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PARTICIPATION AGREEMENT
Dated as of December 18, 1998
among
HEALTHSOUTH CORPORATION, INC.,
as Lessee,
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not individually, except as expressly
stated herein, but solely as Owner Trustee
under the HEALTHSOUTH Corporation Trust 1998-1,
THE VARIOUS BANKS AND OTHER
LENDING INSTITUTIONS WHICH ARE PARTIES
HERETO FROM TIME TO TIME,
as the Holders,
THE VARIOUS BANKS AND OTHER
LENDING INSTITUTIONS WHICH
ARE PARTIES HERETO FROM TIME TO TIME,
as the Lenders,
DEUTSCHE BANK AG NEW YORK BRANCH,
as Documentation Agent
and
NATIONSBANK, N.A.,
as Administrative Agent for the
Lenders
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TABLE OF CONTENTS
SECTION 1. THE LOANS........................................................ 1
SECTION 2. HOLDER ADVANCES.................................................. 1
SECTION 3. SUMMARY OF TRANSACTIONS.......................................... 2
3.1. Operative Agreements .............................................. 2
3.2. Property Purchase ................................................. 2
3.3. Completion of Improvements ........................................ 2
SECTION 4. THE CLOSINGS..................................................... 2
4.1. Initial Closing Date .............................................. 2
4.2. Initial Closing Date; Property Closing Dates ...................... 2
4.3. Appointment of Lessee as Lessor's Agent ........................... 3
SECTION 5. FUNDING OF ADVANCES; REPORTING REQUIREMENTS; LESSEE
DELIVERY OF NOTICES................................................. 3
5.1. General ........................................................... 3
5.2. Procedures for Funding ............................................ 3
5.3. Conditions to the Holders' and the Lenders' Obligations to
advance funds on the Initial Closing Date or funds for the
Acquisition of Property ........................................... 4
5.4. Inspection of Documents; Hold Harmless; Removal of
Properties ........................................................ 8
SECTION 6. CONDITIONS OF THE INITIAL CLOSING................................ 9
6.1. Conditions to the Lessor's and the Holders' Obligations ........... 9
6.2. Conditions to the Lessee's Obligations ............................ 10
6.3. Conditions to the Agent's Obligations ............................. 12
SECTION 7. REPRESENTATIONS AND WARRANTIES ON THE INITIAL CLOSING
DATE................................................................ 13
7.1. Representations and Warranties of the Holders ..................... 13
7.2. Representations and Warranties of the Owner Trustee ............... 15
7.3. Representations and Warranties of the Lessee ...................... 17
7.4. Representations and Warranties of the Agent ....................... 21
SECTION 8. REPRESENTATIONS AND WARRANTIES ON ADVANCE DATES.................. 21
8.1. Representations and Warranties on Each Property Closing Date ...... 21
SECTION 9. PAYMENT OF CERTAIN EXPENSES...................................... 25
9.1. Transaction Expenses .............................................. 25
9.2. Certain Fees and Expenses ......................................... 26
9.3. Commitment Fee .................................................... 26
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SECTION 10. OTHER COVENANTS AND AGREEMENTS.................................. 27
10.1. Cooperation with the Lessee ...................................... 27
10.2. Covenants of the Owner Trustee and the Holders ................... 27
10.3. Lessee Covenants, Consent and Acknowledgement .................... 29
10.4. Sharing of Certain Payments ...................................... 30
10.5. Grant of Easements, etc .......................................... 30
SECTION 11. CREDIT AGREEMENT AND TRUST AGREEMENT............................ 31
11.1. Lessee's Credit Agreement Rights ................................. 31
11.2. Lessee's Trust Agreement Rights .................................. 32
SECTION 12. TRANSFER OF INTEREST............................................ 32
12.1. Restrictions on Transfer ......................................... 32
12.2. Effect of Transfer ............................................... 32
SECTION 13. INDEMNIFICATION................................................. 33
13.1. General Indemnity ................................................ 33
13.2. General Tax Indemnity ............................................ 36
13.3. Environmental Indemnity .......................................... 40
SECTION 14. MISCELLANEOUS................................................... 40
14.1. Survival of Agreements ........................................... 40
14.2. No Broker, etc ................................................... 40
14.3. Notices .......................................................... 41
14.4. Counterparts ..................................................... 43
14.5. Amendments and Termination ....................................... 43
14.6. Headings, etc .................................................... 43
14.7. Parties in Interest .............................................. 43
14.8. Governing Law; Waivers of Jury Trial ............................. 43
14.9. Submission to Jurisdiction; Waivers .............................. 43
14.10. Severability .................................................... 44
14.11. Liability Limited ............................................... 44
14.12. Rights of Lessee ................................................ 45
14.13. Further Assurances .............................................. 46
14.14. Calculations under Operative Agreements ......................... 46
14.15. Confidentiality ................................................. 46
14.16. Calculation of Rent, Interest, Holder Yield and Fees ............ 47
EXHIBIT A REQUISITION FORM ................................................. A-1
Schedule 1 Legal Description of Land .................................. A-3
Schedule 2 Description of Improvements ................................ A-4
Schedule 3 Description of Equipment ................................... A-5
Schedule 4 Work ....................................................... A-6
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EXHIBIT B HEALTHSOUTH CORPORATION OFFICER'S CERTIFICATE.................B-1
EXHIBIT A TO OFFICER'S CERTIFICATE............................B-2
EXHIBIT C FORM OF OPINION OF COUNSEL TO LESSEE..........................C-1
EXHIBIT D HEALTHSOUTH CORPORATION OFFICER'S CERTIFICATE.................D-1
EXHIBIT E HEALTHSOUTH CORPORATION SECRETARY'S CERTIFICATE...............E-1
EXHIBIT F FIRST SECURITY BANK, NATIONAL ASSOCIATION.....................F-1
EXHIBIT G FIRST SECURITY BANK, NATIONAL ASSOCIATION CERTIFICATE
OF ASSISTANT SECRETARY........................................G-1
EXHIBIT H FORM OF OPINION OF COUNSEL TO FIRST SECURITY
BANK, NATIONAL ASSOCIATION ...................................H-1
Appendix A Rules of Usage and Definitions................................A-1
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PARTICIPATION AGREEMENT
THIS PARTICIPATION AGREEMENT, dated as of December 15, 1998 (as amended or
supplemented from time to time, this "Agreement"), is by and among HEALTHSOUTH
CORPORATION, as Lessee (the "Lessee"); FIRST SECURITY BANK, NATIONAL
ASSOCIATION, a national banking association, not individually (in its individual
capacity, the "Trust Company"), except as expressly stated herein, but solely as
Owner Trustee under the HEALTHSOUTH Corporation Trust 1998-1 (the "Owner
Trustee" or the "Lessor"); DEUTSCHE BANK AG NEW YORK BRANCH, as Documentation
Agent; NATIONSBANK, N.A., a national banking association, as Administrative
Agent (in such capacity, the "Agent") for the Lenders and the Holders;
NATIONSBANK, N.A., a national banking association, and the various other banks
and lending institutions which are parties hereto from time to time as Holders;
and NATIONSBANK, N.A. and the various other banks and lending institutions which
are parties hereto from time to time as Lenders. Capitalized terms used but not
otherwise defined in this Agreement shall have the meanings set forth in
Appendix A hereto.
In consideration of the mutual agreements herein contained and other good
and valuable consideration, receipt of which is hereby acknowledged, the parties
hereto hereby agree as follows:
SECTION 1. THE LOANS.
The Lenders have agreed to make Loans to the Lessor from time to time in an
aggregate principal amount of up to the aggregate amount of the Commitments of
the Lenders in order for the Lessor to acquire the Properties and certain
Improvements, and in consideration of the receipt of such Loan proceeds, the
Lessor will issue the Notes (together with any note or notes issued in exchange
or substitution therefor in accordance with the Credit Agreement, the "Notes").
The Loans shall be made and the Notes shall be issued pursuant to the Credit
Agreement. Pursuant to Section 5 of this Agreement and Section 2 of the Credit
Agreement, the Loans will be made to the Lessor from time to time upon the
appropriate submission by the Lessee of a Requisition therefor and in accordance
with this Agreement and the other Operative Agreements. The Loans and the
obligations of the Lessor under the Credit Agreement shall be secured by the
Collateral.
SECTION 2. HOLDER ADVANCES.
Subject to the terms and conditions of this Agreement and in reliance on
the representations and warranties of each of the parties hereto contained
herein or made pursuant hereto on each date Advances are made in accordance with
Section 5 hereof, each Holder shall make a Holder Advance on a pro rata basis to
the Owner Trustee with respect to the HEALTHSOUTH Corporation Trust 1998-1 based
on its Holder Commitment in an amount in immediately available funds such that
the aggregate of all Holder Advances shall be three percent (3%) of the amount
of the Advance being funded on such date; provided, no Holder shall be obligated
for any Holder Advance in excess of its pro rata share of the Available Holder
Commitment. The aggregate amount of Holder Advances shall be up to the aggregate
amount of
the Holder Commitments. No prepayment or any other payment with respect to any
Advance shall be permitted such that the Holder Advance with respect to such
Advance is less than 3% of the outstanding amount of such Advance, except in
connection with termination or expiration of the Term or in connection with the
exercise of remedies relating to the occurrence of a Lease Event of Default. The
representations, warranties, covenants and agreements of the Holders herein and
in the other Operative Agreements are several, and not joint or joint and
several.
SECTION 3. SUMMARY OF TRANSACTIONS.
3.1. Operative Agreements. On the date hereof (the "Initial Closing Date"),
each of the respective parties hereto and thereto shall execute and deliver this
Agreement, the Lease, the Credit Agreement, the Notes, the Certificates, the
Trust Agreement, the Security Agreement and such other documents, instruments,
certificates and opinions of counsel as agreed to by the parties hereto.
3.2. Property Purchase. On the Property Closing Date and subject to the
terms and conditions of this Agreement (a) the Holders will each make a Holder
Advance in accordance with Sections 2 and 5 of this Agreement and the terms and
provisions of the Trust Agreement, (b) the Lenders will make Loans in accordance
with Sections 1 and 5 of this Agreement and the terms and provisions of the
Credit Agreement, and (c) the Lessor will purchase pursuant to a Deed or lease
pursuant to a Ground Lease each Property, as the case may be, and grant the
Agent a Lien on each Property by execution of the required Security Documents.
3.3. Completion of Improvements. Each Property shall be a Completed
Property on the applicable Property Closing Date for such Property.
SECTION 4. THE CLOSINGS.
4.1. Initial Closing Date. All documents and instruments required to be
delivered on the Initial Closing Date shall be delivered at the offices of Smith
Helms Mulliss & Moore, L.L.P., Charlotte, North Carolina, or at such other
location as may be determined by the Lessor, the Agent and the Lessee.
4.2. Initial Closing Date; Property Closing Dates. The Lessee shall deliver
to the Lessor and the Agent a requisition (a "Requisition"), in the form
attached hereto as Exhibit A or in such other form as is reasonably satisfactory
to the Lessor, the Lessee and the Agent (together with such additional
schedules, affidavits, releases, waivers, statements, invoices, bills, and other
documents, certificates and information reasonably required by the Agent, in
connection with (a) the Initial Closing Date relating to the Transaction
Expenses and other fees, expenses and disbursements payable by the Lessor
pursuant to Section 9.1(a) with invoices (in form and substance reasonably
acceptable to the Agent and the Lessor) for such Transaction Expenses and other
fees, expenses and disbursements attached to such Requisition and (b) the
Property Closing Date relating to each Acquisition Advance pursuant to Section
5.3.
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4.3. Appointment of Lessee as Lessor's Agent. The Lessor hereby irrevocably
designates and appoints the Lessee as its exclusive agent, and the Lessee
accepts such appointment, to take all action necessary or desirable for the
acquisition of the Properties (provided title to each Property shall be held in
the name of the Lessor) in accordance with the terms of this Agreement and the
other Operative Agreements. Notwithstanding any provisions hereof or in any
other Operative Agreement to the contrary, the Lessee acknowledges and agrees
that the Lessor shall advance no more than the sum of the aggregate Commitment
of the Lenders plus the aggregate amount of the Holder Commitments in regard to
the Properties (including without limitation for any and all Advances in the
aggregate from the Lenders under the Credit Agreement and from the Holders under
the Trust Agreement). This agency created hereunder shall commence on the date
hereof and shall terminate on the Commitment Period Termination Date.
SECTION 5. FUNDING OF ADVANCES; REPORTING REQUIREMENTS; LESSEE DELIVERY OF
NOTICES.
5.1. General. To the extent funds have been made available to the Lessor as
Loans by the Lenders and Holder Advances by the Holders, the Lessor will use
such funds from time to time in accordance with the terms and conditions of this
Agreement and the other Operative Agreements (i) at the direction of the Lessee
to acquire the Properties in accordance with the terms of this Agreement, the
Lease and the other Operative Agreements, (ii) to make advances to the Lessee to
permit the testing, engineering, installation, development, construction,
modification, design and renovation, as applicable, of Improvements in
accordance with the terms of the Lease and the other Operative Agreements, and
(iii) to pay Transaction Expenses, fees, expenses and other disbursements
payable by the Lessor under Sections 9.1(a) and (b).
5.2. Procedures for Funding.
(a) The Lessee shall designate the date for Advances hereunder in
accordance with the terms and provisions hereof; provided, however, it is
understood and agreed that (i) no more than two (2) Advances may be
requested during any calendar month and (ii) Advances with respect to a
Property (other than Advances with respect to Transaction Expenses, fees,
taxes, expenses and other disbursements funded pursuant to Sections 5.3,
9.1(a) or 9.1(b)) may only be made on the Property Closing Date for such
Property. Not less than three (3) Business Days prior to the date of any
requested Advance, the Lessee shall deliver to the Lessor and the Agent,
with respect to the Initial Closing Date and each Property Closing Date, a
Requisition as described in Section 4.2 hereof (including without
limitation a legal description of the Land, a schedule of the Improvements
and a schedule of the Equipment, if any, acquired on such date, each of the
foregoing in a form reasonably acceptable to the Lessor, and the Agent).
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(b) Each Requisition shall: (i) be irrevocable, (ii) request funds in
an amount that is not in excess of the total aggregate of the Available
Commitments plus the Available Holder Commitments at such time, and (iii)
request that the Holders make Advances and that the Lenders make Loans to
the Lessor for the payment of the Property Acquisition Costs or other
Property Costs that have previously been incurred and were not subject to a
prior Requisition, in each case as specified in the Requisition.
(c) Subject to the terms and conditions of the Credit Agreement and
the Trust Agreement and subject to the satisfaction of the conditions
precedent set forth in Section 5.3 on each Property Closing Date,
(i) the Lenders shall make Loans to the Lessor in an aggregate amount
equal to 97% of the Requested Funds specified in any Requisition up to an
aggregate principal amount equal to the Available Commitments (such loans
to be apportioned 87% to Series A Loans and 10% to Series B Loans);
(ii) each Holder shall make a pro rata Holder Advance based on its
Holder Commitment in an amount such that the aggregate of all Holder
Advances at such time shall be 3% of the Requested Funds specified in any
Requisition, provided no such Holder Advance shall exceed such Holder's pro
rata share of the Available Holder Commitments; and
(iii) the total amount of such Loans and Holder Advances made on such
date shall (w) be used by the Lessor to pay the Property Acquisition Costs
within three (3) Business Days of the receipt by the Lessor of such Advance
(in the case of a Property Closing Date), (x) be used by the Lessor to pay
Transaction Expenses, fees, taxes, expenses and other disbursements to the
extent permitted under Sections 5.3, 9.1(a) or 9.1(b) (as applicable), or
(y) be disbursed by the Lessor, on the date of such Advance, to the Lessee
to pay Property Costs, as applicable. Any such amounts held by the Lessor
(or the Agent on behalf of the Lessor) shall be subject to the lien of the
Security Agreement.
5.3. Conditions to the Holders' and the Lenders' Obligations to advance
funds on the Initial Closing Date or funds for the Acquisition of Property.
(a) The obligations of each Holders to make Holder Advances, and each
Lender to make Loans, to the Lessor on the Initial Closing Date for the
purpose of providing funds to the Lessor necessary to pay Transaction
Expenses, fees, expenses and other disbursements payable by the Lessor
under Section 9.1 of this Agreement, are subject to the prior or
contemporaneous satisfaction or waiver of the following conditions
precedent:
(i) the correctness in all material respects on such date of the
representations and warranties of the Owner Trustee, the Lessee and
the Holders contained herein and in each of the other Operative
Agreements;
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(ii) the performance in all material respects by the Lessee of
its agreements contained herein and in the other Operative Agreements
which covenants are to be performed by it on or prior to such date;
(iii) the satisfaction of all conditions to any such Holder
Advance or Loan set forth in any Operative Agreement;
(iv) the Agent and the Owner Trustee shall have received a fully
executed copy of a counterpart of the respective Requisition,
appropriately completed; and
(v) no Default or Event of Default under any of the Operative
Agreements shall have occurred after giving effect to the Advance
requested by such Requisition.
(b) The obligations of each Holder to make Holder Advances, and each
Lender to make Loans, to the Lessor on a Property Closing Date for the
purpose of providing funds to the Lessor necessary to pay the Transaction
Expenses, fees, expenses and other disbursements payable by Lessor under
Section 9.1 (b) of this Agreement and to acquire a Property, are subject to
the prior or contemporaneous satisfaction or waiver of the following
conditions precedent:
(i) the correctness in all material respects on such Property
Closing Date of the representations and warranties of the Owner
Trustee, the Lessee and the Holders contained herein and in each of
the other Operative Agreements;
(ii) the performance in all material respects by the Lessee of
its agreements contained herein and in the other Operative Agreements
which covenants are to be performed by it on or prior to each such
Property Closing Date;
(iii) the satisfaction of all conditions to any such Holder
Advance or Loan set forth in any Operative Agreement;
(iv) the Agent and the Owner Trustee shall have received a fully
executed copy of a counterpart of the respective Requisition,
appropriately completed, together with copies of all Bills of Sale
with respect to any Equipment;
(v) title to each Property being acquired on such Property
Closing Date shall conform to the representations and warranties set
forth in Section 8.1(c) hereof;
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(vi) the Lessee shall have delivered to the Lessor a copy of the
Deed with respect to the Land and existing Improvements and a copy of
the Bill of Sale with respect to the Equipment, respecting such of the
foregoing as are being acquired on such Property Closing Date; and
such Land and existing Improvements shall be located in an Approved
State;
(vii) there shall not have occurred and be continuing any Default
or Event of Default under any of the Operative Agreements and no
Default or Event of Default under any of the Operative Agreements
shall have occurred after giving effect to the Advance requested by
such Requisition;
(viii) the Lessee shall have delivered to the Agent and the Owner
Trustee, title insurance commitments to issue policies in favor of the
Owner Trustee and the Agent with respect to each Property being
acquired on such Property Closing Date, such policies being in form
and substance reasonably acceptable to the Owner Trustee and the
Agent, with such title exceptions thereto as are reasonably acceptable
to the Owner Trustee and the Agent; and the Lessee shall deliver to
the Owner Trustee and the Agent, as soon as possible (and in any event
by the latter of (A) the respective Property Closing Date or (B) 60
days after the Initial Closing Date), the final title insurance
policies for each such Property taking no specific exception for any
Lien filed on account of materials furnished or labor performed in
connection with such Property, and otherwise showing no additional
exceptions to coverage;
(ix) the Lessee shall have delivered to the Agent and the Owner
Trustee a "Phase I" environmental site assessment with respect to each
such Property, prepared by an independent recognized professional
reasonably acceptable to the Agent and the Owner Trustee and in a form
and substance that is reasonably acceptable to the Agent and the Owner
Trustee;
(x) the Lessee shall have delivered to the Agent and the Owner
Trustee an as-built survey of each such Property, prepared by an
independent recognized professional meeting the then current minimum
standard detail requirements for American Land Title
Association/American Congress of Surveying and Mapping (ALTA/ACSM)
Land Title Surveys certified to the Agent and otherwise reasonably
acceptable to the Agent;
(xi) the Lessee shall have caused to be delivered to the Agent
and the Owner Trustee a legal opinion (in form and substance
reasonably satisfactory to the Agent and the Owner Trustee) from
counsel located in the state where each such Property is located or,
if the Agent and the Owner Trustee have previously received an opinion
from counsel in such state, the Agent and the Owner Trustee (in their
discretion) may accept an update or a reaffirmation of the previous
opinion, in each case addressed to each Lender;
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(xii) the Owner Trustee and the Agent shall be satisfied, in
their discretion, that the acquisition of each Property and the
execution of the Mortgage Instruments and the other Security Documents
will not adversely affect in any material respect the rights of the
Owner Trustee, the Holders, the Agent or the Lenders under or with
respect to the Operative Agreements in effect as of the Property
Closing Date (it being understood and acknowledged that the Agent and
the Owner Trustee may require that the Lessee deliver an acceptable
legal opinion in connection with this condition);
(xiii) the Lessee shall have delivered to the Agent and the Owner
Trustee, respecting each such Property, invoices for the various
Transaction Expenses and other fees, expenses and disbursements
referenced in Section 9.1(a) or (b) of this Agreement and an Officer's
Certificate in the form attached hereto as Exhibit B specifying the
aggregate Property Cost for such Property;
(xiv) the Lessee shall have delivered to the Agent and the Owner
Trustee, respecting each Property, certificates of insurance meeting
the requirements of Section 14.3 of the Lease;
(xv) the Lessor shall have delivered to the Agent a Mortgage
Instrument and Lender Financing Statements with respect to each such
Property in a form reasonably acceptable to the Agent and Lessee and
all necessary recording fees, documentary stamp taxes or similar
amounts will be paid in connection with the related Mortgage
Instrument in an amount sufficient to cover such maximum total
Property Cost, or (in the case of the recording tax with respect to
the Mortgage Instrument) in an amount required to be paid at the time
of recording of such instrument (provided that the Lessee shall
promptly pay or reimburse any Indemnified Person for payment of, any
additional recording tax that may be due at any time with respect to
such instrument);
(xvi) the Lessee shall have delivered to the Lessor with respect
to each such Property, a Lease Supplement and a memorandum regarding
the Lease and such Lease Supplement (such memorandum to be
substantially in the forms attached to the Lease as Exhibit B and in
each case in form suitable for recording);
(xvii) the Lessee shall have delivered to the Lessor with respect
to each such Property Lessor Financing Statements executed by the
Lessee and the Lessor;
(xviii) all necessary (or in the reasonable opinion of the Owner
Trustee, the Agent, or their respective counsel, advisable)
Governmental Actions, in each case required by any law or regulation
enacted, imposed or adopted on or prior to
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each such date or by any change in facts or circumstances on or prior
to each such date, shall have been obtained or made and be in full
force and effect;
(xix) if any such Property is subject to a Ground Lease, the
Lessee shall have caused a lease memorandum (in form and substance
satisfactory to the Agent) to be delivered to the Agent for such
Ground Lease;
(xx) counsel for the ground lessor of each such Property subject
to a Ground Lease shall have issued to the Lessor, the Agent and the
Holders, an opinion satisfactory to the Agent;
(xxi) the Lessee shall cause (i) Uniform Commercial Code lien
searches, tax lien searches and judgment lien searches regarding each
of the Lessee and the Lessor to be conducted (and copies thereof to be
delivered to the Agent and the Owner Trustee) in the state and county
(or other jurisdiction) in which such Property is located, by a
nationally recognized search company acceptable to the Owner Trustee
and the Agent, and (ii) the liens referenced in such lien searches
which are objectionable to the Owner Trustee or the Agent to be either
removed or otherwise handled in a manner reasonably satisfactory to
the Owner Trustee and the Agent;
(xxii) the Agent shall have received on the later of (A) the
respective Property Closing Date or (B) 60 days following the Initial
Closing Date, an Appraisal for such Property showing that such
Property has an enterprise value, when taken together with the
enterprise value of all other Properties for which an Appraisal has
been obtained, equal to at least fifty percent (50%) of the total
Property Cost of all Properties and all Improvements constructed or
expected to be constructed thereon; and
(xxiii) the Lessee shall have determined (as set forth in the
related Requisition) that such Improvements are appropriate to its
business; and the Agent shall have consented to such Improvements,
which consent shall not be unreasonably withheld or delayed.
5.4. Inspection of Documents; Hold Harmless; Removal of Properties. Any
document or item (including without limitation any environmental report)
delivered to the Agent shall be available for inspection at any time during
ordinary business hours upon reasonable notice by any Lender or Holder. The
Agent shall not incur any liability to any Lender, any Holder, the Owner Trustee
or any other Person (and each Lender, each Holder, the Owner Trustee and the
Lessee hereby holds the Agent harmless from any such liability) as a result of
any such document or item, any information contained therein, the failure to
receive any such document, or the Agent's approval of any Property. In the event
the Majority Lenders determine that any environmental site assessment reveals an
Environmental Violation and they or the Agent so
8
notify the Lessee, then the Lessee shall remedy or purchase such Property in
accordance with Sections 15.2, 16.1 and 16.2 of the Lease.
SECTION 6. CONDITIONS OF THE INITIAL CLOSING.
6.1. Conditions to the Lessor's and the Holders' Obligations. The
obligations of the Lessor and the Holders to consummate the transactions
contemplated by this Agreement, including the obligation to execute and deliver
the applicable Operative Agreements to which each is a party on the Initial
Closing Date, are subject to (i) the accuracy and correctness on the Initial
Closing Date of the representations and warranties of the other parties hereto
contained herein, (ii) the accuracy and correctness on the Initial Closing Date
of the representations and warranties of the other parties hereto contained in
any other Operative Agreement or certificate delivered pursuant hereto or
thereto, (iii) the performance by the other parties hereto of their respective
agreements contained herein and in the other Operative Agreements and to be
performed by them on or prior to the Initial Closing Date and (iv) the
satisfaction, or waiver by the Lessor and the Holders, of all of the following
conditions on or prior to the Initial Closing Date:
(a) Each of the Operative Agreements to be entered into on the Initial
Closing Date shall have been duly authorized, executed and delivered by the
parties thereto, other than the Lessor, and shall be in full force and
effect, and no Default or Event of Default shall exist thereunder (both
before and after giving effect to the transactions contemplated by the
Operative Agreements), and the Lessor shall have received a fully executed
copy of each of the Operative Agreements (other than the Notes of which it
shall have received specimens). The Operative Agreements (or memoranda
thereof), any supplements thereto and any financing statements and fixture
filings in connection therewith required under the Uniform Commercial Code
shall have been filed or shall be promptly filed, if necessary, in such
manner as to enable the Lessee's counsel to render its opinion referred to
in Section 6.1(g) hereof;
(b) All taxes, fees and other charges in connection with the
execution, delivery, recording, filing and registration of the Operative
Agreements shall have been paid or provision for such payment shall have
been made to the reasonable satisfaction of the Lessor and the Agent;
(c) 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 Agreement, any other Operative
Agreement or any transaction contemplated hereby or thereby or (ii) which
is reasonably likely to have a Material Adverse Effect;
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(d) In the reasonable opinion of the Lessor and the Holders and their
counsel, the transactions contemplated by the Operative Agreements do not
and will not violate any material Legal Requirements and do not and will
not subject the Lessor or the Holders to any materially adverse regulatory
prohibitions or constraints, in each case enacted, imposed, adopted or
proposed since the date hereof;
(e) The Lessor and the Agent shall each have received an Officer's
Certificate of the Lessee, dated as of the Initial Closing Date, in the
form attached hereto as Exhibit D or in such other form as is reasonably
acceptable to such parties stating that (i) each and every representation
and warranty of the Lessee contained in the Operative Agreements to which
it is a party is true and correct in all material respects on and as of the
Initial Closing Date; (ii) no Default or Event of Default has occurred and
is continuing under any Operative Agreement; (iii) each Operative Agreement
to which Lessee is a party is in full force and effect with respect to it;
and (iv) the Lessee has performed and complied with all covenants,
agreements and conditions contained herein or in any Operative Agreement
required to be performed or complied with by it on or prior to the Initial
Closing Date;
(f) The Lessor and the Agent shall each have received (i) a
certificate of the Secretary or an Assistant Secretary of the Lessee in the
form attached hereto as Exhibit E or in such other form as is reasonably
acceptable to such parties attaching and certifying as to (A) the
resolutions of the Board of Directors of Lessee duly authorizing the
execution, delivery and performance by Lessee of each of the Operative
Agreements to which it is or will be a party, (B) its certificate of
incorporation and by-laws, in each case certified as of a recent date by
the Secretary of State of the State of its incorporation, and (C) the
incumbency and signature of persons authorized to execute and deliver on
its behalf the Operative Agreements to which it is a party and (ii) a good
standing certificate from the appropriate officer of the State of Alabama
and each state in which any Property is located as to its good standing in
such state;
(g) Counsel for the Lessee reasonably acceptable to the other parties
hereto shall have issued to the Lessor, the Agent, the Lenders and the
Holders an opinion in the form attached hereto as Exhibit C or in such
other form as is reasonably acceptable to such parties; and
(h) 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 the Lessee from that set
forth in the audited financial statements of the Lessee dated December 31,
1997.
6.2. Conditions to the Lessee's Obligations. The obligation of the Lessee
to consummate the transactions contemplated by this Agreement, including the
obligation to execute and deliver the Operative Agreements to which it is a
party on the Initial Closing Date, is subject to (i) the accuracy and
correctness on the Initial Closing Date of the representations and
10
warranties of the other parties hereto contained herein, (ii) the accuracy and
correctness on the Initial Closing Date of the representations and warranties of
the other parties hereto contained in any other Operative Agreement or
certificate delivered pursuant hereto or thereto, (iii) the performance by the
other parties hereto of their respective agreements contained herein and in the
other Operative Agreements, in each case to be performed by them on or prior to
the Initial Closing Date, and (iv) the satisfaction or waiver by the Lessee of
all of the following conditions on or prior to the Initial Closing Date:
(a) Each of the Operative Agreements to be entered into on the Initial
Closing Date shall have been duly authorized, executed and delivered by the
parties thereto, other than the Lessee, and shall be in full force and
effect, and no Default, other than Defaults of the Lessee, shall exist
thereunder, and the Lessee shall have received a fully executed copy of
each of the Operative Agreements (other than Notes of which it shall have
received a specimen);
(b) In the reasonable opinion of the Lessee and its counsel, the
transactions contemplated by the Operative Agreements do not violate any
material Legal Requirements and will not subject Lessee to any materially
adverse regulatory prohibitions or constraints, in each case enacted,
imposed, adopted or proposed since the date hereof;
(c) 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 Agreement, any other Operative
Agreement or any transaction contemplated hereby or thereby or (ii) which
is reasonably likely to have a Material Adverse Effect;
(d) The Lessee and the Agent shall each have received an Officer's
Certificate of the Lessor dated as of such Closing Date in the form
attached hereto as Exhibit F or in such other form as is reasonably
acceptable to Lessee and the Agent, stating that (i) each and every
representation and warranty of the Lessor contained in the Operative
Agreements to which it is a party is true and correct on and as of the
Initial Closing Date; (ii) each Operative Agreement to which the Lessor is
a party is in full force and effect with respect to it, and (iii) the
Lessor has duly performed and complied with all covenants, agreements and
conditions contained herein or in any Operative Agreement required to be
performed or complied with by it on or prior to the Initial Closing Date;
(e) The Lessee and the Agent shall each have received (i) a
certificate of the Secretary, an Assistant Secretary, Trust Officer or Vice
President of the Trust Company in the form attached hereto as Exhibit G or
in such other form as is reasonably acceptable to Lessee and the Agent,
attaching and certifying as to (A) the signing resolutions, (B) its
articles of incorporation or other equivalent charter documents, as the
case may be, certified as of a recent date by an appropriate officer of the
Trust Company, (C) its by-
11
laws and (D) the incumbency and signature of persons authorized to execute
and deliver on its behalf the Operative Agreements to which it is a party
and (ii) a good standing certificate from the state of incorporation of the
Trust Company; and
(f) Counsel for the Lessor acceptable to the other parties hereto
shall have issued to the Lessee, the Holders, the Lenders and the Agent an
opinion in the form attached hereto as Exhibit H or in such other form as
is reasonably acceptable to such parties.
6.3. Conditions to the Agent's Obligations. The obligation of the Agent to
consummate the transactions contemplated by this Agreement on the Initial
Closing Date, including the obligation to execute and deliver each of the
Operative Agreements to which it is a party on the Initial Closing Date, is
subject to (i) the accuracy and correctness on the Initial Closing Date of the
representations and warranties of the other parties hereto contained herein,
(ii) the accuracy and correctness on the Initial Closing Date of the
representations and warranties of the other parties hereto contained in any
other Operative Agreement or certificate delivered pursuant hereto or thereto,
(iii) the performance by the other parties hereto of their respective agreements
contained herein and in the other Operative Agreements, in each case to be
performed by them on or prior to the Initial Closing Date, and (iv) the
satisfaction, or waiver by the Agent, of all of the following conditions on or
prior to the Initial Closing Date:
(a) Each of the Operative Agreements to be entered into on the Initial
Closing Date shall have been duly authorized, executed and delivered by the
parties thereto, other than the Agent, and shall be in full force and
effect, and no Default or Event of Default shall exist thereunder (both
before and after giving effect to the transactions contemplated by the
Operative Agreements), and the Agent shall have received a fully executed
copy of each of the Operative Agreements (including the Notes). The
Operative Agreements (or memoranda thereof), any supplements thereto and
any financing statements and fixture filings in connection therewith
required under the Uniform Commercial Code shall have been filed or shall
be promptly filed, if necessary, in such manner as to enable the Lessor's
counsel to render its opinion referred to in Section 6.2(f) hereof;
(b) The satisfaction of each of the conditions set forth in Sections
6.1(b), (c), (e), (f) and (h) and Sections 6.2(d), (e) and (f) hereof; and
(c) In the reasonable opinion of the Agent and its counsel, the
transactions contemplated by the Operative Agreements do not and will not
violate any material Legal Requirements and do not and will not subject the
Agent or the Lenders to any materially adverse regulatory prohibitions or
constraints, in each case enacted, imposed, adopted or proposed since the
date hereof.
12
SECTION 7. REPRESENTATIONS AND WARRANTIES ON THE INITIAL CLOSING DATE.
7.1. Representations and Warranties of the Holders. Effective as of the
Initial Closing Date, each of the Holders represents and warrants to each of the
other parties hereto that:
(a) It is a banking corporation or banking association, or branch or
agency thereof (the entity of which such Holder is a branch or agency being
referred to in this Section 7.1 as the "Primary Institution"), as the case
may be, duly organized, validly existing and in good standing under the
laws of the jurisdiction of its formation, and has the power and authority
to carry on its business as now conducted and to enter into and perform its
obligations under each Operative Agreement to which it is or will be a
party and each other agreement, instrument and document to be executed and
delivered by it on or before each Closing Date in connection with or as
contemplated by each such Operative Agreement to which it is or will be a
party;
(b) The execution, delivery and performance of each Operative
Agreement to which it is or will be a party have been duly authorized by
all necessary action on its part (and on the part of any applicable Primary
Institution) and neither the execution and delivery thereof, nor the
consummation of the transactions contemplated thereby, nor compliance by it
with any of the terms and provisions thereof (i) requires or will require
any approval of the stockholders of, or approval or consent of any trustee
or holder of any indebtedness or obligations of, such Holder (or any
applicable Primary Institution) which have not been obtained and in full
force and effect, (ii) violates or will violate any Legal Requirement
applicable to or binding on it (or any applicable Primary
Institution)(except no representation or warranty is made as to any Legal
Requirement to which it may be subject solely as a result of the activities
of the Lessee) as of the date hereof, (iii) violates or will violate or
result in any breach of or constitute any default under, or result in the
creation of any Lien upon any Property or any of the Improvements (other
than Liens created by the Operative Agreements) under its certificate of
incorporation or other equivalent charter documents, or any indenture,
mortgage, chattel mortgage, deed of trust, conditional sales contract, bank
loan or credit agreement or other agreement or instrument to which it (or
any applicable Primary Institution) is a party or by which it (or any
applicable Primary Institution) or its properties is bound or affected or
(iv) requires or will require any Governmental Action by any Governmental
Authority (other than arising solely by reason of the business, condition
or activities of the Lessee or any Affiliate thereof or the construction or
use of the Properties or the Improvements);
(c) This Agreement and each other Operative Agreement to which it is
or will be a party have been, or will be, duly executed and delivered by it
and constitutes, or upon execution and delivery will constitute, a legal,
valid and binding obligation enforceable against it (including any
applicable Primary Institution) in accordance with the terms thereof,
subject to the effect of any applicable bankruptcy, moratorium, insolvency,
reorganization or other similar laws affecting the enforceability of
creditors'
13
rights generally and to the effect of general principles of equity (whether
considered in a proceeding at law or in equity);
(d) There is no action or proceeding pending or, to its knowledge,
threatened against it (or any applicable Primary Institution) before any
Governmental Authority that questions the validity or enforceability of any
Operative Agreement to which it is or will become a party or that, if
adversely determined, would materially and adversely affect its ability (or
that of any applicable Primary Institution) to perform its obligations
under the Operative Agreements to which it is a party;
(e) It has not assigned or transferred any of its right, title or
interest in or under the Lease except in accordance with the Operative
Agreements;
(f) No Default or Event of Default under the Operative Agreements
attributable to it has occurred and is continuing;
(g) It is not a "holding company" or a "subsidiary company" of a
"holding company" or an "affiliate" of a "holding company" or a "public
utility" within the meaning of the Public Utility Holding Company Act of
1935, as amended, or a "public utility" within the meaning of the Federal
Power Act, as amended. It is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of the
Investment Company Act or an "investment adviser" within the meaning of the
Investment Advisers Act of 1940, as amended;
(h) Except as otherwise contemplated by the Operative Agreements, it
shall not, nor shall it direct the Owner Trustee to, use the proceeds of
any Loan or Holder Advance for any purpose other than the payment of
Transaction Expenses and the fees, expenses and other disbursements
referenced in Sections 9.1(a) and (b) of this Agreement, the purchase or
lease of the Property, the acquisition of Equipment and the construction of
Improvements; and
(i) It is acquiring its interest in the Trust Estate for its own
account (including that of any applicable Primary Institution) for
investment and not with a view to any distribution (as such term is used in
Section 2(11) of the Securities Act) thereof, and if in the future it
should decide to dispose of its interest in the Trust Estate, it
understands that it may do so only in compliance with the Securities Act
and the rules and regulations of the Securities and Exchange Commission
thereunder and any applicable state securities laws. Neither it nor anyone
authorized to act on its behalf has taken or will take any action which
would subject, as a direct result of such action alone, the issuance or
sale of any interest in any Property, the Trust Estate or the Lease to the
registration requirements of Section 5 of the Securities Act. No
representation or warranty contained in this Section 7.1(i) shall include
or cover any action or inaction of the Lessee or any Affiliate thereof
whether or not purportedly on behalf of the Holders, the Owner Trustee or
any of their Affiliates.
14
7.2. Representations and Warranties of the Owner Trustee. Effective as of
the Initial Closing Date, Trust Company in its individual capacity and as the
Owner Trustee, as indicated, represents and warrants to each of the other
parties hereto as follows, provided, that the representations in paragraphs (h),
(i), (j) and (k) below are made solely in its capacity as the Owner Trustee:
(a) It is a national banking association duly organized, validly
existing and in good standing under the laws of the United States of
America and has the power and authority to enter into and perform its
obligations under the Trust Agreement and (assuming due authorization,
execution and delivery of the Trust Agreement by the Holders) has the
corporate and trust power and authority to act as the Owner Trustee and to
enter into and perform the obligations under each of the other Operative
Agreements to which Trust Company or the Owner Trustee, as the case may be,
is or will be a party and each other agreement, instrument and document to
be executed and delivered by it on or before each Closing Date in
connection with or as contemplated by each such Operative Agreement to
which Trust Company or the Owner Trustee, as the case may be, is or will be
a party;
(b) The execution, delivery and performance of each Operative
Agreement to which it is or will be a party, either in its individual
capacity or (assuming due authorization, execution and delivery of the
Trust Agreement by the Holders) as the Owner Trustee, as the case may be,
has been duly authorized by all necessary action on its part and neither
the execution and delivery thereof, nor the consummation of the
transactions contemplated thereby, nor compliance by it with any of the
terms and provisions thereof (i) requires or will require any approval of
its stockholders, or any approval or consent of any trustee or holders of
any of its indebtedness or obligations, (ii) violates or will violate any
current law, governmental rule or regulation relating to its banking or
trust powers, (iii) violates or will violate or result in any breach of or
constitute any default under, or result in the creation of any Lien upon
any of its property under, (A) its charter or by-laws, or (B) any
indenture, mortgage, chattel mortgage, deed of trust, conditional sales
contract, bank loan or credit agreement or other agreement or instrument to
which it is a party or by which it or its properties may be bound or
affected, which violation, breach, default or Lien under clause (B) would
materially and adversely affect its ability, in its individual capacity or
as Owner Trustee, to perform its obligations under the Operative Agreements
to which it is a party or (iv) requires or will require any Governmental
Action by any Governmental Authority regulating its banking or trust
powers;
(c) The Trust Agreement and, assuming the Trust Agreement is the
legal, valid and binding obligation of the Holders, each other Operative
Agreement to which the Trust Company or the Owner Trustee, as the case may
be, is or will be a party have been, or will be, duly executed and
delivered by Trust Company or the Owner Trustee, as the case may be, and
the Trust Agreement and each such other Operative Agreement to which Trust
Company or the Owner Trustee, as the case may be, is a party constitutes,
or
15
upon execution and delivery will constitute, a legal, valid and binding
obligation enforceable against Trust Company or the Owner Trustee, as the
case may be, in accordance with the terms thereof;
(d) There is no action or proceeding pending or, to its knowledge,
threatened to which it is or will be a party, either in its individual
capacity or as the Owner Trustee, before any Governmental Authority that,
if adversely determined, would materially and adversely affect its ability,
in its individual capacity or as Owner Trustee, to perform its obligations
under the Operative Agreements to which it is a party or would question the
validity or enforceability of any of the Operative Agreements to which it
is or will become a party;
(e) It has not assigned or transferred any of its right, title or
interest in or under the Lease except in accordance with the Operative
Agreements;
(f) No Default or Event of Default under the Operative Agreements
attributable to it has occurred and is continuing;
(g) Except as otherwise contemplated in the Operative Agreements, the
Owner Trustee shall not use the proceeds of the Loans and Holder Advances
for any purpose other than the payment of Transaction Expenses and the
fees, expenses and other disbursements referenced in Sections 9.1(a) and
(b) of this Agreement, the purchase or lease of the Properties, the
acquisition of Equipment and the acquisition of Improvements;
(h) Neither the Owner Trustee nor any Person authorized by the Owner
Trustee to act on its behalf has offered or sold any interest in the Trust
Estate or the Notes, or in any similar security relating to any Property,
or in any security the offering of which for the purposes of the Securities
Act would be deemed to be part of the same offering as the offering of the
aforementioned securities to, or solicited any offer to acquire any of the
same from, any Person other than, in the case of the Notes, the Lenders,
and neither the Owner Trustee nor any Person authorized by the Owner
Trustee to act on its behalf will take any action which would subject, as a
direct result of such action alone, the issuance or sale of any interest in
the Trust Estate or the Notes to the provisions of Section 5 of the
Securities Act, or require the qualification of any Operative Agreement
under the Trust Indenture Act of 1939, as amended;
(i) The Owner Trustee's chief place of business, chief executive
office and office where the documents, accounts and records relating to the
transactions contemplated by this Agreement and each other Operative
Agreement are kept are located at 79 South Main Street, Salt Lake City,
Utah 84111;
(j) The Owner Trustee is not engaged principally in, and does not have
as one of its important activities, the business of extending credit for
the purpose of purchasing
16
or carrying any margin stock (within the meaning of Regulation U of the
Board of Governors of the Federal Reserve System of the United States), and
no part of the proceeds of the Loans or the Holder Advances will be used by
it to purchase or carry any margin stock or to extend credit to others for
the purpose of purchasing or carrying any such margin stock or for any
purpose that violates, or is inconsistent with, the provisions of
Regulations T, U, or X of the Federal Reserve Board; and
(k) The Owner Trustee is not a "holding company" or a "subsidiary
company" of a "holding company" or an "affiliate" of a "holding company" or
a "public utility" within the meaning of the Public Utility Holding Company
Act of 1935, as amended, or a "public utility" within the meaning of the
Federal Power Act, as amended. The Owner Trustee is not an "investment
company" or a company "controlled" by an "investment company" within the
meaning of the Investment Company Act or an "investment adviser" within the
meaning of the Investment Advisers Act of 1940, as amended.
7.3. Representations and Warranties of the Lessee. Effective as of the
Initial Closing Date, the Lessee represents and warrants to each of the other
parties hereto that:
(a) It is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware; each of its Subsidiaries
is duly organized and validly existing under the laws of the jurisdiction
of its organization and is duly qualified to do business in each other
jurisdiction where the nature of its business makes such qualification
necessary, except where such failure to so qualify would not have a
Material Adverse Effect. The Lessee and each of its Subsidiaries has the
power and authority to carry on its business as now conducted and to enter
into and perform its obligations under each Operative Agreement to which it
is or will be a party and each other agreement, instrument and document to
be executed and delivered by it on or before each Closing Date in
connection with or as contemplated by each such Operative Agreement to
which it is or will be a party;
(b) The execution, delivery and performance by the Lessee and each of
its relevant Subsidiaries of this Agreement and the other Operative
Agreements to which each is or will be a party have been duly authorized by
all necessary corporate action on the part of the Lessee and each such
Subsidiary (including any necessary shareholder action), have received all
necessary governmental approval, and do not and will not (i) violate any
Legal Requirement, decree, judgment or award which is applicable to or
binding on the Lessee or any of its Subsidiaries, (ii) violate or conflict
with, or result in a breach of, any provision of the Certificate of
Incorporation, By-Laws or other organizational documents of the Lessee or
any of its Subsidiaries, or any indenture, mortgage, chattel mortgage, deed
of trust, conditional sales contract, bank loan, credit agreement or other
agreement, instrument or document to which the Lessee or any of its
Subsidiaries is a party or which is binding on the Lessee or any of its
Subsidiaries or any of their respective properties, or (iii) result in, or
require, the creation or imposition of any
17
Lien (other than pursuant to the terms of the Operative Agreements) on any
asset of the Lessee or any of its Subsidiaries;
(c) Each of this Agreement and each other Operative Agreement to which
the Lessee or any of its Subsidiaries is or will be a party has been, or
will be, duly executed and delivered by it and constitutes, or upon
execution and delivery will constitute, the legal, valid and binding
obligation of the Lessee or such Subsidiary, as the case may be,
enforceable against it in accordance with the terms thereof. The Lessee and
each of its relevant Subsidiaries have each executed the various Operative
Agreements required to be executed as of the Initial Closing Date;
(d) Except as disclosed in the Lessee's annual report on Form 10-K for
the year ended December 31, 1997, or the Lessee's quarterly report on Form
10-Q for the three months ended September 30, 1998, there are no actions,
suits or proceedings (including, without limitation, any derivative action)
pending or, to the knowledge of the Lessee, threatened with respect to the
Lessee or any of its Subsidiaries which, if adversely decided, are
reasonably likely to result, either individually or collectively, in a
Material Adverse Effect. None of the Lessee or any of its Subsidiaries has
any material contingent liabilities not provided for or disclosed in the
financial statements referred to in Section 7.3(f), which are required in
accordance with GAAP to be reported in such financial statements;
(e) No Governmental Action by any Governmental Authority or
authorization, registration, consent, approval, waiver, notice or other
action by, to or of any other Person is required to authorize or is
required in connection with (i) the execution, delivery or performance of
any Operative Agreement or (ii) the legality, validity, binding effect or
enforceability of any Operative Agreement, in each case, except those which
have been obtained and are in full force and effect;
(f) (i) The audited consolidated financial statements of the
Consolidated Entities as at December 31, 1997, copies of which have been
furnished to the Agent and the Owner Trustee, were prepared in accordance
with GAAP and fairly present the financial condition of the Lessee and the
other Consolidated Entities on a consolidated basis as of such date and
their consolidated results of operations for the fiscal year then ended and
(ii) the unaudited consolidated financial statements as at September 30,
1998, copies of which have been furnished to the Agent and the Owner
Trustee, were prepared in accordance with GAAP (subject to normal year-end
adjustments) and fairly present in all material respects the financial
condition of the Lessee and its Consolidated Entities on a consolidated
basis as of such date and its consolidated results of operations for the
fiscal period then ended and such three-quarter period, respectively;
(g) Since the date of the audited financial statements described in
Section 7.3(f), there has been no event or occurrence which has had or is
reasonably likely to have a Material Adverse Effect;
18
(h) The Lessee knows of no proposed material tax assessments against
it or any of its Subsidiaries. No extension of time for assessment or
payment of any material federal, state or local tax by the Lessee or any of
its Subsidiaries is in effect;
(i) The execution and delivery of the Operative Agreements will not
involve any prohibited transaction within the meaning of ERISA, the Lessee
and each ERISA Affiliate has fulfilled its obligations under the minimum
funding standards imposed by ERISA and each is in compliance in all
material respects with the applicable provisions of ERISA, and no
"Reportable Event," as defined in Section 4043(b) of Title IV of ERISA, has
occurred with respect to any plan maintained by the Lessee or any of its
ERISA Affiliates.
(j) Upon the execution and delivery of each Lease Supplement to the
Lease, (i) the Lessee will have unconditionally accepted the Property
subject to the Lease Supplement and will have a valid and subsisting
leasehold interest in the Property, subject only to the Permitted
Exceptions, and (ii) no offset will exist with respect to any Rent or other
sums payable under the Lease;
(k) Neither the Lessee nor any of its Subsidiaries has filed a
voluntary petition in bankruptcy or been adjudicated a bankrupt or
insolvent, or filed any petition or answer seeking any reorganization,
liquidation, receivership, dissolution or similar relief under any
bankruptcy, receivership, insolvency, or other law relating to relief for
debtors, or sought or consented to or acquiesced in the appointment of any
trustee, receiver, conservator or liquidator of all or any part of its
properties or its interest in any Property. No court of competent
jurisdiction has entered an order, judgment, or decree approving a petition
filed against the Lessee or any of its Subsidiaries seeking any
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any federal or state bankruptcy,
receivership, insolvency or other law relating to relief for debtors, and
no other liquidator has been appointed for the Lessee or any of its
Subsidiaries or all or any part of its properties or its interest in any
Property, and no such action is pending. Neither the Lessee nor any of its
Subsidiaries has given notice to any Governmental Authority or any Person
of insolvency or pending insolvency, or suspension or pending suspension of
operations;
(l) Each of the Lessee and its Subsidiaries owns marketable title to,
or a subsisting leasehold interest in, all of its Properties free and clear
of all Liens, except Permitted Liens;
(m) Neither the Lessee nor any of its Subsidiaries is (a) an
"investment company" or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act or an "investment adviser"
within the meaning of the Investment Advisers Act of 1940, as amended, or
(b) 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", or a "public utility", within the
19
meaning of the Public Utility Holding Company Act of 1935, as amended, or a
"public utility" within the meaning of the Federal Power Act, as amended;
(n) Neither the Lessee nor any of its Subsidiaries is engaged
principally in, or has 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 Federal Reserve Board), and no
part of the proceeds of the Loans or the Holder Advances will be used for
the purpose, whether immediate, incidental or ultimate, of purchasing or
carrying any margin stock or maintaining or extending credit to others for
such purpose, or for any purpose that violates, or is inconsistent with
Regulations T, U, or X of the Federal Reserve Board;
(o) The Lessee and each of its Subsidiaries has filed all material tax
returns and reports required by Law to have been filed by it and has paid
all Taxes and governmental charges thereby shown to be owing, except any
such Taxes or charges which are being diligently contested in good faith by
appropriate proceedings and for which adequate reserves shall in accordance
with GAAP have been set aside on its books;
(p) To the best of the knowledge of the Lessee, after inquiry it has
deemed appropriate, the Lessee and each Subsidiary is in material
compliance with all Environmental Laws and Occupational Safety and Health
Laws where failure to comply could have a Material Adverse Effect. Neither
the Lessee nor any of its Subsidiaries has received notice of any claims
that any of them is not in compliance in all material respects with any
Environmental Law where failure to comply could have a Material Adverse
Effect;
(q) The Lessee and each of its Subsidiaries is in compliance with all
statutes, judicial and administrative orders, permits and governmental
rules and regulations which are material to its business or the
non-compliance with which could result in any material fine, penalty or
liability;
(r) No financial statement, document, certificate or other written
communication furnished to the Agent, the Owner Trustee, any Lender or any
Holder by or on behalf of the Lessee or any Consolidated Entity, or to the
extent not a Consolidated Entity any Subsidiary, in connection with any
Operative Agreement contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statements contained
herein or therein not misleading. There is no fact known to the Lessee that
materially adversely affects the business or condition of the Lessee or any
Material Group that has not been disclosed herein or in such financial
statements; and
(s) Each of the Arizona Ground Lease Documents to which TMC or
Meditrust is or will be a party has been, or will be, duly executed and
delivered by it and constitutes, or upon execution and delivery will
constitute, the legal, valid and binding
20
obligation of TMC or Meditrust, as the case may be, enforceable against it
in accordance with the terms thereof.
7.4. Representations and Warranties of the Agent. Effective as of the
Initial Closing Date, the Agent represents and warrants to each of the other
parties hereto that:
(a) It is a national banking association duly organized and validly
existing under the laws of the United States of America and has the full
power and authority to enter into and perform its obligations under this
Agreement and each other Operative Agreement to which it is or will be a
party;
(b) The execution, delivery and performance by the Agent of this
Agreement and each other Operative Agreement to which it is or will be a
party are not, and will not be, inconsistent with the articles of
incorporation or by-laws or other charter documents of the Agent, do not
and will not contravene any applicable Law of the State of North Carolina
or of the United States of America governing its activities and will not
contravene any provision of, or constitute a default under any indenture,
mortgage, contract or other instrument to which it is a party or by which
it or its properties are bound, or require any consent or approval of any
Governmental Authority under any applicable law, rule or regulation of the
State of North Carolina or any federal law, rule or regulation of the
United States of America governing its activities; and
(c) Each of this Agreement and each other Operative Agreement to which
it is a party has been, or when executed and delivered will be, duly
authorized by all necessary corporate action on the part of the Agent and
has been, or on such Closing Date will be, duly executed and delivered by
the Agent and, assuming the due authorization, execution and delivery
hereof and thereof by the other parties hereto and thereto, will constitute
a legal, valid and binding obligation enforceable against the Agent in
accordance with the terms thereof;
(d) Except as otherwise contemplated by the Operative Agreements, the
Agent shall not, nor shall it direct the Owner Trustee to, use the proceeds
of any Loan for any purpose other than the payment of Transaction Expenses
and the fees, expenses and other disbursements referenced in Section 9.1(a)
and (b) of this Agreement, the purchase or lease of the Properties, the
acquisition of Equipment and the acquisition of Improvements.
SECTION 8. REPRESENTATIONS AND WARRANTIES ON ADVANCE DATES.
8.1. Representations and Warranties on Each Property Closing Date. The
Lessee hereby represents and warrants as of each Property Closing Date as
follows:
(a) The representations and warranties of the Lessee set forth in the
Operative Agreements are true and correct in all material respects on and
as of the Property Closing
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Date as if made on and as of such date. The Lessee and its Subsidiaries are
in all material respects in compliance with their respective obligations
under the Operative Agreements and there exists no Default or Event of
Default under any of the Operative Agreements. No Default or Event of
Default will occur under any of the Operative Agreements as a result of, or
after giving effect to, the Advance requested by the Requisition on such
Property Closing Date;
(b) The Properties are being acquired at a price that is not in excess
of fair market value, and such Properties consist of (i) Land and existing
Improvements thereon which Improvements are either suitable for occupancy
at the time or acquisition or will be renovated or modified in accordance
with the terms of this Agreement, or (ii) Equipment. Each of the Properties
is located at the site set forth on the applicable Requisition, which is in
one of the Approved States;
(c) Upon the acquisition of each Property on such Property Closing
Date, and at all times thereafter, the Lessor will have marketable title to
such Property, as evidenced with respect to the Land by the issuance of an
ALTA form owner's policy showing title in the name of the Lessor, subject
only to Permitted Liens, or such Property is subject to a valid and
enforceable Ground Lease;
(d) The execution and delivery of each Operative Agreement delivered
by the Lessee or any of its Subsidiaries on such Property Closing Date and
the performance of the obligations of the Lessee and each of its
Subsidiaries under each Operative Agreement have been duly authorized by
all requisite corporate action on the part of the Lessee or such
Subsidiary, as applicable;
(e) Each Operative Agreement delivered on such Property Closing Date
by the Lessee or any of its Subsidiaries has been duly executed and
delivered by the Lessee or such Subsidiary;
(f) Each Operative Agreement delivered by the Lessee or any of its
Subsidiaries on such Property Closing Date is a legal, valid and binding
obligation of the Lessee or such Subsidiary, as applicable, enforceable
against the Lessee or such Subsidiary, as applicable, in accordance with
its respective terms;
(g) Upon filing of each of the UCC Financing Statements (with respect
to the Property being acquired) in the filing offices designated by the
Lessee, such UCC Financing Statements will have been filed with the
appropriate Governmental Authorities in order to perfect a security
interest in the Property described therein (to the extent perfection can be
obtained by filing under the UCC);
(h) Upon filing in the filing offices designated by the Lessee, the
Lender Financing Statements, together with an assignment to the Agent of
the filed Lessor Financing Statements, will perfect a valid first priority
security interest (in favor of the
22
Agent, for the benefit of itself, the Lenders and the Holders) in all the
Properties and other collateral described therein in which a security
interest or mortgage can be perfected by filing under the UCC, and upon
filing, the Lessor Financing Statements will protect Lessor's interest
under the Lease to the extent the Lease is a security agreement and
mortgage;
(i) 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 any such agency, then flood insurance has been
obtained for such Property in accordance with Section 14.2(b) of the Lease
and in accordance with the National Flood Insurance Act of 1968, as
amended.
(j) None of the Property consists of Tangible Personal Property; and,
without limitation the generality of the first clause of this paragraph
(j), the aggregate Property Cost of any "Personal Property" (as defined in
the Arizona Ground Lease) located at, or included in, the Arizona Property
does not exceed $3,000,000;
(k) The Lessee has obtained insurance coverage for each Property being
acquired by the Lessor on such Property Closing Date which meet the
requirements of Article XIV of the Lease and all of such coverage is in
full force and effect;
(l) Each Property being acquired by the Lessor on such Property
Closing Date complies with all Legal Requirements (including, without
limitation, all zoning and land use laws and Environmental Laws), except to
the extent that failure to comply therewith would not, individually or in
the aggregate, have a Material Adverse Effect;
(m) All consents, licenses, permits, authorizations, assignments and
building permits required as of the date on which such Advance is made by
all Legal Requirements or pursuant to the terms of any contract, indenture,
instrument or agreement for construction, completion, occupancy, operation,
leasing or subleasing of each Property with respect to which an Advance is
being made have been obtained and are in full force and effect, except to
the extent that the failure to so obtain would not, individually or in the
aggregate, have a Material Adverse Effect;
(n) All Improvements comply with all applicable Legal Requirements and
Insurance Requirements (including, without limitation, all zoning and land
use laws and Environmental Laws), except to the extent the failure to
comply therewith would not, individually or in the aggregate, have a
Material Adverse Effect. Such Improvements do not encroach in any manner
onto any adjoining land (except as permitted by express written easements)
and such Improvements and the use thereof by the Lessee and its agents,
assignees, employees, invitees, lessees, licensees and tenants comply in
all respects with all applicable Legal Requirements (including, without
limitation, all applicable Environmental Laws and building, planning,
zoning and fire codes), except to
23
the extent the failure to comply therewith would not, individually or in
the aggregate, have a Material Adverse Effect. There are no material
defects to such Improvements including, without limitation, the plumbing,
heating, air conditioning and electrical systems thereof and all water,
sewer, electric, gas, telephone and drainage facilities and all other
utilities required to adequately service such Improvements for their
intended use will be available pursuant to adequate permits (including any
that may be required under applicable Environmental Laws), except to the
extent that failure to obtain any such permit would not, individually or in
the aggregate, have a Material Adverse Effect. There is no action, suit or
proceeding (including any proceeding in condemnation or eminent domain or
under any Environmental Law) pending or, to the best knowledge of the
Lessee, threatened which adversely affects the title to, or the use,
operation or value of, such Properties. No fire or other casualty with
respect to such Properties has occurred which has had a Material Adverse
Effect. All utilities serving the related Properties, or proposed to serve
the related Properties in accordance with the Plans and Specifications, are
located in (or will be located in) and vehicular access to such
Improvements is provided by (or will be provided by), either public
rights-of-way abutting each related Property or Appurtenant Rights. All
licenses, approvals, authorizations, consents, permits (including, without
limitation, building, demolition and environmental permits, licenses,
approvals, authorizations and consents), easements and rights-of-way,
including proof of dedication, required for (i) the use, treatment,
storage, transport, disposal or disposition of any Hazardous Substance on,
at, under or from the real property underlying such Improvements during the
construction of such Improvements and the use and operation of such
Improvements following such construction, (ii) the construction of such
Improvements in accordance with the Plans and Specifications and (iii) the
use and operation of such Improvements following such construction with the
applicable Equipment which such Improvements support for the purposes for
which they were intended have either been obtained from the appropriate
Governmental Authorities or from private parties, as the case may be, or
will be obtained from the appropriate Governmental Authorities or from
private parties, as the case may be, prior to commencing any such
construction or use and operation, as applicable;
(o) Construction of Improvements, if any, to date has been performed
in a good and workmanlike manner in compliance with all Insurance
Requirements and Legal Requirements, except to the extent noncompliance
with any Legal Requirements would not, individually or in the aggregate,
have a Material Adverse Effect;
(p) When completed, the Improvements shall be wholly within any
building restriction lines (unless consented to by applicable Government
Authorities), however established; and
(q) The Advance is secured by the Lien of the Security Documents, and
the Lessee has not received any notice of, or taken any action to incur,
any Lien against the applicable Improvements other than Permitted Liens;
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(r) All conditions precedent contained in this Agreement and in the
other Operative Agreements relating to the Initial Closing Date have been
substantially satisfied.
SECTION 9. PAYMENT OF CERTAIN EXPENSES.
9.1. Transaction Expenses.
(a) Lessor agrees on the Initial Closing Date, to pay, or cause to be
paid, all reasonable fees, expenses and disbursements of the various legal
counsels for the Lessor and the Agent in connection with the transactions
contemplated by the Operative Agreements and incurred in connection with
the Initial Closing Date, including all Transaction Expenses (arising in
connection with the Initial Closing Date), and all other reasonable fees,
expenses and disbursements in connection with the Initial Closing Date, and
including, without limitation, all fees, taxes and expenses for the
recording, registration and filing of documents; provided, however, that
the Lessor shall pay such amounts described in this Section 9.1(a) only if
(i) such amounts are properly described in a Requisition delivered on or
before such date (or, in the absence of such a Requisition, if requested by
the Agent), subject to Section 5.2(c), and (ii) funds are made available by
the Lenders and the Holders in connection with such Requisition in an
amount sufficient to allow such payment. On the Initial Closing Date, after
delivery and receipt of the Requisition referenced in Section 4.2(a) hereof
and satisfaction of the other conditions precedent for such date, the
Holders shall make Holder Advances and the Lenders shall make Loans to the
Lessor to pay for the Transaction Expenses, fees, expenses and other
disbursements referenced in this Section 9.1(a). The Lessee agrees to pay
all amounts referred to in this Section 9.1(a) to the extent not paid by
Lessor.
(b) Lessor agrees on each Property Closing Date to pay, or cause to be
paid, all reasonable fees, expenses and disbursements of the various legal
counsels for the Lessor and the Agent in connection with the transactions
contemplated by the Operative Agreements and billed in connection with such
Property Closing Date, including all Transaction Expenses arising with
respect to such Property Closing Date, all fees, expenses and disbursements
incurred with respect to the various items referenced in Sections 5.3
(including without limitation the cost of any Appraisals or environmental
site assessments, any developer's fees, any premiums for title insurance
policies and charges for any updates to such policies) and all other
reasonable fees, expenses and disbursements in connection with such
Property Closing Date, including, without limitation, all expenses relating
to and all fees (including brokers' fees), taxes (including any and all
stamp, transfer or similar taxes) and expenses for the recording,
registration and filing of documents; provided, however, the Lessor shall
pay such amounts described in this Section 9.1(b) only if (i) such amounts
are properly described in a Requisition delivered on the applicable date
(or, in the absence of such a Requisition, if requested by the Agent,
subject to Section 5.2(c), and (ii) funds are made available by the Lenders
and
25
the Holders in connection with such Requisition in an amount sufficient to
allow such payment. On each Property Closing Date after delivery of the
applicable Requisition in satisfaction of the other conditions precedent
for such date, the Holders shall make a Holder Advance and the Lenders
shall make Loans to the Lessor to pay for the Transaction Expenses, fees,
expenses and other disbursements referenced in this Section 9.1(b). The
Lessee agrees to pay all amounts referred to in this Section 9.1(b) to the
extent not paid by the Lessor.
9.2. Certain Fees and Expenses. Lessee agrees to pay or cause to be paid
(i) the initial and annual Owner Trustee's fee and all reasonable expenses of
the Owner Trustee and any necessary co-trustees (including without limitation
reasonable counsel fees and expenses) or any successor owner trustee, for acting
as owner trustee under the Trust Agreement, (ii) all reasonable costs and
expenses incurred by the Lessee, the Agent, the Lenders, the Holders or the
Lessor in entering into any future amendments or supplements requested by the
Lessee with respect to any of the Operative Agreements, whether or not such
amendments or supplements are ultimately entered into, or giving or withholding
of waivers of consents hereto or thereto which have been requested by the
Lessee, and (iii) all reasonable costs and expenses incurred by the Lessor, the
Lessee, the Holders, the Lenders or the Agent in connection with the enforcement
of any Operative Agreement or any exercise of remedies under any Operative
Agreement or any purchase of any Property by the Lessee pursuant to Article XX
of the Lease.
9.3. Commitment Fee. The Lessee agrees to pay (a) to the Agent for the
account of each Lender a commitment fee (the "Lender Commitment Fee"), and (b)
to the Owner Trustee for the account of each Holder a commitment fee (the
"Holder Commitment Fee"), in each case during the Commitment Period, computed at
a rate per annum equal to the Applicable Commitment Fee Rate on the average
daily amount, with respect to each Lender, of the Available Commitment of such
Lender and, with respect to each Holder, of the Available Holder Commitment of
such Holder during the period for which payment is made, payable quarterly in
arrears on each Commitment Fee Payment Date, commencing on the first such date
to occur after the Initial Closing Date. Lender Commitment Fees and Holder
Commitment Fees shall be calculated on the basis of a 360-day year for the
actual days elapsed. Notwithstanding the foregoing, so long as any Lender or
Holder fails (in violation of the Operative Agreements) to make available any
portion of its Commitment or Holder Commitment when requested, such Person shall
not be entitled to receive payment of its pro rata share of its Commitment Fee
or Holder Commitment Fee (as the case may be) until such Person shall make
available such portion. Each such fee shall be calculated on the basis of a year
of 360 days for the actual number of days elapsed. If all or a portion of any
Commitment Fee or Holder Commitment Fee shall not be paid when due, such overdue
amount shall bear interest, payable by the Lessee on demand, at a rate per annum
equal to the Base Rate plus 2%, from the date of such non-payment until such
amount is paid in full (as well as before judgment).
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SECTION 10. OTHER COVENANTS AND AGREEMENTS.
10.1. Cooperation with the Lessee. The Holders, the Owner Trustee (at the
direction of the Holders) and the Agent shall, to the extent reasonably
requested by the Lessee (but without assuming additional liabilities on account
thereof), at the Lessee's expense, cooperate with the Lessee in connection with
its covenants contained herein including, without limitation, at any time and
from time to time, upon the request of the Lessee, promptly and duly executing
and delivering any and all such further instruments, documents and financing
statements (and continuation statements related thereto) as the Lessee may
reasonably request in order to perform such covenants.
10.2. Covenants of the Owner Trustee and the Holders. Each of the Owner
Trustee and the Holders hereby agree that so long as this Agreement is in
effect:
(a) None of the Holders and the Owner Trustee (both in its trust
capacity and in its individual capacity) will create or permit to exist at
any time, and each of the Holders and the Owner Trustee will, at its own
cost and expense, promptly take such action (and notify Lessee of such
action) as may be necessary duly to discharge, or to cause to be
discharged, all Lessor Liens attributable to it on the Properties;
provided, however, that the Holders and the Owner Trustee shall not be
required to discharge any such Lessor Lien while the same is being
contested in good faith by appropriate proceedings diligently prosecuted so
long as (a) such proceedings shall not involve any material danger of
impairment of the Liens of the Security Documents or of the sale,
forfeiture or loss of, any Property or title thereto or any interest
therein or the payment of Rent, and (b) such proceedings shall not
materially interfere with the disposition of any Property or title thereto
or interest therein or the payment of Rent.
(b) Without prejudice to any right of the Owner Trustee under the
Trust Agreement to resign (subject to the requirement set forth in the
Trust Agreement that such resignation shall not be effective until a
successor shall have agreed to accept such appointment), or the Holders'
rights under the Trust Agreement to remove the institution acting as Owner
Trustee (after consent to such removal by the Agent as provided in the
Trust Agreement), each of the Holders and the Owner Trustee hereby agrees
with the Lessee and the Agent (i) not to terminate or revoke the trust
created by the Trust Agreement except as permitted by Article VIII of the
Trust Agreement, (ii) not to amend, supplement, terminate or revoke or
otherwise modify any provision of the Trust Agreement in such a manner as
to adversely affect the rights of the Lessee or the Agent without the prior
written consent of such party and (iii) to comply with all of the terms of
the Trust Agreement, the nonperformance of which would adversely affect any
such party;
(c) The Owner Trustee or any successor may resign or be removed by the
Holders as Owner Trustee, a successor Owner Trustee may be appointed and a
corporation may become the Owner Trustee under the Trust Agreement, only in
27
accordance with the provisions of Article IX of the Trust Agreement and,
with respect to such appointment, with the consent of the Lessee, which
consent shall not be unreasonably withheld, conditioned or delayed;
(d) The Owner Trustee, in its capacity as Owner Trustee under the
Trust Agreement, and not in its individual capacity, shall not contract
for, create, incur or assume any indebtedness, or enter into any business
or other activity, other than pursuant to or under the Operative
Agreements;
(e) The Holders will not instruct the Owner Trustee to take any action
in violation of the terms of any Operative Agreement;
(f) Neither any Holder nor the Owner Trustee shall (i) commence any
case, proceeding or other action with respect to the Owner Trustee under
any existing or future law of any jurisdiction, domestic or foreign,
relating to bankruptcy, insolvency, reorganization, arrangement,
winding-up, liquidation, dissolution, composition or other relief with
respect to it or its debts, or (ii) seek appointment of a receiver,
trustee, custodian or other similar official with respect to the Owner
Trustee or for all or any substantial benefit of the creditors of the Owner
Trustee; and neither any Holder nor the Owner Trustee shall take any action
in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in this paragraph;
(g) The Owner Trustee shall give prompt notice to the Lessee and the
Agent if the Owner Trustee's chief place of business or chief executive
office, or the office where the records concerning the accounts or contract
rights relating to any Property are kept, shall cease to be located at 79
South Main Street, Salt Lake City, Utah 84111, or if it shall change its
name;
(h) Provided that no Lease Default or Lease Event of Default has
occurred and is continuing, neither the Owner Trustee nor any Holder shall,
without the prior written consent of the Lessee, consent to or permit any
amendment, supplement or other modification of the terms and provisions of
the Credit Agreement or the Notes;
(i) Neither the Owner Trustee nor any Holder shall consent to or
permit any amendment, supplement or other modification of the terms and
provisions of any Operative Agreement, in each case without the prior
written consent of the Agent except as described in Section 10.5 of this
Agreement; and
(j) The Owner Trustee (i) shall take such actions and shall refrain
from taking such actions with respect to the Operative Agreements or the
Properties and shall grant such approvals and otherwise act or refrain from
acting with respect to the Operative Agreements or the Properties in each
case as directed in writing by the Agent or, to the extent required by
Section 10.5 hereof, the Lessee, notwithstanding any contrary instruction
or absence of instruction by any Holder or Holders; and (ii) shall not take
any
28
action, grant any approvals or otherwise act under or with respect to the
Operative Agreements or any matters relating to the Properties without
first obtaining the prior written consent of the Agent (and without regard
to any contrary instruction or absence of instruction by any Holder);
provided, however, that notwithstanding the foregoing provisions of this
subparagraph (j) the Owner Trustee, the Agent and the Holders each
acknowledge, covenant and agree that, with respect to all matters under the
Operative Agreements that require the consent or concurrence of all of the
Lenders pursuant to the terms of Section 9.1 of the Credit Agreement (the
"Unanimous Vote Matters"), neither the Owner Trustee nor the Agent shall
act or refrain from acting with respect to any Unanimous Vote Matter until
such party has received the approval of each Lender and each Holder with
respect thereto.
10.3. Lessee Covenants, Consent and Acknowledgement.
(a) Lessee acknowledges and agrees that the Owner Trustee, pursuant to
the terms and conditions of the Security Agreement and the Mortgage
Instruments, shall create Liens respecting the various personal property,
fixtures and real property described therein in favor of the Agent. Lessee
hereby irrevocably consents to the creation, perfection and maintenance of
such Liens.
(b) Lessor hereby instructs Lessee, and Lessee hereby acknowledges and
agrees, that until such time as the Loans are paid in full and the Liens
evidenced by the Security Agreement and the Mortgage Instruments have been
released, (i) any and all Rent and any and all other amounts of any kind or
type under any of the Operative Agreements due and owing or payable to the
Lessor or the Owner Trustee shall instead be paid directly to the Agent or
as the Agent may direct from time to time and (ii) Lessee shall cause all
notices, certificates, financial statements, communications and other
information which is delivered, or is required to be delivered, to the
Lessor, the Owner Trustee or any Holder also to be delivered at the same
time to the Agent.
(c) Lessee shall not consent to or permit any amendment, supplement or
other modification of the terms or provisions of any Operative Agreement
without, in each case, obtaining the prior written consent of the Agent
and, to the extent required by the proviso at the end of Section 10.2(j)
hereof, each of the Holders.
(d) Except as otherwise contemplated by the Operative Agreements,
neither the Owner Trustee nor the Lessee shall use the proceeds of any
Holder Advance for any purpose other than the payment of Transaction
Expenses and the fees, expenses and other disbursements referenced in
Section 9.1(a) and (b) of this Agreement, the purchase or lease of the
Properties, the acquisition of Equipment and the acquisition of
Improvements;
(e) The Lessee shall not permit any of the Property to consist of
Tangible Personal Property; and, without limiting the generality of the
first clause of this paragraph
29
(e), the Lessee shall not permit the aggregate Property Cost of any
"Personal Property" (as defined in the Arizona Ground Lease) located at, or
included in, the Arizona Property to exceed $3,000,000;
(f) The Lessee agrees that aggregate appraised enterprise value of all
Properties as shown in the most recent Appraisals of each Property received
by the Agent pursuant to Section 5.3(b) or otherwise shall at all times be
greater than or equal to 50% of the aggregate Property Cost of all
Properties; and any Appraisal obtained to comply with this provision shall
be at the Lessee's sole cost and expense.
(g) The Lessee agrees to perform each of the Incorporated Covenants
and any other covenants set forth in (or incorporated by reference into)
Article XXVIII of the Lease, in accordance with their respective terms.
(h) The Lessee shall not create or permit to exist at any time (and
the Lessee shall, at its own expense, take such action as may be necessary
to duly discharge, or cause to be discharged) any Lien against any Property
other than Permitted Liens.
(i) The Lessee shall perform or shall cause to be performed, within
sixty (60) days after the Initial Closing Date, all actions recommended or
required by the Existing Environmental Reports, such performance to be
satisfactory to the Agent in its reasonable discretion.
(j) The Lessee shall pay (when and as due) any fees pursuant to the
Fee Letter.
10.4. Sharing of Certain Payments. The parties hereto acknowledge and agree
that all payments due and owing by the Lessee to the Lessor under the Lease or
any of the other Operative Agreements shall be made by the Lessee directly to
the Agent as more particularly provided in Section 10.3 hereof. The Holders and
the Agent, on behalf of the Lenders, acknowledge the terms of Section 8 of the
Credit Agreement regarding the allocation of payments and other amounts made or
received from time to time under the Operative Agreements and agree all such
payments and amounts are to be allocated as provided in Section 8 of the Credit
Agreement. In connection therewith the Holders hereby (a) appoint the Agent to
act as collateral agent for the Holders in connection with the Lien granted by
the Mortgage Instruments and other Security Documents to secure the Holder
Amount and (b) acknowledge and agree and direct that the rights and remedies of
the beneficiaries of the Lien of the Mortgage Instruments and other Security
Documents shall be exercised by the Agent on behalf of the Lenders and the
Holders as directed from time to time by the Lenders without notice to or
consent from the Holders.
10.5. Grant of Easements, etc. The Agent and the Holders hereby agree that,
so long as no Event of Default shall have occurred and be continuing, and until
such time as the Agent gives instructions to the contrary to the Owner Trustee,
the Owner Trustee shall, from time to
30
time at the request of the Lessee, in connection with the transactions
contemplated by the Lease or the other Operative Agreements, (i) grant easements
and other rights in the nature of easements with respect to any Property, (ii)
release existing easements or other rights in the nature of easements which are
for the benefit of any Property, (iii) execute and deliver to any Person any
instrument appropriate to confirm or effect such grants or releases, and (iv)
execute and deliver to any Person such other documents or materials in
connection with the acquisition, development or operation of any Property,
including, without limitation, reciprocal easement agreements, operating
agreements, development agreements, plats, replats or subdivision documents;
provided, that each of the agreements and documents referred to in this Section
10.5 shall be of the type normally executed by the Lessee in the ordinary course
of the Lessee's business, or consistent with local practice or as required by
local governmental authorities, and shall be on commercially reasonable terms so
as not to diminish the value of any Property in any material respect.
SECTION 11. CREDIT AGREEMENT AND TRUST AGREEMENT.
11.1. Lessee's Credit Agreement Rights. Notwithstanding anything to the
contrary contained in the Credit Agreement, the Agent, the Lessee and the Owner
Trustee hereby agree that, prior to the occurrence and continuation of any Lease
Default or Lease Event of Default the Lessee (as designated below) shall have
the following rights:
(a) the Lessee shall have the right to give the notice referred to in
Section 2.3 of the Credit Agreement, to designate the account to which a
borrowing under the Credit Agreement is to be credited pursuant to Section
2.3 of the Credit Agreement;
(b) the Lessee shall have the right to terminate or reduce the
Commitments pursuant to Section 2.5(a) of the Credit Agreement and to make
an Extension Request pursuant to Section 2.5(c) of the Credit Agreement;
(c) the Lessee shall have the right to exercise the conversion and
continuation options pursuant to Section 2.7 of the Credit Agreement;
(d) the Lessee shall have the right to approve any successor agent
pursuant to Section 7.8 of the Credit Agreement;
(e) the Lessee shall have the right to consent to any assignment by a
Lender to which the Lessor has the right to consent pursuant to Section 9.8
of the Credit Agreement; and
(f) without limiting the foregoing clauses (a) through (e), and in
addition thereto, provided that no Event of Default then exists, the Lessee
shall have the right to exercise any other right of the Owner Trustee under
the Credit Agreement upon not less than five (5) Business Days' prior
written notice from the Lessee to the Owner Trustee and the Agent.
31
11.2. Lessee's Trust Agreement Rights. Notwithstanding anything to the
contrary contained in the Trust Agreement, the Lessee, the Owner Trustee and the
Holders hereby agree that, prior to the occurrence and continuation of any Lease
Default or Lease Event of Default the Lessee (as designated below) shall have
the following rights:
(a) the Lessee shall have the right to exercise the conversion and
continuation options pursuant to Section 3.8 of the Trust Agreement;
(b) no removal of the Owner Trustee and appointment of a successor
Owner Trustee pursuant to Section 9.1 of the Trust Agreement shall be made
without the prior written consent (not to be unreasonably withheld or
delayed) of the Lessee; and
(c) the Holders and the Owner Trustee shall not amend, supplement or
otherwise modify any provision of the Trust Agreement in such a manner as
to adversely affect the rights of the Lessee without the prior written
consent (not to be unreasonably withheld or delayed) of the Lessee.
SECTION 12. TRANSFER OF INTEREST.
12.1. Restrictions on Transfer. The Holders may, directly or indirectly,
assign, convey or otherwise transfer any of their right, title or interest in or
to the Trust Estate or the Trust Agreement with the prior written consent of the
Agent, and (provided no Default or Event of Default has occurred and is
continuing) the Lessee and (only if such assignee is not a Lender) the Majority
Lenders (which consent in each case shall not be unreasonably withheld or
delayed); provided that such consents shall not be required for an assignment to
a Lender or an affiliate of a Lender. The Owner Trustee may, subject to the Lien
of the applicable Security Documents, but only with the prior written consent of
the Agent, the Holders (which consent may be withheld by the Agent or the
Holders in their sole discretion) and (provided no Default or Event of Default
has occurred and is continuing) the Lessee, directly or indirectly, assign,
convey, appoint an agent with respect to enforcement of, or otherwise transfer
any of the Owner Trustee's right, title or interest in or to any Property, the
Lease, the Trust Agreement, this Agreement (including, without limitation, any
right to indemnification thereunder), or any other document relating to a
Property or any interest in a Property as provided in the Trust Agreement and
the Lease. The provisions of the immediately preceding sentence shall not apply
to the obligations of the Owner Trustee to transfer the Properties to the Lessee
or a third party purchaser pursuant to Article XXII of the Lease upon payment
for such Properties in accordance with each of the terms and conditions of the
Lease.
12.2. Effect of Transfer. From and after any transfer effected in
accordance with this Section 12, the transferor shall be released, to the extent
of such transfer, from its liability hereunder and under the other documents to
which it is a party in respect of obligations to be performed on or after the
date of such transfer; provided, however, that any transferor Holder shall
remain liable under Article XI of the Trust Agreement to the extent that the
transferee Holder shall not have assumed the obligations of the transferor
Holder thereunder. Upon any
32
transfer by the Owner Trustee or a Holder as above provided, any such transferee
shall assume the obligations of the Owner Trustee and Lessor or the obligations
of a Holder, as the case may be, and shall be deemed an "Owner Trustee",
"Lessor" or "Holder", as the case may be, for all purposes of such documents and
each reference herein to the transferor shall thereafter be deemed a reference
to such transferee for all purposes, except as provided in the preceding
sentence. Notwithstanding any transfer of all or a portion of the transferor's
interest as provided in this Section 12, the transferor shall be entitled to all
benefits accrued and all rights vested prior to such transfer including, without
limitation, rights to indemnification under any such document.
SECTION 13. INDEMNIFICATION.
13.1. General Indemnity.
(a) Whether or not any of the transactions contemplated hereby shall
be consummated, the Indemnity Provider hereby assumes liability for and
agrees to defend, indemnify and hold harmless each Indemnified Person on an
After Tax Basis from and against any Claims which may be imposed on,
incurred by or asserted against an Indemnified Person by any other Person
in any way relating to or arising or alleged to arise out of the execution,
delivery, performance or enforcement of this Agreement, the Lease or any
other Operative Agreement or on or with respect to any Property or any part
thereof, including, without limitation, Claims in any way relating to or
arising or alleged to arise out of (i) the financing, refinancing,
purchase, acceptance, rejection, ownership, design, construction,
refurbishment, development, delivery, acceptance, nondelivery, leasing,
subleasing, possession, use, operation, maintenance, repair, modification,
transportation, condition, sale, return, repossession (whether by summary
proceedings or otherwise), or any other disposition of a Property, or any
part thereof, including the acquisition, holding or disposition of any
interest in any Property, lease or agreement comprising a portion of any
thereof; (ii) any latent or other defect in any property whether or not
discoverable by an Indemnified Person or the Indemnity Provider; (iii) any
Environmental Claim, any violation of Environmental Laws, or any other loss
of or damage to any property or the environment relating to any Property,
the Lease or the Indemnity Provider; (iv) the Operative Agreements, or any
transaction contemplated thereby; (v) any breach by the Lessee of any of
its representations or warranties under the Operative Agreements to which
it is a party or failure by the Lessee to perform or observe any covenant
or agreement to be performed by it under any of the Operative Agreements;
(vi) the transactions contemplated hereby or by any other Operative
Agreement, in respect of the application of Parts 4 and 5 of Subtitle B of
Title I of ERISA; (vii) any personal injury, death or property damage,
including without limitation Claims based on strict or absolute liability
in tort; (viii) any easement, right, agreement or document referred to in
Section 10.5 of this Agreement; or (ix) any Lien on any Property (other
than Liens created by the Operative Agreements). The foregoing indemnity
shall not apply to a Claim imposed on, incurred by or asserted against an
Indemnified Person to the extent such Claim arises from (A) the gross
negligence, willful misconduct or willful
33
breach of such Indemnified Person, or (B) the negligence of such
Indemnified Person unless such Indemnified Person is (1) the Owner Trustee
or the Trust Company, (2) a Holder and the claim is brought against such
Holder in its capacity as such or arises from its role as a Holder or (3)
any successor, director, shareholder, officer, employee or agent of any of
the foregoing.
(b) If a written Claim is made against any Indemnified Person or if
any proceeding shall be commenced against such Indemnified Person
(including a written notice of such proceeding) for any Claim, such
Indemnified Person shall promptly notify the Indemnity Provider in writing
and shall not take action with respect to such Claim without the consent of
the Indemnity Provider for thirty (30) days after the receipt of such
notice by the Indemnity Provider; provided, however, that, in the case of
any such Claim, if action shall be required by law or regulation to be
taken prior to the end of such 30-day period, such Indemnified Person shall
endeavor, in such notice to the Indemnity Provider, to inform the Indemnity
Provider of such shorter period, and no action shall be taken with respect
to such Claim without the consent of the Indemnity Provider before seven
(7) days before the end of such shorter period; provided, further, that the
failure of such Indemnified Person to give the notices referred to in this
sentence shall not diminish the Indemnity Provider's obligation hereunder
except to the extent such failure materially precludes the Indemnity
Provider from contesting such Claim.
(c) If, within thirty (30) days of receipt of such notice from the
Indemnified Person (or such shorter period as the Indemnified Person has
notified the Indemnity Provider is required by law or regulation for the
Indemnified Person to respond to such Claim), the Indemnity Provider shall
request in writing that such Indemnified Person respond to such Claim, the
Indemnified Person shall, at the expense of the Indemnity Provider, in good
faith conduct and control such action (including, without limitation by
pursuit of appeals) (provided, however, that (A) if such Claim can be
pursued by the Indemnity Provider on behalf of or in the name of such
Indemnified Person, the Indemnified Person, at the Indemnity Provider's
request, shall allow the Indemnity Provider to conduct and control the
response to such Claim and (B) in the case of any Claim, the Indemnified
Person may request the Indemnity Provider to conduct and control the
response to such Claim (with counsel to be selected by the Indemnity
Provider and consented to by such Indemnified Person, such consent not to
be unreasonably withheld, conditioned or delayed; provided, however, that
any Indemnified Person may retain separate counsel at the expense of the
Indemnity Provider in the event of a conflict)) by, in the sole discretion
of the Person conducting and controlling the response to such Claim, (1)
resisting payment thereof, (2) not paying the same except under protest, if
protest is necessary and proper, (3) if the payment be made, using
reasonable efforts to obtain a refund thereof in appropriate administrative
and judicial proceedings, or (4) taking such other action as is reasonably
requested by the Indemnity Provider from time to time.
34
(d) The party controlling the response to any Claim shall consult in
good faith with the non-controlling party and shall keep the
non-controlling party reasonably informed as to the conduct of the response
to such Claim; provided, that all decisions ultimately shall be made in the
discretion of the controlling party, except that the Indemnity Provider may
not agree to any dismissal or settlement of, or other agreement in
connection with, any claim without the prior written consent of such
Indemnified Person, if such dismissal, settlement or agreement would
require any admission or acknowledgment of any culpability or wrongdoing by
such Indemnified Person or provide for any nonmonetary relief to be
performed by such Indemnified Person. The parties agree that an Indemnified
Person may at any time decline to take further action with respect to the
response to such Claim and may settle such Claim if such Indemnified Person
shall waive its rights to any indemnity from the Indemnity Provider that
otherwise would be payable in respect of such Claim (and any future Claim,
the pursuit of which is precluded by reason of such resolution of such
Claim) and shall pay to the Indemnity Provider any amount previously paid
or advanced by the Indemnity Provider pursuant to this Section 13.1 by way
of indemnification or advance for the payment of any amount regarding such
Claim other than expenses of the action relating to such Claim.
(e) Notwithstanding the foregoing provisions of this Section 13.1, an
Indemnified Person shall not be required to take any action and no
Indemnity Provider shall be permitted to respond to any Claim in its own
name or that of the Indemnified Person unless (i) the Indemnity Provider
shall have agreed to pay and shall pay to such Indemnified Person on demand
and on an After Tax Basis all reasonable costs, losses and expenses that
such Indemnified Person actually incurs in connection with such Claim,
including, without limitation, all reasonable legal, accounting and
investigatory fees and disbursements, (ii) the Indemnified Person shall
have reasonably determined that the action to be taken will not result in
any material danger of sale, forfeiture or loss of 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, (iii) if such
Claim shall involve the payment of any amount prior to the resolution of
such Claim, the Indemnity Provider shall provide to the Indemnified Person
an interest-free advance in an amount equal to the amount that the
Indemnified Person is required to pay (with no additional net after-tax
cost to such Indemnified Person), (iv) in the case of a Claim that must be
pursued in the name of an Indemnified Person (or an Affiliate thereof), the
Indemnity Provider shall have provided to such Indemnified Person an
opinion of independent counsel selected by the Indemnified Person and
reasonably satisfactory to the Indemnity Provider stating that a reasonable
basis exists to contest such Claim, and (v) such claim is covered by
insurance and no Event of Default shall have occurred and be continuing. In
addition, an Indemnified Person shall not be required to contest any Claim
in its name (or that of an Affiliate) if the subject matter thereof shall
be of a continuing nature and shall have previously been decided adversely
by a court of competent jurisdiction pursuant to the contest provisions of
this Section 13.1, unless there shall have been a change in law (or
interpretation thereof) and the Indemnified Person shall have received, at
the Indemnity Provider's expense, an opinion of independent counsel
selected by the Indemnified
35
Person and reasonably acceptable to the Indemnity Provider stating that as
a result of such change in law (or interpretation thereof), it is more
likely than not that the Indemnified Person will prevail in such contest.
13.2. General Tax Indemnity.
(a) The Indemnity Provider shall pay and assume liability for, and
does hereby agree to indemnify, protect and defend each Property and all
Indemnified Persons, and hold them harmless against, all Impositions on an
After Tax Basis.
(b) (i) Subject to the terms of Section 13.2(f), the Indemnity
Provider shall pay or cause to be paid all Impositions directly to the
taxing authorities where feasible and otherwise to the Indemnified
Person, as appropriate, and the Indemnity Provider shall at its own
expense, upon such Indemnified Person's reasonable request, furnish to
such Indemnified Person copies of official receipts or other
satisfactory proof evidencing such payment.
(ii) In the case of Impositions for which no contest is conducted
pursuant to Section 13.2(f) and which the Indemnity Provider pays
directly to the taxing authorities, the Indemnity Provider shall pay
such Impositions prior to the latest time permitted by the relevant
taxing authority for timely payment. In the case of Impositions for
which the Indemnity Provider reimburses an Indemnified Person, the
Indemnity Provider shall do so within thirty (30) days after receipt
by the Indemnity Provider of demand by such Indemnified Person
describing in reasonable detail the nature of the Imposition and the
basis for the demand (including the computation of the amount
payable). In the case of Impositions for which a contest is conducted
pursuant to Section 13.2(f), the Indemnity Provider shall pay such
Impositions or reimburse such Indemnified Person for such Impositions,
to the extent not previously paid or reimbursed pursuant to subsection
(a), prior to the latest time permitted by the relevant taxing
authority for timely payment after conclusion of all contests under
Section 13.2(f).
(iii) Impositions imposed with respect to a Property for a
billing period during which the Lease expires or terminates with
respect to such Property (unless the Lessee has exercised the Purchase
Option with respect to such Property or the Lessee has otherwise
purchased such Property) shall be adjusted and prorated on a daily
basis between the Indemnity Provider and the Lessor, whether or not
such Imposition is imposed before or after such expiration or
termination and each party shall pay its pro rata share thereof.
(iv) At the Indemnity Provider's request, the amount of any
indemnification payment by the Indemnity Provider pursuant to
subsection (a) shall be verified and certified by an independent
public accounting firm mutually acceptable to the Indemnity Provider
and the Indemnified Person. The fees and
36
expenses of such independent public accounting firm shall be paid by
the Indemnity Provider unless such verification shall result in an
adjustment in the Indemnity Provider's favor of 15% or more of the
payment as computed by the Indemnified Person, in which case such fee
shall be paid by the Indemnified Person.
(c) The Indemnity Provider shall be responsible for preparing and
filing any real and personal property or ad valorem tax returns with
respect to each Property. In case any other report or tax return shall be
required to be made with respect to any obligations of the Indemnity
Provider under or arising out of subsection (a) and of which the Indemnity
Provider has knowledge or should have knowledge, the Indemnity Provider, at
its sole cost and expense, shall notify the relevant Indemnified Person of
such requirement and (except if such Indemnified Person notifies the
Indemnity Provider that such Indemnified Person intends to file such report
or return) (A) to the extent required or permitted by and consistent with
Legal Requirements, make and file in Indemnity Provider's name such return,
statement or report; and (B) in the case of any other such return,
statement or report required to be made in the name of such Indemnified
Person, advise such Indemnified Person of such fact and prepare such
return, statement or report for filing by such Indemnified Person or, where
such return, statement or report shall be required to reflect items in
addition to any obligations of the Indemnity Provider under or arising out
of subsection (a), provide such Indemnified Person at the Indemnity
Provider's expense with information sufficient to permit such return,
statement or report to be properly made with respect to any obligations of
the Indemnity Provider under or arising out of subsection (a). Such
Indemnified Person shall, upon the Indemnity Provider's request and at the
Indemnity Provider's expense, provide any data maintained by such
Indemnified Person (and not otherwise available to or within the control of
the Indemnity Provider) with respect to any Property which the Indemnity
Provider may reasonably require to prepare any required tax returns or
reports.
(d) If as a result of the payment or reimbursement by the Indemnity
Provider of any Imposition or other reasonable expenses of the Lessor or
the payment of any Transaction Expenses incurred in connection with the
transactions contemplated by the Operative Agreements, the Lessor, the
Holders, partners of any Holder, or shareholders of such partners of a
partnership which is a partner of such Holder, shall suffer a net increase
in any federal, state or local income tax liability, the Indemnity Provider
shall indemnify such Persons (without duplication of any indemnification
required by subsection (a)) on an After Tax Basis for the amount of such
increase. The calculation of any such net increase shall take into account
any current or future tax savings (including any net operating loss
carry-forward) realized or reasonably expected to be realized by such
Person in respect thereof, as well as any interest, penalties and additions
to tax payable by such Lessor, or such Holder, or such Affiliate, in
respect thereof.
(e) As between the Indemnity Provider on one hand, and the Lessor or
the Agent, any Lender or any Holder on the other hand, the Indemnity
Provider shall be
37
responsible for, and the Indemnity Provider shall indemnify and hold
harmless the Lessor, the Agent, the Lenders and each Holder (without
duplication of any indemnification required by subsection (a)) on an After
Tax Basis against, any obligation for United States or foreign withholding
taxes imposed in respect of payments on the Notes or Certificates or with
respect to Rent payments under the Lease (and, if the Lessor, the Agent,
any Lender or any Holder receives a demand for such payment from any taxing
authority, the Indemnity Provider shall discharge such demand on behalf of
the Lessor, the Agent, such Lender or such Holder); provided, however, that
the right of any Lender to make a claim for indemnification under this
Section 13.2(e) is subject to the compliance by such Lender with the
requirements of Section 2.13 of the Credit Agreement.
(f) (i) If a written Claim is made against any Indemnified Person, or
if any proceeding shall be commenced against such Indemnified Person
(including a written notice of such proceeding), for any Impositions,
such Indemnified Person shall promptly notify the Indemnity Provider
in writing and shall not take action with respect to such Claim or
proceeding without the consent of the Indemnity Provider for thirty
(30) days after the receipt of such notice by the Indemnity Provider;
provided, however, that, in the case of any such Claim or proceeding,
if action shall be required by law or regulation to be taken prior to
the end of such 30- day period, such Indemnified Person shall, in such
notice to the Indemnity Provider, inform the Indemnity Provider of
such shorter period, and no action shall be taken with respect to such
Claim or proceeding without the consent of the Indemnity Provider
before seven (7) days before the end of such shorter period; provided,
further, that the failure of such Indemnified Person to give the
notices referred to this sentence shall not diminish the Indemnity
Provider's obligation hereunder except to the extent such failure
materially precludes the Indemnity Provider from contesting such
Claim.
(ii) If, within thirty (30) days of receipt of such notice from
the Indemnified Person (or such shorter period as the Indemnified
Person has notified the Indemnity Provider is required by law or
regulation for the Indemnified Person to commence such contest), the
Indemnity Provider shall request in writing that such Indemnified
Person contest such Imposition, the Indemnified Person shall, at the
expense of the Indemnity Provider, in good faith conduct and control
such contest (including, without limitation, by pursuit of appeals)
relating to the validity, applicability or amount of such Imposition
(provided, however, that (A) if such contest can be pursued
independently from any other proceeding involving a tax liability of
such Indemnified Person, the Indemnified Person, at the Indemnity
Provider's request, shall allow the Indemnity Provider to conduct and
control such contest and (B) in the case of any contest, the
Indemnified Person may request the Indemnity Provider to conduct and
control such contest (with counsel to be selected by the Indemnity
Provider and consented to by such Indemnified Person, such consent not
to be unreasonably withheld, conditioned or
38
delayed; provided, however, that any Indemnified Person may retain
separate counsel at the expense of the Indemnity Provider in the event
of a conflict)) by, in the sole discretion of the Person conducting
and controlling such contest, (1) resisting payment thereof, (2) not
paying the same except under protest, if protest is necessary and
proper, (3) if the payment be made, using reasonable efforts to obtain
a refund thereof in appropriate administrative and judicial
proceedings, or (4) taking such other action as is reasonably
requested by the Indemnity Provider from time to time.
(iii) The party controlling any contest shall consult in good
faith with the non-controlling party and shall keep the
non-controlling party reasonably informed as to the conduct of such
contest; provided, that all decisions ultimately shall be made in the
sole discretion of the controlling party. The parties agree that an
Indemnified Person may at any time decline to take further action with
respect to the contest of any Imposition and may settle such contest
if such Indemnified Person shall waive its rights to any indemnity
from the Indemnity Provider that otherwise would be payable in respect
of such Imposition (and any future Claim by any taxing authority, the
contest of which is precluded by reason of such resolution of such
contest) and shall pay to the Indemnity Provider any amount previously
paid or advanced by the Indemnity Provider pursuant to this Section
13.2 by way of indemnification or advance for the payment of any
amount regarding such Imposition other than expenses of such contest.
(iv) Notwithstanding the foregoing provisions of this Section
13.2, an Indemnified Person shall not be required to take any action
and no Indemnity Provider shall be permitted to contest any Imposition
in its own name or that of the Indemnified Person unless (A) the
Indemnity Provider shall have agreed to pay and shall pay to such
Indemnified Person on demand and on an After Tax Basis all reasonable
costs, losses and expenses that such Indemnified Person actually
incurs in connection with contesting such Imposition, including,
without limitation, all reasonable legal, accounting and investigatory
fees and disbursements, (B) the Indemnified Person shall have
reasonably determined that the action to be taken will not result in
any material danger of sale, forfeiture or loss of 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 or during the contest, the Indemnity Provider shall provide to the
Indemnified Person an interest-free advance in an amount equal to the
Imposition that the Indemnified Person is required to pay (with no
additional net after-tax cost to such Indemnified Person), (D) in the
case of a Claim that must be pursued in the name of an Indemnified
Person (or an Affiliate thereof), the Indemnity Provider shall have
provided to such Indemnified Person an opinion of independent tax
counsel selected by the Indemnified Person and reasonably satisfactory
to the Indemnity Provider stating that a reasonable basis exists to
contest such Claim, and (E) no Event of Default
39
shall have occurred and be continuing. In addition, an Indemnified
Person shall not be required to contest any claim in its name (or that
of an Affiliate) if the subject matter thereof shall be of a
continuing nature and shall have previously been decided adversely by
a court of competent jurisdiction pursuant to the contest provisions
of this Section 13.2, unless there shall have been a change in law (or
interpretation thereof) and the Indemnified Person shall have
received, at the Indemnity Provider's expense, an opinion of
independent tax counsel selected by the Indemnified Person and
reasonably acceptable to the Indemnity Provider stating that as a
result of such change in law (or interpretation thereof), it is more
likely than not that the Indemnified Person will prevail in such
contest.
13.3. Environmental Indemnity. Without limiting the generality of the
foregoing, whether or not the transactions contemplated hereby shall be
consummated, the Indemnity Provider hereby assumes liability for and agrees to
defend, indemnify and hold harmless each Indemnified Person on an After Tax
Basis from and against any Claims which may be imposed on, incurred by or
asserted against an Indemnified Person by any other Person (but not to the
extent such Claims arise from the gross negligence or willful misconduct of such
Indemnified Person) in any way relating to or arising, or alleged (by any Person
asserting such a Claim against an Indemnified Person) to arise, out of any
Environmental Claim, any violation of Environmental Laws, or any other loss of
or damage to any Property or the environment (including without limitation the
presence on any Property of wetlands, tidelands or swamp or overflow lands, or
any condition arising from or affecting any Property or arising from or
affecting any lands nearby or adjacent to any Property that has or threatens to
have any adverse effect upon human health or the environment at such Property or
upon the use or value of such Property), in each case relating to any Property,
the Lease or the Indemnity Provider.
SECTION 14. MISCELLANEOUS.
14.1. Survival of Agreements. The representations, warranties, covenants,
indemnities and agreements of the parties provided for in the Operative
Agreements, and the parties' obligations under any and all thereof, shall
survive the execution and delivery of this Agreement, the transfer of any
Property to the Owner Trustee, the acquisition of any Equipment, the
construction of any Improvements, any disposition of any interest of the Owner
Trustee in any Property or any interest of the Holders in the Owner Trust, the
payment of the Notes and any disposition thereof, and shall be and continue in
effect notwithstanding any investigation made by any party and the fact that any
party may waive compliance with any of the other terms, provisions or conditions
of any of the Operative Agreements. Except as otherwise expressly set forth
herein or in other Operative Agreements, the indemnities of the parties provided
for in the Operative Agreements shall survive the expiration or termination of
any thereof.
14.2. No Broker, etc. Each of the parties hereto represents to the others
that it has not retained or employed any broker, finder or financial adviser to
act on its behalf in connection with this Agreement, nor has it authorized any
broker, finder or financial adviser retained or employed by any other Person so
to act. Any party who is in breach of this representation shall
40
indemnify and hold the other parties harmless from and against any liability
arising out of such breach of this representation.
14.3. Notices. Unless otherwise specifically provided herein, all notices,
consents, directions, approvals, instructions, requests and other communications
required or permitted by the terms hereof to be given to any Person shall be
given in writing by United States certified or registered mail (postage
prepaid), by nationally recognized courier service, by hand or by telecopy with
confirming notice and any such notice shall become effective upon receipt and
shall be directed to the address of such Person as indicated:
If to the Lessee, to it at the following address:
HEALTHSOUTH CORPORATION
One HealthSouth Parkway
Birmingham, Alabama 35243
Attention: Michael D. Martin
Telephone No.: (205) 969-4712
Telecopy No.: (205) 969-4629
With a copy to:
HEALTHSOUTH CORPORATION
One HealthSouth Parkway
Birmingham, Alabama 35243
Attention: Leif Murphy
Telephone No.: (205) 969-6056
Telecopy No.: (205) 969-6837
If to the Owner Trustee, to it at the following address:
First Security Bank, National Association
79 South Main Street
Salt Lake City, Utah 84111
Attention: Val T. Orton
Telephone No.: (801) 246-5208
Telecopy No.: (801) 246-5053
41
If to NationsBank, National Association, as a Holder or a Lender, to it at the
following address:
NationsBank, N.A.
NationsBank Corporate Center
100 North Tryon Street, 8th Floor
Charlotte, North Carolina 28255
Attn: Philip S. Durand
Telephone No.: (704) 386-4955
Telecopy No.: (704) 388-0960
with all notices of requests for Holder Advances, or conversion, continuation or
prepayment of any Holder Advance, to be sent to:
NationsBank, N.A.
Independence Center, 15th Floor
Charlotte, North Carolina 28255
Attn: Cindy Harmon
Telephone No.: (704) 388-3918
Telecopy No.: (704) 409-0016
If to any other Holder, to it at the address set forth for such Holder on
Schedule 1 hereto or in the applicable Assignment and Assumption;
If to any other Lender, to it at the address for notice set forth on Schedule
1.2 to the Credit Agreement or in the applicable Assignment and Assumption;
If to the Agent, to it at the following address:
NationsBank, N.A.
Independence Center, 15th Floor
Charlotte, North Carolina 28255
Attn: Cindy Harmon
Telephone No.: (704) 388-3918
Telecopy No.: (704) 409-0016
with all notices of borrowing, conversion, continuation or prepayment of any
Loan to be delivered to the address set forth in Section 9.2 of the Credit
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.
42
14.4. Counterparts. This Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the
same instrument.
14.5. Amendments and Termination. Neither this Agreement nor any of the
terms hereof may be terminated, amended, supplemented, waived or modified except
by an instrument in writing signed by the Lessor, the Lessee and (subject to
Section 9.1 of the Credit Agreement) the Agent. This Agreement may be terminated
by an agreement signed in writing by the Owner Trustee, the Holders, the
Lenders, the Lessee and the Agent.
14.6. Headings, etc. The Table of Contents and headings of the various
Articles and Sections of this Agreement are for convenience of reference only
and shall not modify, define, expand or limit any of the terms or provisions
hereof.
14.7. Parties in Interest. Except as expressly provided herein, none of the
provisions of this Agreement are intended for the benefit of any Person except
the parties hereto; provided, that the Lenders are intended to be third-party
beneficiaries of this Agreement.
14.8. GOVERNING LAW; WAIVERS OF JURY TRIAL.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NORTH CAROLINA, WITHOUT REGARD
TO ANY OTHERWISE APPLICABLE PRINCIPLES OF CONFLICT OF LAWS.
(b) TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE
PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY
LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER
OPERATIVE AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.
14.9. Submission to Jurisdiction; Waivers. Each of the parties hereto
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Operative Agreements to
which it is a party, or for recognition and enforcement of any judgement in
respect thereof, to the non-exclusive general jurisdiction of the courts of
the State of North Carolina and the courts of the United States of America,
in each case located in Mecklenburg County, North Carolina, and appellate
courts from any thereof;
(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the
venue of any such
43
action or proceeding in any such court or that such action or proceeding
was brought in an inconvenient court and agrees not to plead or claim the
same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail) postage prepaid, to the
respective party at its address set forth in Section 14.3 hereof or at such
other address of which the Administrative Agent shall have been notified
pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to
in this Section 14.9 any special, exemplary, punitive or consequential
damages.
14.10. Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render such provision unenforceable in any
other jurisdiction.
14.11. Liability Limited.
(a) The Agent, the Lessee and the Holders each acknowledge and agree
that the Owner Trustee is (except as otherwise expressly provided herein or
therein) entering into this Agreement and the other Operative Agreements to
which it is a party (other than the Trust Agreement and other than as set
forth in Section 7.2 of this Agreement), solely in its capacity as trustee
under the Trust Agreement and not in its individual capacity and that Trust
Company shall not be liable or accountable under any circumstances
whatsoever in its individual capacity for or on account of any statements,
representations, warranties, covenants or obligations stated to be those of
the Owner Trustee, except for its own gross negligence or willful
misconduct and except as otherwise expressly provided herein or in the
other Operative Agreements.
(b) Anything to the contrary contained in this Agreement, the Credit
Agreement, the Notes or in any other Operative Agreement notwithstanding,
neither the Lessor nor any Holder (in its capacity as a Holder) nor any
officer, director, shareholder, or partner thereof, nor any of the
successors or assigns of the foregoing (all such Persons being hereinafter
referred to collectively as the "Exculpated Persons"), shall be personally
liable in any respect for any liability or obligation hereunder or under
any other Operative Agreement including the payment of the principal of, or
interest on, the Notes, or for monetary damages for the breach of
performance of any of the covenants contained in the
44
Credit Agreement, the Notes, this Agreement, the Security Agreement or any
of the other Operative Agreements. The Agent (for itself and on behalf of
the Lenders) agrees that, in the event the Agent or any Lender pursues any
remedies available to them under the Credit Agreement, the Notes, this
Agreement, the Security Agreement, the Mortgage Instruments or under any
other Operative Agreement, neither the Lenders nor the Agent shall have any
recourse against any Exculpated Person, for any deficiency, loss or Claim
for monetary damages or otherwise resulting therefrom, and recourse shall
be had solely and exclusively against the Trust Estate and the Lessee (with
respect to the Lessee's obligations under the Lease, the Participation
Agreement and any other Operative Agreement); but nothing contained herein
shall be taken to prevent recourse against or the enforcement of remedies
against the Trust Estate in respect of any and all liabilities, obligations
and undertakings contained herein, in the Credit Agreement, in the Notes,
in the Security Agreement, the Mortgage Instruments or in any other
Operative Agreement. Notwithstanding the provisions of this Section,
nothing in this Agreement, the Credit Agreement, the Notes, the Security
Agreement, the Mortgage Instruments or any other Operative Agreement shall:
(i) constitute a waiver, release or discharge of any indebtedness or
obligation evidenced by the Notes or arising under this Agreement, the
Security Agreement, the Mortgage Instruments or the Credit Agreement or
secured by the Security Agreement, the Mortgage Instruments or any other
Operative Agreement, but the same shall continue until paid or discharged;
(ii) relieve the Lessor or any Exculpated Person from liability and
responsibility for (but only to the extent of the damages arising by reason
of): (a) active waste knowingly committed by such Lessor or such Exculpated
Person with respect to the Properties or (b) any fraud, gross negligence,
willful misconduct or willful breach on the part of such Lessor or such
Exculpated Person; (iii) relieve such Lessor or such Exculpated Person from
liability and responsibility for (but only to the extent of the moneys
misappropriated, misapplied or not turned over) (a) misappropriation or
misapplication by such Lessor (i.e., application in a manner contrary to
any Operative Agreement) of any insurance proceeds or condemnation award
paid or delivered to such Lessor by any Person other than the Agent or (b)
any rents or other income received by such Lessor from the Lessee that are
not turned over to the Agent; or (iv) affect or in any way limit the
Agent's rights and remedies under any Operative Agreement with respect to
the Rents and its rights thereunder or its right to obtain a judgment
against the Lessor's interest in the Properties.
14.12. Rights of Lessee. Notwithstanding any provision of the Operative
Agreements, if at any time all obligations (i) of the Owner Trustee under the
Credit Agreement, the Security Documents, the Trust Agreement and the other
Operative Agreements and (ii) of the Lessee under the Operative Agreements have
in each case been satisfied or discharged in full, then the Lessee shall be
entitled to (a) terminate the Lease and (b) receive all amounts then held under
the Operative Agreements and all proceeds with respect to any of the Properties.
Upon the termination of the Lease pursuant to the foregoing clause (a), the
Lessor shall transfer to the Lessee all of its right, title and interest free
and clear of the Lien of the Lease and all Lessor Liens in and to any Properties
then subject to the Lease and any amounts or proceeds referred to in the
foregoing clause (b) shall be paid over to the Lessee.
45
14.13. Further Assurances. The parties hereto shall promptly cause to be
taken, executed, acknowledged or delivered, at the sole expense of the Lessee,
all such further acts, conveyances, documents and assurances as the other
parties may from time to time reasonably request in order to carry out and
effectuate the intent and purposes of this Participation Agreement, the other
Operative Agreements and the transactions contemplated hereby and thereby
(including, without limitation, the preparation, execution and filing of any and
all Uniform Commercial Code financing statements and other filings or
registrations which the parties hereto may from time to time request to be filed
or effected). The Lessee, at its own expense and without need of any prior
request from any other party, shall take such action as may be necessary
(including any action specified in the preceding sentence), or (if Owner Trustee
shall so request) as so requested, in order to maintain and protect all security
interests provided for hereunder or under any other Operative Agreement.
14.14. Calculations under Operative Agreements. The parties hereto agree
that all calculations and numerical determinations to be made under the
Operative Agreements by the Owner Trustee shall be made by the Agent and that
such calculations and determinations shall be conclusive and binding on the
parties hereto in the absence of manifest error.
14.15. Confidentiality. Each of the Owner Trustee, the Holders, the Agent
and the Lenders severally agrees to use reasonable efforts to keep confidential
all non-public information pertaining to the Lessee or its Subsidiaries which is
provided to it by the Lessee or its Subsidiaries and shall not intentionally
disclose such information to any Person except:
(a) to the extent such information is public when received by such
Person or becomes public thereafter due to the act or omission of any party
other than such Person;
(b) to the extent such information is independently obtained from a
source other than the Lessee or any of its Subsidiaries and such
information from such source is not, to such Person's knowledge, subject to
an obligation of confidentiality or, if such information is subject to an
obligation of confidentiality, that disclosure of such information is
permitted;
(c) to counsel, auditors or accountants retained by any such Person or
any Affiliates of any such Person provided they agree to keep such
information confidential as if such Person or Affiliate were party to this
Agreement and to financial institution regulators, including examiners of
any Lender, the Agent or the Owner Trustee, any Holder or any Affiliate in
the course of examinations of such Persons;
(d) in connection with any litigation or the enforcement or
preservation of the rights of the Agent, the Owner Trustee, the Lessor, any
Lender or any Holder under the Operative Agreements;
(e) to the extent required by any applicable statute, rule or
regulation or court order (including, without limitation, by way of
subpoena) or pursuant to the request of
46
any regulatory or Governmental Authority having jurisdiction over any such
Person; provided, however, that such Person shall endeavor (if not
otherwise prohibited by Law) to notify the Lessee prior to any disclosure
made pursuant to this clause (e), except that no such Person shall be
subject to any liability whatsoever for any failure to so notify the
Lessee;
(f) the Agent may disclose such information to the Owner Trustee, any
Lender or any Holder; or
(g) to the extent disclosure to any other financial institution or
other Person is appropriate in connection with any proposed or actual (i)
assignment or grant of a participation by any of the Lenders of interests
in the Credit Agreement or any Note to such other financial institution
(who will in turn be required by the Agent to agree in writing to maintain
confidentiality as if it were a Lender originally party to the Credit
Agreement) or (ii) assignment by any Holder of interests in the Trust
Agreement to another Person (who will in turn be required by the
transferring Holder to agree in writing to maintain confidentiality as if
it were a Holder originally party to this Participation Agreement).
14.16. Calculation of Rent, Interest, Holder Yield and Fees. Except as
otherwise expressly set forth in the Operative Agreements, all calculation of
Rent, interest, Holder Yield, Overdue Rate, Holder Overdue Rate, Commitment
Fees, or Holder Commitment Fees payable hereunder shall be computed based on the
actual number of days elapsed over a year of 360 days.
47
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized as of the
day and year first above written.
HEALTHSOUTH CORPORATION,
as Lessee
By: /s/ William W. Horton
-------------------------------------
Name: William W. Horton
-----------------------------------
Title: Vice President
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not individually, except as
expressly stated herein, but solely as
Owner Trustee under the HEALTHSOUTH
Corporation Trust 1995-1
By: /s/ Janeen R. Higgs
-------------------------------------
Name: Janeen R. Higgs
Title: Trust Officer
NATIONSBANK, N.A., as Agent
By: /s/ Philip S. Durand
-------------------------------------
Name: Philip S. Durand
Title: Vice President
DEUTSCHE BANK AG NEW YORK BRANCH,
as Documentation Agent
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
48
NATIONSBANK, N.A.,
as a Holder
By: /s/ Philip S. Durand
-------------------------------------
Name: Philip S. Durand
Title: Vice President
NATIONSBANK, N.A.,
as a Lender
By: /s/ Philip S. Durand
-------------------------------------
Name: Philip S. Durand
Title: Vice President
Applicable Funding Office:
NationsBank, N.A.
NationsBank Corporate Center
100 North Tryon Street, 8th Floor
Charlotte, North Carolina 28255
Attn: Philip S. Durand
Telephone No.: (704) 386-4955
Telecopy No.: (704) 388-0960
49
DEUTSCHE BANK AG NEW YORK BRANCH,
as a Holder
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
DEUTSCHE BANK AG NEW YORK BRANCH,
as a Lender
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Applicable Funding Office:
----------------------------------
----------------------------------
Attn:
-----------------------------
Telephone No.:
--------------------
Telecopy No.:
---------------------
50
---------------------------------------,
as a Holder
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
----------------------------------------
as a Lender
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Applicable Funding Office:
----------------------------------------
----------------------------------------
----------------------------------------
51
SCHEDULE 1
Holders at the Initial Closing Date
-----------------------------------
Participation Agreement - HealthSouth Corp., First Security Bank NA, Deutsche Bank AG and NationsBank NA
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