor hereby waives the benefit of all
appraisement, valuation, stay, extension, reinstatement and
redemption laws now or hereafter in force and all rights of
marshaling in the event of any sale of the Mortgaged Property or
any interest therein.
(d) Notwithstanding any other provision of this Mortgage
or any other Operative Document, Mortgagee agrees that upon the
occurrence of a Loan Agreement Event of Default arising out of,
or attributable to, a Lease Default or Lease Event of Default,
Mortgagee shall not at any time exercise against the Mortgagor
any of the remedies provided in this Mortgage and the Operative
Documents unless the Mortgagee shall at the same time be
exercising its rights under the Lease, the Construction Agency
Agreement and the Operative Documents to dispossess the Lessee or
terminate the Lease and the Construction Agency Agreement or to
take any comparable remedial actions thereunder, provided, that
the foregoing provisions of this paragraph shall not apply at any
time when a Loan Agreement Event of Default arising out of, or
<PAGE>
attributable to, a Lease Default or Lease Event of Default, shall
also have occurred and be continuing.
(e) The proceeds of any sale of any of the Mortgaged
Property shall be applied pursuant to Section 5 of the
Participation Agreement.
4. Remedies Not Exclusive. The Mortgagee shall be
entitled to enforce payment of the indebtedness and performance
of the Obligations and to exercise all rights and powers under
this Mortgage or under any of the other Operative Documents or
other agreement or any laws now or hereafter in force,
notwithstanding some or all of the Obligations may now or
hereafter be otherwise secured, whether by mortgage, security
agreement, pledge, lien, assignment or otherwise. Neither the
acceptance of this Mortgage nor its enforcement, shall prejudice
or in any manner affect the Mortgagee's right to realize upon or
enforce any other security now or hereafter held by the
Mortgagee, it being agreed that the Mortgagee shall be entitled
to enforce this Mortgage and any other security now or hereafter
held by the Mortgagee in such order and manner as the Mortgagee
may determine in its absolute discretion. No remedy herein
conferred upon or reserved to the Mortgagee is intended to be
exclusive of any other remedy herein or by law provided or
permitted, but each shall be cumulative and shall be in addition
to every other remedy given hereunder or now or hereafter
existing at law or in equity or by statute. Every power or remedy
given by any of the Operative Documents to the Mortgagee or to
which it may otherwise be entitled, may be exercised,
concurrently or independently, from time to time and as often as
may be deemed expedient by the Mortgagee. In no event shall the
Mortgagee, in the exercise of the remedies provided in this
Mortgage (including, without limitation, in connection with the
assignment of Rent to Mortgagee, or the appointment of a receiver
and the entry of such receiver on to all or any part of the
Mortgaged Property), be deemed a "mortgagee in possession," and
the Mortgagee shall not in any way be made liable for any act,
either of commission or omission, in connection with the exercise
of such remedies.
5. Performance by the Mortgagee of the Mortgagor's
Obligations. If the Mortgagor fails to perform or comply with
any of its agreements contained herein, the Mortgagee, at its
option, but without any obligation so to do, may perform or
comply, or otherwise cause performance or compliance, with such
agreement. The expenses of the Mortgagee incurred in connection
with actions undertaken as provided in this Section, together
with interest thereon at a rate per annum equal to the Overdue
Rate, from the date of payment by the Mortgagee to the date
reimbursed by the Mortgagor, shall be payable by the Mortgagor to
the Mortgagee on demand (but only to the extent Mortgagor has
been reimbursed by the Lessee to the extent required pursuant to
the Participation Agreement or the Lease).
6. Duty of the Mortgagee. The Mortgagee's sole duty
with respect to the custody, safekeeping and physical
preservation of any Mortgaged Property in its possession, under
Section 9-207 of the Uniform Commercial Code or otherwise, shall
be to deal with it in the same
<PAGE>
manner as the Mortgagee deals with similar property for its own
account. Neither the Mortgagee, nor any of their respective
directors, officers, employees or agents shall be liable for
failure to demand, collect or realize upon any of the Mortgaged
Property or for any delay in doing so or shall be under any
obligation to sell or otherwise dispose of any Mortgaged Property
upon the request of the Mortgagor or any other Person or to take
any other action whatsoever with regard to the Mortgaged Property
or any part thereof.
7. Powers Coupled with an Interest. All powers,
authorizations and agencies contained in this Mortgage are
coupled with an interest and are irrevocable until this Mortgage
is terminated and the lien created hereby is released.
8. Execution of Financing Statements. Pursuant to
Section 9-402 of the Uniform Commercial Code, the Mortgagor
authorizes the Mortgagee to file financing statements with
respect to the Mortgaged Property without the signature of the
Mortgagor in such form and in such filing offices as the
Mortgagee reasonably determines appropriate to perfect the
security interests of the Mortgagee under this Mortgage. A
carbon, photographic or other reproduction of this Mortgage shall
be sufficient as a facing statement for filing in any
jurisdiction.
9. Security Agreement Under Uniform Commercial Code.
(a) It is the intention of the parties hereto that this
Mortgage shall constitute a Security Agreement within the meaning
of the Uniform Commercial Code of the State in which the
Mortgaged Property is located. If a Loan Agreement Event of
Default shall occur and be continuing, then in addition to having
any other right or remedy available at law or in equity, the
Mortgagee shall have the option of either (i) proceeding under
the Uniform Commercial Code and exercising such rights and
remedies as may be provided to a secured party by the Uniform
Commercial Code with respect to all or any portion of the
Mortgaged Property which is personal property (including, without
limitation, taking possession of and selling such property) or
(ii) treating such property as real property and proceeding with
respect to both the real and personal property constituting the
Mortgaged Property in accordance with the Mortgagee's rights,
powers and remedies with respect to the real property (in which
event the default provisions of the Uniform Commercial Code shall
not apply). If the Mortgagee shall elect to proceed under the
Uniform Commercial Code, then ten (10) days' notice of sale of
the personal property shall be deemed reasonable notice and the
reasonable expenses of retaking, holding, preparing for sale,
selling and the like incurred by the Mortgagee shall include, but
not be limited to, attorneys' fees and legal expenses. At the
Mortgagee's request, the Mortgagor shall assemble the personal
property and make it available to the Mortgagee at a place
designated by the Mortgagee which is reasonably convenient to
both parties.
(b) The Mortgagor and the Mortgagee agree, to the extent
permitted by law, that this Mortgage upon recording or
registration in the real estate records of the proper office
shall
<PAGE>
constitute a financing statement filed as a "fixture filing"
within the meaning of Sections 9-313
and 9-402 of the Uniform Commercial Code.
(c) The Mortgagor, upon request by the Mortgagee from
time to time, shall execute, acknowledge and deliver to Mortgagee
one or more separate security agreements, in form satisfactory to
Mortgagee, covering all or any part of the Mortgaged Property and
will further execute, acknowledge and deliver, or cause to be
executed, acknowledged and delivered, any financing statement,
affidavit, continuation statement or certificate or other
document as the Mortgagee may request in order to perfect,
preserve, maintain, continue or extend the security interest
under and the priority of this Mortgage and such security
instrument. The Mortgagor further agrees to pay to the Mortgagee
on demand all costs and expenses incurred by the Mortgagee in
connection with the preparation, execution, recording, filing and
refiling of any such document and all reasonable costs and
expenses of any record searches for financing statements the
Mortgagee shall reasonably require; provided, however, that
Mortgagor shall not be liable for payment of any amount under
this Section to the extent Lessee is responsible for payment of
such amount under the Lease or the Participation Agreement. If
the Mortgagor shall fail to furnish any financing or continuation
statement within ten (10) days after request by Mortgagee, then
pursuant to the provisions of the Uniform Commercial Code, the
Mortgagor hereby authorizes the Mortgagee, without the signature
of the Mortgagor, to execute and file any such financing and
continuation statements. The filing of any financing or
continuation statements in the records relating to personal
property or chattels shall not be construed as in any way
imparting the right of the Mortgagee to proceed against any
personal property encumbered by this Mortgage as real property,
as set forth above.
10. Intentionally Omitted.
11. Notices. All notices, requests and demands to or
upon the Mortgagee or the Mortgagor shall be given in accordance
with Section 15.3 of the Participation Agreement.
12. Severability. Any provision of this Mortgage which
is prohibited or unenforceable shall be ineffective to the extent
of such prohibition or unenforceability without invalidating the
remaining provisions hereof.
13. Amendments in Writing; No Waiver; Cumulative
Remedies.
(a) None of the terms or provisions of this Mortgage may
be waived, amended, supplemented or otherwise modified except by
a written instrument executed by the Mortgagor and the Mortgagee
in accordance with the terms of the Loan Agreement and the
Participation Agreement.
(b) No failure to exercise, nor any delay in exercising,
on the part of the
<PAGE>
Mortgagee or any assignee of Mortgagee, any right, power or
privilege hereunder shall operate as a waiver thereof. No single
or partial exercise of any right, power or privilege hereunder
shall preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. A waiver by the
Mortgagee or any assignee of Mortgagee of any right or remedy
hereunder on any one occasion shall not be construed as a bar to
any right or remedy which the Mortgagee or such assignee would
otherwise have on any future occasion.
(c) The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are not
exclusive of any other rights or remedies provided by law.
14. Section Headings. The section headings used in this
Mortgage are for convenience of reference only and are not to
affect the construction hereof or be taken into consideration in
the interpretation hereof.
15. Successors and Assigns. This Mortgage shall run with
the land and be binding upon the successors and assigns of the
Mortgagor and shall inure to the benefit of the Mortgagee, and
their respective successors and assigns.
16. Mortgagor's Waiver of Rights. Except as otherwise
set forth herein, to the fullest extent permitted by law, the
Mortgagor waives the benefit of all laws now existing or that may
subsequently be enacted providing for (i) any appraisement before
sale of any portion of the Mortgaged Property, (ii) any extension
of the time for the enforcement of the collection of the
indebtedness or the creation or extension of a period of
redemption from any sale made in collecting such debt and (iii)
exemption of the Mortgaged Property from attachment, levy or sale
under execution or exemption from civil process. Except as
otherwise set forth herein, to the full extent the Mortgagor may
do so, the Mortgagor agrees that the Mortgagor will not at any
time insist upon, plead, claim or take the benefit or advantage
of any law now or hereafter in force providing for any
appraisement, valuation, stay, exemption, extension or
redemption, reinstatement or requiring foreclosure of this
Mortgage before exercising any other remedy granted hereunder and
the Mortgagor, for the Mortgagor and its successors and assigns,
and for any and all Persons ever claiming any interest in the
Mortgaged Property, to the extent permitted by law, hereby waives
and releases all rights of redemption, reinstatement, valuation,
appraisement, stay of execution, notice of election to mature or
declare due the whole of the secured indebtedness and marshaling
in the event of foreclosure of the liens hereby created.
17. Multiple Security. If (a) the Mortgaged Property
shall consist of one or more parcels, whether or not contiguous
and whether or not located in the same county, or (b) in addition
to this Mortgage, the Mortgagee shall now or hereafter hold one
or more additional mortgages, liens, deeds of trust or other
security (directly or indirectly) for the Obligations upon other
property in the state in which the Mortgaged Property is located
or any other state (whether or not such property is owned by the
Mortgagor or by others) or (c) both the circumstances
<PAGE>
described in clauses (a) and (b) shall be true, then to the
fullest extent permitted by law, the Mortgagee may, in its sole
discretion, commence or consolidate in a single foreclosure
action all foreclosure proceedings against all such collateral
securing the Obligations (including the Mortgaged Property),
which action may be brought or consolidated in the courts of any
county in which any of such collateral is located. The Mortgagor
acknowledges that the right to maintain a consolidated
foreclosure action is a specific inducement to the Mortgagee to
extend the Obligations and the Mortgagor expressly and
irrevocably waives any objections to the commencement or
consolidation of the foreclosure proceedings in a single action
and any objections to the laying of venue based on the grounds of
forum non conveniens which it may now or hereafter have. The
Mortgagor further agrees that if the Mortgagee shall be
prosecuting one or more foreclosure or other proceedings against
a portion of the Mortgaged Property or against any collateral
other than the Mortgaged Property, which collateral directly or
indirectly secures the Obligations, or if the Mortgagee shall
have obtained a judgment of foreclosure and sale or similar
judgment against such collateral, then, whether or not such
proceedings are being maintained or judgments were obtained in or
outside the state in which the Mortgaged Property is located, the
Mortgagee may commence or continue foreclosure proceedings and
exercise its other remedies granted in this Mortgage against all
or any part of the Mortgaged Property and the Mortgagor waives
any objections to the commencement or continuation of a
foreclosure of this Mortgage or exercise of any other remedies
hereunder based on such other proceedings or judgments, and
waives any right to seek to dismiss, stay, remove, transfer or
consolidate either any action under this Mortgage or such other
proceedings on such basis. Neither the commencement nor
continuation of proceedings to foreclose this Mortgage nor the
exercise of any other rights hereunder nor the recovery of any
judgment by the Mortgagee in any such proceedings shall
prejudice, limit or preclude the Mortgagee's right to commence or
continue one or more foreclosure or other proceedings or obtain a
judgment against any other collateral (either in or outside the
state in which the Mortgaged Property is located) which directly
or indirectly secures the Obligations, and the Mortgagor
expressly waives any objections to the commencement of,
continuation of, or entry of a judgment in such other proceedings
or exercise of any remedies in such proceedings based upon any
action or judgment connected to this Mortgage, and the Mortgagor
also waives any right to seek to dismiss, stay, remove, transfer
or consolidate either such other proceedings or any action under
this Mortgage on such basis. It is expressly understood and
agreed that to the fullest extent permitted by law, the Mortgagee
may, at its election, cause the sale of all collateral which is
the subject of a single foreclosure action at either a single
sale or at multiple sales conducted simultaneously and take such
other measures as are appropriate in order to effect the
agreement of the parties to dispose of and administer all
collateral securing the Obligations (directly or indirectly) in
the most economical and least time-consuming manner.
18. GOVERNING LAW. THIS MORTGAGE AND THE RIGHTS AND
OBLIGATIONS OF THE MORTGAGOR UNDER THIS MORTGAGE SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH,
<PAGE>
THE LAWS OF THE STATE OF GEORGIA, WITHOUT REGARD TO CONFLICTS
OF LAWS PRINCIPLES, EXCEPT AS TO MATTERS RELATING TO THE CREATION
OF LIENS AND THE EXERCISE OF REMEDIES WITH RESPECT THERETO, WHICH
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE IN WHICH THE MORTGAGED PROPERTY IS LOCATED.
19. Partial Release; Full Release. The Mortgagee may
release, for such consideration or none, as it may require, any
portion of the Mortgaged Property without, as to the remainder of
the Mortgaged Property, in any way imparting or affecting the
lien, security interest and priority herein provided for the
Mortgagee compared to any other lien holder or secured party.
Further, upon receipt of' the Purchase Option Price relating to
the Mortgaged Property or payment of all principal and interest
due on the Notes, Mortgagee shall execute and deliver to
Mortgagor such documents and instruments as may be required to
release the lien and security interest created by this Mortgage.
In accordance with Section 12.3 of the Lease, Mortgagee shall,
from time to time, execute and deliver to Mortgagor such
documents and instruments as may be required to release the lien
and security interest created by this Mortgage with respect to
any Release Portion.
20. Certain Rights of Mortgagee. Except as provided in
the Operative Documents, the Mortgagee, with the express written
consent of the Mortgagor, may at any time or from time to time
renew or extend this Mortgage, or alter or modify the same in any
way, or the Mortgagee may waive any of the terms, covenants or
conditions hereof in whole or in part and may release any portion
of the Mortgaged Property or any other security, and grant such
extensions and indulgences in relation to the Obligations secured
hereby as the Mortgagee may determine without the consent of any
other Person and without any obligation to give notice of any
kind thereto and without in any manner affecting the priority of
the lien hereof on any part of the Mortgaged Property.
21. Future Advances. This Mortgage is given to secure
not only existing indebtedness, but also future advances made
pursuant to or as provided in the Loan Agreement and the other
Operative Documents, whether such advances are obligatory or to
be made at the option of Mortgagee, or otherwise, to the same
extent as if such future advances were made on the date of
execution of this Mortgage, although there may be no advance made
at the time of execution hereof, and although there may be no
indebtedness outstanding at the time any advance is made. To the
fullest extent permitted by law, the lien of this Mortgage shall
be valid as to all such indebtedness, including all future
advances, from the time this Mortgage is recorded.
Notwithstanding anything in this Mortgage to the contrary,
although the amount of indebtedness secured by this Mortgage may
increase or decrease from time to time, the maximum principal
amount of indebtedness secured by this Mortgage at any one time
shall not exceed ______________ and No/100 Dollars
($_________.00), plus all costs of enforcement and collection of
this Mortgage, the Notes, the Loan Agreement and the other
Operative Documents, plus the total amount of any advances made
pursuant to the Operative Documents to protect the
<PAGE>
collateral and the security interest and lien created hereby,
together with interest on all of the foregoing as provided in the
Operative Documents.
22. Subordination. This Mortgage shall be subject and
subordinate to the Lease.
23. Limitations on Recourse against Mortgagor.
Notwithstanding anything contained in this Mortgage to the
contrary, Mortgagee agrees to look solely to Mortgagor's (or to
any partner thereof's) estate and interest in the Mortgaged
Property and rights pursuant to the Operative Documents for the
collection of any judgment requiring the payment of money by
Mortgagor in the event of liability by Mortgagor, and no other
property or assets of Mortgagor or any shareholder, owner or
partner (direct or indirect) in or of Mortgagor, or any director,
officer, employee, beneficiary, Affiliate of any of the foregoing
shall be subject to levy, execution or other enforcement
procedure for the satisfaction of Mortgagee's remedies against
Mortgagor under or with respect to this Mortgage, the
relationship of Mortgagor and Mortgagee hereunder or Mortgagee's
use of the Mortgaged Property or any other liability of Mortgagor
to Mortgagee; provided that, nothing herein shall limit recourse
against the Mortgagor or its partners for the gross negligence or
willful misconduct of such Persons or Mortgagor's breach of the
provisions of its obligations pursuant to Sections 9.1, 11.2
(only with respect to the first sentence thereof), 11.3, 11.4,
11.6(a), (g), (h) or 11.7 of the Participation Agreement;
provided further, that the foregoing proviso is intended to allow
a claim for damages against Mortgagor but shall not be construed
as creating a full recourse obligation on the part of Mortgagor
(or any partner thereof) to repay any of the Loans or any amounts
relating to the Loans arising under the Loan Agreement or the
Notes.
IN WITNESS WHEREOF, the undersigned has caused this
Mortgage to be duly executed and delivered as of the date first
above written.
CREDIT SUISSE LEASING 92A, L.P.,
a Delaware limited partnership
BY: CREDIT SUISSE, its general
partner
By:________________________________
______
Name:______________________________
___
Title:_____________________________
_____
By:________________________________
______
Name:______________________________
___
Title:_____________________________
_____
<PAGE>
STATE OF ______________ )
) SS.:
COUNTY OF ____________ )
On the ___ day of , 199__, before me personally came
_______________________ to me known, who, being by me duly sworn,
did depose and say that he/she resides at ___________
___________________________________ that he/she is the
______________of Credit Suisse, the general partner of Credit
Suisse Leasing 92A, L.P., the entity described in and which
executed the above instrument; and that he/she signed his/her
name thereto by order of the board of directors of said entity.
Notary Public
<PAGE>
Schedule A
Description of Real Estate
<PAGE>
Schedule B
Description of Lease
Lease, dated as of June 25, 1996, by and between Credit
Suisse Leasing 92A, L.P., as lessor and Home Depot U.S.A., Inc.,
as lessee, as such Lease has been or will be amended, modified or
supplemented from time to time, a memorandum of which has been
recorded with respect to the property described on Schedule A in
the real property records of the county where such property is
located.
<PAGE>
APPENDIX 1
DEFINITIONS
<PAGE>
- EXHIBIT N-2
TO PARTICIPATION AGREEMENT
DEED OF TRUST AND SECURITY AGREEMENT
dated as of_________ ___, 199_
from
CREDIT SUISSE LEASING 92A, L.P., Grantor
to
___________, trustee for the benefit of
HD REAL ESTATE FUNDING CORP., Beneficiary
When recorded return to:
Hunton & Williams
200 Park Avenue
New York, New York 10166
Attention: J. Andrew Murphy, Esquire
DEED OF TRUST AND SECURITY AGREEMENT
DEED OF TRUST AND SECURITY AGREEMENT, dated as of_____
199__ (as amended, supplemented or otherwise modified from time
to time, this "Deed of Trust"), made by CREDIT SUISSE LEASING
92A, L.P., a Delaware limited partnership (the "Grantor"), with
an address at 12 East 49th Street, New York, New York 10017, in
favor of ________ (the "Trustee"), as trustee for the benefit of
HD REAL ESTATE FUNDING CORP., with an address at
__________________________________________________ (the
"Beneficiary").
Preliminary Statement
<PAGE>
Pursuant to the Loan Agreement and subject to the terms of
the Operative Documents, the Beneficiary agreed to make Loans to
the Grantor in an aggregate amount not to exceed TWO HUNDRED
NINETY-ONE MILLION AND NO/100 DOLLARS ($291,000,000) upon the
terms and subject to the conditions set forth therein, to be
evidenced by the Notes issued by the Grantor under the Loan
Agreement. The Notes bear interest as set forth in the Notes and
mature (if not sooner accelerated) on a date no later than
_________________.
It is a condition, among others, to the obligation of the
Beneficiary to make Loans to the Grantor under the Loan Agreement
that the Grantor shall have executed and delivered this Deed of
Trust to the Trustee for the benefit of the Beneficiary.
NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES, THIS DEED
OF TRUST WITNESSETH, that to secure (i)(A) payment when due of
the principal amount of and interest on the Loans, the Notes
(including, without limitation, interest accruing after the
maturity of the Loans and, the Notes, and interest accruing after
the filing of any petition in bankruptcy, or the commencement of
any insolvency, reorganization or like proceeding, relating to
the Grantor, Beneficiary or the Lessee, whether or not a claim
for post-filing or post-petition interest is allowed in such
proceeding), from time to time outstanding and all other
obligations and liabilities (including, without limitation, all
indemnities, costs, fees and expenses) from time to time payable
by, or on behalf of, the Grantor to the Beneficiary pursuant to
the Operative Documents, whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter
incurred, and (B) all fees and expenses of the Beneficiary from
time to time payable under the Operative Documents, (ii) payment
when due of all amounts from time to time owing by the Lessee or
to or for the benefit of the Beneficiary as Lessor under the
Lease and for the benefit of Beneficiary pursuant to the
Operative Documents whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter
incurred, (iii) the performance and observance by the Grantor of
all agreements contained herein and in the other
Operative Documents and (iv) the payment, performance and
observance by the Lessee of its covenants and agreements
contained in the Operative Documents (collectively, the
"Obligations") and subject to the terms and provisions hereof,
and in consideration of the premises and of the covenants herein
and in the other Operative Documents, the Grantor, intending or
to be legally bound, does hereby mortgage, pledge, grant a
security interest in, set over and confirm unto the Beneficiary
and its successors and assigns, for the benefit of the
Beneficiary, all of the Grantor's estate, right, title, interest,
property, claim and demand, now or hereafter arising, in and or
to the following property and rights, excluding Excepted Rights
and Excepted Payments:
(A) the parcel(s) of real property described on
Schedule A attached hereto and made a part hereof by this
reference (the "Land"); all buildings, structures, Fixtures,
Equipment, and other improvements of every kind existing at
any time and from time to time (including (i) those
constructed pursuant to the Construction Agency Agreement
and those described on Schedule 1 to any Lease Supplement,
and (ii) those purchased with
<PAGE>
amounts advanced by the Participants pursuant to the
Participation Agreement) on or under the Land, together with
any and all appurtenances to such buildings, structures or
improvements, including sidewalks, utility pipes, conduits
and lines, parking areas and roadways, and including all
Modifications and other additions to or changes in such
improvements at any time ("Improvements"); all agreements,
easements, rights of way or use, rights of ingress or
egress, privileges, appurtenances, tenements, hereditaments
and other rights and benefits at any time belonging or
pertaining to the Land or the Improvements, including,
without limitation, the use of any streets, ways, alleys,
vaults or strips of land adjoining, abutting, adjacent or
contiguous to the Land and all permits, licenses and rights,
whether or not of record, appurtenant to the Land
("Appurtenant Rights"; the Land, Improvements, Appurtenant
Rights, Fixtures and Equipment being collectively referred
to as the "Property");
(B) all the estate, right, title, claim or demand
whatsoever of the Grantor, in possession or expectancy, in
and to the Property or any part thereof;
(C) all right, title and interest of the Grantor in
and to all of the fixtures and fittings of every kind and
nature whatsoever, and all appurtenances and additions
thereto and substitutions or replacements thereof (together
with, in each case, attachments, components, parts and
accessories) currently owned or subsequently acquired by the
Grantor and now or subsequently attached to the Property
(all of the foregoing in this paragraph (C) being referred
to as the "Fixtures");
(D) all right, title and interest of the Grantor in
and to all of the equipment, apparatus, furnishings,
fittings and articles of personal property of every kind and
nature whatsoever purchased or otherwise acquired with the
proceeds of the Notes or the Lessor Investment Amounts, and
all appurtenances and additions thereto and substitutions or
replacements thereof (together with, in each case,
attachments, components, parts and accessories) currently
owned or subsequently acquired by Grantor and now or
subsequently attached to, or contained in or used or usable
in any way in connection with any operation or letting of
the Property, including but without limiting the generality
of the foregoing, all screens, awnings, storm doors and
windows, heating, electrical and mechanical equipment,
lighting, plumbing, ventilating, air conditioning and air-
cooling apparatus, refrigerating and incinerating equipment,
escalators, refrigerators, display cases, elevators, loading
and unloading systems, sprinkler systems and other fire
prevention and extinguishing apparatus and materials,
security systems, motors, engines, pipes, pumps, tanks,
conduits, appliances and fixtures of every kind and
description (all of the foregoing in this paragraph (D)
being referred to as the "Equipment");
(E) all right, title and interest of the Grantor in
and to all substitutes and replacements of, and all
additions and improvements to, the Improvements, the
Fixtures
<PAGE>
and Equipment, subsequently acquired by the Grantor or
constructed, assembled or placed by Grantor on the Land,
immediately upon such acquisition, release, construction,
assembling or placement, including, without limitation, any
and all building materials stored at the Property or offsite
acquired with the proceeds of the Notes or the Lessor
Investment Amounts, and, in such case, without any further
mortgage, conveyance, assignment or other act by the
Grantor;
(F) all right, title and interest of the Grantor in
and to all unearned premiums under insurance policies now or
subsequently obtained relating to the Property and the
Grantor's interest in and to all proceeds of any such
insurance policies (including title insurance policies)
including the right to collect and receive such proceeds,
and all awards and other compensation, including the
interest payable thereon and the right to collect and
receive the same, made to the present or any subsequent
owner of the Property for the taking by eminent domain,
condemnation or otherwise, of all or any part of the
Property or any easement or other right therein;
(G) all right, title and interest of the Grantor in
and to (i) all consents, licenses, building permits,
certificates of occupancy and other governmental approvals
relating to construction, completion, occupancy, use or
operation of the Property or any part thereof and (ii) all
Plans and Specifications relating to the Property;
(H) all right, title and interest of the Grantor in
and to the Lease, including all powers, privileges, options
and other benefits of the Grantor as Lessor thereunder, more
particularly described on Schedule B attached hereto and
made a part hereof by this reference and all Rent and all
other rents, payments, purchase prices, receipts, revenues,
issues and profits payable under the Lease or pursuant to
any other lease with respect to the Property , including,
without limitation, (i) all rights to the Grantor to receive
proceeds of any indemnity, warranty or guaranty with respect
to the Lease, (ii) all claims of the Grantor for damages
arising out of or for breach of or default under the Lease,
(iii) all rights of the Grantor to exercise any security now
or hereafter payable to or receivable
by the Grantor under the Lease, (iv) the right of the
Grantor to exercise any election or option or to make any
decision or determination or to give or receive any notice,
consent, waiver or approval or to take any action under the
Lease and (v) the right of the Grantor to terminate, amend,
supplement or otherwise modify the Lease and to compel
performance and otherwise exercise all remedies thereunder;
(I) all rights, powers, privileges and other benefits
of the Grantor in Governmental Actions now or hereafter
obtained by the Grantor or the Lessee (or any Affiliates
thereof) from any Governmental Authority relating to the
ownership, operation, management and use of the Property,
the development and financing of the Property, the
<PAGE>
Improvements and the Equipment, the construction and
operation of the Facility and any improvements,
modifications or additions thereto;
(J) the accounts established and maintained pursuant
to the Security Documents and all cash, cash equivalents,
instruments, investments and other securities deposited or
required to be deposited with the Grantor or the Beneficiary
pursuant to any provision of this Deed of Trust, the Lease,
the Security Documents and any other Operative Document;
(K) any and all other property that may from time to
time, by delivery or by writing of any kind, be subjected to
the lien hereof by the Grantor or by anyone with its
consent, or which may come into the possession or be subject
to the control of the Beneficiary pursuant to this Deed of
Trust, including, without limitation, all proceeds of any
sales or other dispositions of all or part of the Mortgaged
Property, any such property being hereby assigned to the
Beneficiary and subjected or added to the lien or estate
created by this Deed of Trust forthwith upon the acquisition
thereof by the Grantor, as fully as if such property were
not owned by the Grantor and were specifically described in
this Deed of Trust and subjected to the lien and security
interest hereof; and the Beneficiary is hereby authorized to
receive any and all such property as and for additional
security hereunder;
(L) all the remainder or remainders, reversion or
reversions, rents, revenues, issues, profits, royalties,
income and other benefits derived from any of the foregoing,
all of which are hereby assigned to the Beneficiary, who is
hereby authorized to collect and receive the same, to give
proper receipts and acquittances therefor and to apply the
same to the payment of the Obligations in accordance with
the provisions of this Deed of Trust;
(M) all rights of the Grantor to the amounts paid or
payable by the Lessee to the Grantor under the Participation
Agreement and the other Operative Documents and all rights
of the Grantor to enforce payments of any such amounts
thereunder;
(N) any right to restitution from the Lessee, or any
other Person in respect of any determination of invalidity
of any of the Lease, Security Documents, the Loan Agreement,
the Notes and the other Operative Documents; and
(O) all proceeds, both cash and noncash, of the
foregoing, including all proceeds of the insurance required
to be maintained by or on behalf of the Lessee pursuant to
the Lease and the other Operative Documents and all awards
or other compensation heretofore or hereafter made to the
Grantor, including any awards for severance damages, all of
which are hereby assigned to the Beneficiary, who is hereby
authorized, subject to the provisions of this Deed of Trust,
to collect and receive the proceeds thereof, to give proper
receipts and acquittances therefor and to apply the same
<PAGE>
to the payment of the Obligations in accordance with the
provisions of this Deed of Trust and the other Operative
Documents;
(All of the foregoing property and rights and interests now
owned or held or subsequently acquired by the Grantor and
described in the foregoing clauses (A) through (O) are,
excluding Excepted Payments and Excepted Rights, collectively
referred to as the "Mortgaged Property"); PROVIDED THAT EXCLUDED
from the Mortgaged Property at all times and in all respects
shall be (i) all Excepted Payments and Excepted Rights, (ii) all
inventory of any lessee of the Mortgaged Property, and (iii) all
equipment, furnishings and fixtures purchased by any lessee of
the Mortgaged Property with funds not provided by the Beneficiary
or Grantor;
TO HAVE AND TO HOLD the Mortgaged Property and the rights
and privileges hereby mortgaged unto the Trustee, for the benefit
of the Beneficiary, its successors and assigns for the uses and
purposes set forth, until all Obligations are fully paid and
performed.
1. Definitions; Rules of Interpretation. Capitalized
terms used but not otherwise defined in this Deed of Trust shall
have the respective meanings specified in Appendix 1 attached to
this Deed of Trust and made a part hereof by this reference; and
the rules of interpretation set forth in Appendix 1 hereto shall
apply to this Deed of Trust.
2. Other Covenants. At any time and from time to
time, upon the written request of the Beneficiary, and at the
sole expense of the Grantor (but only to the extent Grantor has
been reimbursed by the Lessee), the Grantor will promptly and
duly execute and deliver such further instruments and documents
and take such further actions as the Trustee or Beneficiary
reasonably may request for the purposes of obtaining or
preserving the full benefits of this Deed of Trust and of the
rights and powers granted by this Deed of Trust.
3. Default; Remedies.1/ (a) If a Loan Agreement Event
of Default has occurred and is continuing and the Loans have been
accelerated pursuant to Section 5 of the Loan Agreement:
(i) the Trustee or Beneficiary, in addition to all
other remedies available at law or in equity, shall have the
right forthwith to enter upon and take possession of the
_______________
1/ Deed of Trust remedies are a matter of state law and vary
from jurisdiction to jurisdiction. Local counsel will be
consulted to be sure that the Deed of Trust covers all remedies
available under local law, and that any waivers or other
provisions required by state statutes to ensure enforceability
of particular remedies are included in the Deed of Trust.
<PAGE>
Mortgaged Property, and to let the Mortgaged Property and
receive the rents, issues and profits thereof, to make
repairs and to apply said rentals and profits, after payment
of all necessary or proper charges and expenses, on account
of the amounts hereby secured (subject to the Excepted
Payments and Excepted Rights); and
(ii) the Beneficiary shall, as a matter of right, at
the option of the Beneficiary, be entitled to the
appointment of a receiver for the Mortgaged Property, and
the Grantor hereby consents to such appointment and waives
notice of any application therefor.
(b) If a Loan Agreement Event of Default has occurred
and is continuing and the Loans have been accelerated pursuant to
Section 5 of the Loan Agreement, the Trustee or Beneficiary may
proceed by an action at law, suit in equity or other appropriate
proceeding, to protect and enforce its rights, whether for the
foreclosure of the lien of this Deed of Trust, or for the
specific performance of any agreement contained herein or for an
injunction against the violation of any of the terms hereof.
(c) The Grantor hereby waives the benefit of all
appraisement, valuation, stay, extension, reinstatement and
redemption laws now or hereafter in force and all rights of
marshaling in the event of any sale of the Mortgaged Property or
any interest therein.
(d) Notwithstanding any other provision of this Deed
of Trust or any other Operative Document, Beneficiary agrees that
upon the occurrence of a Loan Agreement Event of Default arising
out of, or attributable to, a Lease Default or Lease Event of
Default, Beneficiary shall not at any time exercise against the
Grantor any of the remedies provided in this Deed of Trust and
the Operative Documents unless the Beneficiary shall at the same
time be exercising its rights under the Lease, the Construction
Agency Agreement and the Operative Documents to dispossess the
Lessee or terminate the Lease and the Construction Agency
Agreement or to take any comparable remedial actions thereunder,
provided, that the foregoing provisions of this paragraph shall
not apply at any time when a Loan Agreement Event of Default
arising out of, or attributable to, a Lease Default or Lease
Event of Default, shall also have occurred and be continuing.
(e) The proceeds of any sale of the Mortgaged Property
shall be applied pursuant to Section 5 of the Participation
Agreement.
4. Remedies Not Exclusive. The Beneficiary shall be
entitled to enforce payment of the indebtedness and performance
of the Obligations and to exercise all rights and powers under
this Deed of Trust or under any of the other Operative Documents
or other agreement or any laws now or hereafter in force,
notwithstanding some or all of the Obligations may now or
hereafter be otherwise secured, whether by mortgage, security
agreement, pledge, lien, assignment or otherwise. Neither the
acceptance of this Deed of Trust nor its enforcement,
<PAGE>
shall prejudice or in any manner affect the Beneficiary's right
to realize upon or enforce any other security now or hereafter
held by the Beneficiary, it being agreed that the Beneficiary
shall be entitled to enforce this Deed of Trust and any other
security now or hereafter held by the Beneficiary in such order
and manner as the Beneficiary may determine in its absolute
discretion. No remedy herein conferred upon or reserved to the
Beneficiary is intended to be exclusive of any other remedy
herein or by law provided or permitted, but each shall be
cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by
statute. Every power or remedy given by any of the Operative
Documents to the Beneficiary or to which it may otherwise be
entitled, may be exercised, concurrently or independently, from
time to time and as often as may be deemed expedient by the
Beneficiary. In no event shall the Beneficiary, in the exercise
of the remedies provided in this Deed of Trust (including,
without limitation, in connection with the assignment of Rent to
Beneficiary, or the appointment of a receiver and the entry of
such receiver on to all or any part of the Mortgaged Property),
be deemed a "mortgagee in possession," and the Beneficiary shall
not in any way be made liable for any act, either of commission
or omission, in connection with the exercise of such remedies.
5. Performance by the Trustee or Beneficiary of the
Grantor's Obligations. If the Grantor fails to perform or comply
with any of its agreements contained herein, the Trustee or the
Beneficiary, at its option, but without any obligation so to do,
may perform or comply, or otherwise cause performance or
compliance, with such agreement. The expenses of the Trustee or
the Beneficiary incurred in connection with actions undertaken as
provided in this Section, together with interest thereon at a
rate per annum equal to the Overdue Rate, from the date of
payment by the Trustee or the Beneficiary to the date reimbursed
by the Grantor, shall be payable by the Grantor to the Trustee or
the Beneficiary on demand (but only to the extent Grantor has
been reimbursed by the Lessee to the extent required pursuant to
the Participation Agreement or the Lease).
6. Duty of the Beneficiary. The Beneficiary's sole
duty with respect to the custody, safekeeping and physical
preservation of any Mortgaged Property in its possession, under
Section 9-207 of the Uniform Commercial Code or otherwise, shall
be to deal with it in the same manner as the Beneficiary deals
with similar property for its own account. Neither the
Beneficiary nor any of their respective directors, officers,
employees or agents shall be liable for failure to demand,
collect or realize upon any of the Mortgaged Property or for any
delay in doing so or shall be under any obligation to sell or
otherwise dispose of any Mortgaged Property upon the request of
the Grantor or any other Person or to take any other action
whatsoever with regard to the Mortgaged Property or any part
thereof.
7. Powers Coupled with an Interest. All powers,
authorizations and agencies contained in this Deed of Trust are
coupled with an interest and are irrevocable until this Deed of
Trust is terminated and the lien created hereby is released.
<PAGE>
8. Execution of Financing Statements. Pursuant to
Section 9-402 of the Uniform Commercial Code, the Grantor
authorizes the Beneficiary to file financing statements with
respect to the Mortgaged Property without the signature of the
Grantor in such form and in such filing offices as the
Beneficiary reasonably determines appropriate to perfect the
security interests of the Beneficiary under this Deed of Trust.
A carbon, photographic or other reproduction of this Deed of
Trust shall be sufficient as a financing statement for filing in
any jurisdiction.
9. Security Agreement under Uniform Commercial Code.
(a) It is the intention of the parties hereto that this Deed of
Trust shall constitute a Security Agreement within the meaning of
the Uniform Commercial Code of the state in which the Mortgaged
Property is located. If a Loan Agreement Event of Default shall
occur and be continuing, then in addition to having any other
right or remedy available at law or in equity, the Beneficiary
shall have the option of either (i) proceeding under the Uniform
Commercial Code and exercising such rights and remedies as may be
provided to a secured party by the Uniform Commercial Code with
respect to all or any portion of the Mortgaged Property which is
personal property (including, without limitation, taking
possession of and selling such property) or (ii) treating such
property as real property and proceeding with respect to both the
real and personal property constituting the Mortgaged Property in
accordance with the Beneficiary's rights, powers and remedies
with respect to the real property (in which event the default
provisions of the Uniform Commercial Code shall not apply). If
the Beneficiary shall elect to proceed under the Uniform
Commercial Code, then ten (10) days' notice of sale of the
personal property shall be deemed reasonable notice and the
reasonable expenses of retaking, holding, preparing for sale,
selling and the like incurred by the Beneficiary shall include,
but not be limited to, attorneys' fees and legal expenses. At the
Beneficiary's request, the Grantor shall assemble the personal
property and make it available to the Beneficiary at a place
designated by the Beneficiary which is reasonably convenient to
both parties.
(b) The Grantor and the Beneficiary agree, to the
extent permitted by law, that this Deed of Trust upon recording
or registration in the real estate records of the proper office
shall constitute a financing statement filed as a "fixture
filing" within the meaning of Sections 9-313 and 9-402 of the
Uniform Commercial Code.
(c) The Grantor, upon request by the Beneficiary from
time to time, shall execute, acknowledge and deliver to
Beneficiary one or more separate security agreements, in form
satisfactory to Beneficiary, covering all or any part of the
Mortgaged Property and will further execute, acknowledge and
deliver, or cause to be executed, acknowledged and delivered, any
financing statement, affidavit, continuation statement or
certificate or other document as the Beneficiary may request in
order to perfect, preserve, maintain, continue or extend the
security interest under and the priority of this Deed of Trust
and such security instrument. The Grantor further agrees to pay
to the Beneficiary on demand all costs and expenses incurred by
the
<PAGE>
Beneficiary in connection with the preparation, execution,
recording, filing and refiling of any such document and all
reasonable costs and expenses of any record searches for
financing statements the Beneficiary shall reasonably require;
provided, however, that Grantor shall not be liable for payment
of any amount under this Section to the extent Lessee is
responsible for payment of such amount under the Lease or the
Participation Agreement. If the Grantor shall fail to furnish any
financing or continuation statement within ten (10) days after
request by Beneficiary, then pursuant to the provisions of the
Uniform Commercial Code, the Grantor hereby authorizes the
Beneficiary, without the signature of the Grantor, to execute and
file any such financing and continuation statements. The filing
of any financing or continuation statements in the records
relating to personal property or chattels shall not be construed
as in any way impairing the right of the Beneficiary to proceed
against any personal property encumbered by this Deed of Trust as
real property, as set forth above.
10. Intentionally Omitted.
11. Notices. All notices, requests and demands to or
upon the Beneficiary or the Grantor shall be given in accordance
with Section 15.3 of the Participation Agreement.
12. Severability. Any provision of this Deed of Trust
which is prohibited or unenforceable shall be ineffective to the
extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof.
13. Amendments in Writing; No Waiver; Cumulative
Remedies. (a) None of the terms or provisions of this Deed of
Trust may be waived, amended, supplemented or otherwise modified
except by a written instrument executed by the Grantor and the
Beneficiary in accordance with the terms of the Loan Agreement
and the Participation Agreement.
(b) No failure to exercise, nor any delay in
exercising, on the part of the Beneficiary, any right, power or
privilege hereunder shall operate as a waiver thereof. No single
or partial exercise of any right, power or privilege hereunder
shall preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. A waiver by the
Beneficiary of any right or remedy hereunder on any one occasion
shall not be construed as a bar to any right or remedy which the
Beneficiary would otherwise have on any future occasion.
(c) The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are not
exclusive of any other rights or remedies provided by law.
14. Section Headings. The section headings used in
this Deed of Trust are for convenience of reference only and are
not to affect the construction hereof or be taken into
consideration in the interpretation hereof.
<PAGE>
15. Successors and Assigns. This Deed of Trust shall
run with the land and be binding upon the successors and assigns
of the Grantor and shall inure to the benefit of the Beneficiary
and its successors and assigns.
16. Grantor's Waiver of Rights. Except as otherwise
set forth herein, to the fullest extent permitted by law, the
Grantor waives the benefit of all laws now existing or that may
subsequently be enacted providing for (i) any appraisement before
sale of any portion of the Mortgaged Property, (ii) any extension
of the time for the enforcement of the collection of the
indebtedness or the creation or extension of a period of
redemption from any sale made in collecting such debt and (iii)
exemption of the Mortgaged Property from attachment, levy or sale
under execution or exemption from civil process. Except as
otherwise set forth herein, to the full extent the Grantor may do
so, the Grantor agrees that the Grantor will not at any time
insist upon, plead, claim or take the benefit or advantage of any
law now or hereafter in force providing for any appraisement,
valuation, stay, exemption, extension or redemption,
reinstatement or requiring foreclosure of this Deed of Trust
before exercising any other remedy granted hereunder and the
Grantor, for the Grantor and its successors and assigns, and for
any and all Persons ever claiming any interest in the Mortgaged
Property, to the extent permitted by law, hereby waives and
releases all rights of redemption, reinstatement, valuation,
appraisement, stay of execution, notice of election to mature or
declare due the whole of the secured indebtedness and marshaling
in the event of foreclosure of the liens hereby created.
17. Multiple Security. If (a) the Mortgaged Property
shall consist of one or more parcels, whether or not contiguous
and whether or not located in the same county, or (b) in addition
to this Deed of Trust, the Beneficiary shall now or hereafter
hold one or more additional mortgages, liens, deeds of trust or
other security (directly or indirectly) for the Obligations upon
other property in the state in which the Mortgaged Property is
located or any other state (whether or not such property is owned
by the Grantor or by others) of (c) both the circumstances
described in clauses (a) and (b) shall be true, then to the
fullest extent permitted by law, the Beneficiary may, in its sole
discretion, commence or consolidate in a single foreclosure
action all foreclosure proceedings against all such collateral
securing the Obligations (including the Mortgaged Property),
which action may be brought or consolidated in the courts of any
county in which any of such collateral is located. The Grantor
acknowledges that the right to maintain a consolidated
foreclosure action is a specific inducement to the Beneficiary to
extend the Obligations and the Grantor expressly and irrevocably
waives any objections to the commencement or consolidation of the
foreclosure proceedings in a single action and any objections to
the laying of venue or based on the grounds of forum non
conveniens which it may now or hereafter have. The Grantor
further agrees that if the Beneficiary shall be prosecuting one
or more foreclosure or other proceedings against a portion of the
Mortgaged Property or against any collateral other than the
Mortgaged Property, which collateral directly or indirectly
secures the Obligations, or if the Beneficiary shall have
obtained a judgment of foreclosure and sale or similar judgment
against such collateral, then, whether or not such proceedings
are being
<PAGE>
maintained or judgments were obtained in or outside the state in
which the Mortgaged Property is located, the Beneficiary may
commence or continue foreclosure proceedings and exercise its
other remedies granted in this Deed of Trust against all or any
part of the Mortgaged Property and the Grantor waives any
objections to the commencement or continuation of a foreclosure
of this Deed of Trust or exercise of any other remedies hereunder
based on such other proceedings or judgments, and waives any
right to seek to dismiss, stay, remove, transfer or consolidate
either any action under this Deed of Trust or such other
proceedings on such basis. Neither the commencement nor
continuation of proceedings to foreclose this Deed of Trust nor
the exercise of any other rights hereunder nor the recovery of
any judgment by the Beneficiary in any such proceedings shall
prejudice, limit or preclude the Beneficiary's right to commence
or continue one or more foreclosure or other proceedings or
obtain a judgment against any other collateral (either in or
outside the state in which the Mortgaged Property is located)
which directly or indirectly secures the Obligations, and the
Grantor expressly waives any objections to the commencement of,
continuation of, or entry of a judgment in such other proceedings
or exercise of any remedies in such proceedings based upon any
action or judgment connected to this Deed of Trust, and the
Grantor also waives any right to seek to dismiss, stay, remove,
transfer or consolidate either such other proceedings or any
action under this Deed of Trust on such basis. It is expressly
understood and agreed that to the fullest extent permitted by
law, the Beneficiary may, at its election, cause the sale or
multiple sales conducted simultaneously and take such other
measures as are appropriate in order to effect the agreement of
the parties to dispose of and administer all collateral securing
Obligations (directly or indirectly) in the most economical and
least time-consuming manner.
18. GOVERNING LAW. THIS DEED OF TRUST AND THE RIGHTS
AND OBLIGATIONS OF THE GRANTOR UNDER THIS DEED OF TRUST SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF GEORGIA, WITHOUT REGARD TO CONFLICTS OF
LAWS PRINCIPLES, EXCEPT AS TO MATTERS RELATING TO THE CREATION OF
LIENS AND THE EXERCISE OF REMEDIES WITH RESPECT THERETO, WHICH
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE IN WHICH THE MORTGAGED PROPERTY IS LOCATED.
19. Partial Release; Full Release. The Beneficiary
may release, for such consideration or none, as it may require,
any portion of the Mortgaged Property without, as to the
remainder of the Mortgaged Property, in any way impairing or
affecting the lien, security interest and priority herein
provided for the Beneficiary compared to any other lien holder or
secured party. Further, upon receipt of the Purchase Option
Price relating to the Mortgaged Property or payment of all
principal and interest due on the Notes, Beneficiary shall
execute and deliver to Grantor such documents and instruments as
may be required to release the lien and security interest created
by this Deed of Trust. In accordance with Section 12.3 of the
Lease, Beneficiary
<PAGE>
shall from time to time execute and deliver to Grantor such
documents and instruments as may be required to release the lien
and security interest created by this Deed of Trust with respect
to any Release Portion.
20. Certain Rights of Beneficiary. Except as provided
in the Operative Documents, the Beneficiary, with the express
written consent of the Grantor, may at any time or from time to
time renew or extend this Deed of Trust, or alter or modify the
same in any way, or the Beneficiary may waive any of the terms,
covenants or conditions hereof in whole or in part and may
release any portion of the Mortgaged Property or any other
security, and grant such extensions and indulgences in relation
to the Obligations secured hereby as the Beneficiary may
determine without the consent of any other Person and without any
obligation to give notice of any kind thereto and without in any
manner affecting the priority of the lien hereof on any part of
the Mortgaged Property.
21. Future Advances. This Deed of Trust is given to
secure not only existing indebtedness, but also future advances
made pursuant to or as provided in the Loan Agreement and the
other Operative Documents, whether such advances are obligatory
or to be made at the option of the Beneficiary, or otherwise, to
the same extent as if such future advances were made on the date
of execution of this Deed of Trust, although there may be no
advance made at the time of execution hereof, and although there
may be no indebtedness outstanding at the time any advance is
made. To the fullest extent permitted by law, the lien of this
Deed of Trust shall be valid as to all such indebtedness,
including all future advances, from the time this Deed of Trust
is recorded. Notwithstanding anything in this Deed of Trust to
the contrary, although the amount of indebtedness secured by this
Deed of Trust may increase or decrease from time to time, the
maximum principal amount of indebtedness secured by this Deed of
Trust at any one time shall not exceed ________________ and
No/100 Dollars ($_________________.00), plus all costs of
enforcement and collection of this Deed of Trust, the Notes, the
Loan Agreement and the other Operative Documents, plus the total
amount of any advances made pursuant to the Operative Documents
to protect the collateral and the security interest and lien
created hereby, together with interest on all of the foregoing as
provided in the Operative Documents.
22. Subordination. This Deed of Trust shall be
subject and subordinate to the Lease.
23. Limitations on Recourse against Grantor
Notwithstanding anything contained in this Deed of Trust to the
contrary, Beneficiary agrees to look solely to Grantor's (or to
any partner thereof's) estate and interest in the Mortgaged
Property and rights pursuant to the Operative Documents for the
collection of any judgment requiring the payment of money by
Grantor in the event of liability by Grantor, and no other
property or assets of Grantor or any shareholder, owner or
partner (direct or indirect) in or of Grantor, or any director,
officer, employee, beneficiary, Affiliate of any of the foregoing
shall be subject to levy, execution or
<PAGE>
other enforcement procedure for the satisfaction of Beneficiary's
remedies against Grantor under or with respect to this Deed of
Trust, the relationship of Grantor and Beneficiary hereunder or
Beneficiary's use of the Deed of Trust Property or any other
liability of Grantor to Beneficiary; provided that, nothing
herein shall limit recourse against the Grantor or its partners
for the gross negligence or willful misconduct of such Persons or
claims proximately caused by Grantor's breach of its obligations
pursuant to Sections 9.1, 11.2 (solely with respect to the first
sentence thereof), 11.3, 11.4, 11.6(a), (g), (h) or 11.7 of the
Participation Agreement; provided further, that the foregoing
proviso is intended to allow a claim for damages against Lessor
but shall not be construed as creating a full recourse obligation
on the part of Grantor (or any partner thereof) to repay any of
the Loans or any amounts relating to the Loans arising under the
Loan Agreement and the Notes.
24. Acts by Trustee. At any time upon written request
of Beneficiary, payment of its fees and (in case of full
reconveyance, for cancellation and retention) presentation of
this Deed of Trust and the appropriate instruments evidencing the
Obligations for endorsement and without affecting the liability
of any person for the payment of the Obligations, Trustee may:
(a) consent to the making of any map or plat of the Land; (b)
join in granting any easement or creating any restriction
thereon; (c) join in any subordination or other agreement
affecting this Deed of Trust or the lien or charge thereof; or
(d) reconvey, without warranty, all or any part of the Deed of
Trust Property. The recitals in any reconveyance of any matters
or facts shall be conclusive proof of the truthfulness thereof.
Grantor agrees to pay a reasonable trustee's fee for full or
partial reconveyance, together with a recording fee if Trustee,
at its option, elects to record said reconveyance.
25. Successor Trustee. In the event of the
resignation, refusal or inability of Trustee to act or, at the
option of Beneficiary, with or without any reason, Beneficiary is
authorized either in its own name or through an attorney or
attorney-in-fact appointed for the purpose by written instrument
duly recorded and without any formality other than a designation
in writing of a successor or substitute trustee, to appoint a
successor or substitute trustee who shall thereupon become vested
with and succeed to all the rights, title and powers given to the
Trustee herein named, the same as if the successor or substitute
trustee had been named original Trustee herein; and such right to
appoint a successor or substitute trustee shall exist as often as
and whenever Beneficiary desires.
26. Covenants of Trustee. Trustee covenants
faithfully to perform the trust herein created, being liable,
however, only for its own gross negligence or misconduct and that
of the employees and agents of Trustee.
27. Employment of Agents. Trustee, or anyone acting
in its stead, shall have, in its discretion, authority to employ
all proper agents and attorneys in the execution of this trust
and in the conducting of any sale made pursuant to the terms
hereof, and to pay for such services
<PAGE>
rendered out of the proceeds of the sale of the Mortgaged
Property, should any be realized; and if no sale be made or if
the proceeds of sale be insufficient to pay the same, then
Grantor hereby undertakes and agrees to pay the costs of such
services rendered to Trustee (but only to the extent Grantor has
been reimbursed by the Lessee to the extent required pursuant to
the Participation Agreement). Trustee may rely on any document
believed by it in good faith to be genuine. All money received by
Trustee shall, until used or applied as herein provided, be held
in trust, but need not be segregated (except to the extent
required by law), and Trustee shall not be liable for interest
thereon.
28. Indemnification of Trustee. If Trustee shall be
made a party to or shall intervene in any action or proceeding
affecting the Mortgaged Property or the title thereto, or the
interest of Trustee or Beneficiary under this Deed of Trust,
except for any action or proceeding arising out of the willful
misconduct or, to the extent prohibited by law, the gross
negligence of Trustee or Beneficiary, Trustee and Beneficiary
shall be reimbursed by Grantor, immediately and without demand,
for all reasonable costs, charges and attorneys' fees incurred by
them or any of them in any case (but only to the extent Grantor
has been reimbursed by the Lessee to the extent required pursuant
to the Participation Agreement), and the same shall become so
much additional indebtedness secured hereby.
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Deed of
Trust to be duly executed and delivered as of the date first
above written.
CREDIT SUISSE LEASING 92A, L.P.,
a Delaware limited partnership
BY: CREDIT SUISSE, its general
partner
By:________________________________
Name:______________________________
Title:_____________________________
By:________________________________
Name:______________________________
Title:_____________________________
<PAGE>
STATE OF ________________ )
) SS.:
COUNTY OF ______________
On the _____ day of ____________, 199_, before me personally
came ___________________ to me known, who, being by me duly sworn,
did depose and say that he/she resides at
__________________________________; that he/she is the
_____________________ of Credit Suisse, the general partner of Credit
Suisse Leasing 92A, L.P., the entity described in and which executed
the above instrument; and that he/she signed his/her name thereto by
order of the board of directors of said entity.
__________________________
Notary Public
<PAGE>
Schedule A
Legal Description of the Land
<PAGE>
Schedule B
Description of Lease
Lease, dated as of June 25, 1996, by and between Credit Suisse
Leasing 92A, L.P., as lessor and Home Depot U.S.A., Inc., as lessee, as
such Lease has been or will be amended, modified or supplemented from
time to time, a memorandum of which has been recorded with respect to
the property described on Schedule A in the real property records of
the county where such property is located.
<PAGE>
Appendix 1
Definitions
<PAGE>
EXHIBIT N-3
TO PARTICIPATION AGREEMENT
DEED TO SECURE DEBT AND SECURITY AGREEMENT
dated as of_________ ___, 199_
from
CREDIT SUISSE LEASING 92A, L.P., Grantor
to
HD REAL ESTATE FUNDING CORP., Grantee
[THIS INSTRUMENT IS A "CONSTRUCTION MORTGAGE" AS THAT TERM IS DEFINED
IN SECTION 11-9-313(1)(c) OF THE OFFICIAL CODE OF GEORGIA, AND SECURES
AN OBLIGATION INCURRED FOR THE CONSTRUCTION OF IMPROVEMENTS UPON LAND.]
[NOTE TO TAX COMMISSIONER: __________________________________.]
<PAGE>
DEED TO SECURE DEBT AND SECURITY AGREEMENT
DEED TO SECURE DEBT AND SECURITY AGREEMENT, dated as
of_____ 199__ (as amended, supplemented or otherwise modified
from time to time, this "Security Deed"), made by CREDIT SUISSE
LEASING 92A, L.P., a Delaware limited partnership (the
"Grantor"), with an address at 12 East 49th Street, New York, New
York 10017, in favor of HD REAL ESTATE FUNDING CORP, with an
address at _______________ ___________________________________
(the "Grantee").
Preliminary Statement
Pursuant to the Loan Agreement and subject to the Operative
Documents, the Grantee has agreed to make Loans to the Grantor in
an aggregate amount not to exceed TWO HUNDRED NINETY-ONE MILLION
AND NO/100 DOLLARS ($291,000,000) upon the terms and subject to
the conditions set forth therein, to be evidenced by the Notes
issued by the Grantor under the Loan Agreement. The Notes bear
interest as set forth in the Notes and mature (if not sooner
accelerated) on a date no later than _________________.
It is a condition, among others, to the obligation of the
Grantee to make the Loans to the Grantor under the Loan Agreement
that the Grantor shall have executed and delivered this Security
Deed to the Grantee.
<PAGE>
NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES THIS
SECURITY DEED WITNESSETH, that to secure (i)(A) payment when due
of the principal amount of and interest on the Loans, the Notes
(including, without limitation, interest accruing after the
maturity of the Loans and, the Notes, and interest accruing after
the filing of any petition in bankruptcy, or the commencement of
any insolvency, reorganization or like proceeding, relating to
the Grantor, Grantee or the Lessee, whether or not a claim for
post-filing or post-petition interest is allowed in such
proceeding), from time to time outstanding and all other
obligations and liabilities (including, without limitation, all
indemnities, costs, fees and expenses) from time to time payable
by, or on behalf of, the Grantor to Grantee pursuant to the
Operative Documents, whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter
incurred, and (B) all fees and expenses of the Grantee from time
to time payable under the Operative Documents, (ii) payment when
due of all amounts from time to time owing by the Lessee or to or
for the benefit of the Grantee as Lessor under the Lease and for
the benefit of Grantee pursuant to the Operative Documents
whether direct or indirect, absolute or contingent, due or to
become due, or now existing or hereafter incurred, (iii) the
performance and observance by the Grantor of all agreements
contained herein and in the other Operative Documents and (iv)
the payment performance and observance by the Lessee of its
covenants and agreements
<PAGE>
contained in the Operative Documents (collectively, the
"Obligations") and subject to the terms and provisions hereof,
and in consideration of the premises and of the covenants herein
and in the other Operative Documents, the Grantor, intending or
to be legally bound, does hereby mortgage, pledge, grant a
security interest in, set over and confirm unto the Grantee and
its successors and assigns, for the benefit of the Grantee, all
of the Grantor's estate, right, title, interest, property, claim
and demand, now or hereafter arising, in and or to the following
property and rights, excluding Excepted Rights and Excepted
Payments:
(A) the parcel(s) of real property described on
Schedule A attached hereto and made a part hereof by this
reference (the "Land"); all buildings, structures, Fixtures,
Equipment, and other improvements of every kind existing at
any time and from time to time (including (i) those
constructed pursuant to the Construction Agency Agreement
and those described on Schedule 1 to any Lease Supplement,
and (ii) those purchased with amounts advanced by the
Participants pursuant to the Participation Agreement) on or
under the Land, together with any and all appurtenances to
such buildings, structures or improvements, including
sidewalks, utility pipes, conduits and lines, parking areas
and roadways, and including all Modifications and other
additions to or changes in such improvements at any time
("Improvements"); all agreements, easements, rights of way
or use, rights of ingress or egress, privileges,
appurtenances, tenements, hereditaments and other rights and
benefits at any time belonging or pertaining to the Land or
the Improvements, including, without limitation, the use of
any streets, ways, alleys, vaults or strips of land
adjoining, abutting, adjacent or contiguous to the Land and
all permits, licenses and rights, whether or not of record,
appurtenant to the Land ("Appurtenant Rights"; the Land,
Improvements, Appurtenant Rights, Fixtures and Equipment
being collectively referred to as the "Property");
(B) all the estate, right, title, claim or demand
whatsoever of the Grantor, in possession or expectancy, in
and to the Property or any part thereof;
(C) all right, title and interest of the Grantor in
and to all of the fixtures and fittings of every kind and
nature whatsoever, and all appurtenances and additions
thereto and substitutions or replacements thereof (together
with, in each case, attachments, components, parts and
accessories) currently owned or subsequently acquired by the
Grantor and now or subsequently attached to the Property
(all of the foregoing in this paragraph (C) being referred
to as the "Fixtures");
(D) all right, title and interest of the Grantor in
and to all of the equipment, apparatus, furnishings,
fittings and articles of personal property of every kind and
nature whatsoever purchased or otherwise acquired by using
proceeds of the Notes or the Lessor Investment Amounts, and
all appurtenances and additions thereto and substitutions or
replacements thereof (together with, in each case,
attachments, components, parts and
<PAGE>
accessories) currently owned or subsequently acquired by
Grantor and now or subsequently attached to, or contained in
or used or usable in any way in connection with any
operation or letting of the Property, including but without
limiting the generality of the foregoing, all screens,
awnings, storm doors and windows, heating, electrical and
mechanical equipment, lighting, plumbing, ventilating, air
conditioning and air-cooling apparatus, refrigerating and
incinerating equipment, escalators, refrigerators, display
cases, elevators, loading and unloading systems, sprinkler
systems and other fire prevention and extinguishing
apparatus and materials, security systems, motors, engines,
pipes, pumps, tanks, conduits, appliances and fixtures of
every kind and description (all of the foregoing in this
paragraph (D) being referred to as the "Equipment");
(E) all right, title and interest of the Grantor in
and to all substitutes and replacements of, and all
additions and improvements to, the Improvements, the
Fixtures and Equipment, subsequently acquired by the Grantor
or constructed, assembled or placed by Grantor on the Land,
immediately upon such acquisition, release, construction,
assembling or placement, including, without limitation, any
and all building materials stored at the Property or offsite
acquired with the proceeds of the Notes or the Lessor
Investment Amounts, and, in such case, without any further
mortgage, conveyance, assignment or other act by the
Grantor;
(F) all right, title and interest of the Grantor in
and to all unearned premiums under insurance policies now or
subsequently obtained relating to the Property and the
Grantor's interest in and to all proceeds of any such
insurance policies (including title insurance policies)
including the right to collect and receive such proceeds,
and all awards and other compensation, including the
interest payable thereon and the right to collect and
receive the same, made to the present or any subsequent
owner of the Property for the taking by eminent domain,
condemnation or otherwise, of all or any part of the
Property or any easement or other right therein;
(G) all right, title and interest of the Grantor in
and to (i) all consents, licenses, building permits,
certificates of occupancy and other governmental approvals
relating to construction, completion, occupancy, use or
operation of the Property or any part thereof and (ii) all
Plans and Specifications relating to the Property;
(H) all right, title and interest of the Grantor in
and to the Lease including all powers, privileges, options
and other benefits of the Grantor as Lessor thereunder, more
particularly described on Schedule B attached hereto and
made a part hereof by this reference (as amended,
supplemented or otherwise modified from time to time, the
"Lease") and all Rent and all other rents, payments,
purchase prices, receipts, revenues, issues and profits
payable under the Lease or pursuant to any other lease with
respect to the Property, including, without limitation, (i)
all rights to the Grantor to receive proceeds
<PAGE>
of any indemnity, warranty or guaranty with respect to the
Lease, (ii) all claims of the Grantor for damages arising
out of or for breach of or default under the Lease, (iii)
all rights of the Grantor to exercise any security now or
hereafter payable to or receivable by the Grantor under the
Lease, (iv) the right of the Grantor to exercise any
election or option or to make any decision or determination
or to give or receive any notice, consent, waiver or
approval or to take any action under the Lease and (v) the
right of the Grantor to terminate, amend, supplement or
otherwise modify the Lease and to compel performance and
otherwise exercise all remedies thereunder;
(I) all rights, powers, privileges and other benefits
of the Grantor in Governmental Actions now or hereafter
obtained by the Grantor or the Lessee (or any Affiliates
thereof) from any Governmental Authority relating to the
ownership, operation, management and use of the Property,
the development and financing of the Property, the
Improvements and the Equipment, the construction and
operation of the Facility and any improvements,
modifications or additions thereto;
(J) the accounts established and maintained pursuant
to the Security Documents and all cash, cash equivalents,
instruments, investments and other securities deposited or
required to be deposited with the Grantor or the Grantee
pursuant to any provision of this Security Deed, the Lease,
the Security Documents and any other Operative Document;
(K) any and all other property that may from time to
time, by delivery or by writing of any kind, be subjected to
the lien hereof by the Grantor or by anyone with its
consent, or which may come into the possession or be subject
to the control of the Grantee pursuant to this Security
Deed, including, without limitation, all proceeds of any
sales or other dispositions of all or part of the Mortgaged
Property, any such property being hereby assigned to the
Grantee and subjected or added to the lien or estate created
by this Security Deed forthwith upon the acquisition thereof
by the Grantor, as fully as if such property were not owned
by the Grantor and were specifically described in this
Security Deed and subjected to the lien and security
interest hereof; and the Grantee is hereby authorized to
receive any and all such property as and for additional
security hereunder;
(L) all the remainder or remainders, reversion or
reversions, rents, revenues, issues, profits, royalties,
income and other benefits derived from any of the foregoing,
all of which are hereby assigned to the Grantee, who is
hereby authorized to collect and receive the same, to give
proper receipts and acquittances therefor and to apply the
same to the payment of the Obligations in accordance with
the provisions of this Security Deed;
<PAGE>
(M) all rights of the Grantor to the amounts paid or
payable by the Lessee to the Grantor under the Participation
Agreement and the other Operative Documents and all rights
of the Grantor to enforce payments of any such amounts
thereunder;
(N) any right to restitution from the Lessee, or any
other Person in respect of any determination of invalidity
of any of the Lease, Security Documents, the Loan Agreement,
the Notes and the other Operative Documents; and
(O) all proceeds, both cash and noncash, of the
foregoing, including all proceeds of the insurance required
to be maintained by or on behalf of the Lessee pursuant to
the Lease and the other Operative Documents and all awards
or other compensation heretofore or hereafter made to the
Grantor, including any awards for severance damages, all of
which are hereby assigned to the Grantee, who is hereby
authorized, subject to the provisions of this Security Deed,
to collect and receive the proceeds thereof, to give proper
receipts and acquittances therefor and to apply the same to
the payment of the Obligations in accordance with the
provisions of this Security Deed and the other Operative
Documents;
(All of the foregoing property and rights and interests now
owned or held or subsequently acquired by the Grantor and
described in the foregoing clauses (A) through (O) are,
excluding Excepted Payments and Excepted Rights, collectively
referred to as the "Mortgaged Property"); PROVIDED THAT EXCLUDED
from the Mortgaged Property at all times and in all respects
shall be (i) all Excepted Payments and Excepted Rights, (ii) all
inventory of any lessee of the Mortgaged Property, and (iii) all
equipment, furnishings and fixtures purchased by any lessee of
the Mortgaged Property with funds not provided by the Grantee or
Grantor;
TO HAVE AND TO HOLD the Mortgaged Property and all parts,
rights, members and appurtenances thereof, to the use, benefit
and behoof of Grantee, its successors and assigns, IN FEE SIMPLE
forever.
THIS CONVEYANCE is intended to operate and is to be
construed as a deed passing title to the Mortgaged Property to
Grantee and is made under those provisions of the existing laws
of the State of Georgia relating to deeds to secure debt, and not
as a mortgage, and is given to secure the Obligations.
1. Definitions; Rules of Interpretation. Capitalized
terms used but not otherwise defined in this Security Deed shall
have the respective meanings specified in Appendix 1 attached to
this Security Deed and made a part hereof by this reference; and
the rules of interpretation set forth in Appendix 1 hereto shall
apply to this Security Deed.
2. Other Covenants. At any time and from time to time,
upon the written request of the Grantee, and at the sole expense
of the Grantor (but only to the extent Grantor has been
<PAGE>
reimbursed by the Lessee), the Grantor will promptly and duly
execute and deliver such further instruments and documents and
take such further actions as the Grantee reasonably may request
for the purposes of obtaining or preserving the full benefits of
this Security Deed and of the rights and powers granted by this
Security Deed.
3. Default; Remedies.
(a) If a Loan Agreement Event of Default has occurred and is
continuing and the Loans have been accelerated pursuant to
Section 5 of the Loan Agreement:
(i) the Grantee, in addition to all other remedies
available at law or in equity, shall have the right
forthwith to enter upon and take possession of the Mortgaged
Property, and to let the Mortgaged Property and receive the
rents, issues and profits thereof, to make repairs and to
apply said rentals and profits, after payment of all
necessary or proper charges and expenses, on account of the
amounts hereby secured (subject to the Excepted Payments and
Excepted Rights); and
(ii) the Grantee shall, as a matter of right, at the
option of the Grantee, be entitled to the appointment of a
receiver for the Mortgaged Property, and the Grantor hereby
consents to such appointment and waives notice of any
application therefor.
(b) If a Loan Agreement Event of Default shall have
occurred and is continuing and the Loans have been accelerated
pursuant to Section 5 of the Loan Agreement, Grantee, at its
option, may sell the Mortgaged Property or any part of the
Mortgaged Property at public sale or sales before the door of the
courthouse of the county in which the Mortgaged Property or any
part of the Mortgaged Property is situated, to the highest bidder
for cash, in order to pay the Obligations secured hereby and
accrued interest thereon and insurance premiums, liens,
assessments, taxes and charges, including utility charges, if
any, with accrued interest thereon, and all expenses of the sale
and of all proceedings in connection therewith, including
reasonable attorneys' fees, if incurred, after advertising the
time, place and terms of sale once a week for four (4) weeks
immediately preceding such sale (but without regard to the number
of days) in a newspaper in which Sheriff's sales are advertised
in said county. At any such public sale, Grantee may execute and
deliver to the purchaser a conveyance of the Mortgaged Property
or any part of the Mortgaged Property in fee simple, with full
warranties of title (or without warranties if Grantee shall so
elect) and to this end, Grantor hereby constitutes and appoints
Grantee the agent and attorney-in-fact of Grantor to make such
sale and conveyance, and thereby to divest Grantor of all right,
title, interest, equity and equity of redemption that Grantor may
have in and to the Mortgaged Property and to vest the same in the
purchaser or purchasers at such sale or sales, and all the acts
and doings of said agent and attorney-in-fact are hereby ratified
and confirmed and any recitals in said conveyance or conveyances
as to facts essential to a valid sale shall be binding upon
Grantor. The aforesaid power of sale and agency hereby
<PAGE>
granted are coupled with an interest and are irrevocable by death
or otherwise, are granted as cumulative of the other remedies
provided hereby or by law for collection of the Indebtedness
secured hereby and shall not be exhausted by one exercise thereof
but may be exercised until full payment of all Indebtedness
secured hereby. In the event of any such foreclosure sale by
Grantee, Grantor shall be deemed a tenant holding over and shall
forthwith deliver possession to the purchaser or purchasers at
such sale or be summarily dispossessed according to provisions of
law applicable to tenants holding over.
(c) The Grantor hereby waives the benefit of all
appraisement, valuation, stay, extension, reinstatement and
redemption laws now or hereafter in force and all rights of
marshaling in the event of any sale of the Mortgaged Property or
any interest therein.
(d) Notwithstanding any other provision of this
Security Deed or any other Operative Document, Grantee agrees
that upon the occurrence of a Loan Agreement Event of Default
arising out of, or attributable to, a Lease Default or Lease
Event of Default, Grantee shall not at any time exercise against
the Grantor any of the remedies provided in this Security Deed
and the Operative Documents unless the Grantee shall at the same
time be exercising its rights under the Lease, the Construction
Agency Agreement and the Operative Documents to dispossess the
Lessee or terminate the Lease and the Construction Agency
Agreement or to take any comparable remedial actions thereunder,
provided, that the foregoing provisions of this paragraph shall
not apply at any time when a Loan Agreement Event of Default
arising out of, or attributable to, a Lease Default or Lease
Event of Default, shall also have occurred and be continuing.
(e) The purchase money proceeds or avails of any sale
made under or by virtue of this Section 3, together with any
other sums which then may be held by Grantee under this Security
Deed, whether under the provisions of this Section 3 or
otherwise, shall be applied in accordance with Section 5 of the
Participation Agreement.
(f) Grantee may adjourn from time to time any sale by
it to be made under or by virtue of this Security Deed by
announcement at the time and place appointed for such sale or for
such adjourned sale or sales; and, except as otherwise provided
by any applicable provision of law, Grantee, without further
notice or publication, may make such sale at the time and place
to which the same shall be so adjourned.
(g) Upon the completion of any sale or sales made by
Grantee under or by virtue of this Section 3, Grantee, or an
officer of any court empowered to do so, shall execute and
deliver to the accepted purchaser or purchasers a good and
sufficient instrument, or good and sufficient instruments,
conveying, assigning and transferring all estate, right, title
and interest in and to the property and rights sold. Grantee is
hereby irrevocably appointed the true and lawful attorney of
Grantor, in its name and stead, to make all necessary
conveyances, assignments,
<PAGE>
transfers and deliveries of the Mortgaged Property and rights so
sold and for that purpose Grantee may execute all necessary
instruments of conveyance, assignment and transfer, and may
substitute one or more persons with like power, Grantor hereby
ratifying and confirming all that its said attorney or such
substitute or substitutes shall lawfully do by virtue hereof.
Any such sale or sales made under or by virtue of this Section 3,
whether made under the power of sale herein granted or under or
by virtue of judicial proceedings or of a judgment or decree of
foreclosure and sale, shall operate to divest all the estate,
right, title, interest, claim and demand whatsoever, whether at
law or in equity, of Grantor in and to the properties and rights
so sold, and shall be a perpetual bar both at law and in equity
against Grantor and against any and all persons claiming or who
may claim the same, or any part thereof from, through or under
Grantor.
(h) Upon any sale made under or by virtue of this
Section 3 (whether made under the power of sale herein granted or
under or by virtue of judicial proceedings or of a judgment or
decree of foreclosure and sale), Grantee may bid for and acquire
the Mortgaged Property or any part thereof and in lieu of paying
cash therefor may make settlement for the purchase price by
crediting upon the Indebtedness the net sales price after
deducting therefrom the expenses of the sale and the costs of the
action and any other sums which Grantee is authorized to deduct
under this Security Deed.
(i) No recovery of any judgment by Grantee and no levy
of an execution under any judgment upon the Mortgaged Property or
upon any other property of Grantor shall affect in any manner or
to any extent, the lien and title of this Security Deed upon the
Mortgaged Property or any part thereof, or any liens, titles,
rights, powers or remedies of Grantee hereunder, but such liens,
titles, rights, powers and remedies of Grantee shall continue
unimpaired as before.
(j) Grantor agrees, to the fullest extent permitted by
law, that upon the occurrence of a Loan Agreement Event of
Default, neither Grantor nor anyone claiming through or under it
shall or will set up, claim or seek to take advantage of any
appraisement, valuation, stay, extension, homestead, exemption or
redemption laws now or hereafter in force, in order to prevent or
hinder the enforcement or foreclosure of this Security Deed, or
the absolute sale of the Mortgaged Property, or the final and
absolute putting into possession thereof, immediately after such
sale, of the purchasers thereat, and Grantor, for itself and all
who may at any time claim through or under it, hereby waives to
the full extent that it may lawfully so do, the benefit of all
such laws, and any and all right to have the assets comprised in
the security intended to be created hereby marshaled upon any
foreclosure of the lien or title hereof.
(k) Grantee, at its option, is authorized to foreclose
this Security Deed subject to the rights of any tenants of the
Premises, and the failure to make any such tenants parties to any
such foreclosure proceedings and to foreclose their rights will
not be, nor be asserted to be by Grantor, a defense to any
proceedings instituted by Grantee to collect the sums secured
hereby.
<PAGE>
4. WAIVER OF GRANTOR'S RIGHTS. BY EXECUTION OF THIS
SECURITY DEED AND BY INITIALING THIS SECTION 4, GRANTOR
EXPRESSLY: (A) ACKNOWLEDGES THE RIGHT TO ACCELERATE THE
INDEBTEDNESS EVIDENCED BY THE NOTES AND THE POWER OF ATTORNEY
GIVEN HEREIN TO GRANTEE TO SELL THE MORTGAGED PROPERTY BY
NONJUDICIAL FORECLOSURE UPON DEFAULT BY GRANTOR WITHOUT ANY
JUDICIAL HEARING AND WITHOUT ANY NOTICE; (B) WAIVES ANY AND ALL
RIGHTS WHICH GRANTOR MAY HAVE UNDER THE CONSTITUTION OF THE
UNITED STATES (INCLUDING THE FIFTH AND FOURTEENTH AMENDMENTS
THEREOF), THE VARIOUS PROVISIONS OF THE CONSTITUTIONS FOR THE
SEVERAL STATES, OR BY REASON OF ANY OTHER APPLICABLE LAW, TO
NOTICE AND TO JUDICIAL HEARING PRIOR TO THE EXERCISE BY GRANTEE
OF ANY RIGHT OR REMEDY HEREIN PROVIDED TO GRANTEE; (C)
ACKNOWLEDGES THAT GRANTOR HAS READ THIS SECURITY DEED AND ITS
PROVISIONS HAVE BEEN EXPLAINED FULLY TO GRANTOR AND GRANTOR HAS
CONSULTED WITH COUNSEL OF GRANTOR'S CHOICE PRIOR TO EXECUTING
THIS SECURITY DEED; AND (D) ACKNOWLEDGES THAT ALL WAIVERS OF THE
AFORESAID RIGHTS OF GRANTOR HAVE BEEN MADE KNOWINGLY,
INTENTIONALLY AND WILLINGLY BY GRANTOR AS PART OF A BARGAINED FOR
LOAN TRANSACTION:
INITIALED BY GRANTOR:
[Name of Grantor]
By:__________
5. Remedies Not Exclusive. The Grantee shall be
entitled to enforce payment of the indebtedness and performance
of the Obligations and to exercise all rights and powers under
this Security Deed or under any of the other Operative Documents
or other agreement or any laws now or hereafter in force,
notwithstanding some or all of the Obligations may now or
hereafter be otherwise secured, whether by mortgage, security
agreement, pledge, lien, assignment or otherwise. Neither the
acceptance of this Security Deed nor its enforcement, shall
prejudice or in any manner affect the Grantee's right to realize
upon or enforce any other security now or hereafter held by the
Grantee, it being agreed that the Grantee shall be entitled to
enforce this Security Deed and any other security now or
hereafter held by the Grantee in such order and manner as the
Grantee may determine in its absolute discretion. No remedy
herein conferred upon or reserved to the Grantee is intended to
be exclusive of any other remedy herein or by law provided or
permitted, but each shall be cumulative and shall be in addition
to every other remedy given hereunder or now or hereafter
existing at law or in equity or by statute. Every power or
remedy given by any of the Operative Documents to the Grantee or
to which it
<PAGE>
may otherwise be entitled, may be exercised, concurrently or
independently, from time to time and as often as may be deemed
expedient by the Grantee. In no event shall the Grantee, in the
exercise of the remedies provided in this Security Deed
(including, without limitation, in connection with the assignment
of Rent to Grantee, or the appointment of a receiver and the
entry of such receiver on to all or any part of the Mortgaged
Property), other than foreclosure and sale, be deemed a
"mortgagee in possession," and the Grantee shall not in any way
be made liable for any act, either of commission or omission, in
connection with the exercise of such remedies.
6. Performance by the Grantee of the Grantor's
Obligations. If the Grantor fails to perform or comply with any
of its agreements contained herein, the Grantee, at its option,
but without any obligation so to do, may perform or comply, or
otherwise cause performance or compliance, with such agreement.
The expenses of the Grantee incurred in connection with actions
undertaken as provided in this Section, together with interest
thereon at a rate per annum equal to the Overdue Rate, from the
date of payment by the Grantee to the date reimbursed by the
Grantor, shall be payable by the Grantor to the Grantee on demand
(but only to the extent Grantor has been reimbursed by the Lessee
pursuant to the Participation Agreement or the Lease).
7. Duty of the Grantee. The Grantee's sole duty with
respect to the custody, safekeeping and physical preservation of
any Mortgaged Property in its possession, under Section 9-207 of
the Uniform Commercial Code or otherwise, shall be to deal with
it in the same manner as the Grantee deals with similar property
for its own account. Neither the Grantee nor any of their
respective directors, officers, employees or agents shall be
liable for failure to demand, collect or realize upon any of the
Mortgaged Property or for any delay in doing so or shall be under
any obligation to sell or otherwise dispose of any Mortgaged
Property upon the request of the Grantor or any other Person or
to take any other action whatsoever with regard to the Mortgaged
Property or any part thereof.
8. Powers Coupled with an Interest. All powers,
authorizations and agencies contained in this Security Deed are
coupled with an interest and are irrevocable until this Security
Deed is terminated and the lien and security title created hereby
is canceled.
9. Execution of Financing Statements. Pursuant to
Section 9-402 of the Uniform Commercial Code, the Grantor
authorizes the Grantee to file financing statements with respect
to the Mortgaged Property without the signature of the Grantor in
such form and in such filing offices as the Grantee reasonably
determines appropriate to perfect the security interests of the
Grantee under this Security Deed with a carbon, photographic or
other reproduction of this executed Security Deed attached.
10. Security Agreement under Uniform Commercial Code.
(a) It is the
<PAGE>
intention of the parties hereto that this Security Deed shall
constitute a Security Agreement within the meaning of the Uniform
Commercial Code of the state in which the Mortgaged Property is
located. If a Loan Agreement Event of Default shall occur and be
continuing, then in addition to having any other right or remedy
available at law or in equity, the Grantee shall have the option
of either (i) proceeding under the Uniform Commercial Code and
exercising such rights and remedies as may be provided to a
secured party by the Uniform Commercial Code with respect to all
or any portion of the Mortgaged Property which is personal
property (including, without limitation, taking possession of and
selling such property) or (ii) treating such property as real
property and proceeding with respect to both the real and
personal property constituting the Mortgaged Property in
accordance with the Grantee's rights, powers and remedies with
respect to the real property (in which event the default
provisions of the Uniform Commercial Code shall not apply). If
the Grantee shall elect to proceed under the Uniform Commercial
Code, then ten (10) days' notice of sale of the personal property
shall be deemed reasonable notice and the reasonable expenses of
retaking, holding, preparing for sale, selling and the like
incurred by the Grantee shall include, but not be limited to,
attorneys' fees and legal expenses. At the Grantee's request, the
Grantor shall assemble the personal property and make it
available to the Grantee at a place designated by the Grantee
which is reasonably convenient to both parties.
(b) The Grantor and the Grantee agree, to the extent
permitted by law, that this Security Deed upon recording or
registration in the real estate records of the proper office
shall constitute a financing statement filed as a "fixture
filing" within the meaning of Sections 9-313 and 9-402 of the
Uniform Commercial Code.
(c) The Grantor, upon request by the Grantee from time
to time, shall execute, acknowledge and deliver to Grantee one or
more separate security agreements, in form satisfactory to
Grantee, covering all or any part of the Mortgaged Property and
will further execute, acknowledge and deliver, or cause to be
executed, acknowledged and delivered, any financing statement,
affidavit, continuation statement or certificate or other
document as the Grantee may request in order to perfect,
preserve, maintain, continue or extend the security interest
under and the priority of this Security Deed and such security
instrument. The Grantor further agrees to pay to the Grantee on
demand all costs and expenses incurred by the Grantee in
connection with the preparation, execution, recording, filing and
re-filing of any such document and all reasonable costs and
expenses of any record searches for financing statements the
Grantee shall reasonably require; provided, however, that Grantor
shall not be liable for payment of any amount under this Section
to the extent Lessee is responsible for payment of such amount
under the Lease or the Participation Agreement. If the Grantor
shall fail to furnish any financing or continuation statement
within ten (10) days after request by Grantee, then pursuant to
the provisions of the Uniform Commercial Code, the Grantor hereby
authorizes the Grantee, to the extent permitted by law, without
the signature of the Grantor, to execute and file any such
financing and continuation statements. The filing of any
financing or continuation statements in the records relating to
personal property or chattels shall not be construed as in any
way
<PAGE>
impairing the right of the Grantee to proceed against any
personal property encumbered by this Security Deed as real
property, as set forth above.
11. Intentionally Omitted.
12. Notices. All notices, requests and demands to or
upon the Grantee or the Grantor shall be given in accordance with
Section 15.3 of the Participation Agreement.
13. Severability. Any provision of this Security Deed
which is prohibited or unenforceable shall be ineffective to the
extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof.
14. Amendments in Writing; No Waiver; Cumulative
Remedies. (a) None of the terms or provisions of this Security
Deed may be waived, amended, supplemented or otherwise modified
except by a written instrument executed by the Grantor and the
Grantee in accordance with the terms of the Loan Agreement and
the Participation Agreement.
(b) No failure to exercise, nor any delay in
exercising, on the part of the Grantee, any right, power or
privilege hereunder shall operate as a waiver thereof. No single
or partial exercise of any right, power or privilege hereunder
shall preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. A waiver by the
Grantee of any right or remedy hereunder on any one occasion
shall not be construed as a bar to any right or remedy which the
Grantee would otherwise have on any future occasion.
(c) The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are not
exclusive of any other rights or remedies provided by law.
15. Section Headings. The section headings used in
this Security Deed are for convenience of reference only and are
not to affect the construction hereof or be taken into
consideration in the interpretation hereof.
16. Successors and Assigns. This Security Deed shall
run with the land and be binding upon the successors and assigns
of the Grantor and shall inure to the benefit of the Grantee and
its successors and assigns.
17. Grantor's Waiver of Rights. Except as otherwise
set forth herein, to the fullest extent permitted by law, the
Grantor waives the benefit of all laws now existing or that may
subsequently be enacted providing for (i) any appraisement before
sale of any portion of the Mortgaged Property, (ii) any extension
of the time for the enforcement of the collection of the
indebtedness or the creation or extension of a period of
redemption from any sale made in collecting such debt and (iii)
exemption of the Mortgaged Property from attachment, levy or sale
<PAGE>
under execution or exemption from civil process. Grantor hereby
expressly waives any and all benefits Grantor may have under
O.C.G.A. 44-14-85 to claim or assert that the Obligations have
been reinstated in accordance with their terms following the
withdrawal of any foreclosure proceedings by Grantee, and
acknowledges and agrees that reinstatement shall occur only upon
written agreement of Grantee. Except as otherwise set forth
herein, to the full extent the Grantor may do so, the Grantor
agrees that the Grantor will not at any time insist upon, plead,
claim or take the benefit or advantage of any law now or
hereafter in force providing for any appraisement, valuation,
stay, exemption, extension or redemption, reinstatement or
requiring foreclosure of this Security Deed before exercising any
other remedy granted hereunder and the Grantor, for the Grantor
and its successors and assigns, and for any and all Persons ever
claiming any interest in the Mortgaged Property, to the extent
permitted by law, hereby waives and releases all rights of
redemption, reinstatement, valuation, appraisement, stay of
execution, notice of election to mature or declare due the whole
of the secured indebtedness and marshaling in the event of
foreclosure of the liens hereby created.
18. Multiple Security. If (a) the Mortgaged Property
shall consist of one or more parcels, whether or not contiguous
and whether or not located in the same county, or (b) in addition
to this Security Deed, the Grantee shall now or hereafter hold
one or more additional mortgages, deeds to secure debt, liens,
deeds of trust or other security (directly or indirectly) for the
Obligations upon other property in the state in which the
Mortgaged Property is located or any other state (whether or not
such property is owned by the Grantor or by others) of (c) both
the circumstances described in clauses (a) and (b) shall be true,
then to the fullest extent permitted by law, the Grantee may, in
its sole discretion, commence or consolidate in a single
foreclosure action all foreclosure proceedings against all such
collateral securing the Obligations (including the Mortgaged
Property), which action may be brought or consolidated in the
courts of any county in which any of such collateral is located.
The Grantor acknowledges that the right to maintain a
consolidated foreclosure action is a specific inducement to the
Grantee to extend the Obligations and the Grantor expressly and
irrevocably waives any objections to the commencement or
consolidation of the foreclosure proceedings in a single action
and any objections to the laying of venue or based on the grounds
of forum non conveniens which it may now or hereafter have. The
Grantor further agrees that if the Grantee shall be prosecuting
one or more foreclosure or other proceedings against a portion of
the Mortgaged Property or against any collateral other than the
Mortgaged Property, which collateral directly or indirectly
secures the Obligations, or if the Grantee shall have obtained a
judgment of foreclosure and sale or similar judgment against such
collateral, then, whether or not such proceedings are being
maintained or judgments were obtained in or outside the state in
which the Mortgaged Property is located, the Grantee may commence
or continue foreclosure proceedings and exercise its other
remedies granted in this Security Deed against all or any part of
the Mortgaged Property and the Grantor waives any objections to
the commencement or continuation of a foreclosure of this
Security Deed or exercise of any other remedies hereunder based
on such other proceedings or judgments, and waives any right to
seek to dismiss, stay, remove, transfer or consolidate either any
action
<PAGE>
under this Security Deed or such other proceedings on such basis.
Neither the commencement nor continuation of proceedings to
foreclose this Security Deed nor the exercise of any other rights
hereunder nor the recovery of any judgment by the Grantee in any
such proceedings shall prejudice, limit or preclude the Grantee's
right to commence or continue one or more foreclosure or other
proceedings or obtain a judgment against any other collateral
(either in or outside the state in which the Mortgaged Property
is located) which directly or indirectly secures the Obligations,
and the Grantor expressly waives any objections to the
commencement of, continuation of, or entry of a judgment in such
other proceedings or exercise of any remedies in such proceedings
based upon any action or judgment connected to this Security
Deed, and the Grantor also waives any right to seek to dismiss,
stay, remove, transfer or consolidate either such other
proceedings or any action under this Security Deed on such basis.
It is expressly understood and agreed that to the fullest extent
permitted by law, the Grantee may, at its election, cause the
sale or multiple sales conducted simultaneously and take such
other measures as are appropriate in order to effect the
agreement of the parties to dispose of and administer all
collateral securing Obligations (directly or indirectly) in the
most economical and least time-consuming manner.
19. GOVERNING LAW. THIS SECURITY DEED AND THE RIGHTS
AND OBLIGATIONS OF THE GRANTOR UNDER THIS SECURITY DEED SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF GEORGIA, WITHOUT REGARD TO CONFLICTS OF
LAWS PRINCIPLES, EXCEPT AS TO MATTERS RELATING TO THE CREATION OF
LIENS AND CONVEYANCE OF SECURITY TITLE PURSUANT TO A DEED TO
SECURE DEBT AND THE EXERCISE OF REMEDIES WITH RESPECT THERETO,
WHICH SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE IN WHICH THE MORTGAGED PROPERTY IS LOCATED.
20. Partial Release; Full Release. The Grantee may
release, for such consideration or none, as it may require, any
portion of the Mortgaged Property without, as to the remainder of
the Mortgaged Property, in any way impairing or affecting the
lien, security title, security interest and priority herein
provided for the Grantee compared to any other lien holder or
secured party.
Further, upon receipt of the Purchase Option Price
relating to the Mortgaged Property or payment of all principal
and interest due on the Notes, Grantee shall execute and deliver
to Grantor such documents and instruments as may be required to
release the lien and security interest created by this Security
Deed. In accordance with Section 12.3 of the Lease, Grantee
shall from time to time execute and deliver to Grantor such
documents and instruments as may be required to release the lien
and security interest created by this Security Deed with
<PAGE>
respect to any Release Portion.
21. Certain Rights of Grantee. Except as provided in
the Operative Documents, the Grantee, with the express written
consent of the Grantor, may at any time or from time to time
renew or extend this Security Deed, or alter or modify the same
in any way, or the Grantee may waive any of the terms, covenants
or conditions hereof in whole or in part and may release any
portion of the Mortgaged Property or any other security, and
grant such extensions and indulgences in relation to the
Obligations secured hereby as the Grantee may determine without
the consent of any other Person and without any obligation to
give notice of any kind thereto and without in any manner
affecting the priority of the lien and security title hereof on
any part of the Mortgaged Property.
22. Future Advances. This Security Deed is given to
secure not only existing indebtedness, but also future advances
made pursuant to or as provided in the Loan Agreement and the
other Operative Documents, whether such advances are obligatory
or to be made at the option of the Grantee, or otherwise, to the
same extent as if such future advances were made on the date of
execution of this Security Deed, although there may be no advance
made at the time of execution hereof, and although there may be
no indebtedness outstanding at the time any advance is made. To
the fullest extent permitted by law, the lien of this Security
Deed shall be valid as to all such indebtedness, including all
future advances, from the time this Security Deed is recorded.
Notwithstanding anything in this Security Deed to the contrary,
although the amount of indebtedness secured by this Security Deed
may increase or decrease from time to time, the maximum principal
amount of indebtedness secured by this Security Deed at any one
time shall not exceed ________________ and No/100 Dollars
($_________________.00), plus all costs of enforcement and
collection of this Security Deed, the Notes, the Loan Agreement
and the other Operative Documents, plus the total amount of any
advances made pursuant to the Operative Documents to protect the
collateral and the security interest and lien created hereby,
together with interest on all of the foregoing as provided in the
Operative Documents.
23. Subordination. This Security Deed shall be
subject and subordinate to the Lease.
24. Limitations on Recourse against Grantor
Notwithstanding anything contained in this Security Deed to the
contrary, Grantee agrees to look solely to Grantor's (or to any
partner thereof's) estate and interest in the Mortgaged Property
and rights pursuant to the Operative Documents for the collection
of any judgment requiring the payment of money by Grantor in the
event of liability by Grantor, and no other property or assets of
Grantor or any shareholder, owner or partner (direct or indirect)
in or of Grantor, or any director, officer, employee, Grantee or
Affiliate of any of the foregoing shall be subject to levy,
execution or other enforcement procedure for the satisfaction of
Grantee's remedies against Grantor under or with respect to this
Security Deed, the relationship of Grantor and Grantee hereunder
or Grantee's use
<PAGE>
of the Mortgaged Property or any other liability of Grantor to
Grantee; provided that, nothing herein shall limit recourse
against the Grantor or its partners for the gross negligence or
willful misconduct of such Persons or claims proximately caused
by Grantor's breach of its obligations pursuant to Sections 9.1,
11.2 (solely with respect to the first sentence thereof), 11.3,
11.4, 11.6(a), (g), (h) or 11.7 of the Participation Agreement;
provided further, that the foregoing proviso is intended to allow
a claim for damages against Grantor but shall not be construed as
creating a full recourse obligation on the part of Grantor (or
any partner thereof) to repay any of the Loans or any amounts
relating to the Loans arising under the Loan Agreement and the
Notes.
25. Waiver of Statutory Attorneys' Fees. Any
reference to the payment of attorneys' fees hereunder or under
the other Operative Documents shall refer to reasonable
attorneys' fees actually incurred and not to statutory attorneys'
fees authorized by Official Code of Georgia Annotated 13-1-11.
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Security
Deed to be duly executed and delivered under seal as of the date
first above written.
CREDIT SUISSE LEASING 92A, L.P.,
a Delaware limited partnership
BY: CREDIT SUISSE, its general
partner
By:________________________________
____
Name:______________________________
_
Title:________________________________
[Bank Seal]
Signed, sealed and delivered
By:____________________________________
in the presence of:
Name:_______________________________
Title:________________________________
_______________________
Unofficial Witness
_______________________
Notary Public
Date Executed by Notary: ________________
My commission expires: __________________
[Notarial Seal]
<PAGE>
Schedule A
Legal Description of the Land
<PAGE>
Schedule B
Description of Lease
Lease, dated as of June 25, 1996, by and between Credit Suisse
Leasing 92A, L.P., as lessor and Home Depot U.S.A., Inc., as lessee, as
such Lease has been or will be amended, modified or supplemented from
time to time, a memorandum of which has been recorded with respect to
the property described on Schedule A in the real property records of
the county where such property is located.
<PAGE>
APPENDIX 1
Definitions
<PAGE>
EXHIBIT O
TO THE PARTICIPATION AGREEMENT
LEASE
between
CREDIT SUISSE LEASING 92A, L.P.,
as Lessor
and
HOME DEPOT U.S.A., INC.,
as Lessee
_________________________________
Dated as of June 25, 1996
_________________________________
The interest of the Lessor in this Lease (other than certain "Excepted
Payments" and "Excepted Rights") has been assigned to the Facility
Lender to secure Lessor's obligations pursuant to that certain Loan
Agreement, dated as of June 25, 1996 by and between Lessor and the
Facility Lender. The Facility Lender, in turn has assigned its
interest in this Lease (other than certain "Excepted Payments" and
"Excepted Rights") to Credit Suisse, as Agent Bank for the Lenders (in
such capacity, the "Agent Bank"), pursuant to that certain Liquidity
Agreement. This Lease has been executed in several counterparts. To
the extent, if any, that this Lease constitutes chattel paper (as such
term is defined in the Uniform Commercial Code as in effect in any
applicable jurisdiction), no security interest in this Lease may be
created through the transfer or possession of any counterpart other
than the original counterpart containing the receipt therefor executed
by the Facility Lender and the Agent Bank on the signature page hereof.
<PAGE>
TABLE OF CONTENTS
Section Page
ARTICLE I 1
1.1. Definitions; Rules of Usage 1
ARTICLE II 1
2.1. Acceptance and Lease of Property 1
2.2. Acceptance Procedure 2
2.3. Lease Term 2
ARTICLE III 2
3.1. Rents 2
3.2. Supplemental Rent 3
3.3. Method of Payment 3
ARTICLE IV 4
4.1. Utility Charges 4
ARTICLE V 4
5.1. Quiet Enjoyment 4
ARTICLE VI 4
6.1. Net Lease 4
ARTICLE VII 6
7.1 Ownership of the Property 6
7.2. Use of Properties 6
ARTICLE VIII 6
8.1. Condition of the Property 6
ARTICLE IX 7
9.1. Compliance with Requirements of Law and Insurance
Requirements 7
ARTICLE X 7
10.1. Maintenance and Repair 7
<PAGE>
ARTICLE XI 8
11.1. Modifications; Substitutions and Replacements 8
ARTICLE XII 9
12.1. Warranty of Title 9
12.2. Grants and Releases of Easements 9
12.3 Land Release 10
ARTICLE XIII 11
13.1.Permitted Contests Other than in Respect of
Indemnities 11
ARTICLE XIV 11
14.1. Insurance 11
14.2. Risk of Loss 11
14.3. Self-Insurance
12
ARTICLE XV 12
15.1 Casualty and Condemnation 12
15.2. Environmental Matters 14
15.3. Notice of Environmental Matters 14
15.4. Economic Abandonment 14
ARTICLE XVI 15
16.1. Termination upon Certain Events 15
16.2. Procedures. 15
16.3. Substitution Right 16
ARTICLE XVII 16
17.1. Lease Events of Default 16
17.2. Remedies 19
17.3. Waiver of Certain Rights 21
17.4. Power of Sale and Foreclosure 21
17.5. Remedies Cumulative 22
17.6. Lessee's Purchase Option During Lease Event
of Default or Lease Default 22
17.7. Guarantor's Performance 22
ARTICLE XVIII 22
18.1. Lessor's Right to Cure Lessee's Lease Defaults 22
ARTICLE XIX 23
19.1. Return of Property 23
<PAGE>
ARTICLE XX 23
20.1. Purchase Option 23
20.2 Restrictions on Purchase Option 23
ARTICLE XXI 24
21.1. Renewal 24
ARTICLE XXII 25
22.1. Option to Remarket 25
22.2. Expiration Date Purchase Option 26
22.3. Return of Properties 27
22.4. Shortfall Amount 28
22.5. Certain Obligations and Rights Continue 28
ARTICLE XXIII 28
23.1. Holding Over 28
ARTICLE XXIV 29
24.1. Risk of Loss 29
ARTICLE XXV 29
25.1. Subletting and Assignment 29
ARTICLE XXVI 29
26.1. Estoppel Certificates 29
ARTICLE XXVII 30
27.1. Right to Inspect 30
27.2. No Waiver 30
ARTICLE XXVIII 30
28.1. Acceptance of Surrender 30
ARTICLE XXIX 30
29.1. No Merger of Title 30
ARTICLE XXX 31
30.1. Notices 31
ARTICLE XXXI 32
31.1. Miscellaneous 32
31.2. Amendments and Modifications 32
<PAGE>
31.3. Successors and Assigns 32
31.4. Headings and Table of Contents 32
31.5. Counterparts 32
31.6. GOVERNING LAW 32
31.7. Priority 32
31.8. Original Lease 33
31.9. Memorandum of Lease 33
31.10. Limitations on Recourse against Lessor 33
EXHIBIT A Form of Lease Supplement
EXHIBIT B Form of Termination Notice
EXHIBIT C Insurance Requirements
<PAGE>
LEASE (including all Lease Supplements from time to time executed
and delivered, this "Lease"), dated as of June 25, 1996, between CREDIT
SUISSE LEASING 92A, L.P., a Delaware limited partnership, having its
principal office at 12 East 49th Street, New York, New York 10017, as
lessor (the "Lessor"), and HOME DEPOT U.S.A., INC., a Delaware
corporation, having its principal office at 2455 Paces Ferry Road,
Atlanta, Georgia 30339, as lessee (the "Lessee"),
W I T N E S S E T H:
A. WHEREAS, Lessor will purchase from one or more third parties
on each Property Closing Date, certain parcels of real property,
together with any Improvements thereon;
B. WHEREAS, Lessor desires to lease to Lessee, and Lessee
desires to lease from Lessor, each Property subject hereto; and
C. WHEREAS, Home Depot U.S.A., Inc., as Construction Agent, will
construct, or cause to be constructed, certain Improvements, which as
constructed will be the property of Lessor and, upon execution of a
Lease Supplement with respect thereto, will become part of the Property
subject to the terms of this Lease;
NOW, THEREFORE, in consideration of the foregoing, and of other
good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
1.1. Definitions; Rules of Usage. Capitalized terms used but not
otherwise defined in this Lease have the respective meanings specified
in Appendix 1 attached to this Lease and made a part hereof by this
reference and the rules of interpretation set forth in such Appendix 1
shall apply hereto.
ARTICLE II
2.1. Acceptance and Lease of Property. On each Property Closing
Date, Lessor, subject to the satisfaction or waiver of the conditions
set forth in Section 7 of the Participation Agreement, hereby agrees
(i) to accept delivery on such Property Closing Date of the Land to be
delivered on such Property Closing Date pursuant to the terms of the
Participation Agreement and to be subjected to this Lease, together
with any Improvements then existing thereon, and (ii) simultaneously to
lease to Lessee
<PAGE>
hereunder for the Term, Lessor's interest in such Land and in such
Improvements, together with, on and after the Completion Date with
respect thereto, any Improvements which thereafter may be constructed
thereon pursuant to the Construction Agency Agreement and this Lease,
and Lessee, subject to the satisfaction or waiver of the conditions set
forth in Section 7 of the Participation Agreement, hereby agrees,
commencing on such Property Closing Date, to lease from Lessor for the
Term, the Land together with any Improvements then existing thereon at
the time of the Property Closing Date with respect thereto, and,
following the Completion Date with respect thereto, such other
Improvements as may have been constructed thereon pursuant to the
Construction Agency Agreement and this Lease or which may thereafter be
constructed thereon.
2.2. Acceptance Procedure. Lessor hereby authorizes one or more
employees of Lessee, to be designated by Lessor as the authorized
representative or representatives of Lessor (such designation to be
evidenced by delivery of a power of attorney pursuant to Section 3.5 of
the Participation Agreement) to accept delivery of the Deed to each
Property to be subject hereto on the Property Closing Date for such
Property and to execute such other agreements, easements and other
documents in connection therewith. Lessor and Lessee hereby agree that
such acceptance of delivery of such Deed by such authorized
representative or representatives and the execution and delivery by
Lessee on each Property Closing Date for a Property to be subject
hereto of a Lease Supplement in the form of Exhibit A attached hereto
and made a part hereof by this reference (appropriately completed)
shall, without further act, constitute the irrevocable acceptance by
Lessee of that Property which is the subject thereof for all purposes
of this Lease and the other Operative Documents on the terms set forth
therein and herein, and that such Property, together with any
Improvements then existing thereon shall be deemed to be included in
the leasehold estate of this Lease as of such Property Closing Date and
any Improvements constructed thereon pursuant to the Construction
Agency Agreement and this Lease shall be deemed to be included in the
leasehold estate of this Lease as of the Completion Date at which time
Lessee shall execute and deliver to Lessor a Lease Supplement with
respect to such Improvements (appropriately completed).
2.3. Lease Term. The term of this Lease with respect to each
Property subject hereto (the "Term") shall begin on the respective
Lease Commencement Date for such Property and shall end on the Basic
Term Expiration Date, unless the Term is renewed or earlier terminated
in accordance with the provisions of this Lease.
ARTICLE III
3.1. Rents. (a) During the Term, Lessee hereby covenants and
agrees to pay Basic Rent on each Payment Date and on the Lease
Termination Date; provided that, except as set forth in the
Participation Agreement (including, without limitation, Section 6
thereof), Lessee shall pay no Basic Rent with respect to a Construction
Period Property during the Construction Period for such Property.
<PAGE>
(b) Basic Rent shall be due and payable in lawful money of the
United States and shall be paid by wire transfer of immediately
available funds on the due date therefor to such account or accounts at
such bank or banks or to such other Person or in such other manner as
Lessor or its assignee shall from time to time direct.
(c) Neither Lessee's inability or failure to take possession of
all or any portion of any Property when acquired by Lessor pursuant to
Section 2.2, nor Lessor's inability or failure to deliver all or any
portion of any Property to Lessee on or before the applicable Property
Closing Date or Completion Date, as the case may be, whether or not
attributable to any act or omission of Lessee or any act or omission of
Lessor, or for any other reason whatsoever, shall delay or otherwise
affect Lessee's obligation to pay Rent for such Property in accordance
with the terms of this Lease.
3.2. Supplemental Rent. Lessee shall pay to Lessor or the Person
entitled thereto any and all Supplemental Rent promptly as the same
shall become due and payable, and if Lessee fails to pay any
Supplemental Rent, Lessor shall have all rights, powers and remedies
provided for herein and provided for by law or equity or otherwise in
the case of nonpayment of Basic Rent. Lessee shall pay to Lessor, as
Supplemental Rent, among other things, on demand, to the extent
permitted by applicable Requirements of Law, interest at the applicable
Overdue Rate (i) on any installment of Basic Rent not paid within five
(5) Business Days after the date when due (it being understood that
Lessee shall pay interest on any portion of Lender Basic Rent not paid
when due at the interest rate on the Loans for such five (5) Business
Day period and interest on any portion of Lessor Basic Rent not paid
when due at the Certificate Rate for such five (5) Business Day period
unless such Basic Rent is not paid by the end of such five (5) Business
Day period in which event interest shall be deemed to have accrued on
such overdue amounts at the Overdue Rate since the due date thereof)
for the period for which the same shall be overdue and, (ii) on any
payment of Supplemental Rent not paid when due or, if no due date is
set forth, within five (5) Business Days after demand for the period
from the due date or, if no due date is set forth, five (5) Business
Days after the date of any such demand, as the case may be, until the
same shall be paid. The expiration or other termination of Lessee's
obligations to pay Basic Rent hereunder shall not limit or modify the
obligations of Lessee with respect to Supplemental Rent. Unless
expressly provided otherwise in this Lease, in the event of any failure
on the part of Lessee to pay and discharge any Supplemental Rent as and
when due, Lessee shall also promptly pay and discharge any fine,
penalty, interest or cost which may be assessed or added for nonpayment
or late payment of such Supplemental Rent, all of which shall also
constitute Supplemental Rent.
3.3. Method of Payment. Each payment of Rent shall be made by
Lessee in immediately available funds prior to 2:00 p.m. New York time
at the place of payment in funds consisting of lawful currency of the
United States of America, unless such scheduled date shall not be a
Business Day, in which case such payment shall be made on the next
succeeding Business Day. Payments received after 2:00 p.m. New York
time shall be deemed received on the next succeeding Business Day.
<PAGE>
ARTICLE IV
4.1. Utility Charges. Lessee shall pay or cause to be paid all
charges for electricity, power, gas, oil, water, telephone, sanitary
sewer service and all other rents and utilities used in or on a
Property subject hereto during the Term. Lessee shall be entitled to
receive any credit or refund with respect to any utility charge paid by
Lessee and the amount of any credit or refund received by Lessor on
account of any utility charges paid by Lessee, net of the costs and
expenses incurred by Lessor in obtaining such credit or refund, shall
be promptly paid over to Lessee. All charges for utilities imposed
with respect to a Property for a billing period during which this Lease
expires or terminates shall be adjusted and prorated on a daily basis
between Lessor and Lessee, and each party shall pay or reimburse the
other for each party's pro rata share thereof.
ARTICLE V
5.1. Quiet Enjoyment. Subject to the rights of Lessor contained
in Article XVII and Section 27.1 of this Lease, Lessee shall peaceably
and quietly have, hold and enjoy each Property subject hereto for the
Term, free of any claim or other action by Lessor or anyone rightfully
claiming by, through or under Lessor (other than Lessee or Guarantor)
with respect to any matters arising from and after the applicable Lease
Commencement Date. Such right of quiet enjoyment is independent of,
and shall not affect Lessor's rights otherwise to initiate legal action
to enforce, the obligations of Lessee under this Lease.
ARTICLE VI
6.1. Net Lease. This Lease shall constitute a net lease and,
notwithstanding any provision of this Lease or any other Operative
Document to the contrary, the obligation of the Lessee to pay Rent as
and when due is absolute, irrevocable and unconditional. Any present or
future Applicable Law to the contrary notwithstanding, this Lease shall
not terminate, nor shall Lessee be entitled to any abatement,
suspension, deferment, reduction, set off, counterclaim, or defense
with respect to the Rent, nor shall the obligations of Lessee hereunder
be affected (except as expressly herein permitted or by performance of
its obligations hereunder) by reason of: (i) any defect in the
condition, merchantability, design, construction, quality or fitness
for use of any Property or any part thereof, or the failure of any
Property (or any part thereof) to comply with all Requirements of Law,
including any inability to occupy or use any Property (or any part
thereof) by reason of such non-compliance; (ii) any damage to, removal,
abandonment, salvage, loss, contamination of or Release from, scrapping
or destruction
<PAGE>
of or any requisition or taking of any Property or any part thereof;
(iii) any restriction, prevention or curtailment of or interference
with any use of any Property or any part thereof including eviction;
(iv) any defect in title to or rights to any Property or any Lien on
such title or rights or on any Property or any part thereof; (v) any
change, waiver, extension, indulgence or other action or omission or
breach in respect of any obligation or liability of or by Lessor (or
any partner thereof), the Agent Bank, the Facility Lender or any
Lender; (vi) any bankruptcy, insolvency, reorganization, composition,
adjustment, dissolution, liquidation or other like proceedings relating
to Lessee, Lessor (or any partner thereof), the Agent Bank, any Lender,
the Facility Lender or any other Person, or any action taken with
respect to this Lease by any trustee or receiver of Lessee, Lessor (or
any partner thereof), the Agent Bank, any Lender, the Facility Lender
or any other Person, or by any court, in any such proceeding; (vii) any
claim that Lessee has or might have against any Person, including,
without limitation, Lessor, any vendor, manufacturer, contractor of or
for any Property or any part thereof, Facility Lender, Agent Bank or
any Lender; (viii) any failure on the part of Lessor to perform or
comply with any of the terms of this Lease, any other Operative
Document or of any other agreement; (ix) any invalidity or
unenforceability or illegality or disaffirmance of this Lease against
or by Lessee or any provision hereof or any of the other Operative
Documents or any provision of any thereof; (x) the impossibility or
illegality of performance by Lessee, Lessor or both; (xi) any action by
any court, administrative agency or other Governmental Authority; (xii)
any restriction, prevention or curtailment of or interference with the
construction on or any use of any Property or any part thereof; or
(xiii) any other cause or circumstances whether similar or dissimilar
to the foregoing and whether or not Lessee shall have notice or
knowledge of any of the foregoing. The parties intend that the
obligations of Lessee hereunder shall be covenants and agreements that
are separate and independent from any obligations of Lessor hereunder
and the obligations of Lessee shall continue unaffected unless such
obligations shall have been modified or terminated in accordance with
an express provision of this Lease. Except as specifically set forth
in Articles XVI or XX of this Lease or Section 17.6 hereof, this Lease
shall be noncancellable by Lessee for any reason whatsoever and Lessee,
to the extent now or hereafter permitted by any applicable Requirement
of Law, waives all rights now or hereafter conferred by any applicable
Requirement of Law or otherwise to quit, terminate or surrender this
Lease, or to any diminution, abatement or reduction of Rent payable by
Lessee hereunder. Each payment of Rent made by Lessee hereunder shall
be final and to the fullest extent permitted by applicable Requirements
of Law, Lessee agrees that Lessee shall not seek or have any right to
recover all or any part of such payment from Lessor, the Facility
Lender, Agent Bank or any Lender or any party to any agreements related
thereto for any reason whatsoever. All covenants, agreements and
undertakings of the Lessee herein shall be performed at its cost,
expense and risk unless expressly otherwise stated. WITHOUT DEROGATION
OF THE PROVISIONS OF ARTICLE VIII OF THIS LEASE, THIS LEASE (AND THE
PROVISIONS HEREOF) IS INTENDED TO SUPERSEDE IN ALL RESPECTS THE
PROVISIONS OF, THE RIGHTS GRANTED UNDER, AND THE OBLIGATIONS, IF ANY,
IMPOSED BY, ARTICLE 2A OF THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN
ANY JURISDICTION, AND, TO THE FULLEST EXTENT NOW OR HEREAFTER PERMITTED
BY ALL REQUIREMENTS OF LAW, THE LESSEE HEREBY WAIVES ALL OF ITS RIGHTS
AND REMEDIES UNDER SUCH ARTICLE 2A, AND THE LESSEE HEREBY ACKNOWLEDGES
AND AGREES
<PAGE>
THAT THE FOREGOING HAS BEEN NEGOTIATED AND IS INTENDED TO BE A COMPLETE
EXCLUSION AND NEGATION OF ALL REPRESENTATIONS, WARRANTIES (INCLUDING,
WITHOUT LIMITATION, THOSE OF FITNESS FOR A PARTICULAR PURPOSE AND OF
MERCHANTABILITY), OBLIGATIONS AND DUTIES, EXPRESS OR IMPLIED, IMPOSED
ON THE LESSOR UNDER SUCH ARTICLE 2A. Without derogation of the
absolute and unconditional nature of the Lessee's obligations hereunder
as set forth above in this Section 6.1, Lessee shall have the right to
exercise other remedies available to Lessee at law, by contract or in
equity upon the breach of this Lease or any other Operative Document by
any other party hereto or thereto but such exercise shall not be
inconsistent with any of the foregoing and shall not affect the
absolute and independent nature of the Lessee's covenants hereunder as
set forth above.
ARTICLE VII
7.1 Ownership of the Property. Lessor and Lessee intend that (i)
for financial accounting purposes with respect to Lessee (A) this Lease
will be treated as an "operating lease" pursuant to Statement of
Financial Accounting Standards No. 13, as amended, (B) Lessor will be
treated as the owner and lessor of the Property and (C) Lessee will be
treated as the lessee of the Properties, but (ii) for federal and all
state and local income tax purposes, Lessee will be treated as the
owner of the Properties and will be entitled to all tax benefits
ordinarily available to an owner of property like the Properties for
such tax purposes.
7.2. Use of Properties. Prior to the relevant Completion Date,
the Improvements on each Property (other than Improvements existing on
the Property on the Property Acquisition Date) shall be constructed and
utilized in accordance with the terms of the Construction Agency
Agreement and the other Operative Documents and shall not be part of
the leasehold estate created hereby. Lessee or its sublessees may use
the Properties or any part thereof for any lawful purpose. Lessee
shall not commit or permit any waste of the Properties subject hereto
or any part hereof; provided that, nothing set forth herein shall
prevent the removal of Improvements existing in a Property on the
Property Acquisition Date in connection with the construction of a
Facility on such Property pursuant to the Construction Agency
Agreement. Subject to the foregoing and the other provisions of this
Lease and the Operative Documents, the Lessee shall have no obligation
to occupy or use any Property.
ARTICLE VIII
8.1. Condition of the Property. LESSEE ACKNOWLEDGES AND AGREES
THAT ALTHOUGH LESSOR WILL OWN AND HOLD TITLE TO THE PROPERTIES AND
IMPROVEMENTS, LESSOR IS NOT RESPONSIBLE FOR THE DESIGN, DEVELOPMENT,
BUDGETING OR CONSTRUCTION OF THE
<PAGE>
IMPROVEMENTS OR ANY ALTERATIONS OR MODIFICATIONS. LESSEE FURTHER
ACKNOWLEDGES AND AGREES THAT IT IS RENTING EACH PROPERTY SUBJECT HERETO
"AS IS" WITHOUT REPRESENTATION, WARRANTY OR COVENANT (EXPRESS OR
IMPLIED) BY LESSOR, THE AGENT BANK, THE FACILITY LENDER OR ANY LENDER
AND IN EACH CASE SUBJECT TO (A) THE EXISTING STATE OF TITLE (INCLUDING,
WITHOUT LIMITATION, PERMITTED EXCEPTIONS), (B) THE RIGHTS OF ANY
PARTIES IN POSSESSION THEREOF, (C) ANY STATE OF FACTS WHICH AN ACCURATE
SURVEY OR PHYSICAL INSPECTION MIGHT SHOW, AND (D) VIOLATIONS OF ANY
REQUIREMENTS OF LAW WHICH MAY EXIST ON THE DATE HEREOF. NEITHER LESSOR
NOR THE AGENT BANK NOR ANY LENDER NOR THE FACILITY LENDER HAS MADE OR
SHALL BE DEEMED TO HAVE MADE ANY REPRESENTATION, WARRANTY OR COVENANT
(EXPRESS OR IMPLIED) OR SHALL BE DEEMED TO HAVE ANY LIABILITY
WHATSOEVER AS TO THE TITLE, VALUE, HABITABILITY, USE, CONDITION,
DESIGN, OPERATION, OR FITNESS FOR USE OF ANY PROPERTY (OR ANY PART
THEREOF), OR ANY OTHER REPRESENTATION, WARRANTY OR COVENANT WHATSOEVER,
EXPRESS OR IMPLIED, WITH RESPECT TO ANY PROPERTY (OR ANY PART THEREOF)
AND NEITHER LESSOR NOR THE AGENT BANK NOR ANY LENDER NOR THE FACILITY
LENDER SHALL BE LIABLE FOR ANY LATENT, HIDDEN, OR PATENT DEFECT THEREIN
OR THE FAILURE OF ANY PROPERTY, OR ANY PART THEREOF, TO COMPLY WITH ANY
REQUIREMENT OF LAW.
ARTICLE IX
9.1. Compliance with Requirements of Law and Insurance
Requirements. Subject to the terms of Article XIII relating to
permitted contests, Lessee, at its sole cost and expense, shall (a)
comply with all Requirements of Law (including all Environmental Laws)
relating to the Properties subject hereto, including the use,
construction, operation, maintenance, repair and restoration thereof
and whether or not compliance therewith shall require structural or
extraordinary changes in the Improvements or interfere with the use of
enjoyment of the Properties, (b) procure, maintain and comply with all
licenses, permits, orders, approvals, consents and other authorizations
required for the construction, use, maintenance and operation of the
Properties subject hereto and for the use, operation, maintenance,
repair and restoration of the Improvements (except where the failure to
comply pursuant to clause (a) or to procure or maintain such licenses
and other authorizations pursuant to clause (b) would not have a
Material Adverse Effect), and (c) comply in all material respects with
all Insurance Requirements relating to the Properties.
<PAGE>
ARTICLE X
10.1. Maintenance and Repair. (a) Lessee, at its sole cost
and expense, shall, during the Term, maintain each Property subject
hereto in good condition (ordinary wear and tear excepted) and make all
necessary repairs thereto, of every kind and nature whatsoever, whether
interior or exterior, structural or nonstructural, foreseen or
unforeseen, in each case, in compliance in all material respects with
all Insurance Requirements and with all Requirements of Law (except
where the failure to comply would not have a Material Adverse Effect)
and on a basis materially and reasonably consistent with the operation
and maintenance of properties by Lessee comparable in type, age, use,
size and location to the applicable Property.
(b) Lessor shall under no circumstances be required to build any
improvements on any Property, make any repairs, replacements,
alterations or renewals of any nature or description to any Property,
make any expenditure whatsoever in connection with this Lease or
maintain any Property in any way. Lessor shall not be required to
maintain, repair or rebuild all or any part of any Property, and Lessee
waives the right to (i) require Lessor to maintain, repair, or rebuild
all or any part of any Property, or (ii) make repairs at the expense of
Lessor pursuant to any Requirement of Law, Insurance Requirement,
contract, agreement, or covenant, condition or restriction at any time
in effect.
ARTICLE XI
11.1. Modifications; Substitutions and Replacements. Lessee,
at its sole cost and expense, may at any time and from time to time,
without notice to or the consent of the Lessor, make alterations,
renovations, improvements and additions to any Property subject hereto
(with the understanding that the construction of a Facility on the
Property shall be subject to the Construction Agency Agreement and such
Improvements shall not be deemed to be a part of the leasehold estate
created hereby until the Completion Date) or any part thereof and
substitutions and replacements thereof in the ordinary course of
business (collectively, "Modifications"); provided, that: (i) except
for any Modification required to be made pursuant to a Requirement of
Law or an Insurance Requirement (a "Required Modification"), no
Modification shall materially impair the value, utility, operation or
remaining useful life of any Property subject hereto or any part
thereof from that which existed immediately prior to such Modification
(assuming the Lessee was in full compliance with its obligations
hereunder prior to making such Modification); (ii) the Modification
shall be done expeditiously and in a good and workmanlike manner; (iii)
Lessee shall comply in all material respects with all Requirements of
Law (including all Environmental Laws) and Insurance Requirements
applicable to the Modification, including the obtaining of all permits
and certificates of occupancy; (iv) subject to the terms of Article
XIII relating to
<PAGE>
permitted contests, Lessee shall pay all costs and expenses and shall
discharge (or cause to be insured or bonded over to Lessor's and Agent
Bank's satisfaction by a title insurance company or bonding company
acceptable to Lessor) within sixty (60) days after Lessee has received
from any Person written notice that the same shall have been filed (or
otherwise become effective) any Liens arising with respect to the
Modification; and (v) such Modifications shall comply with Sections 7.1
and 10.1. All Modifications (other than those which are not Required
Modifications and that may be readily removed without materially
impairing the value, utility, operation or remaining useful life of the
applicable Property) shall remain part of the realty and shall be
subject to this Lease, and title thereto shall immediately vest in
Lessor. So long as no Lease Event of Default has occurred and is
continuing, Lessee may place upon any Property any inventory, trade
fixtures, machinery, equipment or other property belonging to Lessee or
third parties and may remove the same at any time during the Term;
provided, that removal of such inventory, trade fixtures, machinery,
equipment or other property does not materially impair the value,
utility, operation or remaining useful life of the applicable Property.
Notwithstanding the foregoing, Lessee shall keep and maintain at each
Property and shall not remove from any Property any Equipment financed
or otherwise paid for (directly or indirectly) by Lessor, the Agent
Bank, the Facility Lender or any Lender pursuant to the Participation
Agreement.
ARTICLE XII
12.1. Warranty of Title. (a) Lessee agrees that, except as
otherwise provided herein and subject to the terms of Article XIII
relating to permitted contests and except for Permitted Liens, Lessee
shall not directly or indirectly create or allow to remain, and shall
promptly (and in any event within sixty (60) days after notice thereof
is received by Lessee from any Person), discharge at its sole cost and
expense, any Lien, defect, attachment, levy or claim upon any Property
(or any part thereof) subject to this Lease or any Modifications or any
Lien, attachment, levy or claim with respect to the Rent. Lessee shall
promptly notify Lessor in the event it receives or acquires knowledge
that a Lien other than a Permitted Lien has occurred or been filed or
otherwise become effective with respect to a Property subject hereto
which Lien is not being promptly removed by Lessee pursuant to the
preceding sentence and which Lien secures a Claim in excess of
$3,000,000.
(b) Nothing contained in this Lease shall be construed as
constituting the consent or request of Lessor, expressed or implied, to
or for the performance by any contractor, mechanic, laborer,
materialman, supplier or vendor of any labor or services or for the
furnishing of any materials for any construction, alteration, addition,
repair or demolition of or to any Property or any part thereof. NOTICE
IS HEREBY GIVEN THAT LESSOR IS NOT AND SHALL NOT BE LIABLE FOR ANY
LABOR, SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO LESSEE, OR
TO ANYONE HOLDING A PROPERTY OR ANY PART THEREOF THROUGH OR UNDER
LESSEE, AND THAT NO MECHANIC'S OR OTHER LIENS FOR ANY SUCH LABOR,
SERVICES OR MATERIALS SHALL ATTACH TO OR AFFECT THE INTEREST OF LESSOR
IN AND TO ANY PROPERTY.
<PAGE>
12.2. Grants and Releases of Easements. (a) Provided that no
Lease Event of Default shall have occurred and be continuing, Lessor
hereby consents in each instance to the following actions by Lessee, in
the name and stead of Lessor and as Lessor's attorney-in-fact, but at
Lessee's sole cost and expense: (i) the granting of easements,
licenses, rights-of-way and other rights and privileges in the nature
of easements reasonably necessary or desirable for the use, repair, or
maintenance of any Property subject hereto as herein provided; (ii) the
release of existing easements or other rights in the nature of
easements which are for the benefit of any Property subject hereto;
(iii) the dedication or transfer of unimproved portions of any Property
subject hereto for road, highway or other public purposes; (iv) the
execution of petitions to have a Property subject hereto annexed to any
municipal corporation or utility district; (v) the execution of any
covenants and restrictions affecting any Property subject hereto or
amendments or modifications thereto; and (vi) the execution or release
of any similar agreements; provided, however, that in each case Lessee,
prior to taking any such action, shall have delivered to Lessor an
Officer's Certificate stating that (x) such grant, release, dedication,
transfer, annexation, or amendment or similar agreement does not
materially impair the value, utility, operation or remaining useful
life of the applicable Property, (y) such grant, release, dedication,
transfer, annexation or amendment will not cause the applicable
Property or any portion thereof to fail to comply in any respect with
the provisions of this Lease or any other Operative Documents or in any
material respect with any Requirements of Law (including, without
limitation, all applicable zoning, planning, building and subdivision
ordinances, all applicable restrictive covenants and all applicable
architectural approval requirements), and (z) Lessee shall timely pay
and perform any obligations of Lessor under such grant, release,
dedication, transfer, annexation or amendment during the Term. Without
limiting the effectiveness of the foregoing or the power of attorney
granted to Lessee pursuant to subsection (b), provided that no Lease
Event of Default shall have occurred and be continuing, Lessor shall,
upon the request of Lessee, and at Lessee's sole cost and expense,
promptly execute and deliver any instruments necessary or appropriate
to confirm any such grant, release, dedication, transfer, annexation or
amendment to any Person permitted under this Section 12.2.
(b) Unless and until a Lease Event of Default has occurred and is
continuing, the Lessor does, solely for the purposes stated in Section
12.2(a), hereby irrevocably make, constitute and appoint Lessee and any
of its officers or designees its true and lawful attorney-in-fact, with
full power and authority to do any and all acts necessary or proper to
carry out the intent of this Section 12.2, including without
limitation, the right, power and authority (i) to take such actions
described in Section 12.2(a), and (ii) to execute such documents and
agreements as the Lessee may reasonably determine are necessary for the
purposes of carrying out the intent of this Section 12.2, and the
Lessor hereby ratifies and confirms all that Lessee as such attorney-in-
fact or its substitute undertakes by virtue of this power of attorney,
which power is coupled with an interest and is irrevocable Lessor
hereby agrees to execute such additional powers of attorney in
recordable form as may be necessary for the Lessee to carry out the
intent of this Section 12.2.
<PAGE>
12.3 Land Release. Provided that no Lease Event of Default shall
have occurred and be continuing, Lessee may make a written request (a
"Release Request") of Lessor, to enter into a supplement or amendment
to this Lease, changing the description of any Property to exclude
either a Modification which is not structurally integrated with the
existing Improvements or any unimproved portion of Land (a "Release
Portion"), and transferring such Release Portion to Lessee (or Lessee's
designee) by special or limited warranty deed (or like instrument), and
Lessor will not unreasonably withhold its consent to such Release
Request, provided that such Release Request (i) does not (x) materially
impair the useful life, operation or utility of the Property (or the
Improvements located or to be constructed thereon) to which such
Release Request relates, or (y) relate to a transfer the net proceeds
of which, when aggregated with the net proceeds of all transfers
previously made pursuant to Release Requests previously delivered
hereunder, exceed the greater of (x) $3,000,000 and (y) ten percent
(10%) of the Lease Balance, and (ii) arises out of an arms-length sale
to a non-affiliated third party.
ARTICLE XIII
13.1. Permitted Contests Other than in Respect of Indemnities.
If, to the extent and for so long as (a) a test, challenge, appeal or
proceeding for review of any Requirement of Law relating to any
Property subject hereto shall be prosecuted diligently and in good
faith in appropriate proceedings by Lessee or (b) compliance with such
Requirement of Law shall have been excused or exempted by a valid
nonconforming use, permit, waiver, extension or forbearance, Lessee
shall not be required to comply with such Requirement of Law but only
if and so long as any such test, challenge, appeal, proceeding or
noncompliance shall not, in the reasonable opinion of Lessor and the
Agent Bank, involve any meaningful risk of (1) foreclosure, forfeiture
or loss of such Property or any material part thereof, or any part of
Rent or (2) criminal liability or material civil liability being
imposed on Lessor, Agent Bank, the Facility Lender or any Lender.
Lessee shall provide Lessor with notice of any contest of the type
described above involving Claims against Lessee or any Indemnitee in
excess of $3,000,000 in detail sufficient to enable Lessor to ascertain
whether such contest may have an effect of the type described above.
Lessor will not be required to join in any proceedings pursuant to
this Section 13.1 unless a provision of any Applicable Laws requires,
or, in the good faith opinion of Lessee, it is helpful to the
prosecution of such contest, that such proceedings be brought by or in
the name of Lessor; and in that event Lessor will join in the
proceedings or permit them or any part thereof to be brought in its
name if and so long as no Lease Event of Default has occurred and is
continuing and provided that, Lessee pays all related expenses and
indemnifies Lessor (and its partners), Facility Lender and the Agent
Bank to the reasonable satisfaction of the such indemnitees.
ARTICLE XIV
14.1. Insurance. During the Term for each Property subject
hereto, Lessee shall procure and carry, or cause to be procured and
carried at Lessee's sole cost and expense, insurance with respect to
its business and the Properties in accordance with the
<PAGE>
requirements of Exhibit "C" hereto. Lessee shall, in the operation of
the Properties subject hereto, comply with the applicable workers'
compensation laws and protect Lessor against any liability under such
laws. In the event that Lessee is no longer entitled to self-insure
pursuant to Section 14.3, Lessee shall furnish the Lessor and the Agent
Bank certificates showing the insurance required under this Section
14.1 to be in effect and naming Lessor (and its partners), the Facility
Lender, the Lenders and Agent Bank as additional insureds and the
property insurance required hereunder shall contain a standard form
mortgage endorsement in favor of the Agent Bank and shall name the
Agent Bank as loss payee.
14.2. Risk of Loss. During the Term for each Property
subject hereto, Lessee shall bear all risk of loss (including any
Casualty or Significant Casualty) with respect to the Properties or any
portion thereof.
14.3. Self-Insurance. Notwithstanding any provision of this
Article XIV to the contrary, as long as Guarantor maintains a
Consolidated Net Worth in excess of $1,000,000,000, the Lessee may self-
insure for any liabilities referenced herein in amounts and on terms no
less favorable than employed by Lessee with respect to similar
properties that it owns and leases, and the Lessor shall be the
beneficiary of such self-insurance as though and to the same extent as
if the insurance were provided by means of a policy required herein.
ARTICLE XV
15.1 Casualty and Condemnation. (a) Subject to the provisions of
this Article XV and Article XVI (in the event Lessee delivers, or is
obligated to deliver, a Termination Notice), and unless a Lease Event
of Default has occurred and is continuing, Lessee shall be entitled to
receive (and Lessor hereby irrevocably assigns to Lessee all of
Lessor's right, title and interest in) any award, compensation or
insurance proceeds to which Lessee or Lessor may become entitled by
reason of their respective interests in a Property subject hereto (i)
if all or a portion of such Property is damaged or destroyed in whole
or in part by a Casualty or (ii) if the use, access, occupancy,
easement rights or title to such Property or any part thereof, is the
subject of a Condemnation; provided, however, if a Lease Event of
Default shall have occurred and be continuing, such award, compensation
or insurance proceeds shall be paid directly to the Agent Bank (or, if
the Loans and all other amounts owing under the Loan Agreement and all
amounts due and payable under the Liquidity Agreement have been fully
paid, to Lessor) or, if received by Lessee, shall be held in trust for
the Agent Bank or the Facility Lender (or, if the Loans and all other
amounts owing under the Loan Agreement and all amounts due and payable
under the Liquidity Agreement have been fully paid, for Lessor), and
shall be paid over by Lessee to the Agent Bank (or, if the Loans and
all other amounts owing under the Loan Agreement and all amounts due
and payable under the Liquidity Agreement have been fully paid, to
Lessor) and held in accordance with the terms of this paragraph (a).
All amounts held by Lessor or the Agent Bank or the Facility Lender
pursuant to this Section 15.1 on account
<PAGE>
of any award, compensation or insurance proceeds either paid directly
to Lessor or the Agent Bank or the Facility Lender or turned over to
Lessor or the Agent Bank shall be held as security for the performance
of Lessee's obligations hereunder, until restoration is complete and
all Lease Events of Default shall have been cured or waived by Lessor
and the Agent Bank, whereupon such amounts, to the extent not
previously applied to Lessee's obligations hereunder, shall be
delivered to Lessee.
(b) Lessee may appear in any proceeding or action to negotiate,
prosecute, adjust or appeal any claim for any award, compensation or
insurance payment on account of any such Casualty or Condemnation and
shall pay all expenses thereof. At Lessee's reasonable request, and at
Lessee's sole cost and expense, Lessor, Facility Lender and the Agent
Bank shall participate in any such proceeding, action, negotiation,
prosecution or adjustment. Lessor and Lessee agree that this Lease
shall control the rights of Lessor and Lessee in and to any such award,
compensation or insurance payment.
(c) In the event of a Casualty or receipt of notice by Lessee of
a Condemnation, in either case, impairing the value of any Property or
Properties by an amount in excess of $3,000,000, Lessee shall, not
later than thirty (30) days after such occurrence, deliver to Lessor
and the Agent Bank (i) an Officer's Certificate stating that (x) such
Condemnation is not a Significant Condemnation or that such Casualty is
not a Significant Casualty (as the case may be), (y) that this Lease
shall remain in full force and effect with respect to the applicable
Property, and (z) at Lessee's sole cost and expense, Lessee shall
promptly and diligently restore the applicable Property in accordance
with this Lease, or (ii) a Termination Notice with respect to such
Property pursuant to Section 16.1. If Lessee timely delivers the
Officer's Certificate described in clause (i) above, then this Lease
shall (subject to the terms and conditions hereof) remain in full force
and effect as to such Property, and Lessee shall, at Lessee's sole cost
and expense, promptly and diligently restore (by the date stated in
such Officer's Certificate) said Property pursuant to clause (d) below
and otherwise in accordance with this Lease. If Lessee timely delivers
the Termination Notice described in clause (ii) above or Lessee fails
to deliver either such Officer's Certificate or such Termination Notice
within such thirty (30) day period, a Significant Event shall
irrevocably be deemed to have occurred with respect to such Property,
and, in such event, this Lease shall terminate as to such Property (but
not as to any remaining Properties subject hereto) and Lessee shall
purchase such Property on the next Payment Date (or, if such Payment
Date is within fifteen (15) days of Lessor's receipt of such
Termination Notice or the expiration of such thirty (30) day period, as
the case may be, on the Payment Date next following such Payment Date)
pursuant to Section 16.1 hereof. Lessor shall promptly deliver any
notice of a Casualty or Condemnation received by Lessor to the Lessee
and the Agent Bank.
<PAGE>
(d) If pursuant to this Section 15.1, this Lease shall continue
in full force and effect following a Casualty or Condemnation with
respect to the affected Property, Lessee shall, at its sole cost and
expense (and, without limitation, if any award, compensation or
insurance payment is not sufficient to restore such Property in
accordance with this paragraph, Lessee shall pay the shortfall),
promptly and diligently repair any damage to the applicable Property
caused by such Casualty or Condemnation in conformity with the
requirements of Sections 10.1 and 11.1 and other provisions of this
Lease using the as-built Plans and Specifications for the applicable
Property (as modified to give effect to any subsequent Modifications,
any Condemnation affecting the Property and all applicable Requirements
of Law and as modified as reasonably requested by Lessee so long as
such modifications do not materially impair the utility, operation,
function, value or remaining useful life of the Property) so as to
restore the applicable Property to the same or better condition,
operation, function and value as existed immediately prior to such
Casualty or Condemnation (assuming the Lessee was in compliance with
the terms and conditions hereunder immediately prior to such Casualty
or Condemnation). In such event, title to the applicable Property
shall remain with Lessor. Upon completion of such restoration, Lessee
shall furnish Lessor an Officer's Certificate confirming that such
restoration has been completed pursuant to this Lease.
(e) In no event shall a Casualty, Condemnation or Environmental
Violation with respect to which this Lease remains in full force and
effect under this Article XV affect Lessee's obligations to pay Rent
pursuant to Section 3.1 or to perform its obligations and pay any
amounts due on or prior to the Expiration Date.
15.2. Environmental Matters. Promptly upon Lessee's actual
knowledge of the presence of Hazardous Substances in any portion of any
Property subject hereto in concentrations and conditions that
constitute a Environmental Violation which would reasonably be expected
to result in an Environmental Claim or in an impairment in the value
of any Property or Properties, in either case, in excess of $1,500,000,
Lessee shall notify Lessor and Agent Bank in writing of such condition.
In the event of such Environmental Violation, Lessee shall, not later
than thirty (30) days after Lessee has actual knowledge of such
Environmental Violation, either, if such Environmental Violation is a
Significant Event, deliver to Lessor and the Agent Bank an Officer's
Certificate and a Termination Notice with respect to the applicable
Property pursuant to Section 16.1, or, if the cost to remediate such
Environmental Violation, together with any Environmental Claims against
Lessee or any Indemnitee arising therefrom, will not cause the same to
be a Significant Event, at Lessee's sole cost and expense, promptly and
diligently undertake any response, clean up, remedial or other action
necessary to remove, cleanup or remediate the Environmental Violation
in accordance with the terms of Section 9.1. If Lessee does not
deliver a Termination Notice with respect to such Property pursuant to
Section 16.1, Lessee shall, upon completion of remedial action by
Lessee, deliver to Lessor an Officer's Certificate describing the
Environmental Violation and the actions taken by Lessee (or its agents)
in response to such Environmental Violation, and containing a statement
that the Environmental Violation has been
<PAGE>
remedied in substantial compliance with applicable Environmental Law.
Each such Environmental Violation shall be remedied prior to the
Expiration Date. Nothing in this Article XV shall reduce or limit
Lessee's obligations under Section 14 of the Participation Agreement.
15.3. Notice of Environmental Matters. Promptly, but in any
event within ten (10) Business Days from the date Lessee has actual
knowledge thereof, Lessee shall provide to Lessor and Agent Bank
written notice of any pending or threatened claim, action or proceeding
involving any Environmental Law or any Release on or in connection with
any Property subject hereto which would reasonably be expected to
result in an Environmental Claim against Lessee or an Indemnitee or an
impairment in the value of any Property or Properties, in either case
in excess of $1,500,000. All such notices shall describe in reasonable
detail the nature of the claim, action or proceeding and Lessee's
proposed response thereto. In addition, Lessee shall provide to
Lessor, within ten (10) Business Days of receipt, copies of all
material written communications with any Governmental Authority
relating to any Environmental Law in connection with any Property
subject hereto. Lessee shall also promptly provide such detailed
reports of any such Environmental Claims as may reasonably be requested
by Lessor and the Agent Bank.
15.4. Economic Abandonment. If Lessee determines, in good
faith, that the continued operation of a Property subject hereto by
Lessee is no longer economically feasible for continued use in Lessee's
business or is surplus to its needs, Lessee may, on the next Payment
Date to occur after notice of such determination is delivered to Lessor
(the "Substitution Date"), either (i) purchase such Property for the
Property Balance with respect thereto, plus all accrued and unpaid
Rent for such Property (including Supplemental Rent), and Lessor shall
convey Lessor's interest in such Property to Lessee (or Lessee's
designee) in accordance with Section 19.1 and the Lease shall terminate
with respect to such Property, or (ii) substitute a Replacement
Property thereof pursuant to Section 16.3. In the event that Lessee
has not substituted a Replacement Property in accordance with Section
16.3 on or before such Payment Date, Lessee shall purchase such
affected Property on such Payment Date in accordance with the foregoing
clause (i).
ARTICLE XVI
16.1. Termination upon Certain Events. If either: (i) Lessee
or Lessor shall have received notice of a Condemnation, and Lessee
shall have delivered to Lessor an Officer's Certificate that such
Condemnation is a Significant Condemnation; or (ii) a Casualty occurs,
and Lessee shall have delivered to Lessor an Officer's Certificate that
such Casualty is a Significant Casualty; or (iii) an Environmental
Violation occurs or is discovered and Lessee shall have delivered to
Lessor an Officer's Certificate stating that, in the reasonable, good
faith judgment of Lessee, the cost to remediate the same will cause the
same to be a Significant Event; then, Lessee shall, simultaneously with
the delivery of the
<PAGE>
Officer's Certificate pursuant to the preceding clause (i), (ii) or
(iii), deliver a written notice in the form described in Section 16.2
(a) (a "Termination Notice") with respect to the affected Property.
16.2. Procedures. (a) A Termination Notice shall be in the
form of Exhibit B attached hereto and made a part hereof by this
reference and shall contain: (i) notice of termination of this Lease
with respect to the affected Property on the next occurring Payment
Date (unless such Payment Date is within fifteen (15) days of Lessor's
receipt of such Termination Notice, in which event such notice shall
specify the Payment Date next following such Payment Date) (the
"Termination Date"); and (ii) a binding and irrevocable agreement of
Lessee to pay the Property Balance, together with all accrued and
unpaid Rent, for such Property and purchase such Property on such
Termination Date or to substitute a Replacement Property pursuant to
Section 16.3.
(b) Unless the Lessee elects to substitute a Replacement Property
pursuant to Section 16.3, on each Termination Date (including, without
limitation, any Termination Date described in Section 15.l(c)), Lessee
shall pay to Lessor the Property Balance for the applicable Property,
plus all accrued and unpaid Rent for such Property (including
Supplemental Rent), and Lessor shall convey Lessor's interest in such
Property or the remaining portion thereof, if any, to Lessee (or
Lessee's designee) all in accordance with Section 19.1, as well as any
Net Proceeds with respect to the Casualty or Condemnation giving rise
to the termination of this Lease with respect to such Property
theretofore received by Lessor; provided, that if a Lease Event of
Default shall have occurred and be continuing, the Excess Proceeds, if
any, shall be paid to Lessor; provided, that, if upon receipt of the
Excess Proceeds, such Lease Event of Default is waived by the Lessor
and the Agent Bank, any remainder of such amount shall be paid to
Lessee.
16.3. Substitution Right. If a Significant Event has occurred
with respect to any Property, or Lessee has exercised its right with
respect to any Property pursuant to Section 15.4, in lieu of paying the
Property Balance with respect to such affected Property, Lessee may, on
the Termination Date or the Substitution Date, as applicable,
substitute therefor another Property on which the same type of Facility
is located as the affected Property (a "Replacement Property") with a
value, utility and remaining useful life at least equal to the value,
utility and remaining useful life of the affected Property immediately
before the Significant Event or Lessee's exercise of its right under
Section 15.4, as the case may be, assuming that such Property was in
the condition required by this Lease, provided that all of the
following conditions are met:
(i) all of the conditions precedent set forth in Section 7
of the Participation Agreement shall have been fulfilled with
respect to such Replacement Property as of the date of
substitution hereunder; and
(ii) Lessee shall deliver an Officer's Certificate to Lessor
stating that with respect to such Replacement Property, in
addition to the statements set forth in such
<PAGE>
Section 7, the Replacement Property has a value, utility and
remaining useful life at least equal to that of the Property being
replaced immediately prior to the Significant Event or Lessee's
exercise of its right under Section 15.4, as the case may be,
assuming that such Property was in the condition required by this
Lease and is of the same type of Facility as the affected
Property. Lessee shall pay, or reimburse Lessor, Facility Lender,
the Agent Bank and each Lender for, all reasonable costs and
expenses, including reasonable attorneys' fees and expenses,
actually incurred by Lessor, Facility Lender, the Agent Bank or
any Lender in connection with any such substitution.
On the date on which all of the foregoing conditions have been
met, Lessor shall convey Lessor's interest in the Property being
replaced, or the remaining portion thereof, if any, to Lessee (or
Lessee's designee), all in accordance with Section 19.1. Lessee's
obligation to pay all Rent due hereunder shall continue in full force
and effect notwithstanding any substitution of Property hereunder and
any such Replacement Property shall be deemed to have the same Property
Balance as the Property replaced thereby.
ARTICLE XVII
17.1. Lease Events of Default. The occurrence of any one or
more of the following events (whether such event shall be voluntary or
involuntary or come about or be effected by operation of law or
pursuant to or in compliance with any judgment, decree or order of any
court or any order, rule or regulation of any administrative or
governmental body) shall constitute a "Lease Event of Default":
(a) Lessee shall fail to make payment of (i) any Basic Rent
within five (5) Business Days after the same has become due and
payable or (ii) any Purchase Option Price, Property Balance, Lease
Balance or Residual Value Guarantee, including, without
limitation, amounts due pursuant to Section 16.2, 20.1, 22.1 or
22.2, after the same has become due and payable;
(b) Lessee shall fail to make payment of any Supplemental
Rent due and payable within five (5) Business Days after receipt
of notice thereof;
(c) Lessee shall fail to maintain the insurance required by
Article XIV hereof;
(d) Lessee or Guarantor shall fail to observe or perform any
term, covenant or condition of Lessee or Guarantor under this
Lease, the Participation Agreement or any other Operative Document
to which it is a party (other than those set forth in Section 17.1
(a), (b) or (c) hereof), or any representation or warranty of
Lessee or Guarantor set forth in this Lease or in any other
Operative Document or in any document entered into in connection
herewith or therewith or in any document, certificate or financial
or other
<PAGE>
statement delivered in connection herewith or therewith shall be
false or inaccurate in any material way, and such failure or
misrepresentation or breach of warranty shall remain uncured for a
period of thirty-five (35) days after the earlier of (i) Actual
Knowledge of the Lessee or Guarantor thereof or (ii) receipt of
written notice by the Lessee or Guarantor thereof; provided,
however, that (i) as to any breach by Lessee or Guarantor or
failure of Lessee or Guarantor to perform its obligations, if such
failure is (l) capable of being cured (other than by the payment
of money), (2) cannot be cured within thirty-five (35) days, and
(3) Lessee or Guarantor is at all times diligently and in good
faith pursuing the cure thereof, then the cure period for such
failure shall be extended for the period reasonably necessary for
Lessee to effect such cure, but in no event greater than two
hundred seventy (270) days, and (ii) as to any such
misrepresentation or breach of warranty, if (l) such
misrepresentation or breach of warranty is susceptible of cure
(other than by the payment of money), and (2) is so cured within
thirty-five (35) days after the earlier of Lessee or Guarantor (i)
having Actual Knowledge thereof or (ii) receiving the written
notice described above, such misrepresentation or breach shall not
constitute a Lease Event of Default hereunder;
(e) an Event of Default other than a Lease Event of Default
shall have occurred and be continuing;
(f) the Guarantor or Lessee shall fail to make any payment
in respect of Indebtedness (exclusive of any intercompany
Indebtedness) outstanding in an aggregate amount in excess of
$50,000,000 when due or within any applicable grace period; or
(g) any event or condition shall occur which results in the
acceleration of the maturity of Indebtedness for money borrowed
outstanding in an aggregate amount in excess of $50,000,000 of the
Guarantor or Lessee (including, without limitation, any required
mandatory prepayment or "put" of such Indebtedness to the
Guarantor or Lessee) or enables the holders of such Indebtedness
or commitment or any Person acting on such holders' behalf to
accelerate the maturity thereof or terminate any such commitment
(including, without limitation, any required mandatory prepayment
or "put" of such Indebtedness of the Guarantor or Lessee); or
(h) the Guarantor or Lessee shall commence a voluntary case
or other proceeding seeking liquidation, reorganization or other
relief with respect to itself or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part
of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an
involuntary case or other proceeding commenced against it, or
shall make a general assignment for the benefit of creditors, or
shall fail generally to pay its debts as they become due, or shall
take any corporate action to authorize any of the foregoing; or
<PAGE>
(i) an involuntary case or other proceeding shall be
commenced against the Guarantor or Lessee seeking liquidation,
reorganization or other relief with respect to it or its debts
under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or
any substantial part of its property, and such involuntary case or
other proceeding shall remain undismissed and unstayed for a
period of ninety (90) days; or an order for relief shall be
entered against the Guarantor or Lessee under the federal
bankruptcy laws as now or hereafter in effect; or
(j) one or more judgments or orders for the payment of money
in an aggregate amount in excess of $25,000,000 shall be rendered
against the Guarantor or Lessee and such judgment or order shall
continue unsatisfied and unstayed for a period of sixty (60) days;
or
(k) one or more federal tax Liens securing an aggregate
amount in excess of $25,000,000 shall be filed against the
Guarantor or Lessee under the Code and such Lien shall remain
undischarged for a period of twenty-five (25) days after the date
of filing;
(l) any Lien granted under any Security Document shall, in
whole or in part terminate, cease to be effective or lose its
priority, except (i) as expressly contemplated by the Operative
Documents, or (ii) as the result of an act or omission of the
Lessor, the Facility Lender, the Agent Bank or any Lender;
provided, however, that, no Lease Event of Default shall be deemed
to have occurred hereunder unless such event affects a material
item of collateral subject to the Security Documents and such
termination, loss of effectiveness or priority shall have
continued for a period of thirty (30) days after notice to the
Lessee from any Person; or
(m) the Guaranty shall terminate, or shall cease to be
effective or to be the legal, valid and binding obligation of the
Guarantor or Guarantor shall deny or disaffirm its obligations
thereunder.
17.2. Remedies. Upon the occurrence of any Lease Event of
Default and at any time thereafter during the continuance thereof,
Lessor may do one or more of the following as Lessor in its sole
discretion shall determine, without limiting any other right or remedy
Lessor may have on account of such Lease Event of Default:
(a) Lessor may, by notice to Lessee, rescind or terminate this
Lease as to any Property or all of the Properties subject hereto as of
the date specified in such notice; however, (A) no reletting, reentry
or taking of possession of any or all of the Properties (or any portion
thereof) by Lessor will be construed as an election on Lessor's part to
terminate this Lease unless a written notice of such intention is given
to Lessee, (B) notwithstanding any reletting, reentry or taking of
possession, Lessor may at any time thereafter elect to terminate this
Lease, and (C) no act or thing done by Lessor or any of its agents,
representatives or employees and no agreement accepting a surrender of
the Properties shall be valid unless the same be made in writing and
<PAGE>
executed by Lessor;
(b) Lessor may (i) demand that Lessee, and Lessee shall upon the
written demand of Lessor, return any or all of the Properties (or any
portion thereof) subject hereto promptly to Lessor in the manner and
condition required by, and otherwise in accordance with all of the
provisions of, Articles IX and X hereof as if the Properties were being
returned at the end of the Term, and Lessor shall not be liable for the
reimbursement of Lessee for any costs and expenses incurred by Lessee
in connection therewith and (ii) without prejudice to any other remedy
which Lessor may have for possession of the Property, and to the extent
and in the manner permitted by any applicable Requirement of Law, enter
upon the Property and take immediate possession of (to the exclusion of
Lessee) any or all of the Properties (or any portion thereof) and expel
or remove Lessee and any other Person who may be occupying any or all
of the Properties (or any portion thereof), by summary proceedings or
otherwise, all without liability to Lessee for or by reason of such
entry or taking of possession, whether for the restoration of damage to
property caused by such taking or otherwise and, in addition to
Lessor's other damages, Lessee shall be responsible for all costs and
expenses incurred by Lessor, Facility Lender or the Agent Bank in
connection with any reletting, including, without limitation, brokers'
fees and all costs of any alterations or repairs made by Lessor;
(c) Lessor may (i) sell all or any part of the Properties at
public or private sale, as Lessor may determine, free and clear of any
rights of Lessee (and any sublessee thereof) and without any duty to
account to Lessee with respect to such action or inaction or any
proceeds with respect thereto (except to the extent required by clause
(ii) below if Lessor shall elect to exercise its rights thereunder) in
which event Lessee's obligation to pay Basic Rent hereunder for periods
commencing after the date of such sale shall be terminated or
proportionately reduced, as the case may be; and (ii) if Lessor shall
so elect, demand that Lessee pay to Lessor, and Lessee shall pay to
Lessor, on the date of such sale, as liquidated damages for loss of a
bargain and not as a penalty (the parties agreeing that Lessor's actual
damages would be difficult to predict, but the aforementioned
liquidated damages represent a reasonable approximation of such amount)
(in lieu of Basic Rent due for periods commencing on or after the date
of sale), an amount equal to (a) the excess, if any, of (1) the Lease
Balance calculated as of such date of sale plus all Rent accrued and
unpaid to and including such date, over (2) the net proceeds of such
sale (that is, after deducting all costs and expenses incurred by
Lessor, the Agent Bank, the Facility Lender and the Lenders incident to
such conveyance, including, without limitation, repossession costs,
brokerage commissions, prorations, transfer taxes, fees and expenses
for counsel, title insurance fees, survey costs, recording fees, and
any repair or alteration costs); and (b) interest at the Overdue Rate
on the foregoing amount from date of sale until the date of payment;
(d) Lessor may, at its option, not terminate this Lease, and
continue to collect all Basic Rent, Supplemental Rent, and all other
amounts due to Lessor (together with all reasonable attorneys' fees, if
any, and all other costs of collection) and enforce Lessee's
obligations under this Lease as and when the same become due, or are to
be performed, and at the option of Lessor,
<PAGE>
upon any abandonment of any Property by Lessee or re-entry of same by
Lessor, Lessor may, in its sole and absolute discretion, elect not to
terminate this Lease and may make such reasonable alterations and
necessary repairs in order to relet such Property, and relet such
Property or any part thereof for such term or terms (which may be for a
term extending beyond the Term of this Lease) and at such rental or
rentals and upon such other terms and conditions as Lessor in its
reasonable discretion may deem advisable; and upon each such reletting
all rentals actually received by Lessor from such reletting shall be
applied to Lessee's obligations hereunder in such order, proportion and
priority as Lessor may elect in Lessor's sole and absolute discretion;
it being agreed that under no circumstances shall Lessee benefit from
its default from any increase in market rents. If such rentals
received from such reletting, during any period are less than the Basic
Rent to be paid during that period by Lessee hereunder, Lessee shall
pay any deficiency, as calculated by Lessor, to Lessor on the next
Payment Date;
(e) If any Property has not (or portions thereof have not) been
sold, Lessor may, whether or not Lessor shall have exercised or shall
thereafter at any time exercise any of its rights under paragraph (b),
(c) or (d) of this Article with respect to the Property or portions
thereof, demand, by written notice to Lessee specifying a date not
earlier than five (5) days after the date of such notice, that Lessee
purchase all of such Properties on such specified date at the price
required and otherwise in accordance with the procedures set forth in
Section 20.1;
(f) Lessor may exercise any other right or remedy that may be
available to it under Applicable Law, or proceed by appropriate court
action (legal or equitable) to enforce the terms hereof or to recover
damages for the breach hereof. Separate suits may be brought to collect
any such damages for any period(s), and such suits shall not in any
manner prejudice Lessor's right to collect any such damages for any
subsequent period(s), or Lessor may defer any such suit until after the
expiration of the Term, in which event such suit shall be deemed not to
have accrued until the expiration of the Term; or
(g) Lessor may retain and apply against Lessor's damages all sums
which Lessor would, absent such Lease Event of Default, be required to
pay to, or turn over to, Lessee pursuant to the terms of this Lease.
17.3. Waiver of Certain Rights. If this Lease shall be
terminated pursuant to Section 17.2, Lessee waives, to the fullest
extent permitted by Applicable Law, (a) any notice of re-entry or the
institution of legal proceedings to obtain re-entry or possession; (b)
any right of redemption, re-entry or repossession; (c) the benefit of
any laws now or hereafter in force exempting property from liability
for rent or for debt; and (d) any other rights which might otherwise
limit or modify any of Lessor's rights or remedies under this Article
XVII.
17.4. Power of Sale and Foreclosure. In the event that a
court of competent jurisdiction rules that this Lease constitutes a
mortgage, deed of trust, security agreement or other secured financing,
then Lessor and Lessee agree that (a) the conveyance provided for in
Article II shall be deemed to be a Lien against the Properties subject
hereto WITH POWER OF SALE, and that, upon the occurrence of any Lease
Event of Default,
<PAGE>
Lessor shall have the power and authority, to the extent provided by
Applicable Law, after proper notice and lapse of such time as may be
required by Applicable Law, to sell such Properties at the time and
place of sale fixed by Lessor in said notice of sale, either as a
whole, or in separate lots or parcels or items and in such order as
Lessor may elect, at auction to the highest bidder for cash in lawful
money of the United States payable at the time of sale; accordingly, it
is acknowledged that A POWER OF SALE HAS BEEN GRANTED IN THIS
INSTRUMENT; A POWER OF SALE MAY ALLOW LESSOR TO TAKE THE APPLICABLE
PROPERTY AND SELL IT WITHOUT GOING TO COURT IN A FORECLOSURE ACTION
UPON DEFAULT BY LESSEE UNDER THIS INSTRUMENT, (b) upon the occurrence
of a Lease Event of Default, Lessor, in lieu of or in addition to
exercising any power of sale hereinabove given, may proceed by a suit
or suits in equity or at law, whether for a foreclosure hereunder, or
for the sale of the Properties, or for the specific performance of any
covenant or agreement herein contained or in aid of the execution of
any power herein granted, or for the appointment of a receiver pending
any foreclosure hereunder or the sale of the Properties, or for the
enforcement of any other appropriate legal or equitable remedy, (c)
with respect to any personal property subject hereto, (i) this Lease
shall also be deemed to be a security agreement and financing statement
within the meaning of Article 9 of the Uniform Commercial Code; (ii)
the conveyance provided for in Article II shall be deemed to be a grant
by Lessee to Lessor of a security interest in all of Lessee's right,
title and interest in and to the Properties and all proceeds of the
conversion, voluntary or involuntary, of the foregoing into cash,
investments, securities or other property, whether in the form of cash,
investments, securities or other property; (iii) the possession by
Lessor or any of its agents of notes and such other items of property
as constitute instruments, money, negotiable documents or chattel paper
shall be deemed to be "possession by the secured party" for purposes of
perfecting the security interest pursuant to Section 9-305 of the
Uniform Commercial Code; and (iv) notifications to Persons holding such
property, and acknowledgments, receipts or confirmations from financial
intermediaries, bankers or agents (as applicable) of Lessee shall be
deemed to have been given for the purpose of perfecting such security
interest under Applicable Law. Lessor and Lessee shall, to the extent
consistent with this Lease, take such actions as may be necessary to
ensure that, if this Lease were deemed to create a security interest in
the Properties in accordance with this Section 17.4, such security
interest would be deemed to be a perfected security interest of first
priority under applicable law and will be maintained as such throughout
the Term.
17.5. Remedies Cumulative. The remedies herein provided shall
be cumulative and in addition to (and not in limitation of) any other
remedies available at law, equity or otherwise, including, without
limitation, any mortgage foreclosure remedies.
<PAGE>
17.6. Lessee's Purchase Option During Lease Event of Default
or Lease Default. If a Lease Event of Default or Lease Default relates
only to a specific Property or Properties subject hereto but not all
Properties subject hereto, Lessee may, to the extent permitted pursuant
to Section 20.2, exercise its Purchase Option in accordance with
Section 20.1 with respect to such specific
<PAGE>
Property or Properties while such Lease Event of Default or Lease
Default is continuing, and the exercise of such Purchase Option shall
be deemed to have cured such Lease Event of Default or Lease Default to
the extent such Lease Event of Default or Lease Default is no longer
continuing with respect to any Property remaining subject to this Lease
after the exercise of such Purchase Option.
17.7. Guarantor's Performance. Lessor agrees that, to the
extent that Guarantor performs Lessee's obligations hereunder, such
performance shall be deemed to satisfy Lessee's obligation with respect
thereto.
ARTICLE XVIII
18.1. Lessor's Right to Cure Lessee's Lease Defaults. Lessor,
without waiving or releasing any obligation or Lease Event of Default,
may (but shall be under no obligation to) remedy any Lease Event of
Default for the account and at the sole cost and expense of Lessee,
including the failure by Lessee to maintain the insurance required by
Article XIV, and may, to the fullest extent permitted by Applicable
Law, and notwithstanding any right of quiet enjoyment in favor of
Lessee, enter upon any Property for such purpose and take all such
action thereon as may be necessary or appropriate therefor; provided
that, Lessor shall have given Lessee thirty (30) days prior written
notice of such intended action to Lessee during which time Lessee does
not remedy or commence action to remedy such Lease Event of Default.
No such entry shall be deemed an eviction of Lessee. All out-of-pocket
costs and expenses so incurred (including reasonable fees and expenses
of counsel), together with interest thereon at the Overdue Rate from
the date on which such sums or expenses are paid by Lessor, shall be
paid by Lessee to Lessor on demand.
ARTICLE XIX
19.1. Return of Property. In connection with any termination
of this Lease with respect to any Property pursuant to the terms of
Sections 15.4, 16.2, 17.2(e) or 23.3(b), or in connection with Lessee's
exercise of its Purchase Option or Expiration Date Purchase Option,
upon the date on which this Lease is to terminate with respect to the
applicable Property or upon the Expiration Date with respect to the
applicable Property, and upon tender by Lessee of the amounts set forth
in Sections 15.4, 16.2(b), 17.2(e), 20.1 or 22.3(b), as applicable, and
any required Government Actions, Lessor shall execute and deliver to
Lessee (or to Lessee's designee), at Lessee's cost and expense, an
assignment of, and/or deed for,
<PAGE>
Lessor's entire interest in the applicable Property (which shall
include an assignment of all of Lessor's right, title and interest in
and to any Net Proceeds not previously received by Lessor), in each
case in recordable form and otherwise in conformity with local custom
and free and clear of the Lien of the applicable Security Documents or
otherwise created under the Operative
<PAGE>
Documents and any Lessor Liens attributable to Lessor. The applicable
Property shall be conveyed to Lessee, without representation, warranty
or recourse, "AS IS" and in its then present physical condition.
ARTICLE XX
20.1. Purchase Option. Lessee shall have the option
(exercisable by giving Lessor irrevocable written notice (the "Purchase
Notice") of Lessee's election to exercise such option not less than ten
(10) days prior to the exercise of such option) to purchase one or more
of the Properties on the date specified in such Purchase Notice at a
price equal to the Property Balance with respect to such Property, (or,
in the case of all Properties, the Lease Balance) plus all accrued and
unpaid Rent (the "Purchase Option Price"); if Lessee exercises its
option to purchase any Property or all of the Properties pursuant to
this Section 20.1 (or is obligated to exercise its option pursuant to
the last sentence hereof) (the "Purchase Option"), Lessor shall
transfer to Lessee all of Lessor's right, title and interest in and to
such Property as of the date specified in the Purchase Notice upon
receipt of the Purchase Option Price and all Rent, in accordance with
Section 19.l. Lessee shall exercise its option to purchase any
Property where the Completion Date has not occurred on or prior to the
Outside Completion Date with respect to such Property, such option to
be exercised and consummated on or before the relevant Outside
Completion Date.
20.2 Restrictions on Purchase Option. Notwithstanding any other
provision of this Lease or the other Operative Documents, the Lessee
shall not be permitted to exercise its Purchase Option with respect to
less than all of the Properties pursuant to Section 20.1 if (x) the
aggregate Property Costs of the Properties that would remain subject to
the Lease after such purchase would be less than the Permitted Amount,
or (y) a Lease Event of Default shall have occurred and be continuing
(except as otherwise provided in Section 17.6).
ARTICLE XXI
21.1. Renewal. Subject to the conditions set forth herein,
Lessee may, by written notice to Lessor, the Facility Lender and the
Agent Bank given not earlier than eighteen (18) months and not later
than fifteen (15) months prior to the Expiration Date then in effect,
request (a "Renewal Request") that the Term be renewed as to all of the
Properties (but not less than all of the Properties) for a period of
two (2) additional years commencing on the
<PAGE>
date following the Expiration Date then in effect; provided that, no
more than five (5) Renewal Requests may be delivered by Lessee
hereunder. No later than the date (the "Renewal Response Date") which
is forty-five (45) days after the "Extension Response Date" under the
Liquidity Agreement, the Agent Bank and the Lessor will notify Lessee
in writing whether or not the
<PAGE>
Lenders and the Lessor consent to such Renewal Request (which consent
may be granted or denied in each such party's sole discretion). In the
event that any Lender or the Lessor denies such consent, Lessee may,
pursuant to the provisions of and subject to all of the conditions,
restrictions and limitations contained in Section 13 of the
Participation Agreement and Section 4.05 of the Liquidity Agreement,
seek to replace such Lender or the Lessor. The Facility Lender shall
automatically be deemed to have consented to any renewal of the Lease
approved by the Lessor. The renewal of the Term contemplated by any
Renewal Request shall become effective as of the first date (the
"Renewal Effective Date") on or after the Renewal Response Date on
which the Lessor (or, pursuant to Section 13.2 of the Participation
Agreement, a replacement Lessor) shall have consented to such Renewal
Request; provided that such renewal shall be subject to and conditioned
upon the following:
(a) on both the date of the Renewal Request and the Renewal
Effective Date, no Lease Event of Default shall have occurred and
be continuing, and
(b) Lessee shall not have exercised the Remarketing Option
or the Expiration Date Purchase Option, and
(c) the Termination Date contemporaneously is extended
pursuant to the Loan Agreement such that the Renewal Term will
expire on the same date as the extended Termination Date (which
extension shall be automatic as set forth above), and
(d) the Maturity Date contemporaneously is extended pursuant
to the Liquidity Agreement such that the Renewal Term will expire
on the extended Maturity Date.
Each renewal of this Lease shall be on the same terms and
conditions as are set forth in this Lease for the original Term.
ARTICLE XXII
22.1. Option to Remarket. Subject to the fulfillment of each
of the conditions set forth in this Section 22.1, Lessee shall have the
option (the "Remarketing Option") to market all but not less than all
of the Properties subject to this Lease for Lessor and to procure a
purchaser or purchasers therefor on the Expiration Date.
Lessee's effective exercise and consummation of the Remarketing
Option shall be subject
<PAGE>
to the due and timely fulfillment of each of the following conditions
as to each Property, the failure of any of which shall render the
Remarketing Option and Lessee's exercise thereof null and void as to
such Property.
<PAGE>
(a) Not later than six (6) months prior to the Expiration
Date, Lessee shall give to Lessor written notice of Lessee's
exercise of the Remarketing Option, which exercise shall be
irrevocable.
(b) On the date of Lessee's notice to Lessor of Lessee's
exercise of the Remarketing Option, no Lease Event of Default
shall exist, and thereafter, no Lease Event of Default shall
exist.
(c) During the Marketing Period, Lessee shall, as
nonexclusive agent for Lessor, use commercially reasonable efforts
to sell Lessor's interest in the Properties and will attempt to
obtain the highest cash purchase price therefor. Lessee will be
responsible for hiring brokers and making such Property available
for inspection by prospective purchasers. Lessee shall promptly
provide any maintenance records relating to such Property to
Lessor and any potential purchasers upon request, and shall
otherwise do all things necessary to sell and deliver possession
of such Property to any purchaser. All such marketing of such
Property shall be at Lessee's sole expense. Lessee shall allow
Lessor and any potential qualified purchaser access to such
Property for the purpose of inspecting the same.
(d) Lessee shall submit all bids to Lessor, and Lessor will
have the right to review the same and the right to submit any one
or more bids. All bids shall be on an all cash basis. Lessee
shall seek bids from one or more bona fide prospective purchasers
and shall use commercially reasonable efforts to deliver to Lessor
not less than thirty (30) days prior to the Expiration Date a
binding written unconditional (except as set forth below)
irrevocable offer by such purchaser or purchasers offering the
highest all-cash bid to purchase the Properties subject hereto.
No such purchaser shall be Lessee, or any Subsidiary or Affiliate
of Lessee. The written offer must specify a date on or prior to
the Expiration Date as the closing date. Lessee shall provide
Lessor with such additional information about the bids and the bid
solicitation procedure as Lessor may request from time to time.
Lessor may reject any and all bids and may assume sole
responsibility for obtaining bids by giving Lessee written notice
to that effect; provided, however, that notwithstanding the
foregoing, Lessor may not reject a bid if such bid is greater than
or equal to the sum of the Limited Recourse Amount applicable to
such Property and is a bona fide offer by a third party purchaser
who is not an Affiliate of the Lessee. In the event of any bona
fide offer to purchase any Property which is not validly rejected
by Lessor pursuant to the preceding sentence, Lessor shall sell
each Property free of any Lessor Liens attributable to it, without
recourse or warranty, for cash in accordance with subsection (g)
to the purchaser or purchasers identified by Lessee or Lessor, as
the case may be and Lessee shall surrender the Properties so sold
in accordance with Section 22.3.
(e) Lessee shall pay directly, and not from the sale
proceeds, all prorations, credits, costs and expenses of the sale
of the Properties, whether incurred by Lessor or Lessee, including
without limitation, the cost of all title insurance, surveys,
<PAGE>
environmental reports, appraisals, transfer taxes, Lessor's
reasonable attorneys' fees, Lessee's attorneys' fees, commissions,
escrow fees, broker's fees, recording fees, and all applicable
documentary and other transfer taxes.
(f) Lessee shall pay to Lessor at least two (2) Business
Days prior to the Expiration Date (or to such other Person as
Lessor shall notify Lessee in writing, or in the case of
Supplemental Rent, to the Person entitled thereto) an amount equal
to the Residual Value Guarantee with respect to all Properties
(other than Properties which the Lessee elects to purchase
pursuant to Section 22.3(b)), plus all Basic Rent and Supplemental
Rent, in the type of funds specified in Section 3.3 hereof.
(g) The purchase of such Properties for which a buyer has
been found shall be consummated on or before the Expiration Date
substantially contemporaneously with Lessee's surrender of such
Properties pursuant to Section 22.3 and the gross proceeds (the
"Gross Proceeds") of the sales (i.e., without deduction for any
marketing, closing or other costs, prorations or commissions)
shall be paid directly to Lessor; provided, however, that if, as
of the Expiration Date, the sum of (w) the Gross Proceeds from all
such sales, plus (x) the Residual Value Guarantee with respect to
all of the Properties (other than the Properties purchased by
Lessee pursuant to Section 22.3(b)) paid by Lessee on or before
the Expiration Date pursuant to paragraph (f) above, plus (y) the
Purchase Price of any Property which Lessee elects to purchase
pursuant to Section 22.3(b), plus (2) all Rent paid by Lessee on
the Expiration Date exceeds the sum of (1) the Lease Balance as of
such date, plus (2) all accrued and unpaid Rent as of the
Expiration Date, then the excess shall be paid to Lessee on the
Expiration Date.
Lessee shall have no right, power or authority to bind Lessor in
connection with any proposed sale of any Property, other than as
expressly provided herein.
22.2. Expiration Date Purchase Option. The Lessee shall have
the option (the "Expiration Date Purchase Option"), to be exercised by
written notice to the Lessor not earlier than twelve (12) months and no
later than six (6) months prior to the Expiration Date, to purchase all
but not less than all of the Properties on the Expiration Date. If the
Lessee fails to deliver a request for a Renewal Term or written notice
of its exercise of the Remarketing Option by the date which is six (6)
months prior to the Expiration Date (or if any election of the Renewal
Option or Remarketing Option is deemed to be ineffective as a result of
the failure to satisfy the conditions thereto), Lessee shall be deemed
to have exercised the Expiration Date Purchase Option. If the
Expiration Date Purchase Option has been exercised or deemed to have
been exercised by the Lessee, then on the Expiration Date, Lessor shall
convey the Properties to the Lessee and Lessee shall purchase the
Properties from the Lessee in accordance with Section 20.1 hereof.
<PAGE>
22.3. Return of Properties. (a) If Lessee exercises the
Remarketing Option (and no Lease Event of Default thereafter occurs and
is continuing) , then (a) Lessee shall, on or before the Expiration
Date, and at its own cost, transfer possession of the applicable
Properties to the independent purchaser(s) thereof, in each case by
surrendering the same into the possession of the Lessor or such
purchaser(s), as the case may be, free and clear of all Liens other
than Lessor Liens, in good condition (as modified by Modifications
permitted by this Lease), ordinary wear and tear excepted, and in
compliance with all Applicable Law and the provisions of this Lease.
Lessee shall, on and within a reasonable time before and after the
Expiration Date, cooperate with Lessor and the independent purchaser(s)
of the Properties in order to facilitate the ownership and operation by
such purchaser(s) of the Properties after the Expiration Date, which
cooperation shall include the following, all of which Lessee shall do
on or before the Expiration Date or as soon thereafter as is reasonably
practicable: providing all books and records regarding the maintenance
and ownership of the Properties subject hereto and all know-how, data
and technical information relating thereto, providing a current copy of
the Plans and Specifications, granting or assigning all licenses
necessary for the operation and maintenance of the Properties subject
hereto and cooperating in seeking and obtaining all necessary
Governmental Action. Lessee shall have also paid the cost of all
Modifications commenced prior to the Expiration Date. The obligations
of Lessee under this paragraph shall survive the expiration or
termination of this Lease for a period of one (1) year.
(b) Lessee shall, on the Expiration Date, with respect to any
Properties for which no buyer is found, or for which a conforming bid
is rejected by Lessor pursuant to Section 22.1, at the sole option of
Lessee, either (x) purchase such remaining Properties for the Property
Balance thereof (which purchase shall be consummated at least two (2)
Business Days prior to the Expiration Date) or (y) subject to the
satisfaction of the conditions set forth in the following sentence,
vacate and surrender such Property to Lessor in the condition required
pursuant to this Section 22.3. Lessee's right to elect to surrender
such Properties shall be subject to the satisfaction of the following
conditions precedent: (i) as of the date of surrender, the Completion
Date shall have occurred as to such Property, (ii) Lessee shall have
completed all Modifications, restoration and rebuilding of such
Property pursuant to Sections 11.1 and 15.1, as the case may be, and
shall have fulfilled all of the conditions and requirements in
connection therewith pursuant to such Sections, in each case by the
date of such surrender, and (iii) Lessee shall have paid the Residual
Value Guarantee with respect to such Properties so surrendered, plus
all other amounts due hereunder, on the date set forth in Section
22.1(f) and (iv) no Lease Event of Default shall have occurred and be
continuing.
22.4. Shortfall Amount. If the sale of the Properties results
in Gross Proceeds, which when aggregated with the Residual Value
Guarantee paid by Lessee in compliance with Section 22.1(f) and the
Purchase Price of any Properties purchased by Lessee pursuant to
Section 22.3(b), is less than the Lease Balance (the difference
referred to herein as the "Shortfall Amount"), the provisions of
Section 14.4 of the Participation Agreement shall apply to any Property
(other than Properties for which the Gross Proceeds
<PAGE>
equaled or exceeded the Property Balance) to the extent of such
Shortfall Amount.
22.5. Certain Obligations and Rights Continue. During the
Marketing Period, the obligation of Lessee to pay Rent with respect to
each Property (including the installment of Basic Rent due on the
Expiration Date) shall continue undiminished until payment in full to
Lessor of the Gross Proceeds, the Residual Value Guarantee, if any, the
amount due under Section 22.3, if any, and all other amounts due
hereunder and all of the rights of the Lessee with respect to the
Properties shall also continue unabated. Lessor shall have the right,
but shall be under no duty, to solicit bids, to inquire into the
efforts of Lessee to obtain bids or otherwise to take action in
connection with any such sale, other than as expressly provided in this
Article XXII.
ARTICLE XXIII
23.1. Holding Over. If Lessee shall for any reason remain in
possession of a Property after the expiration or earlier termination of
this Lease as to such Property (unless such Property is conveyed to
Lessee), such possession shall be as a tenancy at sufferance during
which time Lessee shall continue to pay Supplemental Rent that would be
payable by Lessee hereunder were the Lease then in full force and
effect with respect to such Property and Lessee shall continue to pay
Basic Rent at an annual rate equal to the average rate of Basic Rent
payable hereunder during the preceding Basic Term or Renewal Term, as
applicable. Such Basic Rent shall be payable from time to time upon
demand by Lessor. During any period of tenancy at sufferance, Lessee
shall, subject to the second preceding sentence, be obligated to
perform and observe all of the terms, covenants and conditions of this
Lease, but shall have no rights hereunder other than the right, to the
extent given by law to tenants at sufferance, to continue its occupancy
and use of such Property. Nothing contained in this Article XXIII
shall constitute the consent, express or implied, of Lessor to the
holding over of Lessee after the expiration or earlier termination of
this Lease as to any Property (unless such Property is conveyed to
Lessee) and nothing contained herein shall be read or construed as
preventing Lessor from maintaining a suit for possession of such
Property or exercising any other remedy available to Lessor at law or
in equity.
ARTICLE XXIV
24.1. Risk of Loss. During the Term the risk of loss of or
decrease in the enjoyment and beneficial use of such Property as a
result of the damage or destruction thereof by fire, the elements,
casualties, thefts, riots, wars or otherwise is assured by Lessee, and
Lessor shall in no event be answerable or accountable therefor.
<PAGE>
ARTICLE XXV
25.1. Subletting and Assignment. Lessee may not assign this
Lease or any of its rights or obligations hereunder in whole or in part
to any Person other than a Subsidiary of Lessee but Lessee may, without
the consent of Lessor, sublease any Property subject hereto or portion
thereof to any Person; provided, however that no assignment, sublease
or other relinquishment of possession of any Property subject hereto
shall in any way discharge or diminish any of Lessee's obligations to
Lessor hereunder (or Guarantor's obligations to guarantee Lessee's
obligations under the Guaranty) and Lessee shall remain directly and
primarily liable under this Lease as to such Property, or portion
thereof, so sublet or assigned (such obligation to include, without
limitation, the obligation to make all such payments under this Lease
directly to the recipient thereof (with any reimbursement for such
amount to be paid by the sublessee or assignee to the Lessee and not
the recipient)). Any sublease of any Property subject hereto shall be
made subject to and subordinated to this Lease and to the rights of the
Lessor hereunder, and shall expressly provide for the surrender of such
Property after termination upon the occurrence of a Lease Event of
Default hereunder. All such subleases shall expressly provide for
termination and surrender at or prior to the earlier of the applicable
Expiration Date or any later Expiration Date to which this Lease shall
have been extended. The Lessee acknowledges and agrees that this Lease
has been assigned as described on the cover page hereof. Except for
such assignments described thereon, this Lease may not be assigned by
the Lessor or any assignee thereof except as expressly permitted
pursuant to the terms of the Operative Documents.
ARTICLE XXVI
26.1. Estoppel Certificates. At any time and from time to
time upon not less than thirty (30) days' prior request by Lessor or
Lessee (the "Requesting Party"), the other party (whichever party shall
have received such request, the "Certifying Party") shall furnish to
the Requesting Party (but in the case of Lessor, as Certifying Party,
not more than four (4) times per year unless required to satisfy the
requirements of any sublessees and only to the extent that the required
information has been provided to the Lessor by Lessee or the Agent
Bank) a certificate signed by an individual having the office of vice
president or higher (or corporate trust officer in the case of Lessor)
in the Certifying Party certifying that this Lease is in full force and
effect (or that this Lease is in full force and effect as modified and
setting forth the modifications); the dates to which the Basic Rent and
Supplemental Rent have been paid; to the best knowledge of the signer
of such certificate, whether or not the Requesting Party is in default
under any of its obligations hereunder (and, if so, the nature of such
alleged default); and such other matters under this Lease as the
Requesting Party may reasonably request. Any such certificate
furnished pursuant to this Article XXVI may be relied upon by the
Requesting Party, and any existing or prospective mortgagee, purchaser
or lender, and any accountant or auditor, of, from or to the Requesting
Party (or any Affiliate thereof).
<PAGE>
ARTICLE XXVII
27.1. Right to Inspect. During the Term, Lessee shall, upon
reasonable notice from Lessor (except that no notice shall be required
if a Lease Event of Default has occurred and is continuing), permit
Lessor, the Agent Bank, the Facility Lender and their respective
authorized representatives to inspect any Property subject hereto,
provided that such inspections shall not unreasonably interfere with
Lessee's business operations at such Property.
27.2. No Waiver. No failure by Lessor or Lessee to insist
upon the strict performance of any term hereof or to exercise any
right, power or remedy upon a default hereunder, and no acceptance of
full or partial payment of Rent during the continuance of any such
default, shall constitute a waiver of any such default or of any such
term. To the fullest extent permitted by law, no waiver of any default
shall affect or alter this Lease, and this Lease shall continue in full
force and effect with respect to any other then existing or subsequent
default.
ARTICLE XXVIII
28.1. Acceptance of Surrender. No surrender to Lessor of this
Lease or of all or any portion of any Property or of any part of any
thereof or of any interest therein shall be valid or effective unless
agreed to and accepted in writing by Lessor and, prior to the payment
or performance of all obligations under the Liquidity Agreement, the
Agent Bank, and no act by Lessor or the Agent Bank or any
representative or Agent Bank of Lessor or the Agent Bank, other than a
written acceptance, shall constitute an acceptance of any such
surrender.
ARTICLE XXIX
29.1. No Merger of Title. There shall be no merger of this
Lease or of the leasehold estate created hereby by reason of the fact
that the same Person may acquire, own or hold, directly or indirectly,
in whole or in part, (a) this Lease or the
<PAGE>
leasehold estate created hereby or any interest in this Lease or such
leasehold estate, (b) the fee estate in any Property, except as may
expressly be stated in a written instrument duly executed and delivered
by the appropriate Person or (c) a beneficial interest in Lessor.
ARTICLE XXX
30.1. Notices. All notices, demands, requests, consents,
<PAGE>
approvals and other communications hereunder shall be in writing and
delivered personally or by a nationally recognized overnight courier
service or mailed (by registered or certified mail, return receipt
requested, postage prepaid), addressed to the respective parties, as
follows:
If to Lessee:
Home Depot U.S.A., Inc.
2455 Paces Ferry Road
Atlanta, Georgia 30339-4024
Attention: Treasurer
with a copy to Guarantor:
The Home Depot, Inc.
2455 Paces Ferry Road
Atlanta, Georgia 30339-4024
Attention: Treasurer
If to Lessor:
Credit Suisse Leasing 92A, L.P.
12 East 49th Street
New York, New York 10017
Attention: Director
with a copy to the Agent Bank:
Credit Suisse
Tower 49
12 East 49th Street
New York, New York 10017
Attention: Agency Administration
or such additional parties and/or other address as such party may
hereafter designate (provided, however, in no event shall either party
be obligated to notify, in the aggregate, more than two (2) designees
of the other party), and shall be effective as set forth in Section
15.3 of the Participation Agreement.
ARTICLE XXXI
31.1. Miscellaneous. Anything contained in this Lease to the
contrary notwithstanding, all claims against and liabilities of Lessee
or Lessor arising from
<PAGE>
events commencing prior to the expiration or earlier termination of
this Lease shall survive such expiration or earlier termination. If
any term or provision of this Lease or any application thereof shall be
declared invalid or unenforceable, the remainder of this Lease and any
other application of such term or provision shall not be affected
thereby. If any right or option of Lessee provided in this Lease,
including any right or option described in this Lease, would, in the
absence of the limitation imposed by this sentence, be invalid or
unenforceable as being in violation of the rule against perpetuities or
any other rule of law relating to the vesting of an interest in or the
suspension of the power of alienation of property, then such right or
option shall be exercisable only during the period which shall end
twenty-one (21) years after the date of death of the last survivor of
the descendants of Franklin D. Roosevelt, the former President of the
United States, Henry Ford, the deceased automobile manufacturer, and
John D. Rockefeller, the founder of the Standard Oil Company, known to
be alive on the date of the execution, acknowledgment and delivery of
this Lease.
31.2. Amendments and Modifications. Subject to the
requirements, restrictions and conditions set forth in the
Participation Agreement, neither this Lease, any Lease Supplement nor
any provision hereof may be amended, waived, discharged or terminated
except by an instrument in writing in recordable form signed by Lessor
and Lessee.
31.3. Successors and Assigns. All the terms and provisions of
this Lease shall inure to the benefit of, and be binding upon, the
parties hereto and their respective successors and permitted assigns.
31.4. Headings and Table of Contents. The headings and table
of contents in this Lease are for convenience of reference only and
shall not limit or otherwise affect the meaning hereof.
31.5. Counterparts. This Lease may be executed in any number
of counterparts, each of which shall be an original, but all of which
shall together constitute one and the same instrument.
31.6. GOVERNING LAW. THIS LEASE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE
<PAGE>
WITH, THE LAWS OF THE STATE OF GEORGIA, WITHOUT REGARD TO CONFLICTS OF
LAWS PRINCIPLES, EXCEPT AS TO MATTERS RELATING TO THE CREATION OF THE
LEASEHOLD ESTATE HEREUNDER, AND THE EXERCISE OF RIGHTS AND REMEDIES
WITH RESPECT THERETO, WHICH SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATE IN WHICH SUCH ESTATES ARE LOCATED.
<PAGE>
31.7. Priority. During the Term, the Mortgages shall be
subordinate to this Lease and to all Lease Supplements without any
further act by any Person.
31.8. Original Lease. The single executed original of this
Lease marked "THIS COUNTERPART IS THE ORIGINAL EXECUTED COUNTERPART" on
the signature page thereof and containing the receipt of the Agent Bank
and the Facility Lender therefor on or following the signature page
thereof shall be the Original Executed Counterpart of this Lease (the
"Original Executed Counterpart"). To the extent that this Lease
constitutes chattel paper, as such term is defined in the Uniform
Commercial Code as in effect in any applicable jurisdiction, no
security interest in this Lease may be created through the transfer or
possession of any counterpart other than the Original Executed
Counterpart.
31.9. Memorandum of Lease. This Lease shall not be recorded,
but Lessor and Lessee shall, upon the execution and delivery of each
Lease Supplement, execute and deliver a short-form memorandum of this
Lease (a "Memorandum of Lease") in form suitable for recording under
the laws of the jurisdiction in which the Property covered by such
Lease Supplement is located, which Memorandum of Lease shall be
recorded at Lessee's sole cost and expense.
31.10. Limitations on Recourse against Lessor. Notwithstanding
anything contained in this Lease to the contrary, Lessee agrees to look
solely to Lessor's (or to any partner thereof's) estate and interest in
the Properties and the Improvements thereon and rights pursuant to the
Operative Documents for the collection of any judgment requiring the
payment of money by Lessor in the event of liability by Lessor, and no
other property or assets of Lessor or any shareholder, owner or partner
(direct or indirect) in or of Lessor, or any director, officer,
employee, beneficiary, Affiliate of any of the foregoing shall be
subject to levy, execution or other enforcement procedure for the
satisfaction of Lessee's remedies against Lessor under or with respect
to this Lease, the relationship of Lessor and Lessee hereunder or
Lessee's use of the Properties or any other liability of Lessor to
Lessee; provided that, nothing herein shall limit recourse against the
Lessor or its partners for the gross negligence or willful misconduct
of such Persons or claims proximately caused by Lessor's breach of its
obligations pursuant to Sections 9.1, 11.2 (solely with respect to the
first sentence thereof), 11.3, 11.4, 11.6(a), (g), (h) or 11.7 of the
Participation Agreement; provided further, that the foregoing proviso
is intended to allow a claim for damages against Lessor but shall not
be construed as creating a full recourse obligation on the part of
Lessor (or any partner thereof) to repay any of the Loans or any
amounts relating to the Loans arising under the Loan Agreement and the
Notes.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Lease be duly
executed and delivered as of the date first above written.
HOME DEPOT U.S.A., INC., as Lessee
By:
Marshall L. Day
Senior Vice President and
Chief Financial Officer
Attest:
Lawrence A. Smith
Assistant Secretary
[CORPORATE SEAL]
<PAGE>
CREDIT SUISSE LEASING 92A, L.P.,
a Delaware limited partnership, as Lessor
BY: CREDIT SUISSE, its general partner
By:
Name:
Title:
By:
Name:
Title:
Receipt of this original counterpart of the foregoing Lease is
hereby acknowledged as of the date hereof.
CREDIT SUISSE, as Agent Bank
By:
Name:
Title:
By:
Name:
Title:
HD REAL ESTATE FUNDING CORP.,
as Facility Lender
By:
Name:
Title:
<PAGE>
STATE OF GEORGIA )
) ss:
)
COUNTY OF _____________
The foregoing Lease was acknowledged before me, the undersigned
Notary Public, in the County of _________________ this _____ day of
June, 1996, by Marshall L. Day as Senior Vice President and Chief
Financial Officer of Home Depot U.S.A., Inc.
[Notarial Seal]
____________________________
Notary Public
My commission expires: ____________
<PAGE>
STATE OF _______________ )
) ss:
)
COUNTY OF _____________
The foregoing Lease was acknowledged before me, the undersigned
Notary Public, in the County of ___________________ this _____ day of
________________, by _______________ _________________________ as
__________________, of ____________________________
__________________________, a _____________ corporation, on behalf of
the corporation.
[Notarial Seal]
___________________________
Notary Public
My commission expires: _____________
<PAGE>
EXHIBIT A TO
THE LEASE
LEASE
SUPPLEMENT NO.__
THIS LEASE SUPPLEMENT NO. __ (this "Lease Supplement") dated
as of [ ], between Credit Suisse Leasing 92A, L.P.,
as lessor (the "Lessor"), and Home Depot U.S.A., Inc., a Delaware
corporation, as lessee (the "Lessee").
WHEREAS, the Lessor is the owner of the Land described on Schedule
I attached hereto and made a part hereof and wishes to lease [the
Land] [the Improvements thereon or which thereafter may be constructed
thereon] to Lessee;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
SECTION 1. Definitions; Rules of Usage. For purposes of this
Lease Supplement, capitalized terms used herein and not otherwise
defined herein shall have the meanings assigned to them in Appendix 1
to the Participation Agreement, dated as of June 25, 1996, among the
Lessee, the Lessor, and the other parties named therein as Guarantor
and the rules of interpretation set forth in such Appendix 1 shall
apply herein.
SECTION 2. The Properties. Attached hereto as Schedule I and
made a part hereof is the description of certain Land. Effective upon
the execution and delivery of this Lease Supplement by the Lessor and
the Lessee, such [For Property Closing Date: Land] [For Completion
Date: the Improvements thereon or which thereafter may be constructed
thereon] shall be subject to the terms and provisions of the Lease.
[For Completion Date: the aggregate Property Acquisition Costs for the
Property equal $___________ as of the date hereof and the aggregate
Property Improvement Costs equal $___________ as of the date hereof].
SECTION 3. Ratification; Incorporation by Reference. The
terms and provisions of the Lease, as specifically modified hereby, are
hereby ratified and confirmed and remain in full force and effect, and
the limitations on recourse set forth in Section 31.10 thereof are
hereby incorporated herein by this reference.
<PAGE>
SECTION 4. Original Lease Supplement. The single executed original
of this Lease Supplement marked "THIS COUNTERPART IS THE ORIGINAL
EXECUTED COUNTERPART" on the signature page thereof and containing the
receipt of the Agent Bank and the Facility Lender therefor on or
following the signature page thereof shall be the Original Executed
Counterpart of this Lease Supplement (the "Original Executed
Counterpart"). To the extent that this Lease Supplement constitutes
chattel paper, as such term is defined in the Uniform Commercial Code
as in effect in any applicable jurisdiction, no security interest in
this Lease Supplement may be created through the transfer or possession
of any counterpart other than the Original Executed Counterpart.
SECTION 5. GOVERNING LAW. THIS LEASE SUPPLEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF
GEORGIA, BUT EXCLUDING ALL OTHER CHOICE OF LAW AND CONFLICTS OF LAW
RULES OF SUCH STATE, EXCEPT AS TO MATTERS RELATING TO THE CREATION OF
THE LEASEHOLD HEREUNDER, AND THE EXERCISE OF RIGHTS AND REMEDIES WITH
RESPECT THERETO, WHICH SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAW OF THE STATE IN WHICH SUCH ESTATES ARE LOCATED.
SECTION 6. Counterpart Execution. This Lease Supplement may
be executed in any number of counterparts and by each of the parties
hereto in separate counterparts, all such counterparts together
constituting but one and the same instrument.
SECTION 7. Recordation. The Lessor and the Lessee agree that
this Lease Supplement No. ___ or an appropriate Memorandum of Lease
shall be recorded at the Lessee's sole cost and expense.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Lease Supplement to be duly executed by an officer thereunto duly
authorized as of the date and year first above written.
CREDIT SUISSE LEASING 92A, L.P.,
a Delaware limited partnership
BY: CREDIT SUISSE, its general partner
By:
Name:
Title:
By:
Name:
Title:
HOME DEPOT U.S.A., INC.
By:
Name:
Title:
Receipt of this original counterpart of the foregoing Lease
Supplement No. ______ is hereby acknowledged as of the date hereof.
CREDIT SUISSE, as Agent Bank
By: ____________________________
Name:
Title:
By: ____________________________
Name:
Title:
HD REAL ESTATE FUNDING CORP.,
as Facility Lender
By: ____________________________
Name:
Title:
<PAGE>
STATE OF _______________ )
) ss:
)
COUNTY OF _____________
The foregoing Lease was acknowledged before me, the undersigned
Notary Public, in the County of _____________ ____ this _____ day of
_______________________, by
___________________ as __________________ of Credit Suisse Leasing 92A,
L.P.
[Notarial Seal]
____________________________
Notary Public
My commission expires: ____________
STATE OF _______________ )
) ss:
)
COUNTY OF _____________
The foregoing Lease was acknowledged before me, the undersigned
Notary Public, in the County of ____________ ___ ____ this _____ day of
_________, _________, by __________ as _____________, of Home Depot
U.S.A., Inc., a Delaware corporation, on behalf of the corporation.
[Notarial Seal]
___________________________
Notary Public
My commission expires: _____________
<PAGE>
SCHEDULE I
TO THE LEASE SUPPLEMENT NO. [ ]
Property Description
<PAGE>
EXHIBIT B TO
THE LEASE
TERMINATION NOTICE
Credit Suisse Leasing 92A, L.P.
__________________________
__________________________
__________________________
Attention: __________________________
Ladies and Gentlemen:
Reference is hereby made to the Lease, dated as of June 25, 1996
(as heretofore amended, the "Lease"), between Credit Suisse Leasing
92A, L.P. (the "Lessor") and the undersigned, as lessee (the "Lessee").
Capitalized terms used in this Termination Notice and not otherwise
defined herein shall have the meanings assigned thereto in the Lease.
This notice is a Termination Notice given pursuant to Section 16.1 of
the Lease.
Lessee hereby notifies Lessor that the property described in the
attached Schedule I (the "Affected Property") has been the subject of a
[Significant Condemnation] [Significant Casualty] [Significant Event]
[failure to complete the Improvements thereon by the relevant Outside
Completion Date] and that, as a result thereof, the Lessee is
terminating the Lease with respect to the Affected Property as of
____________,199_ (the "Termination Date") which is a Payment Date.
Lessee hereby irrevocably agrees to [purchase the Affected Property on
the Termination Date and to pay the Property Balance for the Affected
Property, which Property Balance as of the Termination Date will be
$_____________ plus all amounts owing in respect of Rent for such
Property, including Rent, theretofore accruing.] [substitute a
Replacement Property for the Affected Property in compliance with
Section 16.3 of the Lease.]
IN WITNESS WHEREOF, the undersigned has caused this
Termination Notice to be executed as of this ____ day of
______________, 199_ by its duly authorized officer.
HOME DEPOT U.S.A., INC., as Lessee
By:______________________________________
_
Name
Printed:______________________________
Title:___________________________________
__
<PAGE>
SCHEDULE I TO
TERMINATION NOTICE
Legal Description of Property
<PAGE>
EXHIBIT C TO
THE LEASE
INSURANCE REQUIREMENTS
Throughout the Term, the Lessee shall keep, or cause to be kept,
the Properties continuously insured against such risks as are
customarily insured against by businesses of like size and type (other
than business interruption insurance), paying (except as otherwise
provided herein) as the same become due, all premiums with respect
thereto, including, but not necessarily limited to:
(a) property insurance to the full insurable replacement
value of the Properties as determined by the Lessee, but in no
event less than an amount equal to the Properties, without
deduction for depreciation, against (i) loss from damage by fire
and lightning, with a uniform standard extended coverage
endorsement limited only as may be provided in the standard form
of extended coverage endorsement at the time in use in the state
in which the Properties are located (provided that such insurance
may provide for deductible provisions with respect to direct
damage applicable to each separate instance of loss insured
against in amounts customary for the Lessee), and (ii) in time of
war in which the United States of America is a belligerent, loss
from the risks and hazards of war, if such insurance is the
obtainable and generally carried by owners of facilities of like
nature in the state in which the Properties are located; and
(b) commercial general liability insurance against claims
for bodily injury, death or property damage occurring on, in or
about the Properties and the adjoining driveways, sidewalks, and
passageways owned by Lessor and leased to the Lessee, such
insurance to afford protection of not less than $2,000,000.00 with
respect to bodily injury or to property damage resulting from any
one occurrence; and
(c) throughout the Term, the Lessee shall maintain, or cause
to be maintained in connection with the Properties, workers'
compensation coverage required by then Applicable Law, together
with extended all-risk insurance on the Properties, and with
respect to any Construction Period Property, Builder's Risk
insurance.
<PAGE>
EXHIBIT P
TO PARTICIPATION AGREEMENT
COMPLIANCE CERTIFICATE
Reference is made to the Participation Agreement dated as of
June 25, 1996 (the "Participation Agreement") among The Home Depot,
Inc., Home Depot U.S.A., Inc., Credit Suisse Leasing 92A L.P., HD Real
Estate Funding Corp., the Lenders from time to time parties thereto,
and Credit Suisse, as Agent Bank. Capitalized terms used herein shall
have the meanings ascribed thereto in Appendix 1 to the Participation
Agreement and made a part hereof by this reference and the rules of
interpretation set forth in Appendix 1 shall apply to this Assignment.
Pursuant to Section 11.1(a)(iii) of the ParticipationAgreement,
________________________, the duly authorized ________________________
of The Home Depot, Inc., hereby (i) certifies to the Agent Bank, the
Lessor and the Lenders that the information contained in the Compliance
Check List attached hereto is true, accurate and complete as of
_______________, _____, and (ii) that no Event of Default is in
existence on and as of the date hereof.
THE HOME DEPOT, INC.
By:____________________________
Title:
<PAGE>
COMPLIANCE CHECK LIST
The Home Depot, Inc.
__________________________________
_________________, 199__
1. Ratio of Consolidated Funded Debt to Consolidated Total Tangible
Capital (Section 11.1(c))
The ratio of Consolidated Funded Debt to Consolidated Total
Tangible Capital will not exceed 0.60 to 1.00, calculated at the
end of each Fiscal Quarter.
(a) Consolidated Funded Debt Schedule - 1 $_____________
(b) Consolidated Tangible
Net Worth Schedule - 2 $_____________
(c) sum of (a) plus (b) $_____________
Actual Ratio of (a) to (c) _____________
Maximum Ratio 0.60 to 1.00
2. The Guarantor shall not permit any Subsidiary to incur any
Indebtedness except for (i) Indebtedness owing to the Guarantor or
another Subsidiary and (ii) other Indebtedness which shall not
exceed in the aggregate for all Subsidiaries an amount in excess
of 20% of Consolidated Net Worth.
(a) Indebtedness of Subsidiaries $_____________
(b) Limitation - 20% of
Consolidated Net Worth
(Stockholder's Equity
on Schedule - 2) $_____________
<PAGE>
COMPLIANCE CHECK LIST
The Home Depot, Inc.
_________________________________
____________________, _____
Schedule - 1
Consolidated Funded Debt
INTEREST
RATE MATURITY TOTAL
Secured
__________________________ __________ ___________ $____________
__________________________ __________ ___________ $____________
__________________________ __________ ___________ $____________
__________________________ __________ ___________ $____________
Total Secured __________ ___________ $____________
Unsecured
__________________________ __________ ___________ $____________
__________________________ __________ ___________ $____________
__________________________ __________ ___________ $____________
__________________________ __________ ___________ $____________
Total Unsecured __________ ___________ $____________
Guarantees
__________________________________________________________ $____________
__________________________________________________________ $____________
Total $____________
Operating Lease Obligations
__________________________________________________________ $____________
Subtotal $____________
Total (800% of Subtotal) $____________
Other Indebtedness
__________________________________________________________ $____________
__________________________________________________________ $____________
Total $____________
Total Consolidated Funded Debt $____________
<PAGE>
COMPLIANCE CHECK LIST
The Home Depot, Inc.
__________________________________
_________________, _____
Schedule-2
Stockholders' Equity $____________
Less:
Surplus from write-up of assets subsequent
to _______________ $____________
Intangibles $____________
Loans to stockholders, directors,
officers or employees $____________
Capital Stock shown as assets $____________
Consolidated Tangible Net Worth $
Intangible Description
(a)______________________________________ $____________
(b)______________________________________ $____________
(c)______________________________________ $____________
Other $____________
Total $
<PAGE>
EXECUTION COUNTERPART
CONSTRUCTION AGENCY AGREEMENT
dated as of June 25, 1996
between
CREDIT SUISSE LEASING 92A, L.P.,
as Lessor
and
HOME DEPOT U.S.A., INC.,
as Construction Agent
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS 1
1.1. Defined Terms; Rules of Usage 1
ARTICLE II APPOINTMENT OF CONSTRUCTION AGENT 2
2.1. Appointment of Construction Agent 2
2.2. Acceptance; Construction 2
2.3. Commencement of Construction 2
2.4. Supplements to this Agreement 2
2.5. Term 2
2.6. Identification of Properties; Construction Documents;
Assignment of Construction Documents 3
2.7. Scope of Authority 3
2.8. Covenants of the Construction Agent 4
ARTICLE III THE IMPROVEMENTS 5
3.1. Construction 5
3.2. Amendments; Modifications 5
3.3. Casualty; Condemnation and Force Majeure Events 5
ARTICLE IV PAYMENT OF FUNDS 6
4.1. Funding of Property Acquisition Costs and Property
Improvements Costs 6
ARTICLE V CONSTRUCTION AGENCY EVENTS OF DEFAULT 6
5.1. Construction Agency Events of Default 6
5.2. Damages 7
5.3. Remedies; Remedies Cumulative 7
ARTICLE VI NO CONSTRUCTION AGENCY FEE 8
6.1. Lease as Fulfillment of Lessor's Obligations 8
ARTICLE VIILESSOR'S RIGHTS; CONSTRUCTION AGENT'S RIGHTS 8
7.1. Exercise of the Lessor's Rights 8
7.2. Lessor's Right to Cure Construction Agent's Defaults 8
ARTICLE VIII MISCELLANEOUS 9
<PAGE>
8.1. Notices 9
8.2. Successors and Assigns 9
8.3. GOVERNING LAW 9
8.4. Amendments and Waivers 9
8.5. Counterparts 9
8.6. Severability 9
8.7. Headings and Table of Contents 9
8.8. Limitations on Recourse against Lessor 9
<PAGE>
CONSTRUCTION AGENCY AGREEMENT
CONSTRUCTION AGENCY AGREEMENT, dated as of June 25, 1996 (as
amended, supplemented or otherwise modified from time to time,
this "Agreement"), between CREDIT SUISSE LEASING 92A, L.P., a
Delaware limited partnership (the "Lessor"), and HOME DEPOT
U.S.A., INC., a Delaware corporation (in its capacity as
construction agent, the "Construction Agent").
PRELIMINARY STATEMENT
A. Home Depot U.S.A., Inc., as lessee (in such capacity
the "Lessee"), and Lessor, as lessor, are parties to the Lease,
pursuant to which the Lessee has agreed to lease from Lessor, and
Lessor has agreed to lease to Lessee, Lessor's interest in
certain Properties.
B. The Lessor, the Lessee, the Lenders, the Agent Bank,
the Facility Lender, the Guarantor and the Construction Agent are
parties to the Participation Agreement.
C. Subject to the terms and conditions hereof, (i) the
Lessor desires to appoint the Construction Agent as its sole and
exclusive agent for the identification and acquisition of the
Properties pursuant to the Participation Agreement and
construction of the Facilities in accordance with the Plans and
Specifications and pursuant to the Participation Agreement, and
(ii) the Construction Agent desires, for the benefit of the
Lessor, to cause the Facilities to be constructed in accordance
with the Plans and Specifications and pursuant to the
Participation Agreement and this Agreement, in each case in
accordance with the terms herein set forth.
NOW, THEREFORE, in consideration of the foregoing, and for
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto
covenant and agree as follows:
ARTICLE I
DEFINITIONS
1.1. Defined Terms; Rules of Usage. Capitalized terms used
but not otherwise defined in this Agreement shall have the
respective meanings specified in Appendix 1 attached to the
Participation Agreement, which Appendix 1 is made a part hereof
by this reference; and the rules of interpretation set forth in
such Appendix 1 shall apply to this Agreement.
<PAGE>
ARTICLE II
APPOINTMENT OF CONSTRUCTION AGENT
2.1. Appointment of Construction Agent. Pursuant to and
subject to the terms and conditions set forth herein and in the
Participation Agreement and the other Operative Documents, the
Lessor hereby irrevocably designates and appoints the
Construction Agent as its exclusive agent for the identification
and acquisition on behalf of Lessor from time to time of the
Construction Period Properties and construction of the Facilities
thereon in accordance with the Plans and Specifications and the
Construction Budget for such Construction Period Properties.
2.2. Acceptance; Construction. The Construction Agent
hereby unconditionally accepts the designation and appointment as
Construction Agent. The Construction Agent will cause the
Facilities to be constructed on the Land in accordance with the
Plans and Specifications and equipped in compliance in all
material respects with all Requirements of Law and Insurance
Requirements.
2.3. Commencement of Construction. Subject to Force Majeure
Events, the Construction Agent hereby agrees, unconditionally and
for the benefit of the Lessor, to commence construction of a
Facility on each Construction Period Property within one (1) year
after the Property Closing Date in respect of such Construction
Period Property. For purposes hereof, construction of a Facility
shall be deemed to commence on the date (the "Construction
Commencement Date") on which excavation for the foundation for
such Facility commences, as set forth in the records of the
Construction Agent maintained with respect to the Construction
Period Properties. Without limiting the foregoing, no such
construction shall be undertaken or be required to be undertaken
until all necessary, applicable and required Government Actions
have been issued therefor.
2.4. Supplements to this Agreement. On the Property Closing
Date of each Construction Period Property, the Lessor and the
Construction Agent shall each execute and deliver a supplement to
this Agreement in the form of Exhibit A attached hereto and made
a part hereof by this reference, appropriately completed,
pursuant to which the Lessor and the Construction Agent shall,
among other things, each acknowledge and agree that the
construction and development of such Construction Period Property
will be governed by the terms of this Agreement. Following the
execution and delivery of a supplement to this Agreement as
provided above, such supplement and all supplements previously
delivered under this Agreement shall constitute a part of this
Agreement.
2.5. Term. This Agreement shall commence on the date hereof
and shall terminate with respect to any given Construction Period
Property upon the first to occur of:
<PAGE>
(a) payment by the Lessee of the Purchase Option
Price and termination of the related Lease with respect to
such Construction Period Property in accordance with
Article XX of the Lease or upon the occurrence of a
Significant Event or upon any other purchase of Land and
existing Improvements thereon pursuant to the Lease with
respect to any Construction Period Property including any
required repurchase of the Construction Period Property
pursuant to the Lease in the event that the Completion Date
with respect thereto has not occurred by the Outside
Completion Date;
(b) the Completion Date or the Expiration Date;
and
(c) termination of this Agreement pursuant to
Article V hereof.
In the event of the termination of this Agreement with
respect to any Construction Period Property where the Lessee has
elected or is required to pay the Property Balance for the portion
of such Property subject to and pursuant to the terms of the Lease
the Construction Agent shall simultaneously reimburse Lessor for
the Property Improvement Costs relating thereto. Upon receipt of
such funds, Lessor shall simultaneously convey title to such
Improvements together with its interest in the related
Construction Period Property to the Lessee in accordance with
Section 19.1 of the Lease. The Construction Agent's obligations
hereunder are irrevocable, unconditional and absolute, and all
payments by Construction Agent shall be made without diminution,
set-off or counterclaim.
2.6. Identification of Properties; Construction Documents;
Assignment of Construction Documents. The Construction Agent may
execute any of its duties under this Agreement by or through
agents, contractors, employees or attorneys-in-fact, and the
Construction Agent shall enter into such agreements with
architects and contractors as the Construction Agent deems
necessary or desirable for the construction of the Facilities
pursuant hereto (the "Construction Documents"); provided, however,
that no such delegation shall limit or reduce in any way the
Construction Agent's duties and obligations under this Agreement.
As security for its obligations hereunder, the Construction Agent
hereby assigns to Lessor all of the Construction Agent's rights
under and interest in such Construction Documents.
2.7. Scope of Authority. (a) Subject to the terms,
conditions, restrictions and limitations set forth in the
Operative Documents, the Lessor hereby expressly authorizes the
Construction Agent, or any agent or contractor of the Construction
Agent, and the Construction Agent unconditionally agrees, for the
benefit of the Lessor, to take all action necessary or desirable
for the performance and satisfaction of all of the Construction
Agent's obligations hereunder, including, without limitation:
(i) the identification and assistance with
the acquisition of Properties in accordance with the
terms and conditions of the Participation
<PAGE>
Agreement including, without limitation, obtaining all
requisite Environmental Audits and Appraisals;
(ii) all design and supervisory functions
relating to the construction of the Facilities and
performing all engineering work related to the
construction of the Facilities;
(iii) negotiating and entering into all
contracts or arrangements to procure the equipment and
services necessary to construct the Facilities on such
terms and conditions as are customary and reasonable in
light of local standards and practices and prudent
industry practices;
(iv) obtaining all necessary Governmental
Actions, including those required under applicable
Requirements of Law (including Environmental Laws), from
all Governmental Authorities in connection with the
development and construction of the facilities on the
Construction Period Properties in accordance with the
Plans and Specifications;
(v) maintaining all books and records with
respect to the construction, operation and management of
the Construction Period Properties and the Improvements;
and
(vi) performing any other acts necessary in
connection with the identification and acquisition of
the Construction Period Properties and construction and
development of the Improvements in accordance with the
Plans and Specifications.
(b) Neither the Construction Agent nor any of its
Affiliates or agents shall enter into any contract which
would impose any direct liability or obligation on the Lessor
unless such contract expressly contains an acknowledgment by
the other party or parties thereto that the obligations of
the Lessor are non-recourse to the Lessor and its partners or
unless Lessor is a party thereto.
(c) Subject to the terms and conditions of this
Agreement and the other Operative Documents, the Construction
Agent shall have sole management and control over the
construction means, methods, sequences and procedures with
respect to the construction of the Facilities.
2.8. Covenants of the Construction Agent. The Construction
Agent hereby covenants and agrees that it will:
(a) following the Construction Commencement Date
for each Property,
<PAGE>
cause construction of a Facility on such Property to be
prosecuted diligently and without undue interruption in
accordance with the Plans and Specifications for such
Property and all Requirements of Law and Insurance
Requirements;
(b) take all reasonable and practical steps to
cause the Completion Date for such Property to occur on or
prior to the Outside Completion Date for such Property, and
cause all Liens (including, without limitation, Liens or
claims for materials supplied or labor or services performed
in connection with the construction of the improvements)
other than Permitted Liens, to be discharged;
(c) following the Completion Date for each
Property, use reasonable, good-faith efforts to cause all
outstanding punch list items with respect to the Improvements
on such Property to be completed;
(d) during the Construction Period, cause all
title to all personalty purchased to be placed on the
Construction Period Property with proceeds of the Advances
made to the Lessor pursuant to the Operative Documents to
vest in the Lessor; and
(e) during the Construction Period, cause
insurance to be in effect with respect to the Construction
Period Properties as required by Article XIV of the Lease
(assuming the Improvements were part of the leasehold estate
thereof).
ARTICLE III
THE IMPROVEMENTS
3.1. Construction. The Construction Agent shall cause the
Improvements to be constructed, equipped, maintained and used in
compliance in all material respects with all applicable
Requirements of Law and Insurance Requirements; provided that, the
Construction Agent shall have the same right to contest such
requirements as is afforded the Lessee pursuant to Article XIII of
the Lease.
3.2. Amendments; Modifications. The Construction Agent may,
subject to the conditions, restrictions and limitations set forth
herein and in the Operative Documents (but not otherwise), at any
time during the term hereof, revise, amend or modify the Plans and
Specifications and the Construction Budget relating to the
Constructive Period Properties without the consent of the Lessor;
provided that Lessor's prior written consent shall be required if
the aggregate effect of such revision, amendment or modification,
when taken together with any previous or contemporaneous revision,
amendment or modification to the Plans and Specifications for such
Property, would be (i) to reduce the As Built Value of such
Property by a material amount, or (ii) to increase the
Construction Budget of such Property to an aggregate
<PAGE>
amount in excess of 110% of the As Built Value of such Property.
3.3. Casualty; Condemnation and Force Majeure Events. If at
any time prior to the Completion Date with respect to any Facility
there occurs a Casualty or a Force Majeure Event or the Lessor or
the Construction Agent receives notice of a Condemnation, then,
except as otherwise provided in Articles XV and XVI of the Lease,
in each case, the Construction Agent shall promptly and diligently
take all reasonable and practical steps to complete the
construction of the Facility in accordance with the Plans and
Specifications and with the terms hereof, and cause the Completion
Date to occur on or prior to the Outside Completion Date.
ARTICLE IV
PAYMENT OF FUNDS
4.1. Funding of Property Acquisition Costs and Property
Improvements Costs. (a) In connection with the acquisition of any
Property and during the course of the construction of the
Improvements on any Property, the Construction Agent may request
that the Lessor advance funds for the payment of Property
Acquisition Costs or Property Improvements Costs, and the Lessor
will comply with such request to the extent provided for under,
and subject to the conditions, restrictions and limitations
contained in, the Participation Agreement and the other Operative
Documents. The Construction Agent and the Lessor acknowledge and
agree that the Construction Agent's right to request funds and the
Lessor's obligation to advance funds for the payment of Property
Acquisition Costs or Property Improvements Costs is subject in all
respects to the terms and conditions of the Participation
Agreement and each of the other Operative Documents.
(b) The proceeds of any funds made available to the Lessor
to pay Property Acquisition Costs or Property Improvements Costs
shall be made available to the Construction Agent in accordance
with the Funding Request relating thereto and the terms of the
Participation Agreement. The Construction Agent will use such
proceeds only to pay the Property Acquisition Costs or Property
Improvements Costs set forth in the Funding Request relating to
such funds.
ARTICLE V
CONSTRUCTION AGENCY EVENTS OF DEFAULT
5.1. Construction Agency Events of Default. If any one or
more of the following events (each a "Construction Agency Event of
<PAGE>
Default") shall occur:
(a) the Construction Agent fails to apply any
funds paid by the Lessor to the Construction Agent for the
acquisition of the Properties and the construction of the
Facilities or other Improvements to the payment of Property
Acquisition Costs or Property Improvements Costs and such
failure continues for five (5) days after written notice
thereof to the Construction Agent;
(b) any Lease Event of Default shall have occurred
and be continuing; or
(c) the Construction Agent shall fail to observe
or perform any term, covenant or condition of this Agreement
and such failure shall remain uncured for a period of thirty-
five (35) days after the earlier of (i) the Construction
Agent's Actual Knowledge thereof, or (ii) notice thereof to
the Construction Agent; provided, however, no Construction
Agency Event of Default shall be deemed to occur if such
failure or breach cannot reasonably be cured within such
period (other than by the payment of money), so long as the
Construction Agent shall have promptly commenced the cure
thereof and continues to act with diligence to cure such
failure or breach and such failure or breach is in fact cured
within two hundred seventy (270) days after the earlier of
(i) the Construction Agent's Actual Knowledge thereof, or
(ii) notice thereof to the Construction Agent;
then, in any such event, the Lessor may, in addition to the other
rights and remedies provided for in this Article, immediately
terminate this Agreement as to any Construction Period Property or
Construction Period Properties or all of the Construction Period
Properties, separately, successively or concurrently (all in
Lessor's sole discretion) by giving the Construction Agent written
notice of such termination, and upon the giving of such notice,
this Agreement shall terminate as to such Construction Period
Property or Construction Period Properties or all of the
Construction Period Properties (as the case may be) and all rights
of the Construction Agent and all obligations of the Lessor under
this Agreement with respect to such Construction Period Property
or Construction Period Properties or all of the Construction
Period Properties (as the case may be) shall cease, and, the
Lessor may demand, to the extent that it is simultaneously
exercising remedies pursuant to the Lease (and without duplication
of any amounts recovered thereunder), that the Construction Agent
pay to the Lessor an amount equal to the Property Improvement
Costs expended by the Lessor in connection with the Construction
Period Properties which have not reached Completion Date. The
Construction Agent shall pay upon demand all costs, expenses,
losses, expenditures and damages (including, without limitation,
reasonable attorneys' fees and disbursements) actually incurred by
or on behalf of Lessor in connection with any Construction Agency
Event of Default.
5.2. Damages. The termination of this Agreement pursuant to
Section 5.1 shall in no event relieve the Construction Agent of
its liability and obligations
<PAGE>
hereunder, all of which shall survive any such termination.
5.3. Remedies; Remedies Cumulative. (a) If a Construction
Agency Event of Default shall have occurred and be continuing, the
Lessor shall have all rights and remedies available under the
Operative Documents or available at law, equity or otherwise.
Notwithstanding the foregoing, if a Construction Agency Event of
Default hereunder relates only to a specific Construction Period
Property or specific Construction Period Properties but not all
Construction Period Properties (but in any event excluding any
Lease Event of Default arising from a Lessee's failure to pay
Rent), the Construction Agent shall have the right to cure such
Construction Agency Event of Default by purchasing such
Construction Period Property or Construction Period Properties
(including all Improvements then being constructed) therefor from
the Lessor in accordance with the terms and subject to the
conditions, restrictions and limitations of the Lease and the
other Operative Documents for an amount equal to the sum of the
Purchase Option Price(s) plus the related Property Improvement
Cost(s).
(b) No failure to exercise and no delay in exercising, on
the part of the Lessor, any right, remedy, power or privilege
under this Agreement or under the other Operative Documents shall
operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege under this
Agreement preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The
rights, remedies, powers and privileges provided in this Agreement
are cumulative and not exclusive of any rights, remedies, powers
and privileges provided by law.
ARTICLE VI
NO CONSTRUCTION AGENCY FEE
6.1. Lease as Fulfillment of Lessor's Obligations. All
obligations, duties and requirements imposed upon or allocated to
the Construction Agent shall be performed by the Construction
Agent at the Construction's Agent's sole cost and expense, and the
Construction Agent will not be entitled to, and Lessor shall have
no obligation to pay, any agency fee or other fee or compensation,
and the Construction Agent shall not be entitled to, and Lessor
shall have no obligation to make or pay, any reimbursement
therefor, it being understood that this Agreement is being entered
into as consideration for and as an inducement to Lessor entering
into the Lease and the other Operative Documents.
<PAGE>
ARTICLE VII
LESSOR'S RIGHTS; CONSTRUCTION AGENT'S RIGHTS
7.1. Exercise of the Lessor's Rights. Subject to the
Excepted Payments and the Excepted Rights, each of the
Construction Agent and the Lessor hereby acknowledges and agrees
that, subject to and in accordance with the terms of the
Construction Agency Agreement Assignment made by the Lessor in
favor of the Facility Lender and the subsequent assignment of this
Agreement to the Agent pursuant to the Master Assignment, the
rights and powers of the Lessor under this Agreement have been
assigned to and may be exercised by the Agent and, following the
payment in full of all amounts owing to the Agent and the Lenders
and the termination of the Commitment, the Facility Lender.
7.2. Lessor's Right to Cure Construction Agent's Defaults.
The Lessor, without waiving or releasing any obligation or
Construction Agency Event of Default, may (but shall be under no
obligation to) remedy any Construction Agency Event of Default for
the account of and at the sole cost and expense of the
Construction Agent. All out-of-pocket costs and expenses so
incurred (including reasonable fees and expenses of counsel
actually incurred), together with interest thereon at the Overdue
Rate from the date on which such sums or expenses are paid by the
Lessor, shall be paid by the Construction Agent to the Lessor on
demand.
ARTICLE VIII
MISCELLANEOUS
8.1. Notices. All notices, consents, directions, approvals,
instructions, requests, demands and other communications required
or permitted by the terms hereof to be given to any Person shall
be given in writing in the manner provided in, shall be sent to
the respective addresses set forth in, and the effectiveness
thereof shall be governed by the provisions of, Section 15.3 of
the Participation Agreement.
8.2. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the Lessor, the Construction
Agent and their respective legal representatives, successors and
permitted assigns. The Construction Agent shall not assign its
rights or obligations hereunder without the prior written consent
of the Lessor and the Agent.
8.3. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE
<PAGE>
WITH, THE LAWS OF THE STATE OF GEORGIA, WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES THEREOF.
8.4. Amendments and Waivers. Subject to the conditions and
terms hereunder and under the other Operative Documents, the
Lessor and the Construction Agent may from time to time enter into
written amendments, supplements or modifications hereto.
8.5. Counterparts. This Agreement may be executed in any
number of separate counterparts and all of said counterparts taken
together shall be deemed to constitute one and the same agreement.
8.6. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
8.7. Headings and Table of Contents. The headings and table
of contents contained in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning
hereof.
8.8. Limitations on Recourse against Lessor. Notwithstanding
anything contained in this Agreement to the contrary, the
Construction Agent agrees to look solely to Lessor's (or to any
partner thereof's) estate and interest in the Properties and
Improvements thereon and rights pursuant to the Operative
Documents for the collection of any judgment requiring the payment
of money by Lessor in the event of liability by Lessor, and no
other property or assets of Lessor or any shareholder, owner or
partner (direct or indirect) in or of Lessor, or any director,
officer, employee, beneficiary or Affiliate of any of the
foregoing shall be subject to levy, execution or other enforcement
procedure for the satisfaction of the Construction Agent's
remedies against Lessor under or with respect to this Agreement,
the relationship of Lessor and the Construction Agent's hereunder
or the Construction Agent's use of the Properties or any other
liability of Lessor to the Construction Agent; provided that,
nothing herein shall limit recourse against the Lessor or its
partners for the gross negligence or willful misconduct of such
Persons or claims proximately caused by Lessor's breach of its
obligations pursuant to Sections 9.1, 11.2 (solely with respect to
the first sentence thereof), 11.3, 11.4, 11.6(a), (g), (h) or 11.7
of the Participation Agreement; provided further, that the
foregoing proviso is intended to allow a claim for damages against
Lessor but shall not be construed as creating a full recourse
obligation on the part of Lessor (or any partner thereof) to repay
any of the Loans or any amounts relating to the Loans arising
under the Loan Agreement and the Notes.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and
duly authorized officers as of the day and year first above
written.
HOME DEPOT U.S.A., INC.
By:________________________________
______
Marshall L. Day
Senior Vice President and
Chief Financial Officer
Attest:____________________________
_______
Lawrence A. Smith
Assistant Secretary
[CORPORATE SEAL]
<PAGE>
CREDIT SUISSE LEASING 92A, L.P.,
a Delaware limited partnership
BY: CREDIT SUISSE, its general
partner
By:________________________________
______
Title:__________________________________
By:________________________________
______
Title:__________________________________
<PAGE>
EXHIBIT A
Supplement No. to Construction Agency Agreement
SUPPLEMENT No. _______ to Construction Agency Agreement, dated as
of ______________ 19__, between CREDIT SUISSE LEASING 92A, L.P. (the
"Lessor") and HOME DEPOT U.S.A., INC., a Delaware corporation (in its
capacity as construction agent, the "Construction Agent"). Capitalized
terms used but not otherwise defined herein shall have the meanings
given them in the Construction Agency Agreement and the rules of usage
set forth in the Construction Agency Agreement shall apply to this
Agreement.
The Lessor and the Construction Agent are also parties to that
certain Construction Agency Agreement, dated June 25, 1996 (as amended,
supplemented or otherwise modified, the "Construction Agency
Agreement"), pursuant to which (i) the Lessor has appointed the
Construction Agent as its sole and exclusive agent in connection with
the identification and acquisition of the Properties and construction
of the Facilities in accordance with the Plans and Specifications, and
(ii) the Construction Agent has agreed, for the benefit of the Lessor,
to cause the construction of the Facilities to be completed in
accordance with the Plans and Specifications.
Subject to the terms and conditions of the Construction Agency
Agreement, the Lessor and the Construction Agent desire that the terms
of the Construction Agency Agreement apply to the Property described in
Schedule 1 and wish to execute this Supplement to provide therefor.
NOW, THEREFORE, in consideration of the foregoing, and for other
good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto covenant and agree as
follows:
1. The Construction Agent agrees to act as Construction Agent
and to perform its obligations under the Construction Agency Agreement
in connection with the completion of construction of the Facility which
will be a support facility consisting of a [warehouse] [office
building] [distribution facility] [retail store] of the Lessee on the
Construction Period Property described in Schedule 1 attached hereto
and made a part hereof in accordance with the Construction Budget and
the Plans and Specifications for such Property.
2. Each of the Lessor and the Construction Agent acknowledges,
and agrees, that the construction and development of the Facility on
the Construction Period Property described in Schedule 1 attached
hereto and made a part hereof shall be governed by the terms of the
Construction Agency Agreement, including without limitation, Section
8.8 thereof which is incorporated herein by this reference.
3. This Supplement shall, upon its execution and delivery,
constitute a part of the Construction Agency Agreement, the terms of
which, as supplemented hereby, are ratified and confirmed by the Lessor
and the Construction Agent.
<PAGE>
4. THIS SUPPLEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
UNDER THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF GEORGIA, WITHOUT REGARD TO CONFLICTS OF
LAWS PRINCIPLES THEREOF.
IN WITNESS WHEREOF, the parties hereto have caused this Supplement
to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
HOME DEPOT U.S.A., INC.
By:______________________________________
Name:
Title:
CREDIT SUISSE LEASING 92A, L.P.,
a Delaware limited partnership
BY: CREDIT SUISSE, its general partner
By:______________________________________
Name:
Title:
By:______________________________________
Name:
Title:
<PAGE>
Schedule 1 to Supplement
Description of Construction Period Property
<PAGE>
EXECUTION COUNTERPART
GUARANTY
from
THE HOME DEPOT, INC.
Dated as of June 25, 1996
<PAGE>
GUARANTY
THIS GUARANTY (this "Guaranty"), dated as of June 25, 1996,
is made by THE HOME DEPOT, INC., a Delaware corporation
("Guarantor") in favor of CREDIT SUISSE LEASING 92A, L.P., a
Delaware limited partnership (the "Lessor") and each of the other
Participants (as such term is defined below).
W I T N E S S E T H:
WHEREAS, Guarantor, HOME DEPOT U.S.A., INC., a Delaware
corporation (the "Lessee"), Lessor, Facility Lender, Credit
Suisse, as agent for the Lenders (the "Agent Bank") and the
Lenders (the Lessor, the Facility Lender, the Agent Bank and the
Lenders, collectively, the "Participants") have entered into that
certain Participation Agreement, dated as of even date herewith
(as it may be modified, amended or restated from time to time as
and to the extent permitted thereby, the "Participation
Agreement"; and, unless otherwise defined herein, terms which are
defined or defined by reference in the Participation Agreement
(including Appendix 1 attached thereto) shall have the same
meanings when used herein as such terms have therein and the
rules of interpretation set forth in Appendix 1 thereto shall
apply to this Guaranty); and
WHEREAS, it is a condition precedent to the Participants
consummating the transactions to be consummated on the Initial
Closing Date that the Guarantor execute and deliver this
Guaranty; and
WHEREAS, it is in the best interests of the Guarantor that
the transactions contemplated by the Participation Agreement be
consummated; and
WHEREAS, this Guaranty, and the execution, delivery and
performance hereof, have been duly authorized by all necessary
corporate action of Guarantor; and
WHEREAS, this Guaranty is offered by the Guarantor as an
inducement to the Participants to consummate the transactions
contemplated in the Participation Agreement, which transactions,
if consummated, will be of benefit to the Guarantor;
NOW, THEREFORE, in consideration of the foregoing and for
other good and valuable consideration, the receipt of which is
hereby acknowledged by Guarantor, Guarantor hereby agrees as
follows:
<PAGE>
SECTION 1. Guaranty. Guarantor hereby unconditionally
guarantees the full and prompt payment when due, whether by
acceleration or otherwise, and at all times thereafter, and the
full and prompt performance, of all of the Liabilities (as
hereinafter defined), including interest and earnings on any such
Liabilities whether accruing before or after any bankruptcy or
insolvency case or proceeding involving the Lessee or any other
Person and, if interest or earnings on any portion of such
obligations ceases to accrue by operation of law by reason of the
commencement of such case or proceeding, including such interest
and yield as would have accrued on any such portion of such
obligations if such case or proceeding had not commenced, and
further agrees to pay all reasonable expenses (including
reasonable attorneys' fees actually incurred, disbursements and
legal expenses) paid or incurred by each of the Participants in
endeavoring to collect the Liabilities, or any part thereof, and
in enforcing this Guaranty. The term "Liabilities", as used
herein, shall mean all of the following, in each case howsoever
created, arising or evidenced, whether direct or indirect, joint
or several, absolute or contingent, or now or hereafter existing,
or due or to become due: (i) all amounts payable or obligations
to be performed by the Lessee under the Lease (including, without
limitation, Basic Rent, Lease Balance, Supplemental Rent,
Purchase Option Price and Residual Value Guarantee), the
Participation Agreement or any other Operative Document, (ii) all
amounts payable or obligations to be performed by the
Construction Agent pursuant to the Construction Agency Agreement,
and (iii) all principal of the Notes, Liquidity Notes, Commercial
Paper Notes and Lessor Investment Amounts and interest or
Certificate Earnings accrued thereon, premium, if any, and all
additional amounts and other sums at any time due and owing, and
required to be paid, to the Participants under the terms of the
Operative Documents; provided, however, that Guarantor will not
be obligated to pay under this Guaranty any amounts greater than
the Lessee and the Construction Agent would have had to pay under
the Lease, the Construction Agency Agreement, the Participation
Agreement and the other Operative Documents assuming that such
documents were enforced in accordance with their terms (and
without giving effect to any discharge or limitation thereon
resulting or arising by reason of the bankruptcy or insolvency of
the Lessee or the Construction Agent), plus any and all
reasonable costs of enforcing this Guaranty. Without limiting
the generality of the foregoing, in the event that the Lessee
elects the Remarketing Option pursuant to the terms of the Lease,
unless a Lease Event of Default thereafter occurs and is
continuing, the Guarantor's liability for the principal amount of
the Notes, the Commercial Paper Notes, the Liquidity Notes and
the Lessor Investment Amounts shall not exceed the Residual Value
Guarantee with respect to all of the Properties subject to the
Lease on the Expiration Date, plus any amounts owing pursuant to
Section 14 of the Participation Agreement.
SECTION 2. Bankruptcy. Guarantor agrees that, in the
event of the dissolution, bankruptcy or insolvency of the Lessee
or the Construction Agent, or the inability or failure of
<PAGE>
the Lessee or the Construction Agent generally to pay debts as
they become due, or an assignment by the Lessee or the
Construction Agent for the benefit of creditors, or the
commencement of any case or proceeding in respect of the Lessee
the Construction Agent under any bankruptcy, insolvency or
similar laws, and if such event shall occur at a time when any of
the Liabilities may not then be due and payable, Guarantor will
pay to the applicable Participant forthwith the full amount which
would be payable hereunder by the Guarantor if all Liabilities
were then due and payable. In the event of a rejection of the
Lease in a bankruptcy or insolvency proceeding, Guarantor agrees
that it will pay forthwith all payments required to be made by
Lessee under the Lease as though the rejection had not occurred.
SECTION 3. Continuing Guaranty. This Guaranty shall in
all respects be a continuing, primary, absolute and unconditional
guaranty of prompt and complete payment and performance (and not
merely of collection), and shall remain in full force and effect
(notwithstanding, without limitation, the dissolution of the
Lessee or Construction Agent) until the termination of the
Participation Agreement and the full and final payment and
performance of all of the Liabilities or such lesser amount as is
required to be paid hereunder pursuant to Section 1 hereof.
SECTION 4. Reinstatement. Guarantor further agrees
that, if at any time all or any part of any payment theretofore
applied to any of the Liabilities is rescinded or returned for
any reason whatsoever (including, without limitation, the
insolvency, bankruptcy or reorganization of the Lessee), such
Liabilities shall, for the purposes of this Guaranty, to the
extent that such payment is or must be rescinded or returned, be
deemed to have continued in existence, notwithstanding such
application, and this Guaranty shall continue to be effective or
be reinstated, as the case may be, as to such Liabilities, all as
though such application had not been made.
SECTION 5. Certain Actions. Subject to the terms of the
other Operative Documents, the Participants may, from time to
time at their discretion, take any or all of the following
actions: (a) retain or obtain (i) a security interest in the
Lessor's interest in the Lease and Construction Agency Agreement
and (ii) a lien or a security interest hereafter granted by any
Person upon or in any property, in each case to secure any of the
Liabilities or any obligation hereunder provided, however, that
no Participant shall have any obligation to protect, secure,
perfect or insure any security interest or any Lien at any time
held by it as security for the Liabilities or for this Guaranty;
(b) retain or obtain the primary or secondary obligation of any
obligor or obligors, in addition to the Guarantor, with respect
to any of the Liabilities; (c) extend or renew for one or more
periods (regardless of whether longer than the original period),
alter or exchange any of the Liabilities, or release or
compromise any obligation of Guarantor hereunder without
releasing the Guarantor hereunder or any obligation of any nature
of any other obligor (including, without limitation, the Lessor)
with respect to any of the Liabilities; (d) release or fail
<PAGE>
to perfect its lien upon or security interest in, or impair,
surrender, release or permit any substitution or exchange for,
all or any part of any property securing any of the Liabilities
or any obligation hereunder, or extend or renew for one or more
periods (regardless of whether longer than the original period)
or release, compromise, alter or exchange any obligations of any
nature of any obligor with respect to any such property; and
(e) subject to the limitations of Section 1 hereof, resort to
Guarantor for payment of any of the Liabilities, regardless of
whether any of the Participants or any other Person shall have
resorted to any property securing any of the Liabilities or any
obligation hereunder or shall have proceeded against any other
obligor primarily or secondarily obligated with respect to any of
the Liabilities (all of the actions referred to in this clause
(e) being hereby expressly waived by Guarantor). The
Participants shall provide prior written notice to the Guarantor
of any intentional action (or in the case of an unintentional
action, upon discovery by such Participant) taken by any
Participant pursuant to this Section 5, to the extent reasonably
practicable.
SECTION 6. Application. Any amounts received by any
Participant from whatever source on account of the Liabilities
shall be applied by it toward the payment of such of the
Liabilities, and in such order of application, as is set forth in
the Section 5 of the Participation Agreement. Until all of the
Liabilities are indefeasibly paid in full, Guarantor hereby
agrees that no payment made by or for the account of Guarantor
pursuant to this Guaranty shall entitle Guarantor by subrogation,
indemnification, exoneration, contribution, reimbursement or
otherwise to any payment by the Lessee, Construction Agent or
Lessor or from or out of any property of the Lessee, Construction
Agent or Lessor and Guarantor hereby expressly waives, to the
fullest extent possible, and shall not exercise, any right or
remedy against the Lessee, Construction Agent or the Lessor or
any property of the Lessee or the Lessor by reason of any
performance by Guarantor of this Guaranty unless and until all
amounts owing to any Participant on account of the Liabilities
are paid in full.
SECTION 7. Payments Under the Guaranty Relating to
Amounts Due on the Commercial Paper Notes. The Facility Lender,
through the Administrative Agent, is authorized to draw amounts
under this Guaranty to pay amounts due with respect to the
Interest Component and Principal Component of the Commercial
Paper Notes at the times, in the manner and to the extent set
forth in Section 5.6 of the Participation Agreement; provided,
however, that the Facility Lender, through the Administrative
Agent, is not authorized to draw any amounts hereunder greater
than the Lessee would have had to pay under the Lease, the
Participation Agreement and the other Operative Documents
assuming that such documents were enforced in accordance with
their terms (and without giving effect to any discharge or
limitation thereon resulting or arising by reason of the
bankruptcy or insolvency of the Lessee).
In order to make a drawing under this Guaranty, the Facility
Lender, through the
<PAGE>
Administrative Agent, shall, immediately upon determining that
such drawing is required, deliver to the Guarantor, by telecopy,
a Draw Certificate in the form attached hereto as Exhibit "A",
stating the amount required to be funded hereunder and the
purpose for which such funds are being drawn. Notwithstanding
the foregoing, however, failure by the Facility Lender, through
the Administrative Agent, to deliver any such Draw Certificate to
the Guarantor shall not relieve the Guarantor of its obligation
to pay the amounts guaranteed hereunder.
SECTION 8. Waiver. Guarantor hereby expressly waives:
(a) notice of the acceptance of this Guaranty; (b) notice of the
existence or creation or non-payment of all or any of the
Liabilities; (c) presentment, demand, notice of dishonor,
protest, and, to the fullest extent permitted by Applicable Law,
any notice not required herein, all other notices whatsoever;
(d) all diligence in collection or protection of or realization
upon the Liabilities or any thereof, any obligation hereunder, or
any security for or guaranty of any of the foregoing; and (e) any
right to require marshalling of its assets in connection with the
satisfaction of the Liabilities. When making any demand
hereunder against the Guarantor, a Participant may, but shall be
under no obligation to, make a similar demand on the Lessee or
the Construction Agent, as the case may be, and any failure by a
Participant to make any such demand or to collect any payments
from the Lessee or the Construction Agent or any release of the
Lessee or the Construction Agent shall not relieve the Guarantor
of its obligations or liabilities hereunder, and shall not impair
or affect the rights and remedies, express or implied, or as a
matter of law, of such Participant against the Guarantor.
SECTION 9. Assignment. This Guaranty may not be
transferred or assigned by the Guarantor. This Guaranty shall be
binding upon Guarantor and upon Guarantor's successors and shall
inure to the benefit of each Participant and its respective
successors and permitted assigns.
SECTION 10. The Guarantor's Liabilities Not Affected.
The duties and obligations of the Guarantor under this Guaranty
shall remain in full force and effect, without the necessity of
any reservation of rights against the Guarantor or further assent
by the Guarantor, and without regard to, and shall not be
impaired or affected by:
(a) any lack of validly, legality or enforceability of
the Lease, the Participation Agreement or any other
Operative Document for any reason or any limitation of the
remedies of a Participant under any of the Operative
Documents or the rejection or disaffirmance thereof, any
limitation of the liability of the Lessee or the
Construction Agent under the terms of any Operative
Document, which may now or hereafter be imposed by any
Requirement of Law or the occurrence of any Lease Event of
Default or Construction Agency Event of Default;
<PAGE>
(b) any merger or consolidation of the Lessee, the
Construction Agent or the Guarantor into or with any other
Person, or any sale, lease or transfer of any or all of the
capital stock or assets of the Lessee or the Guarantor to
any other Person or any assignment or subletting of any
Property pursuant to the Lease;
(c) any claim, counterclaim, set-off, deduction or
defense (other than payment or performance) the Guarantor or
Lessee or the Construction Agent may have against the
Participants, whether hereunder or under any Operative
Document or independent of or unrelated to the transactions
contemplated by the Operative Documents;
(d) any extension of the Lease Term; or
(e) any action referred to in Section 5 or any other
circumstance whatsoever which might otherwise operate as a
release or discharge of a guarantor or surety;
it being the purpose and intent that this Guaranty and the
obligations and liabilities of the Guarantor hereunder shall be
absolute, unconditional and continuing under any and all
circumstances, shall not be discharged except by payment and
performance in full, and shall only terminate when all of the
Liabilities (subject to the limitations thereon in Section 1) and
all of the obligations of the Guarantor hereunder and all
expenses (including legal expenses) of the Participants in
enforcing this Guaranty and the guarantees and obligations of the
Guarantor hereunder shall have been paid and performed.
SECTION 11. Miscellaneous. No delay in the exercise of
any right or remedy shall operate as a waiver thereof, and no
single or partial exercise of any right or remedy shall preclude
other or further exercise thereof or the exercise of any other
right or remedy. No modification or waiver of any of the
provisions of this Guaranty be binding upon any Participant or
Guarantor unless such modification or waiver is by an instrument
in writing and signed by the Guarantor and such Participant;
provided that as a condition precedent to such modification or
waiver, the Guarantor shall provide written confirmation from S&P
and Moody's that immediately after giving effect to such
modification or waiver, the Commercial Paper Notes shall not be
rated lower than such Commercial Paper Notes are rated
immediately prior thereto and such modification or waiver shall
not result in a downgrade, withdrawal or qualification of the
rating assigned to the Commercial Paper Notes by Moody's and S&P.
No action permitted hereunder shall in any way affect or impair
any Participant's rights or Guarantor's obligations under this
Guaranty. For the purposes of this Guaranty, Liabilities shall
include all of the obligations described in the definition
thereof, and any right or power of the Lessee, Construction Agent
or the Lessor or anyone else to assert any claim or defense shall
not affect or impair the obligations of the Guarantor hereunder.
Guarantor's obligations under this Guaranty shall be absolute and
unconditional irrespective of any circumstance whatsoever which
might constitute a legal or
<PAGE>
equitable discharge or defense of Guarantor. This Guaranty is
effective upon delivery.
Wherever possible each provision of this Guaranty shall be
interpreted in such manner as to be effective and valid under
Applicable Law, but if any provision of this Guaranty shall be
prohibited by or invalid thereunder, such provision shall be
ineffective only to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the
remaining provisions of this Guaranty.
All notices, demands, declarations, consents, directions,
approvals, instructions, requests and other communications
required or permitted by this Guaranty shall be in writing and
shall be deemed to have been duly given when addressed to the
appropriate Person and delivered in the manner specified in
Section 15.3 of the Participation Agreement.
THIS GUARANTY SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF GEORGIA, WITHOUT REGARD TO
CONFLICT OF LAW PRINCIPLES THEREOF. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, GUARANTOR HEREBY EXPRESSLY WAIVES ANY RIGHT TO A
TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND
ANY RIGHTS UNDER THIS GUARANTY OR UNDER ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE
FUTURE BE DELIVERED IN CONNECTION HEREWITH OR ARISING FROM ANY
RELATIONSHIP EXISTING IN CONNECTION WITH THIS GUARANTY, AND
AGREES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, THAT ANY SUCH
ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE
A JURY.
<PAGE>
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be
executed and delivered under seal by its duly authorized officers
as of the date first above written.
THE HOME DEPOT, INC.
[CORPORATE SEAL]
By:________________________________
Marshall L. Day
Senior Vice President and
Chief Financial Officer
Attest:____________________________
Lawrence A. Smith
Assistant Secretary
<PAGE>
EXHIBIT A
Draw Certificates
The Home Depot, Inc. [Date]
2455 Paces Ferry Road
Atlanta, Georgia 30339-4024
Attention: VP - Treasurer
Re: Commercial Paper Notes Issued By HD Real Estate Funding
Corp.
The undersigned, a duly authorized officer of
______________________________ (the "Administrative Agent"), as
agent of HD Real Estate Funding Corp. (the "Facility Lender") is
making a drawing under that certain Guaranty, dated as of
June 25, 1996 (the "Guaranty"), from the Guarantor to the
Facility Lender and the other Participants named therein, in the
amount of $___________. The drawing is being made for the
following purpose:
[The payment of the Interest Component and Principal
Component of maturing Commercial Paper Notes which the
Lenders are not obligated to pay pursuant to the Liquidity
Agreement due to the occurrence and continuance of a Lease
Event of Default.]
The Administrative Agent certifies that the amount drawn
hereunder is an amount for which the Guarantor is liable pursuant
to the terms of the Guaranty.
IN WITNESS WHEREOF, the Administrative Agent has executed
and delivered this Certificate as of the _____ day of
_______________, ____.
________________________, as
Administrative
By:___________________________
Title:__________________________
<PAGE>
EXECUTION COUNTERPART
LOAN AGREEMENT
dated as of June 25, 1996
between
CREDIT SUISSE LEASING 92A, L.P., as borrower
and
HD REAL ESTATE FUNDING CORP., as lender
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1.
DEFINITIONS; INTERPRETATION 1
SECTION 2.
AMOUNT AND TERMS OF COMMITMENTS 1
SECTION 2.1 Facility Lender Commitments 1
SECTION 2.2 Capitalization 2
SECTION 2.3 Notes 2
SECTION 2.4 Prepayments 2
SECTION 2.5 Termination, Reduction or Extension of
Facility Lender Commitments 3
SECTION 2.6 Interest Rates and Payment Dates 3
SECTION 2.7 Pro Rata Treatment and Payments 4
SECTION 3. 4
CONDITIONS PRECEDENT
SECTION 3.1 Conditions to Effectiveness 4
SECTION 3.2 Conditions to Each Loan 4
SECTION 4. 5
COVENANTS
SECTION 4.1 Compliance with Operative Documents 5
SECTION 4.2 Further Assurances 5
SECTION 5. 5
LOAN AGREEMENT EVENTS OF DEFAULT
SECTION 6. 9
ASSIGNMENT TO AGENT BANK; SUBORDINATION
SECTION 6.1 Certain Remedial Matters 9
SECTION 6.2 Subordination 9
<PAGE>
SECTION 7. 9
MISCELLANEOUS
SECTION 7.1 Amendments and Waivers 9
SECTION 7.2 Notices 9
SECTION 7.3 No Waiver; Cumulative Remedies 9
SECTION 7.4 Survival of Representations and
Warranties 9
SECTION 7.5 Successors and Assigns; Assignment by
Lessor 10
SECTION 7.6 Usury 10
SECTION 7.7 Counterparts 10
SECTION 7.8 Severability 10
SECTION 7.9 Governing Law 10
SECTION 7.10 Limitations on Recourse Against Lessor 10
SECTION 7.11 Limitations on Recourse Against Facility
Lender 11
<PAGE>
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of June 25, 1996, is entered
into by and between CREDIT SUISSE LEASING 92A, L.P., a Delaware
limited partnership ("Lessor"), as borrower and HD REAL ESTATE
FUNDING CORP., a Delaware corporation ("Facility Lender"), as
lender.
The parties hereto hereby agree as follows:
SECTION 1.
DEFINITIONS; INTERPRETATION
Unless the context shall otherwise require, capitalized
terms used and not defined herein shall have the meanings
assigned thereto in Appendix 1 attached hereto and made a part
hereof by this reference for all purposes hereof; and the rules
of interpretation set forth in Appendix 1 hereto shall apply to
this Loan Agreement.
SECTION 2.
AMOUNT AND TERMS OF COMMITMENTS
SECTION 2.1 Facility Lender Commitments. (a) Subject to
the terms and conditions hereof and of the other Operative
Documents, Facility Lender hereby agrees to issue Commercial
Paper Notes and/or to request Direct Funding Loans pursuant to
the Liquidity Agreement, and from the proceeds thereof, to make
term loans (the "Loans") to the Lessor from time to time in an
amount equal to the amount requested to be provided by Loans from
Facility Lender in the applicable Funding Request for Advances
pursuant to the Participation Agreement to be applied for use as
contemplated by the Participation Agreement and the other
Operative Documents, in an aggregate principal amount not to
exceed the amount of the Facility Lender Commitments; provided
that, the Facility Lender shall have no obligation to fund any
Loan hereunder unless and to the extent that Facility Lender
shall have received net proceeds of the issuance of Commercial
Paper Notes and/or Direct Funding Loans sufficient to fund such
Loan.
(b) Each Loan made by the Facility Lender hereunder
shall be deemed to consist of a "Tranche A Loan" (collectively,
the "Tranche A Loans") in an initial principal amount equal to
the Facility Lender Tranche A Commitment Percentage multiplied by
the principal amount of such Loan and a "Tranche B Loan"
(collectively, the "Tranche B Loans") in
<PAGE>
an initial principal amount equal to the Facility Lender
Commitment Percentage multiplied by the principal amount of such
Loan.
<PAGE>
SECTION 2.2 Capitalization. On each date which is five (5)
Business Days prior to any Scheduled Payment Date during the
Commitment Period, unless otherwise requested by the Lessor at
least five (5) Business Days prior to such Scheduled Payment Date
by written notice to the Facility Lender, the Lessor shall be
deemed to have requested a borrowing of Loans pursuant to Section
2.1 ("Interest Payment Loans") in an amount equal to the
aggregate amount of accrued interest due and payable on such date
with respect to the principal amount of the Loans allocated to
the Property Acquisition Costs and Property Improvements Cost of
the then existing Construction Period Properties (it being
understood that, upon occurrence of the Completion Date for each
Construction Period Property, no further Interest Payment Loans
shall be made with respect to the Loans allocated to the Property
Costs of each such Property). The Funding Date with respect to
such Interest Payment Loans shall be the relevant Scheduled
Payment Date (provided that the making of the Loans pursuant to
such borrowing shall not be subject to satisfaction of the
applicable conditions precedent set forth in Section 7 of the
Participation Agreement) and the proceeds of such Interest
Payment Loans as set forth in the Participation Agreement shall
be applied to pay such accrued interest. On each such Funding
Date, the Property Acquisition Cost and Property Improvements
Cost of each Construction Period Property shall be increased by
an amount equal to the interest paid on such date with respect to
such Property with the proceeds of such Interest Payment Loans as
set forth in the Participation Agreement.
SECTION 2.3 Notes. The Loans made by Facility Lender shall
be evidenced by a promissory note of the Lessor, substantially in
the form of Exhibit A-1 attached hereto and made a part hereof by
this reference, in the case of Tranche A Loans (the "Tranche A
Note"), or Exhibit A-2 attached hereto and made a part hereof by
this reference, in the case of Tranche B Loans (the "Tranche B
Note") payable to the order of Facility Lender and in a principal
amount equal to the lesser of (a) the initial Tranche A Loan
Commitment or Tranche B Loan Commitment, as the case may be, and
(b) the aggregate unpaid principal amount of all Tranche A Loans
or Tranche B Loans, as the case may be, made hereunder. Facility
Lender is hereby authorized to record the date and amount of each
Loan made by Facility Lender, each continuation thereof, the date
and amount of each payment or prepayment of principal thereof on
the schedule annexed to and constituting a part of its Notes, and
any such recordation shall constitute prima facie evidence of the
accuracy of the information so recorded, provided that the
failure to make any such recordation (or any error in such
recordation) shall not affect the Lessor's obligations hereunder
or under such Note. Each Note shall (i) be dated the Initial
Closing Date, (ii) be stated to mature on the Loan Termination
Date and (iii) provide for the payment of interest in accordance
with Section 2.7.
SECTION 2.4 Prepayments. (a) The Lessor shall be deemed to
have prepaid the Loans, without premium or penalty, on each
Payment Date by an amount equal to any reduction of the
<PAGE>
sum of the aggregate outstanding Principal Component of the
Commercial Paper Notes plus the outstanding principal amount of
all Facility Loans on such date paid by the Lessee pursuant to
the Lease or by the Construction Agent pursuant to the
Construction Agency Agreement or otherwise by any Person pursuant
to the Operative Documents (including, without duplication, any
amount paid by the Guarantor pursuant to the Guaranty with
respect to such obligations).
(b) If on any Payment Date, the Lenders are not obligated
to make Liquidity Loans pursuant to the Liquidity Agreement with
respect to any Commercial Paper Notes maturing on such date, the
Lessor shall prepay the outstanding amount of the Loans in an
amount equal to the Principal Component of such maturing
Commercial Paper Notes (to the extent received as Supplemental
Rent from Lessee or from the Guarantor pursuant to the Guaranty
with respect thereto).
(c) All prepayments of the Loans shall be applied in the
manner set forth in Section 5 of the Participation Agreement.
SECTION 2.5 Termination; Reduction or Extension of Facility
Lender Commitments. (a) The Lessor shall have the right, subject
to the last sentence hereof, upon not less than five (5) Business
Days' notice to the Facility Lender, to terminate the Facility
Lender Commitments or, from time to time, to reduce the amount of
the Facility Lender Commitments, provided that (i) after giving
effect to such reduction, the aggregate outstanding principal
amount of the Tranche A Loans shall not exceed the Tranche A Loan
Commitment, (ii) after giving effect to such reduction, the
aggregate outstanding principal amount of the Tranche B Loans
shall not exceed the Tranche B Loan Commitment, (iii) any such
reduction shall be made pro rata among the Tranche A Loan
Commitment and Tranche B Loan Commitment, and (iv) such notice
shall be accompanied by a certificate of the Construction Agent
stating that, in its reasonable judgment the amount needed to
complete the Improvements on each Property as of the date of such
reduction does not exceed the aggregate amount of Available
Commitments as of such date after giving effect to such
reduction. Any such reduction shall reduce permanently the
Facility Lender Commitments then in effect. Notwithstanding the
foregoing, the Lessor may not terminate or reduce the Facility
Lender Commitments hereunder unless there is a simultaneous and
equal termination or reduction of the Commitment in accordance
with the terms of the Liquidity Agreement.
(b) The Loan Termination Date with respect to the Facility
Lender Commitments shall be deemed to have been extended for the
same term as any extension of the term of the Commitment pursuant
to the Liquidity Agreement and the extension of the Loan
Termination Date shall become effective as of the date (the
"Extension Effective Date") on which the extension of the
Commitment is effective.
<PAGE>
SECTION 2.6 Interest Rates and Payment Dates. (a) Each
Loan shall bear interest for each day during each Payment Period
with respect thereto at a rate per annum equal to the rate
necessary for the Facility Lender to pay when due, the Interest
Component on the outstanding Commercial Paper Notes and all
accrued interest on the Facility Loans outstanding during such
Payment Period (the "Blended Rate").
(b) If all or a portion of (i) the principal amount of any
Loan, (ii) any interest payable thereon or (iii) any other amount
payable hereunder shall not be paid within five (5) Business Days
of the date when due (whether at the stated maturity, by
acceleration or otherwise), such overdue amount shall bear
interest at a rate per annum which is equal to the Overdue Rate;
provided that, such amount shall bear interest at the Blended
Rate during such period unless the same is not paid by such fifth
(5th) Business Day in which case interest shall be deemed to have
accrued at the Overdue Rate from the due date.
(c) Subject to the ability to capitalize certain interest
cost with respect to Construction Period Properties set forth in
Section 2.2 hereof and Section 5.2 of the Participation
Agreement, interest shall be payable on each Payment Date in
amount necessary to repay the Interest Component of the
Commercial Paper Notes maturing on such date and all accrued
interest on the Liquidity Notes payable on such date pursuant to
the Liquidity Agreement. Notwithstanding the foregoing, (i)
interest accruing pursuant to paragraph (b) of this Section 2.7
shall be payable from time to time on demand, and (ii) each
prepayment of the Loans shall be accompanied by accrued interest
to the date of such prepayment on the amount prepaid.
SECTION 2.7 Pro Rata Treatment and Payments. Each
borrowing by the Lessor from the Facility Lender hereunder and
any reduction of the Facility Lender Commitments shall be made
pro rata between the Tranche A Loan Commitment and Tranche B Loan
Commitment. All payments (including prepayments) to be made by
the Lessor hereunder and under the Notes, whether on account of
principal, interest or otherwise, shall be made without setoff or
counterclaim and shall be made prior to 2:00 p.m., New York time,
on the due date thereof (which shall be the due date of the
amount owing on the Commercial Paper Notes or Liquidity Notes
payable with such amount) to the Facility Lender, or its
assignee, at the office referred to in Section 7.2, in Dollars
and in immediately available funds.
SECTION 3.
CONDITIONS PRECEDENT
SECTION 3.1 Conditions to Effectiveness. This Loan
Agreement shall be effective on
<PAGE>
the Initial Closing Date.
SECTION 3.2 Conditions to Each Loan. The agreement of
Facility Lender to make any Loan requested to be made by it on
any date is subject to, (i) other than with respect to Interest
Payment Loans, the satisfaction of the conditions precedent
thereto set forth in Section 7 of the Participation Agreement,
(ii) the Facility Lender shall be satisfied that the Lessor shall
have invested in the Properties on the relevant Funding Date an
amount at least equal to the Lessor Commitment Percentage of the
aggregate outstanding Advances, and (iii) the Facility Lender
shall have received aggregate net proceeds of Commercial Paper
Notes and/or proceeds of Facility Loans in an amount sufficient
to fund such Loan on or prior to the applicable Funding Date.
SECTION 4.
COVENANTS
So long as the Facility Lender Commitments remain in effect,
any Note remains outstanding and unpaid or any other amount is
owing to Facility Lender hereunder or under the other Operative
Documents:
SECTION 4.1 Compliance with Operative Documents. The
Lessor shall at all times observe and perform all of the
covenants, conditions and obligations required to be performed by
it under each Operative Document to which it is a party.
SECTION 4.2 Further Assurances. At any time and from time
to time, upon the written request of the Facility Lender or the
Agent Bank, the Lessor will promptly and duly execute and deliver
such further instruments and documents and take such further
action as the Agent Bank or the Facility Lender may reasonably
request for the purpose of obtaining or preserving the full
benefits of this Loan Agreement and the other Operative Documents
and of the rights and powers herein or therein granted (but only
to the extent Lessor has been reimbursed by the Lessee to the
extent required pursuant to the Participation Agreement for any
costs incurred in complying herewith).
<PAGE>
SECTION 5.
LOAN AGREEMENT EVENTS OF DEFAULT
Upon the occurrence of any of the following specified events
(each a "Loan Agreement
Event of Default"):
(a) The Lessor shall default in the payment when due
of any (i) principal of the Loans, (ii) interest on the
Loans which default pursuant to this subsection (ii) shall
continue for five (5) Business Days or more, or (iii) any
other amounts owing hereunder or under any other Loan
Document to which it is a party and, in the case of a
default pursuant to this subsection (iii), such default
shall continue for five (5) Business Days or more after
notice thereof to the Lessor; or
(b) The Lessor shall default in the due performance or
observance by it of any term, covenant or agreement
contained in any Loan Document to which it is a party (other
than those referred to in paragraph (a) above), and such
default shall have continued unremedied for a period of at
least thirty-five (35) days after notice to the Lessor by
the Facility Lender, the Lessee or the Agent Bank; provided,
however, that as to any breach by Lessor or failure of
Lessor to perform its obligations, if such failure is (1)
capable of being cured (other than by payment of money), (2)
cannot be cured within thirty-five (35) days, and (3) Lessor
is at all times diligently and in good faith pursuing the
cure thereof, then the cure period for such failure shall be
extended for the period reasonably necessary for Lessor to
effect such cure, but in no event greater than ninety (90)
days;
(c) Any representation, warranty or statement made or
deemed made by the Lessor herein or in any other Loan
Document or by the Lessor in the Participation Agreement, or
in any statement or certificate delivered or required to be
delivered pursuant hereto or thereto, shall prove to be
untrue in any material respect on the date as of which made
or deemed made, and such misrepresentation or breach of
warranty shall remain unremedied for a period of at least
thirty-five (35) days after notice to the Lessor by the
Agent Bank, the Lessee or the Facility Lender; or
(d) Any Lease Event of Default or Facility Agreement
Event of Default shall have occurred and be continuing; or
(e) The Lessor shall commence a voluntary case
concerning itself under Title 11 of the United States Code
entitled "Bankruptcy," as now or hereafter in effect, or any
<PAGE>
successor thereto (the "Bankruptcy Code"); or an involuntary
case is commenced against the Lessor and the petition is not
dismissed within ninety (90) days after commencement of the
case; or a custodian (as defined in the Bankruptcy Code) is
appointed for, or takes charge of, all or substantially all
of the property of the Lessor; or the Lessor commences any
other proceeding under any reorganization, arrangement,
adjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar law of any jurisdiction
whether now or hereafter in effect relating to the Lessor;
or there is commenced against the Lessor any such proceeding
which remains undismissed for a period of ninety (90) days;
or the Lessor is adjudicated insolvent or bankrupt; or any
order of relief or other order approving any such case or
proceeding is entered; or the Lessor suffers any appointment
of any custodian or the like for it or any substantial part
of its property to continue undischarged or unstayed for a
period of ninety (90) days; or the Lessor makes a general
assignment for the benefit of creditors; or any corporate
action is taken by the Lessor for the purpose of effecting
any of the foregoing; or
(f) Any Lien granted under any Security Document
shall, in whole or in part terminate, cease to be effective
or lose its priority, except (i) as expressly contemplated
by the Operative Documents, or (ii) as the result of an act
or omission of the Lessee, the Guarantor, the Facility
Lender, the Agent Bank or any Lender; provided, however,
that, no Loan Agreement Event of Default shall be deemed to
have occurred hereunder unless such event affects a material
item of Collateral subject to the Security Documents and
such termination, loss of effectiveness or priority shall
have continued for a period of thirty (30) days after notice
to the Lessor from any Person;
then (A) if such event is a Loan Agreement Event of Default
specified in paragraph (e) or paragraph (d) (solely to the extent
arising out of or attributable to a Lease Event of Default under
Sections 17.1(h) or (i) of the Lease) above, automatically the
Facility Lender Commitments shall immediately terminate and the
Loans hereunder (with accrued interest thereon) and all other
amounts owing under this Loan Agreement and the Notes shall
immediately become due and payable, and (B) if such event is any
other Loan Agreement Event of Default, either or both of the
following actions may be taken: (i) the Facility Lender may, by
notice to the Lessor declare the Facility Lender Commitments to
be terminated forthwith, whereupon the Facility Lender
Commitments shall immediately terminate; and (ii) Facility Lender
may, by notice to the Lessor declare the Loans hereunder (with
accrued interest thereon) and all other amounts owing under this
Loan Agreement and the Notes to be due and payable forthwith,
whereupon the same shall immediately become due and payable (any
of the foregoing occurrences or actions referred to in clause (A)
or (B) above, an "Acceleration"). Except as expressly provided
above in this Section 5, presentment, demand, protest and all
other notices of any kind are hereby expressly waived.
<PAGE>
Notwithstanding the foregoing:
(x) Upon the occurrence of a Loan Agreement Event of
Default (other than a Loan Agreement Event of Default
arising out of, or attributable to, a Material Lease Event
of Default), the Facility Lender shall give the Lessee and
Lessor at least thirty (30) days prior written notice
("Acceleration Notice") prior to exercising any of its
remedies pursuant to the provisions of this Section 5.
(y) In the event of any default by the Lessee of its
obligation to pay Basic Rent or Supplement Rent in
accordance with the Lease, the Lessor may, without the
consent of the Facility Lender, the Agent or the Banks,
prior to the date on which the Loans have been accelerated
pursuant to this Section, pay to the Facility Lender a sum
equal to the amount of all (but not less than all) of the
principal and interest as shall then be due and payable on
the Loans and any other amounts owing by the Lessor
hereunder, together with any overdue interest in respect
thereof, and such payment by the Lessor shall be deemed to
cure any Loan Agreement Default or Loan Agreement Event of
Default hereunder which arose or would otherwise have arisen
on account of such non-payment by the Lessee; provided,
however that the Lessor may not exercise such right on more
than two (2) consecutive occasions or more than four
occasions in the aggregate throughout the Term of the Lease.
In the event of (I) any other Lease Event of Default caused
by or attributable to a default by the Lessee of any other
obligation under the Lease, the Construction Agency
Agreement or any other Operative Agreement or (II) any other
default by Facility Lender under any Operative Document,
the Lessor may (unless the Lessor has received notice within
fifteen (15) days after the Acceleration Notice from the
Lessee that the Lessee is exercising its rights under the
Liquidity Agreement to cure such default and/or to replace
the Facility Lender pursuant to Section 13.2 of the
Participation Agreement, in which case Lessor shall refrain
from taking any such action until the end of such thirty
(30) day period afforded to Lessee thereunder), with prior
or contemporaneous notice to but without the consent of the
Facility Lender, the Agent or the Lenders but no less than
fifteen (15) or more than thirty (30) days after its receipt
of such Acceleration Notice, perform such obligations and
otherwise exercise the rights of the Lessor under Article
XVIII of the Lease and such performance by the Lessor shall
be deemed to cure any Loan Agreement Default or Loan
Agreement Event of Default hereunder.
(z) In the event of any Loan Agreement Event of
Default not attributable to, or arising out of, any default
by the Lessee in the payment or performance of any of its
obligations under the Operative Documents, the Lessee may,
with prior or contemporaneous notice to but without the
consent of the Facility Lender, Agent Bank or
<PAGE>
the Lenders, but within thirty (30) days after its receipt
of such Acceleration Notice, pay and perform such obligation
of the Lessor and/or replace the Lessor pursuant to Section
13.2 of the Participation Agreement and such payment and
performance (or replacement together with payment and
performance of any outstanding obligations of Lessor) by the
Lessee shall be deemed to cure any Loan Agreement Event of
Default hereunder.
In addition to the foregoing, subject to the provisions set
forth in the immediately preceding paragraphs:
(i) Upon the occurrence of any Loan Agreement Event of
Default and at any time thereafter so long as any Loan
Agreement Event of Default shall be continuing, Facility
Lender may exercise any or all of the rights and powers and
pursue any and all of the remedies available to it hereunder
and (subject to the terms thereof) under the other Operative
Documents and shall have any and all rights and remedies
available under the Uniform Commercial Code or any provision
of law.
(ii) Upon the occurrence of any Loan Agreement Event of
Default and at any time thereafter so long as any Loan
Agreement Event of Default shall be continuing, Facility
Lender may proceed to protect and enforce this Loan
Agreement, the Notes, and the other Operative Documents, by
suit or suits or proceedings in equity, at law or in
bankruptcy, and whether for the specific performance of any
covenant or agreement herein contained or in execution or
aid of any power herein granted, or for foreclosure
hereunder, or for the appointment of a receiver or receivers
for the Properties or any Property or for the recovery of
judgment for the indebtedness secured thereby or for the
enforcement of any other proper, legal or equitable remedy
available under Applicable Laws.
(iii) Lessor shall be liable for any and all
accrued and unpaid amounts due hereunder before, after or
during the exercise of any of the foregoing remedies,
including all reasonable legal fees and other reasonable
costs and expenses incurred by Facility Lender by reason of
the occurrence of any Loan Agreement Event of Default or the
exercise of remedies with respect thereto.
SECTION 6.
ASSIGNMENT TO AGENT BANK; SUBORDINATION
SECTION 6.1 Certain Remedial Matters. The Lessor
acknowledges that all of the Facility Lender's rights under this
Loan Agreement and the other Operative Documents (other
<PAGE>
than the right to receive certain Excepted Payments and the
Excepted Rights) have been assigned to the Agent Bank to secure
the Facility Lender's obligations pursuant to the Liquidity
Agreement and agrees that the Agent Bank may exercise any rights
granted to Facility Lender hereunder.
SECTION 6.2 Subordination. During the Term, the Security
Documents with respect to any Property shall be subject and
subordinate to the Lease.
SECTION 7.
MISCELLANEOUS
SECTION 7.1 Amendments and Waivers. Neither this Loan
Agreement, any other Loan Document, nor any terms hereof or
thereof may be amended, supplemented or modified except by a
writing signed by the parties hereto and otherwise in accordance
with the provisions of Section 15.5 of the Participation
Agreement.
SECTION 7.2 Notices. All notices, requests and demands to
or upon the respective parties hereto shall be given in
accordance with Section 15.3 of the Participation Agreement.
SECTION 7.3 No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of the Facility
Lender, any right, remedy, power or privilege hereunder or under
the other Operative Documents shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy,
power or privilege. The rights, remedies, powers and privileges
herein provided are cumulative and not exclusive of any rights,
remedies, powers and privileges provided by law.
SECTION 7.4 Survival of Representations and Warranties.
All representations and warranties made hereunder, in the other
Operative Documents and in any document, certificate or statement
delivered pursuant hereto or in connection herewith shall survive
the execution and delivery of this Loan Agreement and the Notes
and the making of the Loans hereunder.
<PAGE>
SECTION 7.5 Successors and Assigns; Assignment by Lessor. This
Loan Agreement shall be binding upon and inure to the benefit of
the Lessor and the Facility Lender, all future holders of the
Notes and their respective successors and assigns, except that
the Lessor may not assign or transfer any of its rights or
obligations under this Loan Agreement without the prior written
consent of Lessee, Agent Bank and Facility Lender.
SECTION 7.6 Usury. The provisions of Section 15.6 of the
Participation Agreement are incorporated herein by this
reference.
SECTION 7.7 Counterparts. This Loan Agreement may be
executed by one or more of the parties to this Loan Agreement in
any number of separate counterparts (including by telecopy), and
all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
SECTION 7.8 Severability. Any provision of this Loan
Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such
prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
SECTION 7.9 GOVERNING LAW. THIS LOAN AGREEMENT AND THE
NOTES AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS
LOAN AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
GEORGIA (WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES
THEREOF).
SECTION 7.10 Limitations on Recourse against Lessor.
Notwithstanding anything contained in this Loan Agreement or the
Notes to the contrary, Facility Lender agrees to look solely to
Lessor's (or to any partner thereof's) estate and interest in the
Properties and rights pursuant to the Operative Documents for the
collection of any judgment requiring the payment of money by
Lessor in the event of liability by Lessor, and no other property
or assets of Lessor or any shareholder, owner or partner (direct
or indirect) in or of Lessor, or any director, officer, employee,
beneficiary, Affiliate of any of the foregoing shall be subject
to levy, execution or other enforcement procedure for the
satisfaction of Facility Lender's remedies against Lessor under
or with respect to this Loan Agreement, the relationship of
Lessor and Facility Lender hereunder or Facility Lender's use of
the Properties or any other liability of Lessor to Facility
Lender; provided that, nothing herein shall limit recourse
against the Lessor or its partners for the gross negligence or
willful misconduct of such Persons or claims proximately caused
by Lessor's breach of its obligations pursuant to Sections 9.1,
11.2 (solely with respect to the first sentence thereof), 11.3,
11.4, 11.6(a), (g), (h) or 11.7 of the Participation Agreement;
provided further, that the foregoing proviso is intended to allow
a claim for damages against Lessor but shall not be construed as
creating a full recourse obligation on the part of Lessor (or any
partner thereof) to
<PAGE>
repay any of the Loans or any amounts relating to the Loans
arising under the Loan Agreement and the Notes.
SECTION 7.11 Limitations on Recourse Against Facility
Lender. The limitations on recourse against the Facility Lender
set forth or incorporated by reference in Section 15.15 of the
Participation Agreement are hereby incorporated herein by this
reference and made a part hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Loan
Agreement to be duly executed and delivered by their proper and
duly authorized officers as of the day and year first above
written.
CREDIT SUISSE LEASING 92A, L.P.,
a Delaware limited partnership
BY: CREDIT SUISSE, its general
partner
By:________________________________
Title:_____________________________
By:________________________________
Title:_____________________________
HD REAL ESTATE FUNDING CORP.
By:________________________________
Title:_____________________________
<PAGE>
EXECUTION COPY
$291,000,000
LIQUIDITY AGREEMENT
Dated as of
June 25, 1996
Among
HD REAL ESTATE FUNDING CORP.,
The Financial Institutions Parties Hereto,
as Lenders,
DEUTSCHE BANK AG, NEW YORK BRANCH,
as Documentation Agent,
and
CREDIT SUISSE,
as Agent Bank
<PAGE>
LIQUIDITY AGREEMENT
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS 1
1.01 Definitions 1
1.02 Interpretation 1
ARTICLE II
COMMERCIAL PAPER OPERATIONS 2
2.01 Issuance of Commercial Paper 2
2.02 Commercial Paper Account; Payment of Commercial
Paper 3
ARTICLE III
LOANS 4
3.01 Commitment 4
3.02 Loans 4
3.03 Disbursement of Funds 6
3.04 The Notes 7
3.05 Conversions and Continuations 8
3.06 Interest 9
3.07 Increased Cost, etc 9
3.08 Interest Periods 13
3.09 Compensation 14
3.10 Pro Rata Borrowing 14
3.11 Payments from Collateral Only 14
ARTICLE IV
OTHER CREDIT TERMS 15
4.01 Facility Fees 15
4.02 Reduction and Termination of Commitment 16
4.03 Increase of Commitment 16
4.04 Extensions of Commitment 16
4.05 Replacement of a Non-Consenting Lender 17
4.06 Proceeds. 18
4.07 Calculation of Certain Fees and Other Amounts 19
ARTICLE V
PAYMENTS 19
5.01 Prepayments on Non-Business Days 19
5.02 Prepayments 20
5.03 Cash Collateral Account 20
5.04 Method and Place of Payment, Etc 20
5.05 Sharing of Payments, Etc. 21
<PAGE>
ARTICLE VI
CONDITIONS PRECEDENT 22
6.01 Conditions to Effectiveness 22
6.02 Conditions to Each Closing Date 22
6.03 Conditions to Each Other Issuance of Commercial
Paper 22
6.04 Conditions to the Making of Each Loan 23
ARTICLE VII
COVENANTS 24
7.01 Obligations 24
ARTICLE VIII
EVENTS OF DEFAULT 24
ARTICLE IX
REPRESENTATIONS AND WARRANTIES 27
ARTICLE X
MISCELLANEOUS 27
10.01 Computations 27
10.02 Exercise of Rights 28
10.03 Amendment and Waiver 28
10.04 Successors and Assigns 28
10.05 Notices; Requests; Demands 31
10.06 Survival of Representations and Warranties 32
10.07 Usury Savings 32
10.08 Governing Law 32
10.09 Counterparts 33
10.10 Setoff 33
10.11 Further Assurances 33
10.12 Appointment of the Agent Bank; Documentation
Agent 33
10.13 Resignation by the Agent Bank; Removal. 36
10.14 Knowledge of Borrower 37
10.15 Descriptive Headings 37
<PAGE>
ANNEX X Definition of Terms
ANNEX Y Lender Notice and Funding Information
EXHIBIT A Form of Notice of Conversion/Continuation
EXHIBIT B-1 Form of Tranche A Note
EXHIBIT B-2 Form of Tranche B Note
EXHIBIT C Form of Assignment and Acceptance
<PAGE>
LIQUIDITY AGREEMENT
LIQUIDITY AGREEMENT, dated as of June 25, 1996 (as
amended, supplemented or modified from time to time, this
"Agreement") among HD Real Estate Funding Corp., a Delaware
corporation (hereinafter called the "Borrower"), the financial
institutions parties hereto (hereinafter each, together with its
successors and permitted assigns, a "Lender" and collectively,
together with their respective successors and permitted assigns,
the "Lenders"), DEUTSCHE BANK AG, NEW YORK BRANCH, as
documentation agent for the Lenders (the "Documentation Agent"),
and CREDIT SUISSE, a Swiss bank operating through its New York
branch, as agent for the Lenders (hereinafter, together with its
successors in such capacity, the "Agent Bank").
W I T N E S S E T H :
WHEREAS, the Borrower proposes to issue and sell its
promissory notes in the United States commercial paper market and
utilize the net proceeds thereof to provide financing to the
Lessor in order to finance purchases of Construction Period
Properties, and the construction of Improvements thereon, in
accordance with the terms of the Operative Documents, which
Properties will thereafter be leased by the Lessor to the Lessee
pursuant to the Lease and the Lease Supplements;
WHEREAS, the Borrower has made application to the
Lenders for the commitment of the Lenders, subject to and upon
the terms and conditions set forth herein and in the other
Operative Documents, to make loans to the Borrower, the proceeds
of which shall be used (a) to make payments in respect of the
Borrower's Eligible Commercial Paper or (b) to make Loans to the
Lessor to fund Property Acquisition Costs and Property
Improvements Costs in accordance therewith; and
WHEREAS, subject to the terms and conditions set forth
herein, the Lenders are willing to commit to make such loans to
the Borrower.
NOW THEREFORE, in consideration of the premises and
mutual covenants herein contained, the parties hereto agree as
follows:
<PAGE>
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions. As used herein in this
Agreement and unless the context requires a different meaning,
capitalized terms used herein and not otherwise defined have the
meanings assigned to such terms (i) Annex X hereto which is
incorporated by reference or (ii) to the extent not defined in
such Annex X, in Appendix 1 to the Participation Agreement.
SECTION 1.02 Interpretation. The rules of usage set
forth in Appendix 1 to the Participation Agreement shall apply to
this Agreement.
ARTICLE II
COMMERCIAL PAPER OPERATIONS
SECTION 2.01 Issuance of Commercial Paper.
(a) Subject to the provisions of this Section 2.01 and to
Article VI hereof, so long as the Issuing and Paying Agent and
the Borrower have not received instructions from the Agent Bank,
pursuant to this Section 2.01, not to issue or deliver Commercial
Paper, the Borrower shall have the right prior to the fifteenth
(15th) Business Day preceding the Maturity Date, from time to
time on and after the Effective Date, to issue and sell
Commercial Paper pursuant to this Agreement and the other
Commercial Paper Documents. The Agent Bank shall have the right
to instruct the Issuing and Paying Agent and the Borrower not to
issue and sell Commercial Paper only if there shall have occurred
one or more of the following events (i) the Borrower shall have
terminated the Commitment, in whole, hereunder pursuant to
Section 4.02 hereof, or (ii) the conditions precedent specified
in Article VI hereof with respect to the issuance of Commercial
Paper have not been satisfied or waived, or (iii) the Commitment
is otherwise terminated in whole for any reason in accordance
herewith, or (iv) the Cash Collateral Account or the Commercial
Paper Account or any funds on deposit in, or otherwise to the
credit of, the Cash Collateral Account or the Commercial Paper
Account are or have become subject to any stay, writ, judgment,
warrant of attachment, execution or similar process, unless such
stay, writ, judgment, warrant or attachment, execution or similar
process does not, in the reasonable opinion of the Required
Lenders, materially impair the fulfillment of the transactions
contemplated by this Agreement. Any instructions from the Agent
Bank to the Issuing and Paying Agent and the Borrower in
accordance with this Section 2.01 shall be in writing and shall
specify one or more of the events described in clauses (i)
through (iv) as being the reason(s) to cease issuing and
delivering Commercial Paper. Additionally, if the Borrower has
actual knowledge that one or more of the events described in
clauses (i) through (iv) above has occurred, the Borrower agrees
that it will not issue or sell Commercial Paper. If the Agent
Bank shall, as permitted by this Section 2.01(a), instruct the
Issuing and Paying Agent and the Borrower not to issue or deliver
the Commercial Paper, the Borrower shall not thereafter issue or
sell any Commercial Paper. Concurrently with the giving of any
such instructions to the Issuing and Paying Agent and the
Borrower, the Agent Bank shall give notice thereof to the
Guarantor, the Lessee, the Lessor the Placement Agent and the
agency or agencies known to it to have provided investment
ratings with respect to the Commercial Paper, but failure to do
so shall not impair the effectiveness of such instructions.
(b) Subject to Section 2.01(c), the Borrower agrees
that each note constituting Commercial Paper shall (i) be in one
of the forms as provided in the Issuing and Paying Agency
Agreement, (ii) be dated the date of issuance thereof, (iii) be
made payable to the order of a named payee or bearer, (iv) have a
maturity date which shall be a Business Day and shall not be
later than the earlier to occur of (A) the two hundred seventieth
(270th) day following issuance thereof or (B) two (2) Business
Days prior to the Maturity Date in effect on the date of issuance
thereof, and (v) be in a face amount (issued on a discount basis)
of $250,000 or an integral multiple of $1,000 in excess of
$250,000.
(c) No issuance of Commercial Paper shall be made if,
after giving effect to such issuance, the Credits Outstanding (as
defined below) would exceed the Commitment. "Credits
Outstanding" shall mean, as of any date of determination: (i) the
Principal Component and the Interest Component of all Eligible
Commercial Paper outstanding on such date (after giving effect to
any repayments thereof on such date) plus (ii) the principal
amount of the Facility Loans outstanding (after giving effect to
any repayments thereof on such date) minus (iii) to
<PAGE>
the extent not subject to any writ, order, stay, judgment,
warrant of attachment, execution or similar process, the
Deposited Funds remaining after giving effect to all payments
required to be made therefrom under the Operative Documents
(including any Loans required to be made under the Loan Agreement
and any repayments or prepayments of any Facility Loans or
Eligible Commercial Paper). Subject to the provisions of the
Issuing and Paying Agency Agreement, all Commercial Paper shall
be delivered and issued against payment therefor in collected
funds which are immediately available on the date of issuance,
and otherwise in accordance with the terms of this Agreement and
the Commercial Paper Documents.
(d) The Borrower shall not issue any additional
Commercial Paper, the Principal Component of which exceeds the
Principal Component of the then maturing Commercial Paper;
provided, however, that if and to the extent (i) that Commercial
Paper has been issued or Direct Funding Loans have been made to
pay Property Costs of Construction Period Properties, then the
Borrower may, until the occurrence of the applicable Completion
Date with respect to such Properties, issue additional Commercial
Paper in excess of the Principal Component of the then maturing
Commercial Paper to pay Property Costs (including the Interest
Component of Commercial Paper issued to pay other Property Costs)
and/or to repay such Direct Funding Loans with respect to such
Construction Period Properties, or (ii) Liquidity Loans are
outstanding hereunder, then the Borrower may issue additional
Commercial Paper in excess of the Principal Component of the then
maturing Commercial Paper to repay such Liquidity Loans.
SECTION 2.02 Commercial Paper Account; Payment of
Commercial Paper. Contemporaneously with the execution and
delivery by the Borrower of the Issuing and Paying Agency
Agreement, and for the purposes of this Agreement and the Issuing
and Paying Agency Agreement, the Issuing and Paying Agent shall
establish at its banking offices in The City of New York a
special purpose trust account for the exclusive benefit of the
holders of the outstanding Commercial Paper (such account being
referred to herein and in the Issuing and Paying Agency Agreement
as the "Commercial Paper Account"), over which the Issuing and
Paying Agent shall have exclusive control and sole right of
withdrawal (subject to the provisions of the Operative
Documents). Proceeds of the sale of Commercial Paper shall be
deposited: (i) in the Commercial Paper Account only to the extent
necessary to pay matured and concurrently maturing Commercial
Paper, whether or not presented to the Issuing and Paying Agent
for payment; (ii) to the Cash Collateral Account only to the
extent required to pay or repay Facility Loans; or (iii)
otherwise as may be instructed in any Funding Request for
disposition in accordance with the Operative Documents.
<PAGE>
ARTICLE III
LOANS
SECTION 3.01 Commitment. (a) Subject to and upon the
terms and conditions herein set forth, each Lender severally
agrees, at any time and from time to time on a revolving basis
prior to the Maturity Date, to make a loan or loans (each, a
"Facility Loan" and collectively, the "Facility Loans") to the
Borrower up to its Percentage of the Commitment which Facility
Loans shall initially be made as Base Rate Loans or, provided
that the Borrower shall have given the Agent Bank by 12:00 noon
at least three (3) Business Days' prior written notice of any
request therefor, Eurodollar Loans and may thereafter, at the
option of the Borrower, be converted to or continued as either
Base Rate Loans or Eurodollar Loans; provided that all Facility
Loans made pursuant to the same Borrowing shall be of the same
Type and that such Facility Loans shall be repaid and reborrowed
in accordance with the provisions hereof. Each Borrowing (other
than Interest Payment Loans) consisting of Direct Funding Loans
shall be in an amount at least equal to $5,000,000 and in
integral multiples of $100,000 in excess thereof.
(b) No Facility Loan shall be made by a Lender if,
immediately after giving effect to the application of such
Facility Loan and each other Facility Loan to be made in
connection with the same Borrowing, (i) the aggregate outstanding
principal amount of such Lender's Facility Loans would exceed
such Lender's Percentage of the Commitment or (ii) the Credits
Outstanding would exceed the Commitment.
(c) The Borrower shall repay each Facility Loan in
accordance with the provisions of this Agreement, the Notes and
the Operative Documents and in any event each such Facility Loan
shall be repayable in full on the earlier to occur of the
Maturity Date and the acceleration of the maturity of such
Facility Loans in accordance with the provisions of this
Agreement and the Notes.
(d) Each Lender's obligation to make Facility Loans
hereunder is several and not joint. The failure of any Lender to
make the Facility Loan to be made by it as part of any Borrowing
shall not relieve any other Lender of its obligation, if any,
hereunder to make its Facility Loan on the date of such
Borrowing, but no Lender shall be responsible for the failure of
any other Lender to make the Facility Loan to be made by such
other Lender on the date of any Borrowing.
SECTION 3.02 Loans. (a) If, on any Business Day
(other than any day on or after the second Business Day prior to
the Expiration Date) that Commercial Paper matures, the Borrower
is unable to issue additional Eligible Commercial Paper in an
aggregate net amount, together with the aggregate amount of funds
available to repay such maturing Eligible Commercial Paper on
deposit in the Commercial Paper Account, sufficient to repay in
full the Interest Component and Principal Component of all
Eligible Commercial Paper maturing on such day, the Lenders
shall, upon the request of the Borrower or the Issuing and Paying
Agent, as attorney-in-fact for the Borrower, and subject to the
limitations imposed by Section 3.01(d) and Article VI, (i) make
Facility Loans pro rata in an aggregate principal amount equal to
the Commercial Paper Deficit (each such Facility Loan pursuant to
this Section 3.02(a), a "Liquidity Loan"), and (ii) after the
making of any Liquidity Loan as aforesaid, make additional
Liquidity Loans under the circumstances set forth in Section
3.02(e).
(b) If, on any Business Day that an Advance has been
requested to pay Property Acquisition Costs or Property
Improvements Costs, the Borrower is unable (other than as a
result of the non-satisfaction of the conditions precedent set
forth herein and in the Participation Agreement), or for any
reason elects not, to issue additional Eligible Commercial Paper
in an aggregate net amount sufficient to fund the amount of such
Advance requested to be funded by Loans by the Borrower, as set
forth in the applicable Funding Request, the Lenders shall, upon
the request of the Borrower or the Issuing and Paying Agent, as
attorney-in-fact for the Borrower, and subject to the limitations
imposed by Section 3.01(d) and Article VI, make Facility Loans
<PAGE>
pro rata in an aggregate principal amount equal to the Funding
Deficit (each such Facility Loan pursuant to this Section
3.02(b), a "Direct Funding Loan").
(c) If the Lessee has elected the Remarketing Option
then the Lenders shall, upon the request of the Borrower or the
Issuing and Paying Agent, as attorney-in-fact for the Borrower,
and subject to the limitations imposed by Sections 3.01(d) and
Article VI, make Facility Loans, on the second (2nd) Business Day
prior to the Maturity Date, pro rata in an aggregate principal
amount equal to the lesser of: (i) the Tranche B Maximum Amount
minus the aggregate principal amount of all outstanding Tranche B
Facility Loans and (ii) the aggregate outstanding Principal
Component and Interest Component of all outstanding Eligible
Commercial Paper (after giving effect to all payments required to
be made pursuant to Section 5 of the Participation Agreement on
such date, including the application of all Deposited Funds) (the
"CP Deficit") (each such Facility Loan pursuant to this Section
3.02(c), a "Residual Loan"). If the Lessee has elected the
Remarketing Option, on the second (2nd) Business Day prior to the
Maturity Date, the Agent Bank shall, no later than 10:00 a.m.
(New York City time), notify the Borrower whether or not a Lease
Event of Default is then continuing and, unless such notice is
given, the Lenders shall, subject to Section 6.04, thereafter be
obliged to make the Residual Loans on such date.
(d) The Borrower or the Issuing and Paying Agent, as
attorney-in-fact for the Borrower, shall give the Agent Bank
telephonic notice (confirmed in writing promptly thereafter) of
the aggregate principal amount of the Facility Loans required by
Section 3.02(a), (b) or (c). The Agent Bank will promptly give
each Lender telephonic notice (confirmed in writing promptly
thereafter) of such request. If such notice is received by the
Agent Bank prior to 12:45 p.m. (New York City local time) on any
such Business Day, the requested Facility Loans will be made on
such Business Day pro rata by the Lenders. If such notice is not
received prior to 12:45 p.m. (New York City local time) on such
Business Day, the requested Facility Loans will be made pro rata
by the Lenders on the Business Day next succeeding the Business
Day on which such notice is given. If it is determined that the
conditions precedent to the making of any Liquidity Loan or
Residual Loan have not been satisfied, then by no later than 1:30
p.m., the Agent Bank shall notify the Borrower and the Issuing
and Paying Agent of such determination. Failure to give such a
notice shall be deemed to be a confirmation by the Agent Bank
that such conditions precedent have not been satisfied or waived.
(e) On each date which is one Business Day prior to
any date on which interest is due and payable pursuant to Section
3.06(d) (each such date on which interest is due, a "Scheduled
Interest Payment Date") unless otherwise requested by the
Borrower at least one Business Day prior to such Scheduled
Interest Payment Date by written notice to the Agent Bank, the
Borrower shall be deemed to have requested (i) to the extent such
Direct Funding Loans are not then being repaid by the issuance of
Commercial Paper, a Direct Facility Loan, pursuant to Section
3.01, of Base Rate Loans in an amount equal to the aggregate
amount of interest due and payable on such date with respect to
Direct Funding Loans outstanding with respect to current
Construction Period Properties and (ii) to the extent such
Liquidity Loans are not then being repaid by the issuance of
Commercial Paper, a Liquidity Loan, pursuant to Section 3.01, of
Base Rate Loans in an amount equal to the aggregate amount of
interest due and payable on such date with respect to outstanding
Liquidity Loans which repaid Commercial Paper issued to fund
Property Costs with respect to current Construction Period
Properties. The date of such Borrowing shall be the relevant
Scheduled Interest Payment Date and the proceeds of such
borrowing shall be applied to pay such interest. Notwithstanding
the foregoing, the Borrower may, in compliance with Section 3.01,
request that such Interest Payment Loans be made as Eurodollar
Loans.
(f) Each Direct Funding Loan and each Liquidity Loan
made by a Lender hereunder shall be deemed to consist of a
"Tranche A Facility Loan" in an initial principal amount equal to
the Tranche A Percentage times the principal amount of such
Facility Loan and a "Tranche B Facility Loan" in an initial
principal amount equal to the Tranche B Percentage times the
principal amount of such Facility Loan. Each Residual Loan made
by a Lender hereunder shall be deemed to consist solely of
Tranche B Facility Loans
SECTION 3.03 Disbursement of Funds. (a) No later
than 3:00 p.m. (or in the case of Liquidity Loans and Residual
Loans, 2:00 p.m.) (New
<PAGE>
York City local time) for Base Rate Loans and no later than Noon
(New York City local time) for Eurodollars Loans, in each case,
on the date for a Borrowing, each Lender will make available to
the Agent Bank at the Payment Office in freely transferable U.S.
dollars and in immediately available funds its Percentage of the
Borrowing required to be made on such day. After the Agent
Bank's receipt of such funds and the Agent Bank's good faith
determination that the conditions set forth in Article VI and in
the Participation Agreement have been fulfilled, the Agent Bank
will immediately make such funds available to the Borrower by
remitting the proceeds of such Loans (a) in the case of Liquidity
Loans (including Liquidity Loans constituting Interest Payment
Loans) and Residual Loans, to the Commercial Paper Account
maintained with the Issuing and Paying Agent for application in
accordance with the terms of the Issuing and Paying Agency
Agreement or (b) in the case of Direct Funding Loans (other than
Interest Payment Loans), as specified pursuant in the Funding
Request.
(b) Unless the Agent Bank shall have received notice
from a Lender prior to the time of any Borrowing that such Lender
will not make available to the Agent Bank such Lender's Facility
Loan, the Agent Bank may assume that such Lender has made such
Facility Loan available to the Agent Bank on the date of such
Facility Loan in accordance with this Section 3.03 and the Agent
Bank may (but in no event shall be required to), in reliance upon
such assumption, apply the proceeds of such Facility Loan as
provided for in this Section 3.03. If and to the extent such
Lender shall not have so made such Facility Loan available to the
Agent Bank, each of such Lender and the Borrower severally agrees
to repay to the Agent Bank forthwith on demand such corresponding
amount together with interest thereon, for each day from the date
such amount is made available by the Agent Bank until the date
such amount is repaid to the Agent Bank, at a rate per annum
equal to the Federal Funds Rate for each such day; provided, that
any such payment by the Borrower of such amount (and interest
thereon) shall be without prejudice to any rights that the
Borrower may have against such Lender.
SECTION 3.04 The Notes. (a) The Borrower's
obligation to pay the principal of and interest on the Facility
Loans made by each Lender shall be evidenced by promissory notes
of the Borrower in favor of each such Lender, one note with
respect to such Lender's Tranche A Facility Loans substantially
in the form of Exhibit B-1 to this Agreement (a "Tranche A Note")
and one note with respect to such Lender's Tranche B Facility
Loans substantially in the form of Exhibit B-2 to this Agreement
(a "Tranche B Note"), both of which shall: (1) be dated the
Effective Date; (2) be in the stated principal amount equal to
(A) the Tranche A Percentage or the Tranche B Percentage, as the
case may be, multiplied by (B) such Lender's Percentage of the
Initial Aggregate Commitment Amount; (3) mature on the Maturity
Date; (4) bear interest as provided in Section 3.06; (5) be
payable to the order of such Lender; (6) be entitled to the
benefits of this Agreement; and (7) have the blanks appropriately
completed in conformity herewith. Each Lender shall, and is
hereby authorized to, make a notation on the Schedule attached to
its Notes of the date and amount of each Facility Loan and the
date and amount of the payment of principal thereon and prior to
any transfer of its Notes, such Lender shall endorse the
outstanding principal amount of such Notes on the Schedule
attached thereto, each of which notations or endorsements shall
be prima facie evidence of the transactions evidenced thereby;
provided, however, that failure to make such notation or
endorsements or any errors in any such notations or endorsements
shall not adversely affect such Lender's rights with respect to
the Loans or the Borrower's obligations under such Notes.
(b) Although each Note shall be dated the Effective
Date, interest in respect thereof shall be payable only for the
periods during which any Facility Loans are outstanding
thereunder. In addition, although the stated principal amount of
each Note shall be equal to the Tranche A Percentage or the
Tranche B Percentage, as the case may be, of the related Lender's
Percentage of the Commitment, each Note shall be enforceable with
respect to the Borrower's obligation to pay the principal thereof
only to the extent of the unpaid principal amount of the Loans
outstanding thereunder at the time such enforcement shall be
sought.
SECTION 3.05 Conversions and Continuations. (a)
Provided that no Facility Agreement Event of Default has occurred
and is continuing, the Borrower shall have the option, subject to
the provisions of Article III (including,
<PAGE>
without limitation Sections 3.07 and 3.08 and the following
provisions of this Section 3.05), to convert on any Business Day
all or any part of the outstanding principal amount of Facility
Loans made pursuant to a single Borrowing from one Type of
Facility Loan into another Type and to continue any Type of
Facility Loan for a designated period; provided that (x) the
outstanding principal amount of the Loans made pursuant to a
single Borrowing being converted pursuant to this Section 3.05
shall be at least $5,000,000 and in integral multiples of
$100,000 in excess thereof, (y) after giving effect thereto the
outstanding principal amount of Eurodollar Loans made pursuant to
a single Borrowing shall not be less than $5,000,000 or integral
multiples of $100,000 in excess thereof and (z) conversions of
Eurodollar Loans shall only be permitted on the last day of an
Interest Period applicable thereto unless accompanied by payment
pursuant to Section 3.09. Each such conversion or continuation
shall be made pro rata among the Facility Loans made pursuant to
a single Borrowing and shall be effected by the Borrower, in the
case of a conversion, by giving at least three (3) Business Days'
prior written notice or telephonic notice (confirmed in writing
promptly thereafter) (each, a "Notice of Conversion") of each
proposed conversion to the Agent Bank and, in the case of a
continuation, by giving notice (in writing or by telephone
confirmed in writing promptly thereafter) (each, a "Notice of
Continuation") at least three (3) Business Days prior to the
Business Day on which the Interest Period in respect of such
Loans to be continued will expire. The Agent Bank shall promptly
notify each Lender by facsimile of each Notice of Conversion and
Notice of Continuation. Each Notice of Conversion and Notice of
Continuation shall be irrevocable, shall be substantially in the
form attached hereto as Exhibit A and shall specify the Facility
Loans to be converted or continued, the Type of Loans to be
converted into and, if such Facility Loans are to be converted
into or continued as Eurodollar Loans, the Interest Period to be
applicable thereto. If the Borrower shall fail to continue any
Eurodollar Loans in accordance with the provisions contained in
this Section 3.05, the Agent Bank will forthwith so notify the
Borrower, the Lessee and the Lenders, whereupon each such
Eurodollar Loan will automatically, on the last day of the then
existing Interest Period therefor, convert into a Base Rate Loan.
(b)(i) On the date on which the aggregate unpaid
principal amount of Eurodollar Loans comprising any Borrowing
shall be reduced, by payment or prepayment or otherwise, to less
than $5,000,000, such Eurodollar Loans shall automatically
convert into Base Rate Loans on the last day of the Interest
Period applicable to such Eurodollar Loans.
(ii) If a Facility Agreement Event of Default occurs
and is continuing, then (A) each Eurodollar Loan automatically
shall convert into a Base Rate Loan on the last day of the
Interest Period applicable thereto, and the Borrower shall not
have the right to continue such Facility Loans as Eurodollar
Loans or select a succeeding Interest Period with respect thereto
and any such selection of a succeeding Interest Period
theretofore made pursuant to the terms hereof shall be null and
void, and (B) the obligation of the Lenders to make, or to
convert Facility Loans into, Eurodollar Loans shall be suspended;
provided, however, that each Eurodollar Loan automatically shall
be converted into a Base Rate Loan immediately upon the Facility
Loans (or any of them) being declared to be due and payable, or
becoming due and payable, pursuant to Article VIII.
SECTION 3.06 Interest. (a) The Borrower agrees to
pay interest in respect of the unpaid principal amount of each
Base Rate Loan from the date the proceeds thereof are made
available to the Borrower until maturity (whether by acceleration
or otherwise) at a rate per annum equal to the Base Rate in
effect from time to time plus the Applicable Margin.
(b) The Borrower agrees to pay interest in respect of
the unpaid principal amount of each Eurodollar Loan from the date
the proceeds thereof are made available to the Borrower or
converted to or continued as a Eurodollar Loan until maturity
(whether by acceleration or otherwise) at a rate per annum equal
to (i) the Applicable Margin plus (ii) the relevant Adjusted
LIBOR Rate for Eurodollar Loans for the Interest Period
specified.
(c) The Borrower agrees to pay interest in respect of
the unpaid principal amount of and interest on (to the extent
permitted by law), each Facility Loan from the due date thereof
until paid in full at a rate
<PAGE>
per annum equal to the Base Rate plus 1% per annum; provided,
that to the extent such overdue amount is paid prior to the end
of grace period with respect thereto, interest shall accrue on
only the principal portion thereof and shall accrue at the
applicable rate pursuant to subsections (a) and (b) above.
(d) Accrued interest in respect of each Base Rate Loan
shall be payable monthly in arrears on the last Business Day of
each calendar month, on any prepayment or conversion (on the
amount prepaid or converted), at maturity (whether by
acceleration, demand or otherwise), and after such maturity, on
demand. Accrued interest in respect of each Eurodollar Loan
shall be payable in arrears on the last Business Day of each
Interest Period applicable to such Eurodollar Loan (and with
respect to any Interest Period of six (6) months, the date which
is three (3) months after the commencement of such Interest
Period), on any prepayment or conversion (on the amount prepaid
or converted), at maturity (whether by acceleration, demand or
otherwise), and after such maturity, on demand.
(e) The Agent Bank, upon determining the Adjusted
LIBOR Rate for any Interest Period, shall promptly notify the
Borrower and the Lessee thereof by telephone or in writing.
SECTION 3.07 Increased Cost, etc. (a)(i) Except as
to taxes, levies, imposts, deductions, charges, or withholdings
as provided in Section 3.07(e), if after the date hereof, a
Change of Law or compliance by any Lender (or its Applicable
Lending Office) with any official request or directive (whether
or not having the force of law) of any Authority:
(x) shall subject any Lender (or its Applicable
Lending Office) to any tax, duty or other charge on its
Eurodollar Loans or its obligation to make Eurodollar Loans,
or shall change the basis of taxation of payments to any
Lender (or its Applicable Lending Office) of the principal
of or interest on its Eurodollar Loans or any other amounts
due under this Agreement in respect of its Eurodollar Loans
or its obligation to make Eurodollar Loans (except for
changes in the rate of tax on the overall net income or
gross receipts of such Lender or its Applicable Lending
Office imposed by the jurisdiction in which such Lender's
principal executive office or Applicable Lending Office is
located); or
(y) shall impose, modify or deem applicable any
reserve, special deposit or similar requirement (including,
without limitation, any such requirement imposed by the
Board of Governors of the Federal Reserve System, but
excluding with respect to any Eurodollar Loan any such
requirement included in an the calculation of the Adjusted
LIBOR Rate) against assets of, deposits with or for the
account of, or credit extended by, any Lender (or its
Applicable Lending Office); or
(z) shall impose on any Lender (or its Applicable
Lending Office) or on the United States market or the London
interbank market any other condition affecting its
Eurodollar Loans, Notes, or its obligation to make
Eurodollar Loans;
and the result of any of the foregoing is to increase the cost to
such Lender (or its Applicable Lending Office) of making or
maintaining any Eurodollar Loan, or to reduce the amount of any
sum received or receivable by such Lender (or its Applicable
Lending Office) under this Agreement, its Notes with respect
thereto, or under any other Operative Document by an amount
reasonably determined by such Lender to be material, then, within
fifteen (15) days after demand, which demand shall be accompanied
by an explanation of the nature of the costs and a reasonably
detailed calculation thereof, by such Lender (with a copy to the
Agent Bank, the Lessor and the Lessee), the Borrower shall pay to
such Lender such additional amount or amounts as will compensate
such Lender for such increased cost or reduction; provided that
no such amount may be claimed by any Lender which is attributable
to periods prior to the date which is sixty (60) days preceding
the date on which the officer of the Lender having primary
responsibility for asset liability management shall have obtained
actual knowledge of such demand.
<PAGE>
(ii) If any Lender shall have determined that after the
date hereof the adoption of any applicable law, rule or
regulation regarding capital adequacy, or any change therein, or
any change in the official interpretation or official
administration thereof, or compliance by any Lender (or its
Applicable Lending Office) or any Person controlling such Lender
with any request or directive regarding capital adequacy (whether
or not having the force of law) of any Governmental Authority,
has or would have the effect of reducing the rate of return on
such Lender's or such controlling Person's capital as a
consequence of its obligations hereunder to a level below that
which such Lender or such controlling Person could have achieved
but for such adoption, change or compliance (taking into
consideration such Lender's or such controlling Person's policies
with respect to capital adequacy) by an amount reasonably
determined by such Lender or such controlling Person to be
material, then from time to time, within fifteen (15) days after
demand, which demand shall be accompanied by an explanation of
the nature of the costs and a reasonably detailed calculation
thereof, by such Lender or such controlling Person (with a copy
to the Lessee, the Lessor and the Agent Bank), the Borrower shall
pay to such Lender an additional amount or amounts as will
compensate such Lender or such controlling Person for such
reduction; provided that no such amount may be claimed by any
Lender which is attributable to periods prior to the date which
is sixty (60) days preceding the date on which the officer of the
Lender having primary responsibility for asset liability
management shall have obtained actual knowledge of such demand.
(b) Notice. Each Lender will promptly notify the
Borrower, the Lessee, the Lessor and the Agent Bank of any event
of which its officer having primary responsibility for asset
liability management has knowledge, which occurs or is expected
to occur after the date hereof, which will entitle such Lender to
compensation pursuant to this Section and will designate a
different Applicable Lending Office if such designation will
avoid the need for, or reduce the amount of, such compensation
and will not, in the reasonable judgment of such Lender, be
otherwise materially disadvantageous to such Lender. A
certificate of any Lender claiming compensation under this
Section and setting forth in reasonable detail the additional
amount or amounts to be paid to it hereunder, the reasonably
detailed calculations required above and the date on which the
officers of the Lender having primary responsibility for asset
liability management obtained knowledge of such event shall
constitute rebuttable presumptive evidence of the amounts to be
paid in the absence of manifest error. In determining such
amount, such Lender may use any reasonable averaging and
attribution methods.
(c) Unavailability or Inadequacy of Adjusted LIBOR
Rate. If, with respect to any Eurodollar Loans, (i) the Agent
Bank determines that, for any reason, appropriate quotations are
not available to it in the London interbank market for purposes
of determining the Adjusted LIBOR Rate, or (ii) the Required
Lenders shall notify the Agent Bank that the Adjusted LIBOR Rate
for any Interest Period for such Loans will not adequately
reflect the cost to such Lenders of making, funding or
maintaining their Eurodollar Loans for such Interest Period, the
Agent Bank shall forthwith so notify the Borrower, the Lessee,
the Lessor and the Lenders, whereupon (x) each such Eurodollar
Loan will automatically, on the last day of the then existing
Interest Period therefor, convert into a Base Rate Loan and (y)
the obligation of the Lenders to make, or to convert Loans into,
Eurodollar Loans shall be suspended until the Agent Bank shall
notify the Borrower, the Lessor and the Lessee that, in the case
of clause (i), the Agent Bank has, and, in the case of clause
(ii), Required Lenders have, determined that the circumstances
causing such suspension no longer exist.
(d) Illegality. If, after the date hereof, a Change
in Law shall occur or compliance by any Lender (or its Applicable
Lending Office) with any request or directive (whether or not
having the force of law) of any Authority shall make it unlawful
or impossible for any Lender (or its Applicable Lending Office)
to make, maintain or fund its Eurodollar Loans and such Lender
shall so notify the Agent Bank, the Agent Bank shall forthwith
give notice thereof to the other Lenders, the Lessor, the Lessee
and the Borrower, whereupon until such Lender notifies the
Borrower, the Lessor, the Lessee and the Agent Bank that the
circumstances giving rise to such suspension no longer exist, the
obligation of such Lender to make Eurodollar Loans shall be
suspended. Before giving any notice to the Agent Bank pursuant
to this Section 3.07(d), such Lender shall designate a different
Applicable Lending Office if such designation will avoid the need
for giving such notice and will not, in the reasonable judgment
of such Lender, be otherwise materially disadvantageous to such
Lender. If by reason of any such Change of Law any such Lender
may not lawfully continue to maintain and fund any of its
outstanding
<PAGE>
Eurodollar Loans to maturity and shall so specify in such notice,
the Borrower shall immediately prepay in full the then
outstanding principal amount of each Eurodollar Loan of such
Lender, together with accrued interest thereon. Concurrently
with prepaying each such Eurodollar Loan, the Borrower shall
borrow a Base Rate Loan in an equal principal amount from such
Lender (on which interest and principal shall be payable
contemporaneously with the related Eurodollar Loans of the other
Lenders), and such Lender shall make such a Base Rate Loan.
(e) Taxes. (i) No Withholding. Any and all payments
by the Borrower hereunder shall be made, in accordance with this
Section 3.07, free and clear of and without deduction for any and
all present or future taxes, levies, imposts, deductions, charges
or withholdings, and all liabilities with respect thereto,
excluding, (A) in the case of each Lender and the Agent Bank,
taxes imposed on, or measured by, its net income, and franchise
taxes imposed on it, by the jurisdiction under the laws of which
such Lender or the Agent Bank (as the case may be) is organized
or any political subdivision or taxing authority thereof or
therein and (B) in the case of each Lender and the Agent Bank,
taxes imposed on, or measured by, its net income, and franchise
taxes imposed on it, by the jurisdiction of such Lender's
principal office or Applicable Lending Office or any political
subdivision or taxing authority thereof or therein (all such
non-excluded taxes, levies, imposts, deductions, charges,
withholdings and liabilities being hereinafter referred to as
"Taxes"). If the Borrower or Agent Bank shall be required by law
to deduct any Taxes from or in respect of any sum payable
hereunder to any Lender or the Agent Bank, (x) the sum payable
shall be increased as may be necessary so that after making all
required deductions (including deductions applicable to
additional sums payable under this Section 3.07(e)) such Lender
or the Agent Bank (as the case may be) receives an amount equal
to the sum it would have received had no such deductions been
made, (y) the Borrower shall make such deductions and (z) the
Borrower or Agent Bank shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with
applicable law; provided, however, that any such Lender shall,
upon the request of the Borrower, designate a different
Applicable Lending Office if, in the sole judgment of the Lender,
such designation would avoid the need for, or reduce the amount
of, any Taxes required to be deducted from or in respect of any
sum payable hereunder to any Lender or the Agent Bank and would
not, in the reasonable judgment of such Lender, be otherwise
materially disadvantageous to such Lender. Notwithstanding the
foregoing, the Borrower shall have no obligation to pay any
amount to or for the account of any Lender or the Agent Bank on
account of any Taxes pursuant to this Section 3.07(e) to the
extent such amount results from the failure of any Lender or the
Agent Bank to deliver to the Borrower and the Agent Bank (upon
request therefor pursuant to clause (C) below), on or before the
date payment is due by the Borrower to such Lender or the Agent
Bank, two (2) duly completed copies of United States Internal
Revenue Service Form W-8, 1001 or 4224, or any successor
applicable form, as the case may be, certifying that the Lender
or the Agent Bank is entitled to receive such payments without
deduction or withholding of United States Federal income taxes,
if either such form or successor form would be applicable. Such
form, certificate or document will be provided by each such
Lender and the Agent Bank (without consequence for nondelivery
except as set forth above) (A) as is required by law due to a
change in the factual circumstances of any such Lender and the
Agent Bank (but not due to a change in applicable law), (B) upon
the expiration or obsolescence of any previously delivered form,
certificate or document and (C) from time to time after the
Effective Date as reasonably requested by either the Borrower or
the Agent Bank.
(ii) Indemnity. Reference is made to Section 14.5 of
the Participation Agreement with respect to the rights of the
Agent Bank and the Lenders to be indemnified with respect to
Taxes.
(iii) Evidence of Payment. Within thirty (30) days
after the date of any payment of Taxes, the Borrower will furnish
to the Agent Bank, at its address referred to in Section 10.05,
the original or a certified copy of a receipt evidencing payment
thereof.
(iv) Refunds. In the event any Lender receives a
refund of any Taxes paid by, or on behalf of, the Borrower under
this Section 3.07(e), it will pay to the Borrower the amount of
such refund promptly upon receipt thereof; provided, however, if
at any time thereafter it is required to return such refund, the
Borrower shall promptly repay to it the amount of such refund.
<PAGE>
(v) Survival of Covenant. Without prejudice to the
survival of any other agreement of the Borrower hereunder, the
agreements and obligations of the Borrower contained in this
Section 3.07(e) shall survive the payment in full of principal
and interest and all other amounts due and payable to the Agent
Bank and the Lenders hereunder and under the Operative Documents.
SECTION 3.08 Interest Periods. At the time the
Borrower gives any Notice of Conversion in respect of Eurodollar
Loans (in the case of the initial Interest Period applicable
thereto) or any Notice of Continuation prior to 12:00 noon (New
York City time) on the third (3rd) Business Day prior to the
expiration of an Interest Period applicable to such Eurodollar
Loans (in the case of subsequent Interest Periods), the Borrower
shall have the right to elect, by giving the Agent Bank written
notice (or telephonic notice confirmed in writing promptly
thereafter), the interest period (each, an "Interest Period")
applicable to such Borrowing of Eurodollar Loans, which Interest
Period shall, at the option of the Borrower, be one (1), two (2),
three (3) or six (6) months; provided, that: (i) the initial
Interest Period for any Eurodollar Loan shall commence on the
date of any conversion of such Facility Loan from a Base Rate
Loan and each Interest Period occurring thereafter in respect of
such Facility Loan shall commence on the last day of the next
preceding Interest Period in respect of such Facility Loan; (ii)
if any Interest Period would otherwise expire on a day which is
not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; provided, however, that if any Interest
Period would otherwise expire on (x) a day which is not a
Business Day but is a day of the month after which no further
Business Day occurs in such month, such Interest Period shall
expire on the next preceding Business Day or (y) a Business Day
for which there is no numerically corresponding Business Day in
the applicable subsequent calendar month, such Interest Period
shall expire on the last Business Day of such applicable
subsequent calendar month; (iii) no Interest Period shall extend
beyond the Maturity Date and (iv) there may be no more than ten
(10) separate Interest Periods in respect of Eurodollar Loans
from each Lender outstanding at any one time.
SECTION 3.09 Compensation. In addition to the
amounts required to be paid by the Borrower pursuant to Section
3.07 hereof, the Borrower shall pay to any Lender, upon demand by
such Lender, such amount or amounts as the Lender reasonably
determines is or are necessary to compensate it for any loss,
cost or expense actually incurred by reason of the liquidation or
redeployment of deposits or funds required by such Lender to fund
or continue such Eurodollar Loans by it as a result of (i) any
payment, prepayment or conversion of a Eurodollar Loan for any
reason (including, without limitation, by reason of an
acceleration pursuant to Article VIII hereof) on a date other
than the last day of an Interest Period applicable to such
Eurodollar Loan or (ii) replacement of a Non-Consenting Lender
under Section 4.05 on a date other than the last day of an
Interest Period or (iii) any failure by Borrower to borrow any
Eurodollar Loan or to convert or continue any Facility Loan as or
to a Eurodollar Loan on the date for such Borrowing, conversion
or continuation on the date specified in the applicable notice of
Borrowing pursuant to Section 3.01, the Notice of Conversion or
the Notice of Continuation, as the case may be.
<PAGE>
SECTION 3.10 Pro Rata Borrowing. All Facility Loans
under this Agreement shall be made by the Lenders simultaneously
and in such amount as necessary so that after giving effect
thereto the outstanding Facility Loans of each Lender shall bear
the same proportion to all outstanding Facility Loans of all
Lenders as such Lender's Percentage bears to 100%. It is
understood that no Lender shall be responsible for any default by
any other Lender in its obligations to make Facility Loans
hereunder and that each Lender shall be obligated to make the
Facility Loans provided to be made by it hereunder, regardless of
the failure of any other Lender to fulfill its commitment
hereunder.
SECTION 3.11 Payments from Collateral Only. Without
impairing any of the other rights, powers, privileges, liens or
security interests of the Lenders or the Agent Bank on behalf of
the Lenders under this Agreement or any other Operative Document,
each of the Agent Bank and the Lenders agrees that, except as
expressly provided in this Agreement or any other Operative
Document, (i) the obligation to make all payments of the
principal amount of and interest on the Notes, and the
performance by the Borrower of every obligation or covenant
contained in this Agreement, the Security Documents and in the
Participation Agreement or any of the other Operative Documents,
shall be payable only from the income and proceeds to the extent
included in the Collateral or (to the extent provided in Section
5 of the Participation Agreement) from payments under the
Guaranty and only to the extent that the Borrower shall have
sufficient income or proceeds to the extent included in the
Collateral or (to the extent provided in Section 5 of the
Participation Agreement) from payments under the Guaranty to
enable the Borrower to make such payments in accordance with the
terms of the Security Documents, and all of the statements,
representations, covenants and agreements made by the Borrower
(when made in such capacity) contained in this Agreement, the
Security Documents and any agreement referred to herein, unless
expressly otherwise stated, are made and intended only for the
purpose of binding the Borrower and establishing the existence of
rights and remedies which can be exercised and enforced against
the Borrower; therefore, anything contained in this Agreement,
the Security Documents, Operative Documents or such other
agreements to the contrary notwithstanding, no recourse shall be
had with respect to this Agreement, the Security Documents, the
Operative Documents or such other agreements against the Borrower
or against any officer, director, trustee, servant or direct or
indirect parent or controlling person or persons of any of them;
and (ii) neither the Borrower, nor the Agent Bank shall have any
personal liability for any amounts payable hereunder, under the
Participation Agreement or any of the other Operative Documents
or under the Notes; provided, however, that this Section 3.11
shall not be construed to prohibit any action or proceeding
against any party hereto for its own willful misconduct or (i) in
the case of the Facility Lender, fraudulent conduct or (ii) with
respect to any other party hereto, gross negligence, in either
case, for which it would otherwise be liable; and provided,
further, that nothing contained in this Section 3.11 shall be
construed to limit the exercise and enforcement in accordance
with the terms of this Agreement, the Security Documents or any
other Operative Document of rights and remedies against the
Borrower. These provisions are not intended as any release or
discharge of the indebtedness represented by the Notes and the
Security Documents, but are intended only as a covenant not to
sue the Borrower or the Agent Bank in their individual capacities
for a deficiency and the indebtedness represented by the Security
Documents and the Notes shall remain in full force and effect as
fully as though these provisions were not contained in this
Agreement. The Borrower hereby acknowledges that the Agent Bank
and the Lenders have expressly reserved all their legal rights
and remedies against the Collateral, against the Facility Lender
under Section 5 of the Participation Agreement to receive
payments under the Guaranty and against the Borrower, including,
without limitation of the generality of the foregoing, the right,
in the event of the default in the payment of principal amount of
or interest on any Notes, or upon the occurrence and continuation
of any other Facility Agreement Event of Default under this
Agreement, to foreclose upon the Security Documents and/or to
receive the proceeds from the Collateral and otherwise to enforce
any other right under this Agreement or the Operative Documents.
Nothing in this Section 3.11 shall release the Borrower from
corporate liability, or constitute a covenant not to sue the
Borrower, for any breach by it of any of its covenants contained
in Section 11.6 of the Participation Agreement.
<PAGE>
ARTICLE IV
OTHER CREDIT TERMS
SECTION 4.01 Facility Fees. The Borrower agrees to
pay to the Agent Bank for pro rata distribution to each Lender a
facility fee computed at a rate per annum equal to the Facility
Fee Rate from the date hereof, in the case of each Lender that is
signatory hereto, and from the effective date specified in the
Assignment and Acceptance pursuant to which it became a Lender,
in the case of each other Lender, until the Maturity Date on the
amount such Lender's Percentage of the Commitment (in the
aggregate, the "Facility Fees"). The Facility Fees shall be paid
quarterly in arrears on each Quarterly Payment Date for the
quarter ending on such Quarterly Payment Date and on the Maturity
Date and the date of any reduction or termination of the
Commitment in accordance with the provisions of Section 4.02 or
Article VIII. Facility Fees shall be calculated on the basis of
a 365- (or 366-, as the case may be) day year for the actual
number of days elapsed. Upon the receipt of such payment from
the Borrower, the Agent Bank shall promptly distribute to each
Lender its pro rata share thereof.
SECTION 4.02 Reduction and Termination of Commitment.
The Borrower shall have the right, at any time and from time to
time to terminate the Commitment in whole or permanently reduce
the Commitment in increments of $5,000,000 (or integral multiples
thereof) to an amount not less than the sum of the Credits
Outstanding, without penalty, by giving at least five (5)
Business Days' prior written notice to the Agent Bank (which
shall give similar notice to each Lender) and the Issuing and
Paying Agent specifying the scheduled date (which shall be a
Business Day and which in the case of termination shall be the
first date on which there no longer are any Credits Outstanding)
of such termination or reduction and the amount of any permitted
partial reduction. Such termination or partial reduction of the
Commitment shall be pro rata among the Lenders and shall be
effective on the scheduled date specified in the Borrower's
notice; provided, however, that no such termination shall be
effective if, on the scheduled date thereof, any Facility Loan or
interest thereon or Commercial Paper would remain outstanding
after such scheduled date, in which case such termination shall
be effective on the first Business Day on which no Facility Loans
or Commercial Paper shall be outstanding and provided, further,
that no such reduction shall be effective, if on the scheduled
date thereof, the Credits Outstanding would exceed the Commitment
as so reduced.
SECTION 4.03 Increase of Commitment. The Borrower
may, with the consent of the Required Lenders and the Agent Bank,
amend this Agreement to increase the Commitment (whether by the
addition of Persons as Lenders and changing the Percentages of
the then existing Lenders or otherwise); provided, that no such
amendment may increase the dollar amount of any Lender's
obligation to make Facility Loans without the consent of such
Lender; and provided, further, that as a condition precedent to
any such event, the Borrower shall provide written confirmation
from S&P and Moody's that immediately after giving effect to such
amendment the Commercial Paper shall be rated not lower than such
Commercial Paper is rated immediately prior to giving effect to
such event and no addition of a Lender shall result in a
downgrading, qualification or withdrawal of the rating assigned
to the Commercial Paper by the agencies then rating the
Commercial Paper.
SECTION 4.04 Extensions of Commitment. (a) Subject
to paragraph (b) of this Section 4.04 and other provisions of
this Agreement permitting earlier termination, this Agreement and
the Commitment shall terminate on June 27, 2001.
(b) The Borrower may, by written request to the
Lessor, the Agent Bank and the Lenders given not earlier than
eighteen (18) months nor later than fifteen (15) months prior to
the Maturity Date then in effect, request (an "Extension
Request") that the Maturity Date be extended to the date that is
two (2) years after the Maturity Date then in effect; provided,
that the Borrower shall not be entitled to request more than five
(5) such extensions. No later than the date (the "Extension
Response Date") which is forty-five (45) days after such
<PAGE>
request has been delivered to each of the Lenders, each Lender
will notify the Borrower and Lessor in writing (with a copy to
the Agent Bank and the Lessee) whether or not it consents to such
Extension Request (which consent may be granted or denied by each
Lender in its sole discretion and may be conditioned on receipt
of such financial information or other documentation as may be
specified by such Lender); provided, that any Lender that fails
to so advise the Borrower on or prior to the Extension Response
Date shall be deemed to have denied such Extension Request. The
extension of the Maturity Date contemplated by any Extension
Request shall become effective as of the first date (the
"Extension Effective Date") on or after the Extension Response
Date on which all of the Required Lenders (other than Non-
Consenting Lenders which have been replaced by Replacement
Lenders in accordance with Section 4.05) shall have consented to
such Extension Request if the following conditions have been met:
(i) the Required Lenders have consented to the extension, (ii)
(x) each of the representations and warranties made by the
Borrower in or pursuant to the Credit Documents shall be true and
correct in all material respects on and as of each of the date of
such Extension Request and such Extension Effective Date as if
made on and as of such date, (y) no Facility Agreement Default or
Facility Agreement Event of Default shall have occurred and be
continuing on the date of such Extension Request or on such
Extension Effective Date and (z) on each of the date of such
Extension Request and such Extension Effective Date, the Agent
Bank shall have received a certificate of the Borrower as to the
matters set forth in clauses (x) and (y) above, and (iii) the
Agent Bank shall have received satisfactory evidence that the
Expiration Date with respect to each Property under the Lease
shall, after giving effect to any extension thereof which has
become effective on or prior to such Extension Effective Date,
occur no earlier than the Maturity Date as so extended. As of
the Maturity Date, (i) except to the extent that Non-Consenting
Lenders have consummated their assignments of their interests to
Replacement Lenders pursuant to Section 4.05, the Commitment
shall be reduced by an amount equal to product of the aggregate
Percentages of all Non-Consenting Lenders multiplied by the
amount of the Commitment and (ii) the Non-Consenting Lenders
shall have no further obligations under the Operative Documents
to fund Facility Loans and the Percentages of all Lenders (other
than the Non-Consenting Lenders) shall be adjusted to reflect
their pro rata share of the so reduced Commitment.
SECTION 4.05 Replacement of a Non-Consenting Lender.
The Borrower shall be permitted to replace with a replacement
bank or other financial institution (a "Replacement Lender"):
(1) any Non-Consenting Lender, any Lender to whom or for whose
account any material amount has been paid pursuant to Section
3.07(a) or 3.07(e) hereof or any Lender who has given a notice of
illegality pursuant to Section 3.07(d) hereof at any time on or
prior to the date which is six (6) months after (x) the relevant
Extension Response Date or (y) the Non-Consenting Lender's
failure to consent to an increase of Commitment pursuant Section
4.03 or (y) payment by Borrower of any material amount to any
Lender pursuant to Section 3.07(a) or 3.07(d) or (z) the giving
of such notice of illegality or (2) any Lender whose long-term
credit rating has been publicly announced by any Rating Agency as
being downgraded or subject to "Credit Watch" with negative
implications and until such credit rating is publicly announced
by each such Rating Agency imposing such a "Credit Watch" as
being no longer subject to "Credit Watch" without any downgrade
thereof, during any such "Credit Watch" period, so long as no
Lease Event of Default shall be in existence and remedies are not
being exercised pursuant to the Operative Documents as a result
thereof, Borrower may require by written notice to that Lender
that it assign its Percentage of the Commitment to another Lender
or to a bank or other financial institution selected by Borrower
and reasonably acceptable to the Agent Bank which is willing to
accept such assignment, subject to the satisfaction of the
following conditions precedent (i) such replacement does not
conflict with any applicable law, rule or regulation, (ii) the
Replacement Lender shall purchase, at par, all Facility Loans and
other amounts owing to such Lender under the Operative Documents
on or prior to the date of replacement, (iii) the Borrower shall
be liable to such Lender under Section 3.09 if any Eurodollar
Loan owing to such Lender shall be prepaid (or purchased) other
than on the last day of the Interest Period relating thereto,
(iv) the Replacement Lender, if not already a Lender, shall be
reasonably satisfactory to the Agent Bank, the Lessor and the
Lessee, (v) upon payment of the amounts set forth in clause (ii)
above, such Lender shall be obligated to make such replacement in
accordance with the provisions of Section 10.04 (provided that
the Borrower or the relevant Replacement Lender shall be
obligated to pay the registration and processing fee referred to
therein), (vi) if applicable, the Replacement Lender shall have
agreed to be subject
<PAGE>
to all of the terms and conditions of this Agreement (including
the extension of the Maturity Date contemplated by the relevant
Extension Request), (vii) the Borrower notifies S&P and Moody's
of such replacement and the identity of the Replacement Lender at
least ten (10) Business Days prior to such replacement, and
(viii) the Borrower and the Agent Bank receive notice from S&P
and Moody's that immediately after giving effect to such
replacement, the Commercial Paper shall be rated not lower than
such Commercial Paper is rated immediately prior to giving effect
to such replacement. The Agent Bank hereby agrees to cooperate
with the Borrower and the Lessee in the Borrower's and Lessee's
efforts to arrange one or more Replacement Lenders as
contemplated by this Section 4.05.
SECTION 4.06 Proceeds. (a) The proceeds of
Commercial Paper shall be used by the Borrower only to (i) make
Loans to the Lessor to pay Property Acquisition Costs and
Property Improvements Costs in accordance with the Operative
Documents and (ii) repay Eligible Commercial Paper or Facility
Loans.
(b) The proceeds of the Liquidity Loans and Residual
Loans shall be used by the Borrower only to repay Eligible
Commercial Paper and (with respect to Liquidity Loans which
constitute Interest Payment Loans), to the extent set forth in
Section 3.02(e), to pay interest on certain outstanding Liquidity
Loans. Direct Funding Loans shall be used by Borrower only to
make Loans to the Lessor to pay Property Acquisition Costs and
Property Improvements Costs in accordance with the terms of the
Operative Documents, (including, to the extent set forth in
Section 3.02(e), to pay interest on certain outstanding Direct
Funding Loans).
SECTION 4.07 Calculation of Certain Fees and Other
Amounts. In determining the amounts to be paid by the Borrower
pursuant to Sections 3.06(a) and (b) and 4.01, the Agent Bank
shall refer to the Guarantor's most recent financial statements
delivered to the Lenders pursuant to Section 11.1(a)(i) of the
Participation Agreement (together with the Compliance Certificate
delivered in connection therewith, the "Audited Statement" ) and
Section 11.1(a)(ii) (together with the Compliance Certificate
delivered in connection therewith, the "Unaudited Statements");
provided, that, should any relevant Audited Statements or
Unaudited Statements be delivered on a date later than a
Performance Pricing Determination Date, any necessary changes in
the Applicable Margin and Facility Fees to be paid shall not be
effective, except to the extent hereinafter provided to the
contrary within this Section 4.07, until the next succeeding
Performance Pricing Determination Date (as such term is
hereinafter defined); provided, further, that, should the Audited
Statements reflect a Leverage Ratio other than the ratio
determined by the Unaudited Statements for the third Fiscal
Quarter, then (i) should the Audited Statements reveal that the
Borrower should have paid interest and fees at a higher rate for
the period from the last Performance Pricing Determination Date
to the next Performance Pricing Determination Date then the
Borrower shall immediately pay to the Lenders such amounts as are
necessary to cause the Lenders to have received the appropriate
return, and (ii) should the Audited Statements reveal that the
Borrower should have paid interest and fees at a lower rate for
the period from the last Performance Pricing Determination Date
to the next Performance Pricing Determination Date, then, so long
as no Lease Default or Lease Event of Default shall be in
existence, the Lenders shall promptly pay to the Borrower (for
repayment to the Lessee) such amounts as are necessary to cause
the Lenders to have received the appropriate return. For
purposes hereof, "Performance Pricing Determination Date" shall
mean each date that occurs forty-five (45) days after the end of
each of the first three (3) Fiscal Quarters, and ninety (90) days
after the end of the last Fiscal Quarter, of the Guarantor. All
determinations hereunder shall be made by the Agent Bank unless
the Required Lenders shall object to any such determination.
Notwithstanding the foregoing, for purposes of determining the
amounts to be paid by the Borrower pursuant to Sections 3.06(a)
and (b) and 4.01 until the Performance Pricing Determination Date
which occurs on or about July 30, 1996, the Leverage Ratio shall
conclusively be presumed to be greater than .25 but less than
.35.
<PAGE>
ARTICLE V
PAYMENTS
SECTION 5.01 Prepayments on Non-Business Days.
Except as provided in Section 3.08, whenever any payment to be
made hereunder or under a Note shall be stated to be due on a day
which is not a Business Day, the due date thereof shall be
extended to the next succeeding Business Day and interest shall
be payable at the applicable rate during such extension.
SECTION 5.02 Prepayments. (a) Subject to Section
3.09, the Borrower shall have the right to prepay the Facility
Loans in whole or in part from time to time pursuant to this
Section 5.02 with such payment to be applied to such Facility
Loans as may be specified in the notice of prepayment. If no
such specification is given in such notice of prepayment, then
Base Rate Loans shall be prepaid to the extent thereof prior to
any prepayment of Eurodollar Loans. In the case of Eurodollar
Loans, (i) the Borrower shall give the Agent Bank at least three
(3) Business Days' prior written notice or telephonic notice
(confirmed in writing) of its intent to prepay Eurodollar Loans
and the amount of such prepayment, which notice shall be
irrevocable; (ii) each prepayment shall be in a principal amount
of $1,000,000 or an integral multiple of $100,000 in excess
thereof or equal to the then outstanding principal amount of the
Loans being prepaid; provided, that no partial prepayment of any
Eurodollar Loans made pursuant to a single Borrowing may be made
pursuant to this Section 5.02 if after giving effect thereto the
outstanding principal amount of such Eurodollar Loans would be
less than $5,000,000; and (iii) no such prepayment in respect of
any Eurodollar Loan shall be made on a day which is not the
expiration date of an Interest Period applicable to such Loan
unless accompanied by all compensation and payments pursuant to
Section 3.09. Except as expressly set forth below, all such
prepayments shall be applied pro rata among the Facility Loans
being prepaid (it being understood that except as expressly set
forth herein, any prepayment of any Lender's Facility Loans shall
be deemed to reduce ratably the Tranche A Facility Loans and
Tranche B Facility Loans of such Lender). The Agent Bank shall
promptly transmit any notice of prepayment to each Lender.
(b) (i) The Facility Loans shall be subject to
prepayment and repayment at the times and in the amounts set
forth in Sections 5.3, 5.4, 5.5 and 5.8 of the Participation
Agreement and shall be applied to the Facility Loans as set forth
therein and herein.
(ii) Any prepayment of the Facility Loans pursuant
to Section 5.11 of the Participation Agreement, shall be applied
to the prepayment of the outstanding principal amount of the
Facility Loans held by Non-Consenting Lenders not replaced prior
to the Maturity Date (without giving effect to any extension
thereof) pursuant to Section 4.05.
SECTION 5.03 Cash Collateral Account. (a) For the
purpose of facilitating the transactions contemplated by this
Agreement, the Borrower has established, for the benefit of the
Agent Bank and the Lenders, a special purpose trust account with
the Agent Bank the operation of which shall be governed by the
Security Agreement (such account being referred to as the "Cash
Collateral Account" and being identified as Account No. 93050401,
ABA No. 026009179).
SECTION 5.04 Method and Place of Payment, Etc. All
payments by the Borrower under this Agreement and the Notes owing
to the Lenders shall be made not later than 2:00 P.M. (New York
City time) to the Agent Bank for (except to the extent this
Agreement expressly provides for payments other than on a pro
rata basis) the pro rata account of each Lender on the date when
due and shall be made in freely transferable U.S. dollars and in
immediately available funds at the Payment Office. The Agent
Bank will promptly thereafter cause to be distributed like funds
relating to the payment of principal or interest or Facility Fees
ratably (other than amounts payable pursuant to Section 3.07(a),
3.07(b), 3.07(e), 4.05 or 5.02(b)(ii)) to the Lenders for the
account of their Applicable Lending Offices,
<PAGE>
and like funds relating to the payment of any other amount
payable to any Lender to such Lender for the account of its
Applicable Lending Office, in each case to be applied in
accordance with the terms of this Agreement. Unless the Agent
Bank shall have received notice from the Lessee prior to the time
of any payment of Basic Rent or Supplemental Rent due to or on
behalf of the Agent Bank and the Lenders that the Lessee will not
make such Rent payment, the Agent Bank may assume that payment
will be made in accordance with the Lease and the Agent Bank may
(but in no event shall be required to), in reliance upon such
assumption, make the payments required under this Section 5.04.
If and to the extent the Lessee shall not have so made such Rent
payment available to the Agent Bank, such Lender agrees to repay
to the Agent Bank forthwith on demand such corresponding amount
together with interest thereon, for each day from the date such
amount is made available by the Agent Bank until the date such
amount is repaid to the Agent Bank, at a rate per annum equal to
the Federal Funds Rate for each such day. Upon its acceptance of
an Assignment and Acceptance, from and after the effective date
of such Assignment and Acceptance, the Agent Bank shall make all
payments hereunder in respect of the interest assigned thereby to
the Lender assignee thereunder, and the parties to such
Assignment and Acceptance shall make all appropriate adjustments
in such payments for periods prior to such effective date
directly between themselves.
SECTION 5.05 Sharing of Payments, Etc. If any Lender
shall obtain any payment (whether voluntary, involuntary, through
the exercise of any right of set-off, or otherwise) on account of
the Facility Loans owing to it (other than pursuant to Section
3.07(a), 3.07(b), 3.07(e), 4.05 or 5.02(b)(ii)) or in excess of
its Percentage of payments on account of the Facility Loans
obtained by all the Lenders, such Lender shall so notify the
Agent Bank and forthwith purchase from the other Lenders such
participations in the Facility Loans owing to them as shall be
necessary to cause such purchasing Lender to share the excess
payment ratably with each of them; provided, however, that if all
or any portion of such excess payment is thereafter recovered
from such purchasing Lender, such purchase from each Lender shall
be rescinded and such Lender shall repay to the purchasing Lender
the purchase price to the extent of such recovery together with
an amount equal to such Lender's ratable share (according to the
proportion of (i) the amount of such Lender's required repayment
to (ii) the total amount so recovered from the purchasing Lender)
of any interest or other amount paid or payable by the purchasing
Lender in respect of the total amount so recovered. The Borrower
agrees that any Lender so purchasing a participation from another
Lender pursuant to this Section 5.05 may, to the fullest extent
permitted by law, exercise all its rights of payment (including
the right of set-off) with respect to such participation as fully
as if such Lender were the direct creditor of the Borrower in the
amount of such participation.
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.01 Conditions to Effectiveness. This
Agreement shall become effective on the date (the "Effective
Date") which shall be the first day on which all of the following
conditions set forth in Appendix 2 to the Participation Agreement
are satisfied.
SECTION 6.02 Conditions to Each Closing Date. The
right of the Borrower to issue Eligible Commercial Paper in
connection with funding its Loans under the Loan Agreement on any
Property Closing Date to pay Property Acquisition Costs in
accordance with the Operative Documents, is subject to the
fulfillment, to the satisfaction of the Agent Bank, of each of
the conditions set forth in Sections 7.1 and 7.2
of the Participation Agreement.
SECTION 6.03 Conditions to Each Other Issuance of
Commercial Paper. The right of the Borrower to issue
<PAGE>
Eligible Commercial Paper on dates other than a Property Closing
Date is subject, at the time such Eligible Commercial Paper is
issued, to the satisfaction of each of the following conditions
(unless waived by the Required Lenders in accordance with the
provisions of this Agreement):
(a) To the extent that, on such date the Borrower
seeks to issue Eligible Commercial Paper the net proceeds of
which are to be applied to Property Improvements Costs (other
than funding "Interest Payment Loans" under the Loan Agreement):
(i) Commercial Paper. After giving effect
to such issuance of Commercial Paper, the Credits
Outstanding will not exceed the Commitment;
(ii) Participation Agreement. The conditions
precedent set forth in Section 7.2 of the Participation
Agreement; and
(iii) Such issuance shall not violate
Section 2.01 hereof.
(b) To the extent that, on such date, the Borrower
seeks to issue Eligible Commercial Paper, the net proceeds of
which are intended to fund "Interest Payment Loans" under the
Loan Agreement or to repay the Principal Component of any then
maturing Commercial Paper.
(i) No Defaults. No Material Lease Event of
Default shall have occurred and be continuing; and
(ii) Commercial Paper. After giving effect
to such issuance of Commercial Paper, the Credits
Outstanding will not exceed the Commitment; and
(iii) Such issuance shall not violate
Section 2.01 hereof.
SECTION 6.04 Conditions to the Making of Each Loan.
In addition to the requirements of Section 3.01(b), the
obligation of each Lender to make a Facility Loan on the occasion
of each Borrowing shall be subject to the satisfaction of the
following conditions (unless waived by the Required Lenders in
accordance with the provisions hereunder):
(a) Direct Funding Loans. If the Facility Loan to be
made on such date is a Direct Funding Loan, and (x) is to be made
on a Property Closing Date, the conditions precedent set forth in
Sections 7.1 and 7.2 of the Participation Agreement or (y) is to
be made on a Funding Date other than a Property Closing Date the
conditions precedent set forth in Section 7.2 of the
Participation Agreement; and
(b) Liquidity Loans. If the Facility Loan to be made
on such date is a Liquidity Loan, no Lease Event of Default shall
have occurred and be continuing;
(c) Residual Loans. If the Facility Loan to be made
on such date is a Residual Loan, no Material Lease Event of
Default shall have occurred and be continuing; it being
understood that if the Lessee shall have irrevocably elected its
Remarketing Option and no Material Lease Event of Default shall
have occurred and be continuing each Lender shall be
unconditionally obligated, notwithstanding the failure of any
other conditions to be satisfied, to make Residual Loans on the
Expiration Date in an aggregate principal amount equal to such
Lender's Percentage of the CP Deficit;
<PAGE>
provided, that in no event shall any Lender be obligated to make
a Residual Loan or a Liquidity Loan in a principal amount that,
together with the aggregate principal amount of such Lender's
outstanding Facility Loans, would exceed such Lender's Percentage
of the Commitment; provided further, however, that no Lender
shall be obligated to make a Facility Loan if at or prior to the
time of making such Facility Loan (i) an order for relief shall
be entered in a case under Title 11 of the United States
Bankruptcy Code in which the Borrower is a debtor or (ii) the
Borrower shall have voluntarily commenced any proceeding or filed
any petition under any bankruptcy, insolvency or similar law
seeking the dissolution, liquidation or reorganization of the
Borrower or taken any corporate action for the purpose of
effectuating any of the foregoing or seeking the appointment of a
receiver, trustee, custodian or liquidator for itself or a
substantial portion of its property, assets or business, or (iii)
involuntary proceedings or an involuntary petition shall have
been commenced or filed against the Borrower by any Person under
any bankruptcy, insolvency of similar law seeking the
dissolution, liquidation or reorganization of the Borrower or
seeking the appointment of a receiver, trustee, custodian or
liquidation for itself or a substantial portion of its property,
assets or business and such proceeding or petition shall not have
been dismissed or bonded within 60 days of commencement or filing
thereof. The Lenders' obligations to make Facility Loans in
accordance with the terms of this Agreement are primary,
irrevocable, absolute and, except as set forth in Section 3.01(b)
and this Section 6.04 of this Agreement, unconditional. Each
Lender waives any and all defenses (except for the conditions
precedent set forth in Section 3.01(b) and this Section 6.04),
rights of rescission, counterclaims or setoff with respect to its
obligations to make Facility Loans.
ARTICLE VII
COVENANTS
While this Agreement is in effect (i.e., until all
indebtedness hereunder and under the Commercial Paper and the
Notes shall have been paid in full and the Lenders no longer have
any Commitment hereunder):
SECTION 7.01 Obligations. The Borrower agrees that
it will duly and punctually pay the principal amount of, premium,
if any, and interest on and other amounts due under the Notes and
hereunder in accordance with the terms of the Notes, the Security
Documents and this Agreement and comply with its other
obligations under the Operative Documents.
ARTICLE VIII
EVENTS OF DEFAULT
Upon the occurrence of any of the following events (each, a
"Facility Agreement Event of
Default"):
(a) Payments. Failure by the Borrower (x) to pay the
principal of a Loan when due, or (y) to pay any interest on the
Facility Loans within five (5) Business Days after such amount
becomes due or (z) to pay any Facility Fee within five (5)
Business Days after receipt by Borrower, Lessor and Lessee of
notice of such failure; or
(b) Representations. Any representation or warranty
or statement made or deemed made by the Borrower in this
Agreement or in any other Operative Document or in any document
entered into in connection herewith or therewith shall prove to
have been incorrect when made in any material respect and the
circumstances rendering such representation or warranty or
statement incorrect shall not be remediable or, if such
representation or warranty or statement is remediable and the
Borrower is proceeding diligently so to remedy, shall continue
unremedied for thirty (30) days after the earlier of: (i) the
date on which written notice is delivered by the Agent Bank to
the Lessee, Lessor and Borrower specifying such circumstances and
demanding that they be
<PAGE>
remedied and (ii) the date on which any executive officer of the
Borrower has actual knowledge of such incorrectness; or
(c) Covenants. (i) Failure by the Borrower to observe
or perform any covenant or agreement contained in Section
11.6(a), (b), (d), (h) or (j) of the Participation Agreement; or
(ii) the failure by the Borrower to observe or perform any other
covenant or agreement contained herein or in any other Operative
Document and not constituting an Event of Default under any other
clause of this Article VIII and the continuance of such default
for thirty-five (35) days after the earlier of: (i) notice
thereof to the Borrower, Lessee and Lessor by the Agent Bank and
(ii) the date on which any executive officer of the Borrower has
actual knowledge of such failure to observe or perform; or
(d) Voluntary Bankruptcy Proceedings of the Borrower.
Either (i) an order for relief shall be entered in a case under
Title 11 of the United States Code in which the Borrower is a
debtor, or the Borrower shall become insolvent or generally fail
to pay, or admit in writing its inability to pay, its debts as
they become due, or shall voluntarily commence any proceeding or
file any petition under any bankruptcy, insolvency or similar law
or seeking dissolution or reorganization or the appointment of a
receiver, trustee, custodian or liquidator for itself or a
substantial portion of its property, assets or business or to
effect a plan or other arrangement with its creditors, or shall
file any answer admitting the jurisdiction of the court and the
material allegations of an involuntary petition filed against it
in any bankruptcy, insolvency or similar proceeding, or shall be
adjudicated bankrupt, or shall make a general assignment for the
benefit of creditors, or shall consent to, or acquiesce in the
appointment of, a receiver, trustee, custodian or liquidator for
itself or a substantial portion of its property, assets or
business or (ii) corporate action shall be, taken by the Borrower
for the purpose of effectuating any of the foregoing; or
(e) Involuntary Bankruptcy Proceedings against the
Borrower. Involuntary proceedings or an involuntary petition
shall be commenced or filed against the Borrower under any
bankruptcy, insolvency or similar law or seeking the dissolution
or reorganization of the Borrower or the appointment of a
receiver, trustee, custodian or liquidator for the Borrower or of
a substantial part of the property, assets or business of the
Borrower, or any writ, order, judgment, warrant of attachment,
execution or similar process shall be issued or levied against a
substantial part of the property, assets or business of the
Borrower, and such proceeding or petition shall not be dismissed,
or such writ, order, judgment, warrant of attachment, execution
or similar process shall not be released, vacated or fully
bonded, within ninety (90) days after commencement, filing or
levy, as the case may be; or
(f) Lessor Loan Default. There shall have occurred
and be continuing an "Event of Default" under the Loan Agreement;
or
(g) Eligible Commercial Paper. The Borrower shall
issue any Commercial Paper which is not Eligible Commercial
Paper;
then, at any time during the continuance of any Facility
Agreement Event of Default and so long as such Facility Agreement
Event of Default shall continue unremedied, the Agent Bank shall
at the written request of the Required Lenders, by written notice
to the Borrower and the Issuing and Paying Agent (with a copy to
the Placement Agent) in compliance with clause (x) below, (i)
declare the principal of and accrued interest in respect of the
Facility Loans and the Notes evidencing the Facility Loans and
all other amounts due and owing to the Agent Bank and the Lenders
to be, whereupon the same shall become, forthwith due and payable
without presentment, demand, protest or further notice of any
kind, all of which are hereby expressly waived by the Borrower,
anything contained herein or in any Note to the contrary
notwithstanding, and/or (ii) subject to the two immediately
following sentences declare the Commitment terminated, whereupon
the Commitment shall terminate
<PAGE>
immediately and any accrued fees or premiums shall forthwith
become due and payable without any further notice of any kind
and/or (iii) terminate the right of the Borrower to issue
Commercial Paper; provided, that if a Facility
Agreement Event of Default described in clauses (d) or (e) above
shall occur, then the principal of and accrued interest in
respect of the Facility Loans and the Notes evidencing the
Facility Loans and all other amounts due and owing to the Agent
Bank and the Lenders shall automatically be and become due and
payable immediately without presentment, demand, protest or
further notice of any kind, all of which are hereby expressly
waived by the Borrower, anything contained herein or in any Note
to the contrary notwithstanding. Anything herein to the contrary
notwithstanding (but subject to the provisos to Section 6.04), no
declaration or termination of the Commitment pursuant to the
foregoing provisions of this Article VIII shall affect the
obligation of the Lenders to make Liquidity Loans or Residual
Loans with respect to the Eligible Commercial Paper issued,
authenticated and delivered by the Issuing and Paying Agent prior
to receipt of instructions from the Agent Bank to cease issuing
Commercial Paper as provided in Section 2.01(a) hereof provided
the conditions set forth in Section 6.04 are satisfied at the
time of the making of any such Liquidity Loans or Residual Loan.
Upon the occurrence of a Facility Agreement Event of Default the
Lenders may, subject to compliance with clause (x) below, proceed
to enforce their rights and remedies as permitted by Applicable
Law, including bringing an action for specific performance by the
Borrower of any of the Borrower's obligations under the Operative
Documents.
(x) Upon the occurrence of a Facility Agreement
Event of Default (other than a Facility Agreement Event of
Default arising out of or attributable to a Material Lease Event
of Default), the Agent Bank shall give each of the Lessee and
Lessor at least thirty (30) days prior written notice
("Acceleration Notice") prior to exercising any of its remedies
pursuant to the foregoing provisions of this Article VIII.
(y) In the event of any default by the Lessee of
its obligation to pay Basic Rent or Supplemental Rent in
accordance with the Lease, the Lessor may, without the consent of
the Agent or the Banks, prior to the date on which the Facility
Loans have been accelerated pursuant to this Section, pay to the
Agent a sum equal to the amount of all (but not less than all) of
the principal and interest as shall then be due and payable on
the Facility Loans and any other amounts owing by the Borrower
hereunder, together with any overdue interest in respect thereof,
and such payment by the Borrower shall be deemed to cure any
Facility Agreement Default or Facility Agreement Event of Default
hereunder which arose or would otherwise have arisen on account
of such non-payment by the Lessee; provided, however that the
Lessor may not exercise such right on more than two (2)
consecutive occasions or more than four occasions in the
aggregate throughout the Term of the Lease. In the event of (I)
any default by the Lessee of any other obligation under the
Lease, the Construction Agency Agreement or any other Operative
Agreement or (II) any other default by Borrower hereunder or
under any other Operative Document, the Lessor may (unless the
Lessor has received notice within fifteen (15) days after the
Acceleration Notice from the Lessee that the Lessee is exercising
its rights under clause (z) below to cure such default and/or to
replace the Borrower pursuant to Section 13.2 of the
Participation Agreement, in which case Lessor shall have no right
to take any such action until the end of such thirty (30) day
period), with prior or contemporaneous notice to but without the
consent of the Agent or the Lenders but no less than fifteen (15)
or more than thirty (30) days after its receipt of such
Acceleration Notice, perform such obligations and otherwise
exercise the rights of the Lessor under Article XVIII of the
Lease and such performance by the Lessor shall be deemed to cure
any Facility Agreement Default or Facility Agreement Event of
Default hereunder.
(z) In the event of any Facility Agreement Event
of Default not attributable to, or arising out of, any default by
the Lessee in the payment or performance of any of its
obligations under the Operative Documents, the Lessee may, with
prior or contemporaneous notice to but without the consent of the
Agent or the Lenders but within thirty (30) days after its
receipt of such Acceleration Notice (provided Lessee has given
notice to Lessor that it intends to perform or replace within
fifteen (15) days after its receipt of such Acceleration Notice),
pay and perform such obligation of the Lessor or the Borrower or
replace the Lessor or (to the extent such replacement, together
with payment and performance by the Lessee, would cure such
Facility Agreement Event of Default) the Borrower pursuant to
Section 13.2 of the Participation Agreement and such performance
by the Lessee shall be deemed to cure any Facility Agreement
Event of Default hereunder.
<PAGE>
ARTICLE IX
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders to enter into this
Agreement and to provide the credit facilities provided for
herein, the Borrower represents and warrants to the Agent Bank
and each of the Lenders that the representations and warranties
of the Borrower set forth in the Participation Agreement and the
other Operative Documents are true and correct.
ARTICLE X
MISCELLANEOUS
SECTION 10.01 Computations. All computations of
interest in respect of Eurodollar Loans shall be made by the
Agent Bank on the basis of a year of 360 days, and computations
of interest in respect of Base Rate Loans and Facility Fees shall
be made by the Agent Bank on the basis of a year of 365 days or
366 days, as the case may be, in each case for the actual number
of days (including the first day but excluding the last day)
occurring in the period for which such interest or Facility Fees
are payable. Each determination by the Agent Bank hereunder
shall be conclusive and binding for all purposes, absent manifest
error.
SECTION 10.02 Exercise of Rights. No failure or delay
on the part of any Lender to exercise any right, power or
privilege under this Agreement and no course of dealing between
the Borrower and any Lender shall operate as a waiver thereof,
nor shall any single or partial exercise of any right, power or
privilege under this Agreement preclude any other or further
exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein expressly provided are
cumulative and except to the extent limited under this Agreement
not exclusive of any rights or remedies which the Lenders would
otherwise have pursuant to law or equity. No notice to or demand
on any party in any case shall entitle such party to any other or
further notice or demand in similar or other circumstances, or
constitute a waiver of the right of the other party to any other
or further action in any circumstances without notice or demand.
SECTION 10.03 Amendment and Waiver. Subject to
Section 15.5 of the Participation Agreement, no provision of the
Operative Documents may be amended, waived, supplemented,
restated, discharged or terminated without the prior written
consent signed by the Required Lenders and the Borrower, provided
that no such amendment of this Section 10.03 or of the definition
of Required Lenders may be made without the prior written consent
of all the Lenders, and provided, further that any provisions
relating to (i) release of the Collateral or the Guaranty, (ii)
other than as provided in Sections 4.03 and 4.04, any change with
respect to the increase of any amount of the Commitment, or (iii)
the decrease of any Facility Fee or a reduction in the principal
of, or interest on, any Facility Loan or Note, or (iv) the
extension of the maturity date of any Facility Loan or
forgiveness of debt, may only be amended, waived, supplemented,
restated, discharged or terminated with the prior written consent
of the Borrower and all of the Lenders. Notwithstanding the
preceding sentence of this Section 10.03, any provision of the
Operative Documents which by its terms requires the written
consent of all the Lenders shall not be amended, waived,
supplemented, restated, discharged or terminated without the
prior written consent of all such Lenders.
SECTION 10.04 Successors and Assigns. (a) This
Agreement shall bind, and the benefits hereof shall inure to, the
Borrower, the Agent Bank and the Lenders and their respective
successors and permitted assigns; provided that the Borrower may
not
<PAGE>
transfer or assign any or all of its rights and obligations
hereunder without (i) the prior written consent of each Lender,
the Lessor and the Lessee, subject to the Lessee's rights
pursuant to Section 13.2 of the Participation Agreement and (ii)
prior written confirmation from S&P and Moody's that immediately
after giving effect to such proposed transfer or assignment the
Commercial Paper shall be rated not lower than such Commercial
Paper is rated immediately prior to giving effect to such
proposed transfer or assignment.
(b) Any Lender may, in the ordinary course of its
business and in accordance with applicable law, at any time and
from time to time assign to any Lender or any affiliate of any
Lender or, with the consent of the Borrower, the Lessee and the
Agent Bank (which in each case shall not be unreasonably withheld
or delayed), to an additional bank, financial institution or
other entity (each, a "Purchasing Lender") all or any part of its
rights and obligations under this Agreement and the other
Operative Documents pursuant to an Assignment and Acceptance,
substantially in the form of Exhibit C, executed by such
Purchasing Lender, such assigning Lender (and, in the case of a
Purchasing Lender that is not a Lender or an affiliate thereof,
by the Borrower, the Lessee and the Agent Bank) and delivered to
the Agent Bank for its acceptance and recording in the Register;
provided that (i) no such assignment to a Purchasing Lender
(other than any Lender or any affiliate thereof) shall be in an
aggregate principal amount less than $10,000,000 (other than in
the case of an assignment of all of a Lender's interests under
this Agreement and the Notes); (ii) after giving effect to any
such assignment (other than an assignment of all of a Lender's
interests under this Agreement and the Notes), the assigning
Lender (together with any Lender which is an affiliate of such
assigning Lender) shall retain Loans and/or Commitments
aggregating not less than $5,000,000; (iii) the Lender notifies
S&P and Moody's of such assignment and the identity of the
assignee ten (10) days in advance thereof; (iv) the Agent Bank
and the Borrower receive prior written notice from S&P and
Moody's that immediately after giving effect to such assignment,
the Commercial Paper shall be rated not lower than such
Commercial Paper is rated immediately prior to giving effect to
such assignment; and (v) after giving effect to such proposed
transfer or assignment, the total number of Lenders and
Participants shall not exceed 97 at such time. Any such
assignment shall be ratable as between the Tranche A Facility
Loans and Tranche B Facility Loans of the assigning Lender. Upon
such execution, delivery, acceptance and recording, from and
after the effective date determined pursuant to such Assignment
and Acceptance, (x) the Purchasing Lender thereunder shall be a
party hereto and, to the extent provided in such Assignment and
Acceptance, have the rights and obligations of a Lender hereunder
with a Commitment as set forth therein, and (y) the assigning
Lender thereunder shall, to the extent provided in such
Assignment and Acceptance, be released from its obligations under
this Agreement (and, in the case of an Assignment and Acceptance
covering all or the remaining portion of an assigning Lender's
rights and obligations under this Agreement, such assigning
Lender shall cease to be a party hereto). Notwithstanding
anything to the contrary in this Agreement, the consent of the
Borrower and, if the Facility Agreement Event of Default
hereunder arises out of, or is attributable to, a Lease Event of
Default, the Lessee shall not be required, and, unless requested
by the relevant Purchasing Lender and/or assigning Lender, new
Notes shall not be required to be executed and delivered by the
Borrower, for any assignment which occurs at any time when any
Facility Agreement Event of Default under Article VIII shall have
occurred and be continuing.
Upon its receipt of an Assignment and Acceptance
executed by an assigning Lender and a Purchasing Lender (and, in
the case of a Purchasing Lender that is not a Lender or an
affiliate thereof, by the Borrower, the Lessee and the Agent Bank
to the extent required) together with payment to the Agent Bank
of a registration and processing fee of $3,500, the Agent Bank
shall (i) promptly accept such Assignment and Acceptance and (ii)
promptly after the effective date determined pursuant thereto,
record the information contained therein in the Register and give
notice of such acceptance and recordation to the Lenders and the
Borrower. On or prior to such effective date, the Borrower, at
its own expense, shall execute and deliver to the Agent Bank, new
Notes (in exchange for the Notes of the assigning Lender), each
in an amount equal to the percentage of the Commitment assumed by
the relevant Purchasing Lender pursuant to such Assignment and
Acceptance, and, if the assigning Lender has retained a
Commitment hereunder, new Notes to the order of the assigning
Lender, each in an amount equal to the percentage of the
Commitment retained by it hereunder. Such new Notes shall be
dated the Effective Date and shall otherwise be in the form of
the Notes replaced thereby.
<PAGE>
(c) The Agent Bank shall maintain at its address
referred to in Section 10.05 copy of each Assignment and
Acceptance delivered to it and a register (the "Register") for
the recordation of the names and addresses of the Lenders, each
Lender's Percentage of the Commitment, and the principal amount
of the Facility Loans owing to each Lender from time to time.
The entries in the Register shall be conclusive, in the absence
of clearly demonstrable error, and the Borrower, the Agent Bank
and the Lenders may treat each Person whose name is recorded in
the Register as the owner of the Facility Loan recorded therein
for all purposes of this Agreement. The Register shall be
available for inspection by the Borrower, the Lessee or any
Lender at any reasonable time and from time to time upon
reasonable prior notice.
(d) Any Lender may, in the ordinary course of its
business and in accordance with applicable law, at any time sell
to one or more banks, financial institutions or other entities
(each a "Participant") participating interests in any Loan owing
to such Lender, any Note held by such Lender, any Commitment of
such Lender or any other interest of such Lender hereunder and
under the other Operative Documents; provided, that (i) any such
participation shall be ratable as between the Tranche A Facility
Loans and Tranche B Facility Loans of such Lender; (ii) such
Lender shall give the Borrower, the Agent Bank and the Lessee
written notice of any participation within ten (10) Business Days
after the consummation of such transaction and (iii) after giving
effect to such proposed transaction the total number of Lenders
and Participants shall not exceed 97 at such time. In the event
of any such sale by a Lender of a participating interest to a
Participant, such Lender's obligations under this Agreement to
the other parties to this Agreement shall remain unchanged, such
Lender shall remain solely responsible for the performance
thereof, such Lender shall remain the holder of any such Note for
all purposes under this Agreement and the Notes, and the Lender
and the Agent Bank shall continue to deal solely and directly
with such Lender in connection with such Lender's rights and
obligations under this Agreement and the Notes. Such
transferring Lender shall pay all costs and expenses incurred in
connection with a sale pursuant to Section 10.04(d) except as
otherwise provided in Section 4.05. In no event shall any
Participant have any right to approve any amendment or waiver of
any provision of this Agreement or any other Operative Document,
or any consent to any departure by the Borrower, the Guarantor or
any other Person therefrom, except to the extent that such
amendment, waiver or consent would (a) reduce the principal of,
or interest on, any Facility Loan or Note, or postpone the date
of the final maturity of any Facility Loan or Note, or reduce the
amount of any Facility Fee, in each case to the extent subject to
such participation or (b) release all or substantially all of the
Collateral.
(e) Notwithstanding any of the foregoing or any other
provision herein, any Lender may at any time assign or pledge all
or a portion of its rights hereunder, including without
limitation its Facility Loans, to a Federal Reserve Bank as
collateral in accordance with Regulation A of the Board of
Governors of the Federal Reserve System and the applicable
circular of such Federal Reserve Bank.
SECTION 10.05 Notices; Requests; Demands. Except
where telephonic instructions or notices are authorized herein to
be given, all notices, demands, instructions and other
communications required or permitted to be given to or made upon
any party hereto shall be in writing and shall be given and
deemed delivered in compliance with Section 15.3 of the
Participation Agreement. Unless otherwise specified in a notice
sent or delivered in accordance with the foregoing provisions of
this Section, notices, demands, instructions and other
communications in writing shall be given to or made upon the
respective parties hereto at their respective addresses (or to
their respective facsimile transmission numbers) indicated below,
and, in the case of telephonic instructions or notices, by
calling the telephone number or numbers indicated for such party
below:
<PAGE>
If to the Borrower:
HD Real Estate Funding Corp.
c/o J H Management Corporation
One International Place
Room 520
Boston, Massachusetts 02110
Attention: R. Douglas Donaldson
Tel. No.: (617) 951-7690
Telecopier No.: (617) 951-7050
If to the Agent Bank:
Credit Suisse
Tower 49
12 East 49th Street
New York, New York 10017
Attention: Agency Administration
Tel. No.: (212) 238-2506
Telecopier No.: (212) 238-5073
If to the Issuing and Paying Agent:
The First National Bank of Chicago
One First National Plaza, Suite 0439
Chicago, Illinois 60670-0439
Attention: Commercial Paper Customer Service
Tel. No.:
Telecopier No.:
If to the Placement Agent:
THE FIRST BOSTON CORPORATION
55 East 52nd Street
New York, New York 10055
Attention: Robert Vahradian
Tel. No.: (212) 909-2000
Telecopier No.: (212) 355-4937
If to Moody's:
MOODY'S INVESTOR SERVICE, INC.
Structured Finance Group
99 Church Street, Fourth Floor
New York, New York 10007
If to S&P:
STANDARD & POOR'S RATINGS GROUP
25 Broadway - 13th Floor
New York, New York 1004
Attention: Letter of Credit Backed
<PAGE>
Commercial Paper Department
If to the Lenders:
to the addresses and phone numbers indicated on Annex Y
SECTION 10.06 Survival of Representations and
Warranties. All representations and warranties contained in
Article IX shall survive the execution and delivery of this
Agreement and the Notes and shall continue only so long as and
until such time as all indebtedness hereunder and under
Commercial Paper and the Notes shall have been paid in full and
the Lenders no longer have any Commitment hereunder.
SECTION 10.07 Usury Savings. The provisions of
Section 15.6 of the Participation Agreement are hereby
incorporated herein by reference.
SECTION 10.08 Governing Law. THIS AGREEMENT AND THE
RIGHTS AND OBLIGATIONS OF THE PARTES UNDER THIS AGREEMENT AND
UNDER THE NOTES SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF GEORGIA.
SECTION 10.09 Counterparts. This Agreement may be
executed in any number of copies, and by the different parties
hereto on the same or separate counterparts, each of which shall
be deemed to be an original instrument. Complete counterparts of
this Agreement shall be lodged with the Borrower and the Agent
Bank.
SECTION 10.10 Setoff . Each Lender hereby waives, to the
extent permitted by applicable law, any and all rights to set off,
appropriate or apply any and all deposits (general or special) and any
other indebtedness at any time held or owing by such Lender to or for
the credit or the account of the Borrower against and on account of the
obligations and liabilities of the Borrower to such Lender under this
Agreement and the Notes, including, without limitation, all claims of
any nature or description arising out of or connected with this
Agreement or the Notes; provided, however, that the rights of the
Lenders and the Agent Bank to the Cash Collateral Account shall be
governed by the Security Documents.
SECTION 10.11 Further Assurances. The Borrower agrees to do
such further acts and things and to execute and deliver to the Agent
Bank such additional assignments, agreements, powers and instruments,
as the Agent Bank may require or deem advisable to carry into effect
the purposes of this Agreement or to better assure and confirm unto the
Agent Bank its rights, powers and remedies hereunder.
SECTION 10.12 Appointment of the Agent Bank; Documentation
Agent. (a) Each Lender hereby irrevocably appoints the Agent Bank as
its agent hereunder, under the Issuing and Paying Agency Agreement and
under the other Operative Documents and hereby authorizes the Agent
Bank to take such action on its behalf and to exercise such rights,
remedies, powers and privileges hereunder or thereunder as are
specifically authorized to be exercised by the Agent Bank by the terms
hereof or thereof, together with such rights, remedies, powers and
privileges as are reasonably incidental thereto. The Agent Bank may
execute any of its duties hereunder, under the Issuing and Paying
Agency Agreement and under the other Operative Documents, by or through
agents or employees. The relationship between the Agent Bank and each
Lender is that of agent and principal only, and nothing herein shall be
deemed to constitute the Agent Bank a trustee for any Lender or impose
on the Agent Bank any obligations other than those for which express
provision is made herein or in the other Operative Documents or the
Issuing and Paying Agency Agreement.
(b) Except as required by the specific terms of this
Agreement, the Issuing and Paying Agency Agreement and the other
Operative Documents, the Agent Bank shall not have any duty to exercise
any right, power, remedy or privilege granted to it hereby or thereby,
or to take any affirmative action or exercise any discretion hereunder
or thereunder, including, without limitation, the right of the Agent
Bank to instruct the Issuing and Paying Agent not to issue or deliver
Commercial Paper under the provisions of Section 2.01(a) hereof and the
Issuing and Paying Agency Agreement, unless directed to do so by the
Required Lenders (and shall be fully protected in acting or refraining
from acting pursuant to such directions which shall be binding upon the
Lenders), and shall not, without the prior approval of the Required
Lenders, consent to any material departure by the Borrower, the Lessee,
or the Guarantor or the Issuing and Paying Agent from the terms hereof
or thereof, waive any default on the part of any such party under any
such agreement or instrument or amend, modify, supplement or terminate,
or agree to any surrender of, any such agreement or instrument;
provided, that the foregoing limitation on the authority of the Agent
Bank is for the benefit of the Lenders and shall not impose any
obligation on the Issuing and Paying Agent or the Borrower to
investigate or inquire into the authority of the Agent Bank in any
circumstances, and the Issuing and Paying Agent and the Borrower shall
be fully protected in carrying out any request, direction or
instruction made or given to the Issuing and Paying Agent or the
Borrower by the Agent Bank in the exercise of any right, power, remedy
or privilege granted to the Agent Bank hereby or by the terms of the
Issuing and Paying Agency Agreement or the other Operative Documents,
receiving or acting upon any consent or waiver granted to the Borrower
or the Issuing and Paying Agent hereunder or thereunder by the Agent
Bank, or entering into any amendment or modification of, or supplement
to, this Agreement, the Issuing and Paying Agency Agreement or the
Operative Documents, and neither the Issuing and Paying Agent nor the
Borrower shall be subject to the claims of any Lender by reason of the
lack of authority of the Agent Bank to take any such action nor shall
the lack of authority on the part of the Agent Bank in any circumstance
give rise to any claim on the part of the Issuing and Paying Agent or
the Borrower against any Lender; and provided, further, that the Agent
Bank shall not be required to take any action which exposes the Agent
Bank to personal liability or which is contrary to this
<PAGE>
Agreement, the Issuing and Paying Agency Agreement, the other Operative
Documents or any applicable law, rule or regulation.
(c) Neither the Agent Bank nor any Lender, or any of its or
their respective directors, officers, agents or employees, shall be
liable to the Agent Bank, any other Lender, the Issuing and Paying
Agent or the Borrower, as the case may be, for any action taken or
omitted to be taken by it or them hereunder, under the Issuing and
Paying Agency Agreement, under the other Operative Documents, or in
connection herewith or therewith, except for its or their own gross
negligence or willful misconduct; nor shall the Agent Bank or any Bank
be responsible to the Agent Bank or any other Lender, as the case may
be, for the validity, effectiveness, value, sufficiency or
enforceability against the Borrower, the Issuing and Paying Agent, the
Agent Bank, the Guarantor, the Lessor or the Lessee, of the Collateral,
this Agreement, the Issuing and Paying Agency Agreement, the Operative
Documents, the Notes, or any other document furnished pursuant hereto
or thereto or in connection herewith or therewith. Without limitation
of the generality of the foregoing, the Agent Bank: (i) may consult
with legal counsel (including counsel for the Borrower), independent
public accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken in good faith by it
in accordance with the advice of such counsel, accountants or experts;
(ii) makes no warranty or representation to any Lender and shall not be
responsible to any Lender for any statements, warranties or
representations made in or in connection with this Agreement, the
Issuing and Paying Agency Agreement, the Operative Documents, any other
document furnished pursuant hereto or thereto or in connection herewith
or therewith; (iii) shall not have any duty to ascertain or to inquire
as to the performance or observance of any of the terms, covenants or
conditions of this Agreement, the Issuing and Paying Agency Agreement,
the Operative Documents, or the Notes, on the part of any party hereto
or thereto or to inspect the property (including the books and records)
of the Borrower; (iv) shall not be responsible to any Lender for the
due execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement, the Issuing and Paying Agency
Agreement, the Operative Documents, the Notes or any other instrument
or document furnished pursuant hereto or thereto; and (v) shall incur
no liability under or in respect of this Agreement, the Issuing and
Paying Agency Agreement or the Operative Documents by acting upon any
notice, consent, certificate or other instrument or writing to the
extent authorized herein or therein believed by it to be genuine and
signed or sent by the proper party or parties.
(d) Each Lender hereby severally agrees, in the ratio that
such Lender's Percentage of the Commitment hereunder bears to the
Commitment, to indemnify and hold harmless the Agent Bank, from and
against any and all losses, liabilities (including liabilities for
penalties), actions, suits, judgments, demands, damages, costs and
expenses of any kind whatsoever (including, without limitation, fees
and expenses of attorneys, accountants and experts) incurred or
suffered by the Agent Bank in its capacity as Agent Bank hereunder as a
result of any action taken or omitted to be taken by the Agent Bank in
such capacity or otherwise incurred or suffered by, made upon, or
assessed against the Agent Bank in such capacity; provided, that no
Lender shall be liable for any portion of any such losses, liabilities
(including liabilities for penalties), actions, suits, judgments,
demands, damages, costs or expenses resulting from or attributable to
gross negligence or willful misconduct on the part of the Agent Bank.
Without limiting the generality of the foregoing, each Lender hereby
agrees, in the ratio aforesaid, to reimburse the Agent Bank promptly
following its demand for any out-of-pocket expenses (including, without
limitation, attorneys' fees and expenses) incurred by the Agent Bank
hereunder, under the Issuing and Paying Agency Agreement or under the
Operative Documents, and not promptly reimbursed to the Agent Bank by
the Borrower, the Lessee or the Guarantor. Each Lender's obligations
under this paragraph shall survive the termination of this Agreement
and the discharge of the Borrower's obligations hereunder.
(e) The Lenders agree that, with respect to their obligation
to lend under this Agreement, the Loans made by them and the Notes,
issued to such Lenders, the Agent Bank shall have the same rights and
powers hereunder as any other Lender or holder of a Note and may
exercise the same as though it were not performing the duties specified
herein; and the terms "Lenders," "Required Lenders," "holders of
Notes," or any similar terms shall, unless the context clearly
otherwise indicates, include the Agent Bank and the Agent Bank may
accept
<PAGE>
deposits from, lend money to, and generally engage in any kind of
banking, trust or other business with the Borrower, the Guarantor, the
Lessor, the Lessee or any of their affiliates as if it were not
performing the duties specified herein, and may accept fees and other
consideration from the Borrower, or any of their affiliates for
services in connection with this Agreement and otherwise without having
to account for the same to any Lender.
(f) Each Lender hereby acknowledges that it has, independent
of and without reliance upon the Agent Bank or any materials provided
by the Agent Bank or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis
and decision to enter into this Agreement. The Agent Bank shall in no
event be liable to any Lender on account of any materials prepared or
provided by it.
(g) Each Lender hereby irrevocably appoints the
Documentation Agent as its Agent hereunder and hereby authorizes the
Documentation Agent to take such action on its behalf and to exercise
such rights, remedies powers and privileges hereunder as are
specifically authorized to be exercised by the Documentation Agent by
the terms of the Operative Documents, together with such rights,
remedies, powers and privileges as are reasonably incidental thereto.
The Documentation Agent may execute any of its duties hereunder by or
through agents or employees. The relationship between the
Documentation Agent and each Lender is that of agent and principal
only, and nothing herein shall be deemed to constitute the
Documentation Agent a trustee for any Lender or impose on the
Documentation Agent a trustee for any Lender or impose on the
Documentation Agent any obligations other than those for which express
provision is made herein or in the Operative Documents.
SECTION 10.13 Resignation by the Agent Bank; Removal. (a)
The Agent Bank may resign as such at any time upon at least thirty (30)
days' prior written notice to the Guarantor, the Lessee, the Lessor,
the Borrower, the Issuing and Paying Agent, the Lenders, S&P, Moody's
and the Placement Agent.
(b) In the event that Lessor exercises its rights under
clause (y) of Article VIII hereof or of Section 5.1 of the Loan
Agreement, the Required Lenders may, within sixty (60) days of the
commencement of such exercise, remove Credit Suisse as Agent Bank upon
prior written notice to the Guarantor, the Lessee, the Lessor, the
Agent Bank, the Issuing and Paying Agent, S&P, Moody's and the
Placement Agent.
(c) In the event of such resignation or removal, the Required
Lenders shall as promptly as practicable appoint a successor agent to
replace the Agent Bank, subject to (i) the prior written consent of the
Lessee which consent shall not (x) be required during the continuance
of a Lease Event of Default and the exercise of remedies under the
Operative Documents as a result thereof or if the replacement Agent
Bank is then a Lender hereunder and (y) in any event, be unreasonably
withheld and (ii) receipt of notice from S&P and Moody's that
immediately after giving effect to such replacement, the Commercial
Paper is not rated lower than such Commercial Paper is rated
immediately prior to giving effect to such replacement. If no
successor Agent Bank shall have been so appointed by the Required
Lenders, and shall have accepted such appointment, within 30 days after
the retiring Agent Bank's giving of notice of resignation, then the
retiring Agent Bank may, on behalf of the Lenders, appoint a successor
Agent Bank, which shall be a commercial bank organized under the laws
of the United States of America or of any State thereof and having a
combined capital and surplus of at least $50,000,000 which is
acceptable to the Borrower, and as to which the Borrower will not
unreasonably withhold its approval. Upon the acceptance of any
appointment as Agent Bank hereunder by a successor Agent Bank, such
successor Agent Bank shall thereupon succeed to and become vested with
all the rights, powers, discretion, privileges and duties of the
retiring Agent Bank, and the retiring Agent Bank shall be discharged
from its duties and obligations hereunder. Notwithstanding the
resignation of the Agent Bank or any Agent Bank hereunder, the
provisions of Section 10.12 shall continue to inure to the benefit of
the Agent Bank in respect of any action taken or omitted to be taken by
the Agent Bank in its capacity as such while it was such under this
Agreement.
<PAGE>
SECTION 10.14 Knowledge of Borrower. The Borrower shall be
entitled to assume that no Facility Agreement Event of Default or
Facility Agreement Default shall have occurred and be continuing,
unless an officer or a director of the Borrower has actual knowledge
thereof or the Borrower has received notice from any Person that such
Person considers that such a Facility Agreement Event of Default or
Default has occurred and is continuing.
SECTION 10.15 Descriptive Headings. The descriptive
headings of the various sections of this Agreement are inserted for
convenience of reference only and shall not be deemed to affect the
meaning or construction of any of the provisions hereof.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Agreement to be duly executed and delivered as of
the date first above written.
HD REAL ESTATE FUNDING CORP.
By:
Name:
Title:
CREDIT SUISSE,
as Agent Bank
By:
Name:
Title:
By:
Name:
Title:
CREDIT SUISSE,
as Bank
By:
Name:
Title:
By:
Name:
Title:
DEUTSCHE BANK AG, NEW YORK BRANCH,
as Documentation Agent
By:
Name:
Title:
<PAGE>
ANNEX X
Definitions
As used in the document to which this Annex X is attached,
unless specified to the contrary in Section 1.01 of the Liquidity
Agreement or within the document, the following terms shall have the
meanings herein specified and shall include in the singular number the
plural and in the plural number the singular.
"Actual Knowledge" shall mean the actual knowledge of a
responsible officer of the Borrower, the Lessor, the Guarantor or the
Lessee, as the case may be.
"Adjusted LIBOR Rate" applicable to any Interest Period means
a rate per annum equal to the quotient obtained (rounded upwards, if
necessary, to the next higher 1/100 of 1%) by dividing (i) the
applicable LIBOR Rate by (ii) a percentage equal to 100% minus the
maximum stated rate of all reserve requirements (including, without
limitation, any marginal emergency, supplemental, special or other
reserves) that would be applicable to any member bank of the Federal
Reserve System during such Interest Period in respect of eurocurrency
or eurodollar funding, lending or liabilities.
"Agent Bank" shall have the meaning specified in the first
paragraph of the Liquidity Agreement.
"Applicable Lending Office" shall mean, with respect to each
Lender, such Lender's Domestic Lending Office in the case of a Base
Rate Loan and such Lender's Eurodollar Lending Office in the case of a
Eurodollar Loan.
"Applicable Margin" shall mean for each type of Loan (Base
Rate or Eurodollar), when the Leverage Ratio for the applicable period
is within one of the ranges set forth below, the rate per annum,
determined in accordance with Section 4.07 of the Liquidity Agreement
set forth opposite such range:
LEVERAGE RATIOS APPLICABLE MARGIN FOR APPLICABLE MARGIN FOR
EURODOLLAR LOANS BASE RATE LOANS
Tranche A Tranche B Tranche A and Tranche B
<= 0.25 0.12% 0.17% 0%
> 0.25 to <= 0.35 0.125% 0.175% 0%
> 0.35 to <= 0.45 0.15% 0.20% 0%
> 0.45 0.225% 0.275% 0%
"Assignment and Acceptance" shall mean an assignment and
acceptance made by a Lender and an assignee of such Lender, and
accepted by the Agent Bank, in substantially the form of Exhibit C
hereto.
"Audited Statements" shall have the meaning set forth in
Section 4.07 of the Liquidity Agreement.
"Authority" shall mean any Governmental Authority, central
bank or comparable agency charged with the interpretation or
administration of any applicable law, rule or regulation.
"Base Rate" means, on any date, a rate equal to the higher of
(a) the Federal Funds Rate plus one-half of one percent (0.5%) per
annum or (b) the rate of interest per annum from time to time publicly
announced by the Agent Bank as its base lending rate for commercial
loans made in the United States, each as in effect on such date. The
base lending rate is not necessarily the lowest rate of interest
charged by the Agent Bank in connection with extensions of credit.
<PAGE>
"Base Rate Loan" shall mean any Facility Loan which is
bearing interest as provided in Section 3.06(a) of the Liquidity
Agreement.
"Borrowing" shall mean the incurrence of Facility Loans made
or to be made by the Lenders on a given date pursuant to Section 3.02
of the Liquidity Agreement or pursuant to a conversion made pursuant to
Section 3.05 of the Liquidity Agreement, all of which Facility Loans
comprising any Borrowing shall be of the same Type.
"Cash Collateral Account" shall have the meaning assigned to
such term in Section 5.03 of the Liquidity Agreement.
"Change of Law" shall mean the adoption of any applicable
law, rule or regulation, or any change in applicable law, rule or
regulation, or any change in the official interpretation or official
administration thereof by any Governmental Authority, central bank or
comparable agency charged with the interpretation or administration
thereof.
"Collateral" shall mean all assets of the Lessor or Borrower,
now owned or hereafter acquired, upon which a Lien is purported to be
created by the Security Documents.
"Commercial Paper" shall mean promissory notes of the
Borrower in one of the forms attached to the Issuing and Paying Agency
Agreement issued by the Borrower in the commercial paper market
pursuant to the Commercial Paper Documents and such other debt
obligations of the Borrower agreed to in writing by the Lenders.
"Commercial Paper Account" shall have the meaning specified
in Section 2.02 of the Liquidity Agreement.
"Commercial Paper Deficit" shall mean the excess of the
amount required to pay in full all Commercial Paper maturing on any
given day over the sum of the net proceeds of the issuance of
Commercial Paper on such day plus the amount on deposit in the
Commercial Paper Account applied to repay such maturing Commercial
Paper.
"Commitment" shall mean the obligation of the Lenders to make
Loans in an aggregate maximum principal amount at any time outstanding
equal to $291,000,000 as such amount may from time to time be reduced
pursuant to Section 4.02 of the Liquidity Agreement.
"Compliance Certificate" shall have the meaning set forth in
Section 11.1(a)(iii) of the Participation Agreement.
"CP Deficit" shall have the meaning set forth in Section
3.02(c) of the Liquidity Agreement.
"Credit Documents" shall mean this Agreement, the Notes, the
Issuing and Paying Agency Agreement and the Security Documents.
"Credits Outstanding" shall have the meaning set forth in
Section 2.01(c) of the Liquidity Agreement.
"Deposited Funds" shall mean at the time any determination
thereof is made the aggregate amount of funds on deposit in the
Commercial Paper Account.
<PAGE>
"Direct Funding Loan" shall have the meaning specified in
Section 3.02(b) of the Liquidity Agreement.
"Dollar" shall mean the lawful currency of the United States.
"Domestic Lending Office" means, with respect to any Lender,
the office of such Lender specified as its "Domestic Lending Office"
opposite its name on Annex Y hereto or in the Assignment and Acceptance
pursuant to which it became a Lender, or such other office of such
Lender as such Lender may from time to time specify to the Borrower and
the Agent Bank.
"Effective Date" shall have the meaning specified in Section
6.01 of the Liquidity Agreement.
"Eligible Commercial Paper" shall mean Commercial Paper
issued in accordance with the terms and conditions set forth in Section
2.01(b) of the Liquidity Agreement.
"Eurodollar Lending Office" means, with respect to any
Lender, the office of such Lender specified as its "Eurodollar Lending
Office" opposite its name on Annex Y hereto or in the Assignment and
Acceptance pursuant to which it became a Lender (or, if no such office
is specified, its Domestic Lending Office), or such other office of
such Lender as such Lender may from time to time specify to the
Borrower and the Agent Bank.
"Eurodollar Loan" shall mean any Facility Loan which is
bearing interest as provided in Section 3.06(b) of the Liquidity
Agreement.
"Extension Effective Date" shall have the meaning specified
in Section 4.04(b).
"Extension Request" shall have the meaning specified in
Section 4.04(b).
"Extension Response Date" shall have the meaning specified in
Section 4.04(b).
"Facility Agreement Default" shall mean any event which with
notice or lapse of time, or both, would become a Facility Agreement
Event of Default.
"Facility Agreement Event of Default" shall have the meaning
specified in Article VIII of the Liquidity Agreement.
"Facility Fee" shall have the meaning specified in Section
4.01 of the Liquidity Agreement.
"Facility Fee Rate" shall mean, when the Leverage Ratio of
the Guarantor for the applicable period is within one of the ranges set
forth below, the rate per annum, determined in accordance with Section
4.07 of the Liquidity Agreement, set forth opposite such range:
<PAGE>
LEVERAGE RATIOS FACILITY FEE RATE
Tranche A Tranche B
<= 0.25 0.06% 0.11%
> 0.25 to <= 0.35 0.065% 0.115%
> 0.35 to <= 0.45 0.075% 0.125%
> 0.45 0.095% 0.145%
"Facility Loans" shall mean the Facility Loans made to the
Borrower pursuant to Article III of the Liquidity Agreement.
"Federal Funds Rate" shall mean the weighted average of the
rate on the overnight Federal funds transactions with members of the
Federal Reserve System only arranged by Federal funds brokers as
published by the Federal Reserve Bank of New York from time to time,
or, if not so published at any time, the rate then used by first class
banks in extending overnight loans to other first class banks.
"Funding Deficit" shall mean, on any given Funding Date, the
difference between (x) the amount of the Advance to be funded by Loans
by the Borrower (as set forth in the applicable Funding Request) to be
made on such date minus (y) the aggregate net proceeds of any Eligible
Commercial Paper issued on such date for the purpose of funding the
amounts set forth in (x).
"Governmental Authority" shall mean any judicial, national or
central governmental authority, including any federal, state, province
or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Guarantor" shall mean The Home Depot, Inc., a Delaware
corporation.
"Initial Aggregate Commitment Amount" shall mean
$291,000,000.
"Interest Component" shall mean when used with respect to
Commercial Paper (a) the portion of the stated amount of Commercial
Paper issued on a discount basis equal to the difference between the
face principal amount thereof and the purchase price for such
Commercial Paper and (b) the amount of interest payable to maturity in
respect of Commercial Paper issued on an interest-bearing basis.
"Interest Payment Loan" means any Direct Funding Loan or
Liquidity Loan made pursuant to Section 3.02(e) to fund the interest
due and payable on any Direct Funding Loans or Liquidity Loans
outstanding with respect to current Construction Period Properties.
"Interest Period" shall have the meaning specified in Section
3.08 of the Liquidity Agreement.
"Lender" and "Lenders" shall have the meaning specified in
the first paragraph of the Liquidity Agreement.
"Lessee" shall mean Home Depot U.S.A., Inc.
"Lessor" shall mean Credit Suisse Leasing 92A, L.P.
<PAGE>
"Leverage Ratio" shall mean the ratio of the Guarantor's
Consolidated Funded Indebtedness to Consolidated Total Tangible
Capital.
"LIBOR Rate" shall mean, with respect to each Interest Period
for a Eurodollar Loan, the per annum rate of interest for amounts
comparable to the outstanding principal amount of the Eurodollar Loans
for which an interest rate is then being determined with maturities
comparable to the Interest Period to be applicable to such Eurodollar
Loans, determined as of 11:00 A.M. (London Time) on the date which is
two Business Days prior to the commencement of such Interest Period and
which: (i) appears on page 4750 of the Telerate Screen as of such time
and date provided that if more than one such offered rate appears on
page 4750 of the Telerate Screen, the "London Interbank Offered Rate"
will be the arithmetic average (rounded upward, if necessary, to the
next higher 1/100th of 1%) of such offered rates or (ii) if no such
rate appears on such page 4750, is the rate of interest then offered to
prime banks in the London interbank Eurodollar market by the Agent Bank
for Dollar Deposits.
"Lien" shall mean a mortgage, pledge, lien, claim, equity
interest, participation interest, security interest or other charge or
encumbrance of any kind, including the retained security title of a
conditional vendor or lessor.
"Liquidity Agreement" means the Liquidity Agreement dated as
of June 25, 1996 among the Borrower, the Agent Bank, the Lenders and
the Documentation Agent.
"Liquidity Loan" shall mean a Facility Loan that is not a
Residual Loan or a Direct Funding Loan.
"Maturity Date" shall mean the later of (i) June 27, 2001,
or, if said day is not a Business Day, the Business Day next succeeding
said day, and (ii) the last day of any extension of such date pursuant
to Section 4.05 of the Liquidity Agreement, or, if said day is not a
Business Day, the Business Day next succeeding said day.
"Non-Consenting Lender" shall mean any Lender which has
denied, or is deemed to have denied, (i) a request for an increase of
the Commitment pursuant to Section 4.03 or (ii) an Extension Request
pursuant to Section 4.04(b).
"Notes" shall mean the Tranche A Notes and the Tranche B
Notes.
"Notice of Continuation" shall have the meaning specified in
Section 3.05 of the Liquidity Agreement.
"Notice of Conversion" shall have the meaning specified in
Section 3.05 of the Liquidity Agreement.
"Participant" shall have the meaning specified in Section
10.04(d).
"Participation Agreement" shall mean the Participation
Agreement dated as of June 25, 1996 among the Borrower, the Agent Bank,
the Lenders, the Lessor, the Lessee and the Guarantor.
"Payment Office" shall mean the offices of the Agent Bank at
12 East 49th Street, New York, New York 10017, or such other office as
the Agent Bank may designate in writing to the Borrower and the
Lenders.
"Percentage" for each Lender shall mean the percentage set
forth opposite its signature in the Liquidity Agreement, as adjusted
pursuant to Sections 4.03, 4.04 and 10.04 of the Liquidity Agreement.
<PAGE>
"Performance Pricing Determination Date" shall have the
meaning set forth in Section 4.07 of the Liquidity Agreement.
Agreement.
"Placement Agent" shall mean CS First Boston
Corporation.
"Principal Component" shall mean when used with respect to
Commercial Paper (a) the excess of the face amount of Commercial Paper
issued on a discount basis over the Interest Component thereof and (b)
the principal amount of Commercial Paper issued on an interest-bearing
basis.
"Purchasing Lender" shall have the meaning specified in
Section 10.04 of the Liquidity Agreement.
"Quarterly Payment Date" shall mean each March 31, June 30
(other than June 30, 1996), September 30, and December 31, and the
Maturity Date.
"Rating Agency" shall mean S&P, Moody's Duff & Phelps Inc.,
Fitch's Investors' Services, Inc. and any other nationally recognized
rating service.
"Rent Payment Date" shall have the meaning specified in the
Lease.
"Replacement Lender" shall have the meaning specified in
Section 4.05 of the Liquidity Agreement.
"Required Lenders" shall mean Lenders whose Percentages
aggregate more than 51%.
"Residual Loan" shall have the meaning specified in Section
3.02(c) of the Liquidity Agreement.
"Subsidiary" of any Person means any corporation,
partnership, joint venture, trust or estate of which (or in which) 50%
or more of:
(a) the outstanding capital stock having Voting Power to
elect a majority of the Board of Directors of such corporation
(irrespective of whether at the time capital stock of any other class
or classes of such corporation shall or might have Voting Power upon
the occurrence of any contingency),
(b) the interest in the capital or profits of such
partnership or joint venture, or
(c) the beneficial interest of such trust or estate,
is at the time directly or indirectly owned by such Person, by such
Person and one or more of its Subsidiaries or by one or more of such
Person's Subsidiaries.
"Taxes" shall have the meaning specified in Section
3.07(e)(i) of the Liquidity Agreement.
"Tranche A Facility Loan" shall have the meaning specified in
Section 3.02(c).
"Tranche A Maximum Amount" shall mean the Tranche A
Percentage of the Commitment.
"Tranche A Note" shall have the meaning specified in Section
3.04.
<PAGE>
"Tranche A Percentage" shall mean 86.6%.
"Tranche A/B Percentage" shall mean a fraction (expressed as
a percentage) equal to the sum of the Tranche A Maximum Amount and the
Tranche B Maximum Amount divided by $300,000,000.
"Tranche B Facility Loan" shall have the meaning specified in
Section 3.02(d) of the Liquidity Agreement.
"Tranche B Maximum Amount" shall mean the Tranche B
Percentage of the Commitment.
"Tranche B Note" shall have the meaning specified in Section
3.04 of the Liquidity Agreement.
"Tranche B Percentage" shall mean 13.4%.
"Type" shall mean any type of Facility Loan, i.e., whether a
Base Rate Loan or a Eurodollar Loan made pursuant to the Liquidity
Agreement.
"Unaudited Statements" shall have the meaning set forth in
Section 4.07 of the Liquidity Agreement.
"UCC" shall mean the Uniform Commercial Code.
"Voting Power" means, with respect to securities issued by
any Person, the combined voting power of all securities of such Person
which are issued and outstanding at the time of determination and which
are entitled to vote in the election of directors of such Person, other
than securities having such power only by reason of the happening of a
contingency.
<TABLE>
Exhibit 11.1
THE HOME DEPOT, INC. AND SUBSIDIARIES
Computation of Earnings
Per Common and Common Equivalent Share
(In Thousands, Except Per Share Data)
Three Months Ended Six Months Ended
July 28, July 30, July 28, July 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Net earnings applicable
to common and common
equivalent shares $ 270,174 $ 212,887 $ 465,193 $ 370,652
Tax effected interest
expense, net of interest
capitalized, attributable
to 4.5% Convertible
Subordinated Notes ------ ------ ------ 2,415
$ 270,174 $ 212,887 $ 465,193 $ 373,067
Shares:
Weighted average number
of common and common
equivalent Shares assuming
average market price 482,446 477,737 481,384 470,499
Additional shares from
conversion of 4.5%
Convertible Subordinated
Notes ------ ------ ------ 6,925
482,446 477,737 481,384 477,424
Primary earnings per common
and common equivalent share $ 0.560 $ 0.446 $ 0.966 $ 0.781
(1) Common equivalent shares represent shares granted under
three stock option plans and an employee stock purchase
plan.
(2) The Company's 4.5% Convertible Subordinated Notes, issued in
1992, were common stock equivalents prior to their
conversion in March 1995. For the six months ended July 30,
1995 the Notes were dilutive and, accordingly, were assumed
to be converted as of the beginning of the accounting period
for purposes of calculating earnings per share.
(3) Fully diluted earnings per share computations are not
presented because the impact of a higher ending market price
on weighted average common equivalent shares was not
material for the three month period ended July 30, 1995, and
the six month periods ended July 28, 1996 and July 30, 1995.
Fully diluted earnings per share was not calculated for the
three month period ending July 28, 1996, because the ending
market price was lower than the average price.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-02-1997
<PERIOD-END> JUL-28-1996
<CASH> 33224
<SECURITIES> 233
<RECEIVABLES> 305370
<ALLOWANCES> 0
<INVENTORY> 2516349
<CURRENT-ASSETS> 2916018
<PP&E> 5475113
<DEPRECIATION> 605918
<TOTAL-ASSETS> 7997552
<CURRENT-LIABILITIES> 1976054
<BONDS> 275389
0
0
<COMMON> 23953
<OTHER-SE> 5444599
<TOTAL-LIABILITY-AND-EQUITY> 7997552
<SALES> 5292917
<TOTAL-REVENUES> 5292917
<CGS> 3856022
<TOTAL-COSTS> 3856022
<OTHER-EXPENSES> 994959
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2428
<INCOME-PRETAX> 444364
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