-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, H4e/yv+BxhOsNuRr6a0kgSmNbgOuxgFFigr2QfbgZcsWHuoeUz9GeKL73VsYcCFN myA8ZcEKSlktYPzUawPthg== 0000950144-99-012985.txt : 19991117 0000950144-99-012985.hdr.sgml : 19991117 ACCESSION NUMBER: 0000950144-99-012985 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991112 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CATALINA MARKETING CORP/DE CENTRAL INDEX KEY: 0000883977 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ADVERTISING AGENCIES [7311] IRS NUMBER: 330499007 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-11008 FILM NUMBER: 99751300 BUSINESS ADDRESS: STREET 1: 11300 9TH ST NORTH CITY: ST PETERSBURG STATE: FL ZIP: 33716 BUSINESS PHONE: 8135795000 MAIL ADDRESS: STREET 1: 11300 9TH STREET NORTH CITY: ST PETERSBURG STATE: FL ZIP: 33716-2329 10-Q 1 CATALINA MARKETING CORPORATION 1 =============================================================================== SECURITIES AND EXCHANGE COMMISSION WASHINGTON D.C. 20549 FORM 10-Q (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999 ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period From ______ to _______ Commission File Number 1-11008 CATALINA MARKETING CORPORATION ------------------------------------------------------ (Exact Name of Registrant as Specified in its Charter) Delaware 33-0499007 ------------------------------ ---------------------- (State of Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification Number) 11300 9th Street North St. Petersburg, Florida 33716-2329 ----------------------- ---------- (727) 579-5000 ---------------------------------------------------- (Registrant's Telephone Number, Including Area Code) Indicate by check mark whether Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] At November 11, 1999, Registrant had outstanding 18,239,947 shares of Common Stock. =============================================================================== 2 CATALINA MARKETING CORPORATION INDEX
Page ---- PART I. FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Statements of Income for the three and six month periods ended September 30, 1999 and 1998 3 Condensed Consolidated Balance Sheets at September 30, 1999 and March 31, 1999 4 Condensed Consolidated Statements of Cash Flows for the six month periods ended September 30, 1999 and 1998 5 Notes to Condensed Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9 PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders 14 Item 6. Exhibits and Reports on Form 8-K 14 SIGNATURES 16
-2- 3 CATALINA MARKETING CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (dollars in thousands, except per share data) (unaudited)
Three Months Ended Six Months Ended September 30, September 30, --------- --------- --------- --------- 1999 1998 1999 1998 --------- --------- --------- --------- Revenues $ 86,828 $ 64,448 $ 159,442 $ 121,282 Costs and Expenses: Direct operating expenses 36,369 28,198 65,705 51,748 Selling, general and administrative 22,648 14,022 43,288 29,327 Depreciation and amortization 8,577 6,638 16,764 13,042 --------- --------- --------- --------- Total costs and expenses 67,594 48,858 125,757 94,117 --------- --------- --------- --------- Income From Operations 19,234 15,590 33,685 27,165 Interest Expense, Net and Other (9) (2,893) (210) (2,921) --------- --------- --------- --------- Income Before Income Taxes and Minority Interest 19,225 12,697 33,475 24,244 Income Taxes (7,728) (6,308) (13,458) (11,117) Minority Interest in Losses of Subsidiaries 175 -- 358 -- --------- --------- --------- --------- Net Income $ 11,672 $ 6,389 $ 20,375 $ 13,127 Diluted: Earnings Per Common Share $ 0.60 $ 0.34 $ 1.05 $ 0.69 Weighted Average Common Shares Outstanding 19,366 18,963 19,426 18,998 Basic: Earnings Per Common Share $ 0.63 $ 0.35 $ 1.09 $ 0.71 Weighted Average Common Shares Outstanding 18,625 18,512 18,650 18,521
The accompanying Notes are an integral part of these consolidated financial statements. -3- 4 CATALINA MARKETING CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (dollars in thousands) (unaudited)
September 30, March 31, 1999 1999 --------- --------- ASSETS Current Assets: Cash and cash equivalents $ 10,557 $ 13,942 Accounts receivable, net 45,468 44,045 Deferred tax asset 10,715 8,932 Prepaid expenses and other current assets 29,624 28,562 --------- --------- Total current assets 96,364 95,481 --------- --------- Property and Equipment: Property and equipment 219,744 199,625 Accumulated depreciation and amortization (123,988) (111,939) --------- --------- Property and equipment, net 95,756 87,686 --------- --------- Purchased intangible assets, net 54,524 35,628 Other assets 1,989 2,252 --------- --------- Total Assets $ 248,633 $ 221,047 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $ 15,749 $ 14,149 Accrued expenses 53,390 44,697 Deferred revenue 30,031 27,349 Short term borrowings 20,625 7,635 --------- --------- Total current liabilities 119,795 93,830 --------- --------- Deferred tax liability 7,384 5,696 Minority interest 1,457 -- Long term debt 1,780 588 --------- --------- Commitments and Contingencies Stockholders' Equity: Preferred stock; $0.01 par value; 5,000,000 authorized shares; none issued and outstanding -- -- Common stock; $0.01 par value; 50,000,000 authorized shares and 18,233,245 and 18,389,438 shares issued and outstanding at September 30, 1999 and March 31, 1999, respectively 182 184 Paid-in capital 446 819 Accumulated other comprehensive income (438) 843 Retained earnings 118,027 119,087 --------- --------- Total stockholders' equity 118,217 120,933 --------- --------- Total Liabilities and Stockholders' Equity $ 248,633 $ 221,047 ========= =========
The accompanying Notes are an integral part of these consolidated financial statements. -4- 5 CATALINA MARKETING CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in thousands) (unaudited)
Six Months Ended September 30, ----------------------- 1999 1998 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 20,375 $ 13,127 Adjustments to reconcile net income to net cash provided by operating activities: Minority interest (358) -- Depreciation and amortization 16,764 14,003 Other 6,127 2,204 Changes in operating assets and liabilities 7,798 (9,438) -------- -------- Net cash provided by operating activities 50,706 19,896 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures, net (25,641) (17,096) Purchase of investments, net of cash acquired (24,689) (2,480) -------- -------- Net cash used in investing activities (50,330) (19,576) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Net borrowings on credit facility 10,000 -- Proceeds from debt obligations 13,524 13,436 Principal payments on debt obligations (8,764) (13,369) Proceeds from issuance of common and subsidiary stock 11,796 3,152 Tax benefit from exercise of non-qualified options and disqualified dispositions 4,304 1,010 Payment for repurchase of company common stock (34,531) (11,771) -------- -------- Net cash used in financing activities (3,671) (7,542) -------- -------- NET DECREASE IN CASH (3,295) (7,222) Effect of exchange rate changes on cash (90) (312) CASH, at end of prior period 13,942 18,434 -------- -------- CASH, at end of current period $ 10,557 $ 10,900 ======== ========
The accompanying Notes are an integral part of these consolidated financial statements. -5- 6 CATALINA MARKETING CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Note 1. Condensed Consolidated Financial Statements: In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the financial position of the Company as of September 30, 1999 and March 31, 1999, the results of operations for the three and six months ended September 30, 1999 and 1998 and cash flows for the six month periods ended September 30, 1999 and 1998. Certain prior period balances have been reclassified to conform with the current period presentation. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned and majority-owned subsidiaries. The second quarter balances and results of the majority and wholly owned foreign subsidiaries are included as of June 30, 1999 and December 31, 1998 and for the three and six month periods ended June 30, 1999 and 1998, respectively. All material intercompany profits, transactions and balances have been eliminated. These financial statements, including the condensed consolidated balance sheet as of March 31, 1999, which has been derived from audited financial statements, are presented in accordance with the requirements of Form 10-Q and consequently may not include all disclosures normally required by generally accepted accounting principles or those normally made in the Company's Annual Report on Form 10-K. The accompanying condensed consolidated financial statements and related notes should be read in conjunction with the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 1999. Note 2. Earnings Per Common Share: The following is a reconciliation of the denominator of basic EPS to the denominator of diluted EPS (in thousands):
THREE MONTHS ENDED SIX MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ------------------ ------------------ 1999 1998 1999 1998 ------ ------ ------ ------ Basic weighted average common shares outstanding 18,625 18,512 18,650 18,521 Dilutive effect of options outstanding 741 451 776 477 ------ ------ ------ ------ Diluted weighted average common shares outstanding 19,366 18,963 19,426 18,998
-6- 7 Options to purchase 120,650 shares of common stock at exercise prices per share ranging from $91 1/4 to $106 7/8 were outstanding at September 30, 1999, but were not included in the computation of diluted EPS because the options' exercise prices were greater than the average market price of common stock. Note 3. Comprehensive Income:
Three months ended Six months ended September 30, September 30, --------------------- ----------------------- 1999 1998 1999 1998 -------- ------ -------- -------- (in thousands) Net income $ 11,672 $6,389 $ 20,375 $ 13,127 Other comprehensive income, net of tax: Currency translation adjustment (695) 197 (1,281) (540) -------- ------ -------- -------- Comprehensive Income $ 10,977 $6,586 $ 19,094 $ 12,587
Note 4. Credit Facility: In September 1999, the Company, as a part of its $150 million credit agreement, extended the term of the $50 million 364 day line of credit facility to September 26, 2000. At September 30, 1999, there was $10 million outstanding thereunder. Note 5. Convertible Long Term Debt: Effective April 5, 1999, the Tribune Company, an unrelated entity, made an investment in Supermarkets Online, a majority owned subsidiary of the Company. In addition to this equity investment, Supermarkets Online borrowed $1.4 million from the Tribune Company in exchange for a subordinated convertible note bearing interest at a rate of 4.5 percent per annum. This long term debt obligation is convertible into 500,000 shares of Supermarkets Online common stock upon certain occurrences. Note 6. Acquisitions: Effective April 21, 1999, the Company, through one of its wholly owned subsidiaries, acquired one of its vendors, CompuScan Marketing, Inc. ("CompuScan"), for $9.1 million in initial cash consideration, net of cash acquired, by means of a merger transaction. CompuScan provides the intellectual property and backroom processing for the Company's Checkout Prizes product. Terms of the merger agreement call for the Company to make a series of additional payments, which are based on specified criteria, including future revenue growth targets of the Checkout Prizes product. -7- 8 Effective July 1, 1999, the Company acquired certain assets and assumed certain liabilities of Alliance Research, Inc., an attitudinal research company, for $6.7 million in initial consideration, net of cash and cash equivalents acquired. Terms of the purchase agreement call for the Company to make a series of payments, which are contingent upon future operating performance of Alliance Research, Inc. The above referenced acquisitions have been accounted for using the purchase method of accounting for acquisitions and, accordingly, the results of operations of each acquisition have been included in the fiscal 2000 financial statements since the date of such acquisition. Note 7. Segment Information (in thousands):
For the Three Months Ended September 30, -------------------------------------------------- 1999 1998 ------------------------ ------------------------ Targeted Targeted Marketing Marketing Services Eliminations Services Eliminations -------- ------------ -------- ------------ Revenue from external customers $ 86,828 $ 64,448 Revenue from internal sources 344 (344) 608 (608) Net income 11,672 6,389
For the Six Months Ended September 30, -------------------------------------------------- 1999 1998 ------------------------ ------------------------ Targeted Targeted Marketing Marketing Services Eliminations Services Eliminations -------- ------------ -------- ------------ Revenue from external customers $159,442 $ 121,282 Revenue from internal sources 654 (654) 1,089 (1,089) Net income 20,375 13,127
Note 8. Commitments and Contingencies As of October 21, 1999, the Company entered into a lease financing agreement for a new corporate headquarters building in St. Petersburg, Florida. The lease term runs through September 2005. The Company has the option to extend the lease term for up to three, five year renewal periods, subject to certain conditions. The agreement includes a purchase option for the Company that approximates the original cost of the building. The Company anticipates that it will occupy the new corporate headquarters building and begin making lease payments in the second quarter of FY 2001. -8- 9 ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS: FISCAL 2000 COMPARED TO FISCAL 1999 The Company's revenues for the second quarter and first six months of fiscal 2000 increased 34.7 percent and 31.5 percent, respectively, compared with the same periods in fiscal 1999. The increase in revenues is due to an increase in promotions printed worldwide, growth in the Checkout Direct(R) program and increases in direct mail marketing programs. Additionally, the second quarter and first six months of fiscal 2000 includes revenues from Market Logic and DCI Cardmarketing, acquired in July 1998 and January 1999, respectively. The second quarter of fiscal 2000 also includes revenues of approximately $2.5 million from Alliance Research, Inc. acquired in July 1999. In the U.S., the Catalina Marketing Network was in 12,635 stores at September 30, 1999, which reach 160 million shoppers each week as compared to 11,621 stores reaching 151 million shoppers each week at September 30, 1998 and 12,092 stores reaching 152 million shoppers each week at March 31, 1999. The Health Resource Network was in 4,706 pharmacies at September 30, 1999 as compared to 3,186 pharmacies at September 30, 1998 and 3,861 pharmacies at March 31, 1999. Outside the U.S., the Catalina Marketing Network was in 2,335 stores at September 30, 1999, which reach 34 million shoppers each week as compared to 1,560 stores reaching 24 million shoppers each week at September 30, 1998 and 1,935 stores reaching 29 million shoppers each week at March 31, 1999. In the first six months of fiscal 2000 the Company installed its Catalina Marketing Network in 543 stores in the U.S., net of deinstallations, as compared to 457 stores in the comparable fiscal 1999 period. Deinstallation activity can and does occur primarily due to the consolidation and business combination of supermarket chains as well as store closures made by retailers in the ordinary course of business. The Company also installed its Health Resource Network in 845 pharmacies in the first six months of fiscal 2000, net of deinstallations, as compared to 1,266 stores in the comparable fiscal 1999 period. Outside the U.S., the Company installed 400 stores in the first six months of fiscal 2000, net of deinstallations, as compared to 188 stores in the comparable fiscal 1999 period. Direct operating expenses consist of retailer fees; paper; sales commissions; loyalty and direct marketing expenses; provision for doubtful accounts; the expenses of operating and maintaining the Catalina Marketing and Health Resource network, primarily expenses relating to operations personnel and service offices; and the direct expenses associated with operating the outdoor media business in a majority-owned subsidiary in Asia. Direct operating expenses increased in absolute terms to $36.4 million and $65.7 million for the second quarter and first six months of fiscal 2000, respectively, from $28.2 million and $51.7 million in the -9- 10 comparable periods of fiscal 1999. Direct operating expenses in the second quarter and first six months of fiscal 2000 as a percentage of revenues decreased to 41.9 percent and 41.2 percent, respectively, from 43.7 percent and 42.7 percent in the comparable periods of fiscal 1999. This decrease in fiscal 2000 is principally attributable to a favorable shift in product mix towards higher margin domestic sales, partially offset by the higher material costs component of direct costs as a function of revenue associated with the increase in direct marketing programs, including Market Logic and the DCI Cardmarketing business. Selling, general and administrative expenses include personnel-related costs of selling and administrative staff, overhead, marketing expenses and new product development expenses. Selling, general and administrative expenses for the second quarter and first six months of fiscal 2000 were $22.6 million and $43.3 million, respectively, compared to $14.0 million and $29.3 million for the comparable period of fiscal 1999, increases of 61.5 percent and 47.6 percent, respectively. As a percentage of revenues, selling, general and administrative expenses increased 4.3 percent and 2.9 percent in the second quarter and first six months of fiscal 2000, to 26.1 percent and 27.1 percent, respectively, from 21.8 percent and 24.2 percent for the comparable periods of fiscal 1999. These increases relate primarily to administrative, advertising and marketing expenses relating to new operating units and products. Depreciation and amortization increased to $8.6 million and $16.7 million for the second quarter and first six months of fiscal 2000 from $6.6 million and $13.0 million for the comparable periods in fiscal 1999. Depreciation increased due to the investment in capital expenditures, during the current and prior periods, associated with new operating units and product lines, data processing equipment and the increase in stores installed. Amortization expense increased due to the increases in goodwill and other intangible assets related to the Company's acquisitions. Interest expense, net and other decreased to $9,000 and $210,000 net expense for the second quarter and first six months of fiscal 2000 from $2.9 million net expense for each of the comparable periods in fiscal 1999. The decrease is primarily due to the Company writing off its $3.0 million investment in Intelledge Corporation in the second quarter of fiscal 1999. The provision for income taxes increased to $13.5 million, or 40.2 percent of income before income taxes and minority interest, for the first six months of fiscal 2000, compared to $11.1 million, or 45.9 percent of income before income taxes and minority interest, for the same period in fiscal 1999. The rate decrease is primarily due to the valuation allowance recorded against the $3.0 million deferred tax benefit for the Intelledge investment write off in the second quarter of fiscal 1999 and secondarily due to the Company's ability to utilize losses of a majority owned foreign subsidiary for income tax purposes in fiscal 2000. The Company's effective tax rate is higher than the federal statutory income tax rate due to state and foreign income taxes, various nondeductible expenses, primarily the amortization of goodwill related to the Company's acquisitions and, in the case of fiscal 1999, the valuation allowance referred to in the previous sentence. -10- 11 LIQUIDITY AND CAPITAL RESOURCES The Company's primary capital expenditures are store equipment and third-party store installation costs, as well as data processing equipment for the Company's central data processing facilities. Total store equipment and third-party store installation costs range from $3,000 to $13,000 per store. During the first six months of fiscal 2000 and 1999, the Company made capital expenditures of $25.6 million and $17.1 million, respectively. The pace of installations varies depending on the timing of contracts entered into with retailers and the scheduling of store installations by mutual agreement. During the first six months of fiscal 2000, the Company spent $6.6 million more on store equipment compared to the comparable fiscal 1999 period. Effective April 21, 1999, the Company, through one of its wholly owned subsidiaries, acquired one of its vendors, CompuScan, for $9.1 million in initial cash consideration, net of cash acquired, by means of a merger transaction. Terms of the merger agreement call for the Company to make a series of additional payments, which are based on specified future revenue growth targets of the Checkout Prizes product. Effective July 1, 1999, the Company acquired certain assets and assumed certain liabilities of Alliance Research, Inc., an attitudinal research company, for $6.7 million in initial consideration, net of cash and cash equivalents acquired. Terms of the purchase agreement call for the Company to make a series of payments, which are contingent upon future operating performance of Alliance Research, Inc. Additionally, in the first six months of fiscal 2000, investments were made totaling $8.9 million which were comprised of earnout payments attributable to past acquisitions. During the second quarter of fiscal 2000, the Company purchased 396,500 shares of its common stock for $34.5 million. On October 25, 1999 the Company announced approval by its Board of Directors of an additional $50.0 million to buy back Company common stock. As of October 25, 1999, this authorization increases the total funds available for share repurchases to $59.0 million. During the second quarter of fiscal 2000, the Company borrowed approximately $10 million against its $150 million credit facility. The $10 million was outstanding as of September 30, 1999. The Company believes working capital generated by operations along with existing credit facilities is sufficient for its overall capital requirements. Other Year 2000 Readiness Disclosure -11- 12 This year 2000 disclosure is the most current information available and replaces all previous disclosures made by the Company in its filings on Form 10-Q and Form 10-K, and in its Annual Report to Stockholders. In the next few months, many companies will face potentially serious risks associated with the inability of existing business systems to appropriately recognize calendar dates beginning in the year 2000. The Company is aware of the year 2000 issue and the effects it may have on its business systems. In response, the Company has developed a detailed plan to address the issue. This plan includes a campaign which began in fiscal 1998, revised from time to time to consider acquired companies' business systems, and has a goal for completion in December 1999. The plan currently includes spending of approximately $1.5 million for testing and upgrading hardware and software. The Company has spent approximately $1.3 million on the year 2000 issue through September 30, 1999. The Company has contacted substantially all of its hardware and software vendors, suppliers and financial institution partners to evaluate their compliance efforts. Those that have been considered noncompliant have been evaluated and corrective action has been or will be taken by December 1999 to ensure the vendors' year 2000 efforts or lack there of will not adversely impact the Company's operations. The Company's manufacturer clients and retailers may also encounter year 2000 issues and are in various states of readiness. If these manufacturers or retailers encounter serious problems related to the year 2000 issue, those problems could have a material adverse impact on the operations of the Company. The Company believes most of its manufacturer clients and retailers are addressing the year 2000 issue, and the Company is closely monitoring the status of their readiness. In the event that the Company's year 2000 compliance efforts are unsuccessful and/or one or more of the Company's critical internal systems are not year 2000 compliant by December 31, 1999, the following could occur, any of which could have a material adverse impact on the operations of the Company: (a) Customer service could deteriorate to the point that a substantial number of the Company's customers move their relationships to other organizations; (b) The Company may be unable to provide manufacturer and retail clients with timely and accurate information about program execution; or (c) The Company may be unable to fulfill various contractual obligations. The Company believes substantially all of its internally developed applications and purchased applications used internally will be year 2000 compliant by December 1999. The Company has therefore focused its efforts on contingency planning for business systems outside of those applications, as warranted. Forward Looking Statements -12- 13 The statements in this Form 10-Q may be forward looking, and actual results may differ materially. Statements not based on historical facts involve risks and uncertainties, including, but not limited to, the changing market for promotional activities, especially as it relates to policies and programs of packaged goods manufacturers for the issuance of certain product coupons, the effect of economic and competitive conditions and seasonal variations, actual timing and level of promotional activities and programs with the Company's customers, the pace of installation of the Company's store network, the success of new services and businesses and the pace of their implementation, any acquisitions or dispositions by the Company, and the Company's ability to maintain favorable client relationships. -13- 14 PART II - OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. The Company's Annual Meeting of Stockholders was held on July 20, 1999. The following members were elected as Class II members of the Company's Board of Directors for the period ending as of the annual meeting of stockholders in 2002: Frederick W. Beinecke Thomas W. Smith The terms of the other directors of the Company continued after the meeting. These directors are: Frank H. Barker, Patrick W. Collins, George W. Off, Daniel D. Granger, Stephen I. D'Agostino and Michael B. Wilson. With regard to the proposal to ratify and approve the Company's 1999 Stock Option Plan, 12,449,868 votes were cast in favor, 1,833,057 were cast against, there were 2,034,007 abstentions and broker non-votes, and the proposal was approved. With regard to the proposal to ratify and approve the Company's independent certified public accountants for fiscal 2000, 16,298,075 votes were cast in favor, 3,800 were cast against, there were 15,057 abstentions, and the proposal was approved. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. a. Exhibits 10.26.2 Second Amendment dated as of February 19, 1999, to the Credit Agreement dated as of September 30, 1997, by and between the Registrant and Nationsbank, National Association, as agent and lender, and the other lenders party thereto 10.27 Lease Agreement dated as of October 21, 1999 by and between First Security Bank, National Association, as the owner trustee under Dolphin Realty Trust 1999-1, as lessor, and Catalina Marketing Sales Corporation, as lessee -14- 15 10.28 Participation Agreement dated as of October 21, 1999 among Catalina Marketing Sales Corporation, as lessee; the Registrant, as guarantor; First Security Bank, National Association, as the owner trustee under Dolphin Realty Trust 1999-1, as lessor and borrower; the various banks and other lending institutions and First Union National Bank, as the agent for the lenders 10.29 Purchase and Sale Agreement dated as of October 21, 1999 by and among 200 Carillon, LLC, as seller, Echelon International Corporation, as developer, and Catalina Marketing Sales Corporation, as buyer 15 Acknowledgement Letter 19 Review Report of Independent Certified Public Accountants b. Reports of Form 8-K None -15- 16 CATALINA MARKETING CORPORATION SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, Registrant's principal financial officer, thereunto duly authorized. November 12, 1999 CATALINA MARKETING CORPORATION ---------------------------------------- (Registrant) /s/ Joseph P. Port ---------------------------------------- Joseph P. Port Senior Vice President and Chief Financial Officer (Authorized officer of Registrant and principal financial officer) -16- EX-10.26.2 2 SECOND AMENDMENT TO CREDIT AGREEMENT 1 EXHIBIT 10.26.2 AMENDMENT AGREEMENT NO. 2 TO CREDIT AGREEMENT THIS AMENDMENT AGREEMENT is made and entered into this 19th day of February, 1999, by and among CATALINA MARKETING CORPORATION, a Delaware corporation (herein called the "Borrower"), NATIONSBANK, NATIONAL ASSOCIATION a national banking association organized and existing under the laws of the United States (the "Agent"), as Agent for the lenders (the "Lenders") party to a Credit Agreement dated September 30, 1997, as amended by Amendment Agreement No. 1 to Credit Agreement dated August 12, 1998, among such Lenders, Borrowers and the Agent, as amended (the "Agreement") and Lenders party to this Amendment Agreement. W I T N E S S E T H: WHEREAS, the Borrower, the Agent and the Lenders have entered into the Agreement pursuant to which the Lenders have agreed to make revolving loans to the Borrower in the principal amount of $150,000,000 as evidenced by the Notes (as defined in the Agreement); and WHEREAS, the Borrower has requested that the Agent and the Lenders amend the Agreement as provided herein; and WHEREAS, upon the terms and conditions contained herein the Agent and the Lenders are willing to amend the Agreement; NOW, THEREFORE, the Borrower, the Agent and the Lenders do hereby agree as follows: 1. Definitions. The term "Agreement" as used herein and in the Loan Documents (as defined in the Agreement) shall mean the Agreement as hereby amended and modified. Unless the context otherwise requires, all terms used herein without definition shall have the definition provided therefor in the Agreement. 2. Amendment. The Agreement is hereby amended, effective as of February 19, 1999, as follows: (a) The following additional defined terms are hereby added to Section 1.1: "SMO" means Supermarkets On-Line, Inc. "SMO Holdings" means an entity to be formed as a corporation, limited liability company or partnership for purposes of the Tribune Transaction, which entity will, upon consummation of the Tribune Transaction, be jointly owned by the Borrower and Tribune. 2 "SMO License" means a license to be granted by the Borrower or its affiliates to SMO Holdings or SMO entitling SMO Holdings and/or SMO to utilize certain of the proprietary technology, know-how and information of the Borrower and its affiliates in connection with the operation of SMO Holdings' and SMO's business, as such license may be amended, modified, renewed, extended or replaced from time to time. "Tribune" means Tribune Company or one of its subsidiaries. "Tribune Transaction" means a transaction occurring on or prior to August 31, 1999 pursuant to which the Borrower and Tribune will enter into a joint venture, initially for the purpose of owning and operating SMO's assets and business, which joint venture will be structured as follows: (i) the parties to such transaction will form and become joint owners of SMO Holdings and (ii) SMO will become a subsidiary of SMO Holdings. "Tribune Transaction Notice Date" means the date the Agent receives written notice from the Borrower stating that the Borrower intends to consummate the Tribune Transaction." (b) The definition of "Acquisition" in Section 1.1 is hereby amended by inserting the following proviso after the word "Person" at the end of the definition: "; provided, that the Borrower's acquisition of capital stock of SMO Holdings in connection with the Tribune Transaction shall not be deemed an Acquisition hereunder." (c) The definition of "Subsidiary" in Section 1.1 is hereby amended in its entirety so that as amended it shall read as follows: ""Subsidiary" means any corporation or other entity in which more than 50% of its outstanding voting stock or more than 50% of all equity interests is owned directly or indirectly by the Borrower and/or by one or more of the Borrower's Subsidiaries; provided, however, that (i) effective as of the Tribune Transaction Notice Date, SMO shall not be deemed a Subsidiary for all purposes of this Agreement and (ii) upon and after formation, SMO Holdings and its subsidiaries (then existing or thereafter formed) including, without limitation, SMO after SMO is transferred to SMO Holdings in connection with the consummation of the Tribune Transaction, shall not be deemed a Subsidiary for all purposes of this Agreement." (d) Effective as of the Tribune Transaction Notice Date Schedule 7.4 shall be deemed amended by removing any reference to SMO as a Subsidiary. 2 3 (e) Section 9.4 of the Agreement is hereby amended by (i) deleting the phrase "of the Borrower" where it initially appears therein, and (ii) amending clause (f) in its entirety so that as amended it shall read as follows: "(f) Indebtedness in an aggregate outstanding amount at any time of up to $33,000,000 of Pacific Media KK including any existing indebtedness described on Schedule 7.6 (the "Pacific Indebtedness"), and with respect to Borrower guaranties (including through indemnifications with respect to personal guaranties) of Pacific Indebtedness, provided that the obligation of the Borrower under all such guaranties shall at no time exceed the sum of (i) $8,000,000 and (ii) fifty-one percent (51%) of the positive difference, if any, between the aggregate amount of Pacific Indebtedness and $8,000,000;" and (iii) amending clause (h) by deleting the figure "$2,000,000" appearing therein and inserting in lieu thereof the figure "$10,000,000". (f) Section 9.5 is hereby amended by (i) deleting the word "and" at the end of clause (c) and inserting in lieu thereof a comma, (ii) deleting the period at the end of clause (d) and inserting in lieu thereof the word "and" and (iii) inserting a new clause (e) thereto which clause shall read as follows: "(e) (i) the sale or other disposition of capital stock of SMO to SMO Holdings in connection with the Tribune Transaction, (ii) the sale or other disposition of capital stock of SMO Holdings to Tribune in connection with the Tribune Transaction and (iii) after consummation of the Tribune Transaction, the sale or other disposition of capital stock of SMO Holdings, Inc." (g) Section 9.6 is hereby amended by deleting the figure "$5,000,000" appearing in clause (f) and inserting in lieu thereof the figure "$15,000,000", (ii) deleting the word "and" at the end of clause (g), (iii) deleting the period at the end of clause (h) and inserting in lieu thereof a semi-colon and the word "and", and (iv) by adding a new clause (i) at the end which reads as follows: "(i) effective as of the Tribune Transaction Notice Date shares of capital stock of SMO and SMO Holdings, provided that any additional loan to or investment made in either of them shall be deemed a loan or an investment pursuant to subsection 9.6(f) hereof." (h) Section 9.9 of the Agreement is hereby amended by inserting the following proviso after the word "Affiliate" at the end of the Section: "; provided, that the foregoing restriction shall not be applicable to the SMO License" 3 4 3. Limitations with Respect to SMO. Notwithstanding any provision contained in Article IX to the contrary, from the date hereof until the earlier of (x) the release of SMO as a Guarantor pursuant to Section 4 below or (y) August 31, 1999, (i) neither SMO nor SMO Holdings shall be entitled to incur any additional Indebtedness for which the Borrower or any other Guarantor shall be directly or indirectly liable, (ii) neither the Borrower nor any Subsidiary shall make any additional loans to or investments in SMO or SMO Holdings except to the extent the Borrower could make loans or investments under Section 9.6 if neither SMO nor SMO Holdings were a Subsidiary, and (iii) the Borrower will not permit any Subsidiary of the Borrower to consolidate with or merge into SMO or SMO Holdings. 4. Release. Each of the Lenders hereby consent to (i) the release of SMO as a Guarantor effective as of the Tribune Transaction Notice Date, (ii) the release of the stock of SMO from the pledge thereof to the Agent as security for the Obligations effective as of the Tribune Transaction Notice Date, and (iii) the Agent taking such other and further action as may be necessary or desirable to effect the foregoing. As soon as practicable following the Notice Date, the Agent shall (i) execute and deliver to SMO a release of SMO from the Guaranty and Suretyship Agreement dated as of September 30, 1997 and (ii) to release the Borrower's pledge of the stock of SMO, and shall take such other actions as may be reasonably requested by the Borrower to effect the releases described in this Section 4. 5. Representations and Warranties. The Borrower hereby certifies that: (a) The representations and warranties made by Borrower in Article VII of the Agreement are true on and as of the date hereof except that the financial statements referred to in Section 7.6 shall be those most recently furnished to each Lender pursuant to Section 8.1(a) and (b); (b) There has been no material change in the condition, financial or otherwise, of the Borrower and its Subsidiaries since the date of the most recent financial reports of the Borrower received by each Lender under Section 8.1 of the Agreement, other than changes in the ordinary course of business, none of which has been a material adverse change; (c) The business and properties of the Borrower and its Subsidiaries are not, and since the date of the most recent financial report of the Borrower and its Subsidiaries received by each Lender under Section 8.1 of the Agreement have not been, adversely affected in any substantial way as the result of any fire, explosion, earthquake, accident, strike, lockout, combination of workers, flood, embargo, riot, activities of armed forces, war or acts of God or the public enemy, or cancellation or loss of any major contracts; and (d) No event has occurred and no condition exists which, upon the consummation of the transaction contemplated hereby, constituted a Default or an Event of Default under 4 5 the Agreement or the Notes either immediately or with the lapse of time or the giving of notice, or both. 6. Conditions. As a condition to the effectiveness of this Amendment Agreement, the Borrower shall deliver, or cause to be delivered to the Agent, the following: (a) Twelve (12) executed counterparts of this Amendment Agreement; and (b) copies of all additional agreements, instruments and documents which the Agent may reasonably request, such documents, when appropriate, to be certified by appropriate governmental authorities. 7. Entire Agreement. This Amendment Agreement sets forth the entire understanding and agreement of the parties hereto in relation to the subject matter hereof and supersedes any prior negotiations and agreements among the parties relative to such subject matter. No promise, conditions, representation or warranty, express or implied, not herein set forth shall bind any party hereto, and no one of them has relied on any such promise, condition, representation or warranty. Each of the parties hereto acknowledges that, except as in this Amendment Agreement, no representations, warranties or commitments, express or implied, have been made by any other party to the other. None of the terms of conditions of this Amendment Agreement may be changed, modified, waived or canceled orally or otherwise, except by writing, signed by all the parties hereto, specifying such change, modification, waiver or cancellation of such terms or conditions, or of any proceeding or succeeding breach thereof. 8. Consent. The Guarantors have joined in the execution of this Amendment Agreement for the purpose of consenting hereto and confirming their respective guaranty of the Obligations on the terms set forth in the Facility Guaranty. 9. Full Force and Effect of Agreement. Except as hereby specifically amended, modified or supplemented, the Agreement and all of the other Loan Documents are hereby confirmed and ratified in all respects and shall remain in full force and effect according to their respective terms. [Remainder of page intentionally left blank.] 5 6 IN WITNESS WHEREOF, the parties hereto have caused this Amendment agreement to be duly executed by their duly authorized officers, all as of the day and year first above written. CATALINA MARKETING CORPORATION WITNESS: By: - ---------------------------- ------------------------------------- Name: - ---------------------------- ----------------------------------- Title: ---------------------------------- 6 7 GUARANTORS: WITNESS: CATALINA MARKETING SALES CORPORATION - -------------------------- By: - -------------------------- ------------------------------------- Name: George W. Off Title: Director WITNESS: CATALINA MARKETING RETAIL SALES CORPORATION - -------------------------- By: - -------------------------- ------------------------------------- Name: George W. Off Title: Director ---------------------------------- WITNESS: CATALINA MARKETING INTERNATIONAL, INC. - -------------------------- By: - -------------------------- ------------------------------------- Name: George W. Off Title: Chief Executive Officer and President WITNESS: CATALINA MARKETING WORLDWIDE, INC. - -------------------------- By: - -------------------------- ------------------------------------- Name: George W. Off Title: President WITNESS: CATALINA MARKETING U.K., INC. - -------------------------- By: - -------------------------- ------------------------------------- Name: George W. Off Title: President 7 8 WITNESS: HEALTH RESOURCE PUBLISHING COMPANY - ------------------------- By: - ------------------------- ------------------------------------- Name: George W. Off Title: Vice President CATALINA MARKETING LOYALTY WITNESS: HOLDINGS, INC. - ------------------------- By: - ------------------------- ------------------------------------- Name: George W. Off Title: President WITNESS: MARKET LOGIC, INC. - ------------------------- By: - ------------------------- ------------------------------------- Name: Daniel D. Granger Title: President/CEO WITNESS: DYNAMIC CONTROLS, INC. - ------------------------- By: - ------------------------- ------------------------------------- Name: Daniel D. Granger Title: President/CEO 8 9 NATIONSBANK, NATIONAL ASSOCIATION, as Agent and Lender By: ------------------------------------- Name: Richard M. Starke Title: Senior Vice President 9 10 FLEET NATIONAL BANK By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- 10 11 FIRST UNION NATIONAL BANK By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- 11 12 CREDIT LYONNAIS ATLANTA AGENCY By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- 12 13 COMERICA BANK By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- 13 14 THE LONG-TERM CREDIT BANK OF JAPAN, LTD. By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- 14 15 PNC BANK, N.A. By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- 15 16 SUNTRUST BANK, TAMPA BAY By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- 16 17 AMSOUTH BANK By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- 17 18 UNION BANK OF CALIFORNIA By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- 18 19 RIGGS BANK, N.A. By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- 19 EX-10.27 3 LEASE AGREEMENT DATED 10/21/99 1 EXHIBIT 10.27 - ------------------------------------------------------------------------------- LEASE AGREEMENT Dated as of October 21, 1999 among FIRST SECURITY BANK, NATIONAL ASSOCIATION, not individually, but solely as the Owner Trustee under the Dolphin Realty Trust 1999-1, as Lessor and CATALINA MARKETING SALES CORPORATION, as Lessee - ------------------------------------------------------------------------------- This Lease Agreement is subject to a security interest in favor of First Union National Bank, as the agent for the Lenders and respecting the Security Documents, as the agent for the Lenders and the Holders, to the extent of their interests (the "Agent") under a Security Agreement dated as of October 21, 1999, between First Security Bank, National Association, not individually, but solely as the Owner Trustee under the Dolphin Realty Trust 1999-1 and the Agent, as amended, modified, extended, supplemented, restated and/or replaced from time to time in accordance with the applicable provisions thereof. This Lease Agreement has been executed in several counterparts. To the extent, if any, that this Lease Agreement constitutes chattel paper (as such term is defined in the Uniform Commercial Code as in effect in any applicable jurisdiction), no security interest in this Lease Agreement may be created through the transfer or possession of any counterpart other than the original counterpart containing the receipt therefor executed by the Agent on the signature page hereof. 2 TABLE OF CONTENTS ARTICLE I........................................................................................1 1.1 Definitions....................................................................1 1.2 Interpretation.................................................................2 ARTICLE II.......................................................................................2 2.1 Property.......................................................................2 2.2 Lease Term.....................................................................2 2.3 Title..........................................................................2 2.4 Lease Supplements..............................................................2 ARTICLE III......................................................................................3 3.1 Rent...........................................................................3 3.2 Payment of Basic Rent..........................................................3 3.3 Supplemental Rent..............................................................3 3.4 Performance on a Non-Business Day..............................................4 3.5 Rent Payment Provisions........................................................4 ARTICLE IV.......................................................................................4 4.1 Taxes; Utility Charges.........................................................4 ARTICLE V........................................................................................5 5.1 Quiet Enjoyment................................................................5 ARTICLE VI.......................................................................................5 6.1 Net Lease......................................................................5 6.2 No Termination or Abatement....................................................6 ARTICLE VII..................................................................................... 6 7.1 Ownership of the Property......................................................6 ARTICLE VIII.....................................................................................7 8.1 Condition of the Property......................................................7 8.2 Possession and Use of the Property.............................................8 8.3 Integrated Property............................................................9 ARTICLE IX.......................................................................................9 9.1 Compliance With Legal Requirements, Insurance Requirements and Manufacturer's Specifications and Standards................................9 ARTICLE X........................................................................................9 10.1 Maintenance and Repair; Return.................................................9 10.2 Environmental Inspection......................................................11 ARTICLE XI......................................................................................11 11.1 Modifications.................................................................11 ARTICLE XII.....................................................................................12 12.1 Warranty of Title.............................................................12 ARTICLE XIII....................................................................................13 13.1 Permitted Contests Other Than in Respect of Indemnities.......................13 13.2 Impositions, Utility Charges, Other Matters; Compliance with Legal Requirements..................................................................14 ARTICLE XIV.....................................................................................14 14.1 Public Liability and Workers' Compensation Insurance..........................14
i 3 14.2 Permanent Hazard and Other Insurance..........................................14 14.3 Coverage......................................................................15 14.4 Additional Insurance Requirements.............................................16 ARTICLE XV......................................................................................16 15.1 Casualty and Condemnation.....................................................16 15.2 Environmental Matters.........................................................18 15.3 Notice of Environmental Matters...............................................19 ARTICLE XVI.....................................................................................19 16.1 Termination Upon Certain Events...............................................19 16.2 Procedures....................................................................19 ARTICLE XVII....................................................................................20 17.1 Lease Events of Default.......................................................20 17.2 Surrender of Possession.......................................................23 17.3 Reletting.....................................................................23 17.4 Damages.......................................................................24 17.5 Power of Sale.................................................................24 17.6 Final Liquidated Damages......................................................25 17.7 Environmental Costs...........................................................25 17.8 Waiver of Certain Rights......................................................26 17.9 Assignment of Rights Under Contracts..........................................26 17.10 Remedies Cumulative...........................................................26 ARTICLE XVIII...................................................................................26 18.1 Lessor's Right to Cure Lessee's Lease Defaults................................26 ARTICLE XIX.....................................................................................27 19.1 Provisions Relating to Lessee's Exercise of its Purchase Option...............27 19.2 No Purchase or Termination With Respect to Less than All of the Property......27 ARTICLE XX......................................................................................27 20.1 Purchase Option or Sale Option-General Provisions.............................27 20.2 Lessee Purchase Option........................................................28 20.3 Third Party Sale Option.......................................................28 ARTICLE XXI.....................................................................................29 21.1 [Intentionally Reserved]......................................................29 ARTICLE XXII....................................................................................29 22.1 Sale Procedure................................................................29 22.2 Application of Proceeds of Sale...............................................32 22.3 Indemnity for Excessive Wear..................................................32 22.4 Appraisal Procedure...........................................................32 22.5 Certain Obligations Continue..................................................33 ARTICLE XXIII...................................................................................33 23.1 Holding Over..................................................................33 ARTICLE XXIV....................................................................................34 24.1 Risk of Loss..................................................................34 ARTICLE XXV.....................................................................................34 25.1 Assignment....................................................................34 25.2 Subleases.....................................................................34
ii 4 ARTICLE XXVI....................................................................................35 26.1 No Waiver.....................................................................35 ARTICLE XXVII...................................................................................35 27.1 Acceptance of Surrender.......................................................35 27.2 No Merger of Title............................................................36 ARTICLE XXVIII..................................................................................36 28.1 Incorporation of Covenants....................................................36 ARTICLE XXIX....................................................................................37 29.1 Notices.......................................................................37 ARTICLE XXX.....................................................................................37 30.1 Miscellaneous.................................................................37 30.2 Amendments and Modifications..................................................38 30.3 Successors and Assigns........................................................38 30.4 Headings and Table of Contents................................................38 30.5 Counterparts..................................................................38 30.6 Governing Law.................................................................38 30.7 Calculation of Rent...........................................................38 30.8 Memoranda of Lease and Lease Supplements......................................38 30.9 Allocations between the Lenders and the Holders...............................39 30.10 Limitations on Recourse.......................................................39 30.11 Waivers of Jury Trial.........................................................39 30.12 Exercise of Lessor Rights.....................................................39 30.13 Submission to Jurisdiction; Venue.............................................39 30.14 Usury Savings Provision.......................................................40 EXHIBITS EXHIBIT A - Lease Supplement No. ____ EXHIBIT B - Memorandum of Lease and Lease Supplement No. ____
iii 5 LEASE AGREEMENT THIS LEASE AGREEMENT dated as of October 21, 1999 (as amended, modified, extended, supplemented, restated and/or replaced from time to time, this "Lease") is among FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking association, having its principal office at 79 South Main Street, Third Floor, Salt Lake City, Utah 84111, not individually, but solely as the Owner Trustee under the Dolphin Realty Trust 1999-1, as lessor (the "Lessor"), and CATALINA MARKETING SALES CORPORATION, a Delaware corporation, having its principal place of business at 11300 Ninth Street North, St. Petersburg, Florida 33716, as lessee (the "Lessee"). W I T N E S S E T H: A. WHEREAS, effective on the date of the Lease Supplement (the "Supplement Date"), Lessor will be the owner of the Property (as such term is Appendix A to the Participation Agreement described below); and B. WHEREAS, Lessor desires to lease to Lessee, and Lessee desires to lease from Lessor, the Property; NOW, THEREFORE, in consideration of the foregoing, and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I 1.1 DEFINITIONS. For purposes of this Lease, capitalized terms used in this Lease and not otherwise defined herein shall have the meanings assigned to them in Appendix A to that certain Participation Agreement dated as of October 21, 1999 (as amended, modified, extended, supplemented, restated and/or replaced from time to time in accordance with the applicable provisions thereof, the "Participation Agreement") among the Lessee, Catalina Marketing Corporation, as the Guarantor, Lessor, the various banks and other lending institutions which are parties thereto from time to time, as the Holders, the various banks and other lending institutions which are parties thereto from time to time, as the Lenders, and First Union National Bank, as agent for the Lenders and respecting the Security Documents, as the agent for the Lenders and the Holders, to the extent of their interests. Unless otherwise indicated, references in this Lease to articles, sections, paragraphs, clauses, appendices, schedules and exhibits are to the same contained in this Lease. 1 6 1.2 INTERPRETATION. The rules of usage set forth in Appendix A to the Participation Agreement shall apply to this Lease. ARTICLE II 2.1 PROPERTY. Effective on the Supplement Date and subject to the terms and conditions hereinafter set forth and contained in the Lease Supplement relating to the Property, Lessor hereby leases to Lessee and Lessee hereby leases from Lessor, the Property. 2.2 LEASE TERM. This Lease shall be effective as of the Closing Date; notwithstanding the foregoing, the basic term of this Lease with respect to the Property (the "Basic Term") shall begin on the Property Closing Date (the "Basic Term Commencement Date") and shall end on the sixth annual anniversary of the Closing Date (the "Basic Term Expiration Date"), unless the Basic Term is earlier terminated. To the extent no Default or Event of Default has occurred and is continuing, and provided the Lessor, the Agent, every Lender and every Holder consents (which such consent may be withheld for any reason), the Lessee shall have the option to extend the term of this Lease for up to three (3) additional terms (each, a "Renewal Term") each of five (5) years' duration from the later of (i) the Basic Term Expiration Date or (ii) the last day of the immediately prior Renewal Term; provided that the Expiration Date shall not be later than the twenty-first annual anniversary of the Closing Date, unless such later expiration date has been expressly agreed to, at the request of Lessee, in writing by each of Lessor, the Agent, the Lenders and the Holders in their sole and absolute discretion. 2.3 TITLE. The Property is leased to Lessee without any representation or warranty, express or implied, by Lessor and subject to the rights of parties in possession (if any), the existing state of title (including without limitation the Permitted Liens) and all applicable Legal Requirements. Lessee shall in no event have any recourse against Lessor for any defect in Lessor's title to the Property or any interest of Lessee therein other than for Lessor Liens. 2.4 LEASE SUPPLEMENTS. On or before the Property Closing Date, Lessee and Lessor shall execute and deliver a Lease Supplement for the Property substantially the form of Exhibit A hereto. 2 7 ARTICLE III 3.1 RENT. (a) Basic Rent shall be due and payable in arrears on each Payment Date, and on any date on which this Lease shall terminate with respect to the Property during the Term. (b) Basic Rent shall be due and payable in lawful money of the United States and shall be paid by immediately available funds on the due date therefor (or within the applicable grace period) to such account or accounts at such bank or banks as Lessor shall from time to time direct. (c) Lessee's inability or failure to take possession of all or any portion of the Property when delivered by Lessor, whether or not attributable to any act or omission of Lessor, Lessee or any other Person or for any other reason whatsoever, shall not delay or otherwise affect Lessee's obligation to pay Rent for such Property in accordance with the terms of this Lease. (d) Lessee shall make all payments of Rent prior to 12:00 Noon, Charlotte, North Carolina time, on the applicable date for payment of such amount. 3.2 PAYMENT OF BASIC RENT. Basic Rent shall be paid absolutely net to Lessor or its designee, so that this Lease shall yield to Lessor the full amount thereof, without setoff, deduction or reduction. 3.3 SUPPLEMENTAL RENT. Lessee shall pay to the Person entitled thereto any and all Supplemental Rent when and as the same shall become due and payable, and if Lessee fails to pay any Supplemental Rent within three (3) days after the same is due, Lessor shall have all rights, powers and remedies provided for herein or by law or equity or otherwise in the case of nonpayment of Basic Rent. All such payments of Supplemental Rent shall be in the full amount thereof, without setoff, deduction or reduction. Lessee shall pay to the appropriate Person, as Supplemental Rent due and owing to such Person, among other things, on demand, (a) any and all payment obligations (except for amounts payable as Basic Rent) owing from time to time under the Operative Agreements by any Person to the Agent, any Lender, any Holder or any other Person, (b) interest at the applicable Overdue Rate on any installment of Basic Rent not paid when due (subject to the applicable grace period) for the period for which the same shall be overdue and on any payment of Supplemental Rent not paid when due or demanded by the appropriate Person (subject to any applicable grace period) for the period from the due date or the date of any such demand, as the case may be, until the same shall be paid and (c) amounts referenced as Supplemental Rent obligations pursuant to Section 8.3 of the Participation Agreement. The 3 8 expiration or other termination of Lessee's obligations to pay Basic Rent hereunder shall not limit or modify the obligations of Lessee with respect to Supplemental Rent. Unless expressly provided otherwise in this Lease, in the event of any failure on the part of Lessee to pay and discharge any Supplemental Rent as and when due, Lessee shall also promptly pay and discharge any fine, penalty, interest or cost which may be assessed or added for nonpayment or late payment of such Supplemental Rent, all of which shall also constitute Supplemental Rent. 3.4 PERFORMANCE ON A NON-BUSINESS DAY. If any Basic Rent is required hereunder on a day that is not a Business Day, then such Basic Rent shall be due on the corresponding Scheduled Interest Payment Date. If any Supplemental Rent is required hereunder on a day that is not a Business Day, then such Supplemental Rent shall be due on the next succeeding Business Day. 3.5 RENT PAYMENT PROVISIONS. All Basic Rent and Supplemental Rent shall be paid when due (subject to the applicable grace periods) regardless of whether any of the Operative Agreements pursuant to which same is calculated and is owing shall have been rejected, avoided or disavowed in any bankruptcy or insolvency proceeding involving any of the parties to any of the Operative Agreements. Such provisions of such Operative Agreements and their related definitions are incorporated herein by reference and shall survive any termination, amendment or rejection of any such Operative Agreements. ARTICLE IV 4.1 TAXES; UTILITY CHARGES. Lessee shall pay or cause to be paid all Impositions with respect to the Property and/or the use, occupancy, operation, repair, access, maintenance or operation thereof and all charges for electricity, power, gas, oil, water, telephone, sanitary sewer service and all other rents, utilities and operating expenses of any kind or type used in or on the Property and related real property during the Term. Upon Lessor's request, Lessee shall provide from time to time Lessor with evidence of all such payments referenced in the foregoing sentence. Lessee shall be entitled to receive any credit or refund with respect to any Imposition or utility charge paid by Lessee. Unless an Event of Default shall have occurred and be continuing, the amount of any credit or refund received by Lessor on account of any Imposition or utility charge paid by Lessee, net of the costs and expenses incurred by Lessor in obtaining such credit or refund, shall be promptly paid over to Lessee. All charges for Impositions or utilities imposed with respect to the Property for a period during which this Lease expires or terminates shall be adjusted and prorated on a daily basis between Lessor and Lessee, and each party shall pay or reimburse the other for such party's pro rata share thereof. 4 9 ARTICLE V 5.1 QUIET ENJOYMENT. Subject to the rights of Lessor contained in Sections 17.2, 17.3 and 20.3 and the other terms of this Lease and the other Operative Agreements and so long as no Event of Default shall have occurred and be continuing, Lessee shall peaceably and quietly have, hold and enjoy the Property for the applicable Term, free of any claim or other action by Lessor or anyone rightfully claiming by, through or under Lessor (other than Lessee) with respect to any matters arising from and after the Basic Term Commencement Date. ARTICLE VI 6.1 NET LEASE. This Lease shall constitute a net lease, and the obligations of Lessee hereunder are absolute and unconditional. Lessee shall pay all operating expenses arising out of the use, operation and/or occupancy of the Property. Any present or future law to the contrary notwithstanding, this Lease shall not terminate, nor shall Lessee be entitled to any abatement, suspension, deferment, reduction, setoff, counterclaim, or defense with respect to the Rent, nor shall the obligations of Lessee hereunder be affected (except as expressly herein permitted and by performance of the obligations in connection therewith) for any reason whatsoever, including without limitation by reason of: (a) any damage to or destruction of the Property or any part thereof; (b) any taking of the Property or any part thereof or interest therein by Condemnation or otherwise; (c) any prohibition, limitation, restriction or prevention of Lessee's use, occupancy or enjoyment of the Property or any part thereof, or any interference with such use, occupancy or enjoyment by any Person or for any other reason; (d) any title defect, Lien or any matter affecting title to the Property; (e) any eviction by paramount title or otherwise; (f) any default by Lessor hereunder; (g) any action for bankruptcy, insolvency, reorganization, liquidation, dissolution or other proceeding relating to or affecting the Agent, any Lender, Lessor, Lessee, any Holder or any Governmental Authority; (h) the impossibility or illegality of performance by Lessor, Lessee or both; (i) any action of any Governmental Authority or any other Person; (j) Lessee's acquisition of ownership of all or part of the Property; (k) breach of any warranty or representation with respect to the Property or any Operative Agreement; (l) any defect in the condition, quality or fitness for use of the Property or any part thereof; or (m) any other cause or circumstance whether similar or dissimilar to the foregoing and whether or not Lessee shall have notice or knowledge of any of the foregoing. The parties intend that the obligations of Lessee hereunder shall be covenants, agreements and obligations that are separate and independent from any obligations of Lessor hereunder and shall continue unaffected unless such covenants, agreements and obligations shall have been modified or terminated in accordance with an express provision of this Lease. Lessor and Lessee acknowledge and agree that the provisions of this Section 6.1 have been specifically reviewed and subjected to negotiation. 5 10 6.2 NO TERMINATION OR ABATEMENT. Lessee shall remain obligated under this Lease in accordance with its terms and shall not take any action to terminate, rescind or avoid this Lease, notwithstanding any action for bankruptcy, insolvency, reorganization, liquidation, dissolution, or other proceeding affecting any Person or any Governmental Authority, or any action with respect to this Lease or any Operative Agreement which may be taken by any trustee, receiver or liquidator of any Person or any Governmental Authority or by any court with respect to any Person, or any Governmental Authority. Lessee hereby waives all right (a) to terminate or surrender this Lease (except as permitted under the terms of the Operative Agreements) or (b) to avail itself of any abatement, suspension, deferment, reduction, setoff, counterclaim or defense with respect to any Rent. Lessee shall remain obligated under this Lease in accordance with its terms and Lessee hereby waives any and all rights now or hereafter conferred by statute or otherwise to modify or to avoid strict compliance with its obligations under this Lease. Notwithstanding any such statute or otherwise, Lessee shall be bound by all of the terms and conditions contained in this Lease. ARTICLE VII 7.1 OWNERSHIP OF THE PROPERTY. (a) Lessor and Lessee intend that for federal and all state and local income tax purposes, bankruptcy purposes, regulatory purposes, commercial law and real estate purposes and all other purposes (other than for accounting purposes) (A) this Lease will be treated as a financing arrangement and (B) Lessee will be treated as the owner of the Property and will be entitled to all tax benefits ordinarily available to owners of property similar to the Property for such tax purposes. Notwithstanding the foregoing, neither party hereto has made, or shall be deemed to have made, any representation or warranty as to the availability of any of the foregoing treatments under applicable accounting rules, tax, bankruptcy, regulatory, commercial or real estate law or under any other set of rules. Lessee shall claim the cost recovery deductions associated with the Property, and Lessor shall not, to the extent not prohibited by Law, take on its tax return a position inconsistent with Lessee's claim of such deductions. (b) For all purposes described in Section 7.1(a), Lessor and Lessee intend this Lease to constitute a finance lease and not a true lease. In order to secure the obligations of Lessee now existing or hereafter arising under any and all Operative Agreements, Lessee hereby conveys, grants, assigns, transfers, hypothecates, mortgages and sets over to Lessor, for the benefit of all Financing Parties, a first priority security interest (but subject to the security interest in the assets granted by Lessee in favor of the Agent in accordance with the Security Agreement) in and lien on all right, title and interest of Lessee (now owned or hereafter acquired) in and to the Property to the extent such is personal property and irrevocably grants and conveys a lien, deed of trust and mortgage on all right, title and interest of Lessee (now owned or hereafter acquired) in and to the Property to the extent such is a real property. Lessor and Lessee further intend and agree 6 11 that, for the purpose of securing the obligations of Lessee now existing or hereafter arising under the Operative Agreements, (i) this Lease shall be a security agreement and financing statement within the meaning of Article 9 of the Uniform Commercial Code respecting the Property and all proceeds (including without limitation insurance proceeds thereof) to the extent such is personal property and an irrevocable grant and conveyance of a lien, deed of trust and mortgage on the Property and all proceeds (including without limitation insurance proceeds thereof) to the extent such is real property; (ii) the acquisition of title by Lessor in the Property referenced in Article II constitutes a grant by Lessee to Lessor of a security interest, lien, deed of trust and mortgage in all of Lessee's right, title and interest in and to the Property and all proceeds (including without limitation insurance proceeds thereof) of the conversion, voluntary or involuntary, of the foregoing into cash, investments, securities or other property, whether in the form of cash, investments, securities or other property, and an assignment of all rents, profits and income produced by the Property; and (iii) notifications to Persons holding such property, and acknowledgments, receipts or confirmations from financial intermediaries, bankers or agents (as applicable) of Lessee shall be deemed to have been given for the purpose of perfecting such lien, security interest, mortgage lien and deed of trust under applicable law. Lessee shall promptly take such actions as Lessor may reasonably request (including without limitation the filing of Uniform Commercial Code Financing Statements, Uniform Commercial Code Fixture Filings and memoranda (or short forms) of this Lease and the various Lease Supplements) to ensure that the lien, security interest, mortgage lien and deed of trust in the Property and the other items referenced above will be deemed to be a perfected lien, security interest, mortgage lien and deed of trust of first priority under applicable law and will be maintained as such throughout the Term. ARTICLE VIII 8.1 CONDITION OF THE PROPERTY. LESSEE ACKNOWLEDGES AND AGREES THAT IT IS LEASING THE PROPERTY "AS-IS WHERE-IS" WITHOUT REPRESENTATION, WARRANTY OR COVENANT (EXPRESS OR IMPLIED) BY LESSOR (EXCEPT THAT LESSOR SHALL KEEP THE PROPERTY FREE AND CLEAR OF LESSOR LIENS) AND IN EACH CASE SUBJECT TO (A) THE EXISTING STATE OF TITLE, (B) THE RIGHTS OF ANY PARTIES IN POSSESSION THEREOF (IF ANY), (C) ANY STATE OF FACTS REGARDING ITS PHYSICAL CONDITION OR WHICH AN ACCURATE SURVEY MIGHT SHOW, (D) ALL APPLICABLE LEGAL REQUIREMENTS AND (E) VIOLATIONS OF LEGAL REQUIREMENTS WHICH MAY EXIST ON THE DATE HEREOF AND/OR THE DATE OF THE APPLICABLE LEASE SUPPLEMENT. NEITHER LESSOR NOR THE AGENT NOR ANY LENDER NOR ANY HOLDER HAS MADE OR SHALL BE DEEMED TO HAVE MADE ANY REPRESENTATION, WARRANTY OR COVENANT (EXPRESS OR IMPLIED) (EXCEPT THAT LESSOR SHALL KEEP THE PROPERTY FREE AND CLEAR OF LESSOR LIENS) OR SHALL BE DEEMED TO HAVE ANY LIABILITY WHATSOEVER AS TO THE TITLE, VALUE, HABITABILITY, USE, CONDITION, 7 12 DESIGN, OPERATION, MERCHANTABILITY OR FITNESS FOR USE OF THE PROPERTY (OR ANY PART THEREOF), OR ANY OTHER REPRESENTATION, WARRANTY OR COVENANT WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE PROPERTY (OR ANY PART THEREOF), AND NEITHER LESSOR NOR THE AGENT NOR ANY LENDER NOR ANY HOLDER SHALL BE LIABLE FOR ANY LATENT, HIDDEN, OR PATENT DEFECT THEREON OR THE FAILURE OF THE PROPERTY, OR ANY PART THEREOF, TO COMPLY WITH ANY LEGAL REQUIREMENT. LESSEE HAS OR PRIOR TO THE BASIC TERM COMMENCEMENT DATE WILL HAVE BEEN AFFORDED FULL OPPORTUNITY TO INSPECT THE PROPERTY AND THE IMPROVEMENTS THEREON (IF ANY), IS OR WILL BE (INSOFAR AS LESSOR, THE AGENT, EACH LENDER AND EACH HOLDER ARE CONCERNED) SATISFIED WITH THE RESULTS OF ITS INSPECTIONS AND IS ENTERING INTO THIS LEASE SOLELY ON THE BASIS OF THE RESULTS OF ITS OWN INSPECTIONS, AND ALL RISKS INCIDENT TO THE MATTERS DESCRIBED IN THE PRECEDING SENTENCE, AS BETWEEN LESSOR, THE AGENT, THE LENDERS AND THE HOLDERS, ON THE ONE HAND, AND LESSEE, ON THE OTHER HAND, ARE TO BE BORNE BY LESSEE. 8.2 POSSESSION AND USE OF THE PROPERTY. (a) At all times during the Term with respect to the Property, such Property shall be a Permitted Facility and shall be used by Lessee in the ordinary course of its business. Lessee shall pay, or cause to be paid, all charges and costs required in connection with the use of the Property as contemplated by this Lease. Lessee shall not commit or permit any waste of the Property or any part thereof. (b) The address stated in Section 29.1 of this Lease is the principal place of business and chief executive office of Lessee (as such terms are used in Section 9-103(3) of the Uniform Commercial Code of any applicable jurisdiction), and Lessee will provide Lessor with prior written notice of any change of location of its principal place of business or chief executive office. Regarding the Property, the Lease Supplement correctly identifies the initial location of the related Equipment (if any) and Improvements (if any) and contains an accurate legal description for the related parcel of Land. The Equipment and Improvements respecting the Property will be located only at the location identified in the applicable Lease Supplement. (c) Lessee will not attach or incorporate any item of Equipment to or in any other item of equipment or personal property or to or in any real property in a manner that could give rise to the assertion of any Lien on such item of Equipment by reason of such attachment or the assertion of a claim that such item of Equipment has become a fixture and is subject to a Lien in favor of a third party that is prior to the Liens thereon created by the Operative Agreements. (d) At all times during the Term with respect to the Property, Lessee will comply with all obligations under and (to the extent no Event of Default exists and 8 13 provided that such exercise will not impair the value, utility or remaining useful life of such Property) shall be permitted to exercise all rights and remedies under, all operation and easement agreements and related or similar agreements applicable to such Property. 8.3 INTEGRATED PROPERTY. At all times during the Term, Lessee shall, at its sole cost and expense, cause the Property to constitute all of the equipment, facilities, rights, other personal property and other real property necessary or appropriate to operate, utilize, maintain and control a Permitted Facility in a commercially reasonable manner. ARTICLE IX 9.1 COMPLIANCE WITH LEGAL REQUIREMENTS, INSURANCE REQUIREMENTS AND MANUFACTURER'S SPECIFICATIONS AND STANDARDS. Subject to the terms of Article XIII relating to permitted contests, Lessee, at its sole cost and expense, shall (a) comply with all applicable Legal Requirements (including without limitation all Environmental Laws) and all Insurance Requirements relating to the Property, (b) procure, maintain and comply with all licenses, permits, orders, approvals, consents and other authorizations required for the acquisition, installation, testing, use, development, construction, operation, maintenance, repair, refurbishment and restoration of the Property and (c) comply with all manufacturer's specifications and standards, including without limitation the acquisition, installation, testing, use, development, construction, operation, maintenance, repair, refurbishment and restoration of the Property, whether or not compliance therewith shall require structural or extraordinary changes in the Property or interfere with the use and enjoyment of the Property, unless the failure to procure, maintain and comply with such items identified in subparagraphs (b) and (c), individually or in the aggregate, shall not have and could not reasonably be expected to have a Material Adverse Effect. Lessor agrees to take such actions as may be reasonably requested by Lessee in connection with the compliance by Lessee of its obligations under this Section 9.1. ARTICLE X 10.1 MAINTENANCE AND REPAIR; RETURN. (a) Lessee, at its sole cost and expense, shall maintain the Property in good condition, repair and working order (ordinary wear and tear excepted) and in the repair and condition as when originally delivered to Lessor and make all necessary repairs thereto and replacements thereof, of every kind and nature whatsoever, whether interior or exterior, ordinary or extraordinary, structural or nonstructural or foreseen or unforeseen, in each case as required by Section 9.1 and on a basis consistent with the operation and maintenance of properties or equipment comparable in type and function to 9 14 the applicable Property, such that such Property is capable of being immediately utilized by a third party and in compliance with standard industry practice subject, however, to the provisions of Article XV with respect to Casualty and Condemnation. (b) Lessee shall not move or relocate any component of the Property beyond the boundaries of the Land (comprising part of such Property) described in the applicable Lease Supplement, except for the temporary removal of Equipment and other personal property for repair or replacement. (c) If any component of the Property becomes worn out, lost, destroyed, damaged beyond repair or otherwise permanently rendered unfit for use, Lessee, at its own expense, will within a reasonable time replace such component with a replacement component which is free and clear of all Liens (other than Permitted Liens and Lessor Liens) and has a value, utility and useful life at least equal to the component replaced (assuming the component replaced had been maintained and repaired in accordance with the requirements of this Lease). All components which are added to the Property shall immediately become the property of (and title thereto shall vest in) Lessor and shall be deemed incorporated in such Property and subject to the terms of this Lease as if originally leased hereunder. (d) Upon reasonable advance notice, Lessor and its agents shall have the right to inspect the Property and all maintenance records with respect thereto at any reasonable time during normal business hours but shall not, in the absence of an Event of Default, materially disrupt the business of Lessee. (e) Lessee shall cause to be delivered to Lessor (at Lessee's sole expense) one or more additional Appraisals (or reappraisals of Property) as Lessor may request if any one of Lessor, the Agent, the Trust Company, any Lender or any Holder is required pursuant to any applicable Legal Requirement to obtain such Appraisals (or reappraisals) and upon the occurrence of any Event of Default. (f) Lessor shall under no circumstances be required to build any improvements or install any equipment on the Property, make any repairs, replacements, alterations or renewals of any nature or description to the Property, make any expenditure whatsoever in connection with this Lease or maintain the Property in any way. Lessor shall not be required to maintain, repair or rebuild all or any part of the Property, and Lessee waives the right to (i) require Lessor to maintain, repair, or rebuild all or any part of the Property, or (ii) make repairs at the expense of Lessor pursuant to any Legal Requirement, Insurance Requirement, contract, agreement, covenant, condition or restriction at any time in effect. (g) Lessee shall, upon the expiration or earlier termination of this Lease with respect to the Property, if Lessee shall not have exercised its Purchase Option with respect to such Property and purchased such Property, surrender such Property (i) pursuant to the exercise of the applicable remedies upon the occurrence of a Lease Event 10 15 of Default, to Lessor or (ii) pursuant to the second paragraph of Section 22.1(a) hereof, to Lessor or the third party purchaser, as the case may be, subject to Lessee's obligations under this Lease (including without limitation the obligations of Lessee at the time of such surrender under Sections 9.1, 10.1(a) through (f), 10.2, 11.1, 12.1, 22.1 and 23.1). 10.2 ENVIRONMENTAL INSPECTION. If Lessee has not given notice of exercise of its Purchase Option on the Expiration Date pursuant to Section 20.1 or for whatever reason Lessee does not purchase the Property in accordance with the terms of this Lease, then not more than one hundred twenty (120) days nor less than sixty (60) days prior to the Expiration Date, Lessee shall cause to be delivered to Lessor a Phase I environmental site assessment recently prepared (no more than thirty (30) days prior to the date of delivery) by an independent recognized professional reasonably acceptable to Lessor, and in form, scope and content reasonably satisfactory to Lessor. The cost incurred respecting such Phase I environmental site assessment shall be paid for in accordance with the provisions set forth in Section 20.3(b). ARTICLE XI 11.1 MODIFICATIONS. (a) Lessee at its sole cost and expense, at any time and from time to time without the consent of Lessor may make modifications, alterations, renovations, improvements and additions to the Property or any part thereof and substitutions and replacements therefor (collectively, "Modifications"), and Lessee shall make any and all Modifications required to be made pursuant to all Legal Requirements, Insurance Requirements and manufacturer's specifications and standards; provided, that: (i) no Modification shall materially impair the value, utility or useful life of the Property from that which existed immediately prior to such Modification; (ii) each Modification shall be done expeditiously and in a good and workmanlike manner; (iii) no Modification shall adversely affect the structural integrity of the Property; (iv) to the extent required by Section 14.2(a), Lessee shall maintain builders' risk insurance at all times when a Modification is in progress; (v) subject to the terms of Article XIII relating to permitted contests, Lessee shall pay all costs and expenses and discharge any Liens arising with respect to any Modification; (vi) each Modification shall comply with the requirements of this Lease (including without limitation Sections 8.2 and 10.1); and (vii) no Improvement shall be demolished or otherwise rendered unfit for use unless Lessee shall finance the proposed replacement Modification outside of this lease facility; provided, further, Lessee shall not make any Modification (unless required by any Legal Requirement) to the extent any such Modification, individually or in the aggregate, shall have or could reasonably be expected to have a Material Adverse Effect. Title to each Modification shall vest in Lessee to the extent such Modification (a) is not financed pursuant to the Operative Agreements, (b) is not a fixture or other real estate interest, (c) is readily removable without causing material damage to any Property, (d) is not required in order 11 16 for the applicable Property to comply with any Legal Requirement, any Insurance Requirement or any requirement of Section 8.3 of this Lease and (e) is not necessary to conform to any applicable manufacturer's specification and/or standard respecting any Property or any Modification which is the property of the Lessor. All other Modifications shall immediately and without further action upon their incorporation into the applicable Property (1) become property of Lessor, (2) be subject to this Lease and (3) be titled in the name of Lessor. Lessee may freely remove or replace any equipment, trade fixtures and other personal property located on the Property and not financed pursuant to the Operative Agreements and any Modifications titled in the name of Lessee; provided Lessee at its sole cost and expense shall repair in a good and workmanlike manner any and all damage done to any Property due to the removal, detachment, attempted removal or attempted detachment of any Modification from a Property and all such repairs shall be completed by the earlier of (a) thirty (30) days after such removal, detachment, attempted removal or attempted detachment of the applicable Modification from the applicable Property and (b) the Expiration Date. Lessee shall not remove or attempt to remove any Modification from the Property except in accordance with the provisions of this Section 11.1. Lessee, at its own cost and expense, will pay for the repairs of any damage to the Property caused by the removal or attempted removal of any Modification. ARTICLE XII 12.1 WARRANTY OF TITLE. (a) Lessee hereby acknowledges and shall cause title in the Property (including without limitation all Equipment, all Improvements, all replacement components to the Property and all Modifications) immediately and without further action to vest in and become the property of Lessor and to be subject to the terms of this Lease from and after the date hereof or such date of incorporation into the Property. Lessee agrees that, subject to the terms of Article XIII relating to permitted contests, Lessee shall not directly or indirectly create or allow to remain, and shall promptly discharge at its sole cost and expense, any Lien, defect, attachment, levy, title retention agreement or claim upon the Property, any component thereof or any Modifications or any Lien, attachment, levy or claim with respect to the Rent or with respect to any amounts held by Lessor, the Agent, any Lender or any Holder pursuant to any Operative Agreement, other than Permitted Liens and Lessor Liens. Lessee shall promptly notify Lessor in the event it receives actual knowledge that a Lien other than a Permitted Lien or Lessor Lien has occurred with respect to the Property, the Rent or any other such amounts, and Lessee represents and warrants to, and covenants with, Lessor that the Liens in favor of Lessor and/or the Agent created by the Operative Agreements are (and until the Financing Parties under the Operative Agreements have been paid in full shall remain) first priority perfected Liens subject only to Permitted Liens and Lessor Liens. At all times during the Term, Lessee shall (i) cause a valid, perfected, first priority Lien on the Property to be in place in favor of the Agent (for the benefit of the Lenders and the 12 17 Holders) and (ii) file, or cause to be filed, all necessary documents under the applicable real property law and Article 9 of the Uniform Commercial Code to perfect such title and Liens. (b) Nothing contained in this Lease shall be construed as constituting the consent or request of Lessor, expressed or implied, to or for the performance by any contractor, mechanic, laborer, materialman, supplier or vendor of any labor or services or for the furnishing of any materials for any construction, alteration, addition, repair or demolition of or to the Property or any part thereof. NOTICE IS HEREBY GIVEN THAT LESSOR IS NOT AND SHALL NOT BE LIABLE FOR ANY LABOR, SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO LESSEE, OR TO ANYONE HOLDING A PROPERTY OR ANY PART THEREOF THROUGH OR UNDER LESSEE, AND THAT NO MECHANIC'S OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS SHALL ATTACH TO OR AFFECT THE INTEREST OF LESSOR IN AND TO THE PROPERTY. ARTICLE XIII 13.1 PERMITTED CONTESTS OTHER THAN IN RESPECT OF INDEMNITIES. Except to the extent otherwise provided for in Section 11 of the Participation Agreement, Lessee, on its own or on Lessor's behalf but at Lessee's sole cost and expense, may contest, by appropriate administrative or judicial proceedings conducted in good faith and with due diligence, the amount, validity or application, in whole or in part, of any Legal Requirement, Imposition or utility charge payable pursuant to Section 4.1 or any Lien, attachment, levy, encumbrance or encroachment, and Lessor agrees not to pay, settle or otherwise compromise any such item, provided, that (a) the commencement and continuation of such proceedings shall suspend the collection of any such contested amount from, and suspend the enforcement thereof against, the applicable Property, Lessor, each Holder, the Agent and each Lender; (b) there shall not be imposed a Lien (other than Permitted Liens and Lessor Liens) on the Property and no part of the Property nor any Rent would be in any danger of being sold, forfeited, lost or deferred; (c) at no time during the permitted contest shall there be a risk of the imposition of criminal liability or material civil liability on Lessor, any Holder, the Agent or any Lender for failure to comply therewith; and (d) in the event that, at any time, there shall be a material risk of extending the application of such item beyond the end of the Term, then Lessee shall deliver to Lessor an Officer's Certificate certifying as to the matters set forth in clauses (a), (b) and (c) of this Section 13.1. Lessor, at Lessee's sole cost and expense, shall execute and deliver to Lessee such authorizations and other documents as may reasonably be required in connection with any such contest and, if reasonably requested by Lessee, shall join as a party therein at Lessee's sole cost and expense. 13 18 13.2 IMPOSITIONS, UTILITY CHARGES, OTHER MATTERS; COMPLIANCE WITH LEGAL REQUIREMENTS. Except with respect to Impositions, Legal Requirements, utility charges and such other matters referenced in Section 13.1 which are the subject of ongoing proceedings contesting the same in a manner consistent with the requirements of Section 13.1, Lessee shall cause (a) all Impositions, utility charges and such other matters to be timely paid, settled or compromised, as appropriate, with respect to the Property and (b) the Property to comply with all applicable Legal Requirements. ARTICLE XIV 14.1 PUBLIC LIABILITY AND WORKERS' COMPENSATION INSURANCE. During the Term for the Property, Lessee shall procure and carry, at Lessee's sole cost and expense, commercial general liability and umbrella liability insurance for claims for injuries or death sustained by persons or damage to property while on such Property or respecting the Equipment and such other public liability coverages as are then customarily carried by similarly situated companies conducting business similar to that conducted by Lessee. Such insurance shall be on terms and in amounts that are no less favorable than insurance maintained by Lessee with respect to similar properties and equipment that it owns and are then carried by similarly situated companies conducting business similar to that conducted by Lessee, and in, but in no event shall such coverage have a minimum combined single limit per occurrence coverage (i) for commercial general liability of less than $1,000,000 and (ii) for umbrella liability of less than $10,000,000. The policies shall name Lessee as the insured and shall be endorsed to name Lessor, the Holders, the Agent and the Lenders as additional insureds. The policies shall also specifically provide that such policies shall be considered primary insurance which shall apply to any loss or claim before any contribution by any insurance which Lessor, any Holder, the Agent or any Lender may have in force. In the operation of the Property, Lessee shall comply with applicable workers' compensation laws and protect Lessor, each Holder, the Agent and each Lender against any liability under such laws. 14.2 PERMANENT HAZARD AND OTHER INSURANCE. (a) During the Term for the Property, Lessee shall keep the Property insured against all risk of physical loss or damage by fire and other risks and shall maintain builders' risk insurance during construction of any Improvements or Modifications in each case in amounts no less than the then current replacement value of such Property (assuming that such Property was in the condition required by the terms of this Lease immediately prior to such loss) and on terms that (i) are no less favorable than insurance covering other similar properties owned by Lessee and (ii) are then carried by similarly situated companies conducting business similar to that conducted by Lessee. The policies shall name Lessee as the insured and shall be endorsed to name Lessor and the Agent (on behalf of the Lenders and the Holders) as a named additional insured and loss payee, to 14 19 the extent of their respective interests; provided, so long as no Event of Default exists, any loss payable under the insurance policies required by this Section for losses up to $1,000,000 will be paid to Lessee. (b) If, during the Term, the area in which the Property is located is designated a "flood-prone" area pursuant to the Flood Disaster Protection Act of 1973, or any amendments or supplements thereto or is in a zone designated A or V, then Lessee shall comply with the National Flood Insurance Program as set forth in the Flood Disaster Protection Act of 1973. In addition, Lessee will fully comply with the requirements of the National Flood Insurance Act of 1968 and the Flood Disaster Protection Act of 1973, as each may be amended from time to time, and with any other Legal Requirement, concerning flood insurance to the extent that it applies to any such Property. During the Term, Lessee shall, in the operation and use of the Property, maintain workers' compensation insurance consistent with that carried by similarly situated companies conducting business similar to that conducted by Lessee and containing minimum liability limits of no less than $100,000. In the operation of the Property, Lessee shall comply with workers' compensation laws applicable to Lessee, and protect Lessor, each Holder, the Agent and each Lender against any liability under such laws. 14.3 COVERAGE. (a) As of the date of this Lease and annually thereafter during the Term, Lessee shall furnish the Agent (on behalf of Lessor and the other beneficiaries of such insurance coverage) with certificates prepared by the insurers or insurance broker of Lessee showing the insurance required under Sections 14.1 and 14.2 to be in effect, naming (to the extent of their respective interests) Lessor, the Holders, the Agent and the Lenders as additional insureds and loss payees and evidencing the other requirements of this Article XIV. All such insurance shall be at the cost and expense of Lessee and provided by nationally recognized, financially sound insurance companies having an A+ or better rating by A.M. Best's Key Rating Guide. Lessee shall cause such certificates to include a provision for thirty (30) days' advance written notice by the insurer to the Agent (on behalf of Lessor and the other beneficiaries of such insurance coverage) in the event of cancellation or material alteration of such insurance. If an Event of Default has occurred and is continuing and the Agent (on behalf of Lessor and the other beneficiaries of such insurance coverage) so requests, Lessee shall deliver to the Agent (on behalf of Lessor and the other beneficiaries of such insurance coverage) copies of all insurance policies required by Sections 14.1 and 14.2. (b) Lessee agrees that the insurance policy or policies required by Sections 14.1, 14.2(a) and 14.2(b) shall include an appropriate clause pursuant to which any such policy shall provide that it will not be invalidated should Lessee waive, at any time, any or all rights of recovery against any party for losses covered by such policy or due to any breach of warranty, fraud, action, inaction or misrepresentation by Lessee or any Person acting on behalf of Lessee. Lessee hereby waives any and all such rights against Lessor, 15 20 the Holders, the Agent and the Lenders to the extent of payments made to any such Person under any such policy. (c) Neither Lessor nor Lessee shall carry separate insurance concurrent in kind or form or contributing in the event of loss with any insurance required under this Article XIV, except that Lessor may carry separate liability insurance at Lessor's sole cost so long as (i) Lessee's insurance is designated as primary and in no event excess or contributory to any insurance Lessor may have in force which would apply to a loss covered under Lessee's policy and (ii) each such insurance policy will not cause Lessee's insurance required under this Article XIV to be subject to a coinsurance exception of any kind. (d) Lessee shall pay as they become due all premiums for the insurance required by Section 14.1 and Section 14.2, shall renew or replace each policy prior to the expiration date thereof or otherwise maintain the coverage required by such Sections without any lapse in coverage. 14.4 ADDITIONAL INSURANCE REQUIREMENTS. Not in limitation of any provision of the Operative Agreements but in addition thereto, Lessee shall obtain any and all additional insurance policies (including without limitation with respect to Condemnation) with regard to the Property or otherwise with respect to the transactions contemplated by the Operative Agreements as requested from time to time by Lessor. ARTICLE XV 15.1 CASUALTY AND CONDEMNATION. (a) Subject to the provisions of this Article XV and Article XVI (in the event Lessee delivers, or is obligated to deliver or is deemed to have delivered, a Termination Notice), and prior to the occurrence and continuation of a Default or an Event of Default, Lessee shall be entitled to receive (and Lessor hereby irrevocably assigns to Lessee all of Lessor's right, title and interest in) any condemnation proceeds, award, compensation or insurance proceeds under Sections 14.2(a) or 14.2(b) hereof to which Lessee or Lessor may become entitled by reason of their respective interests in the Property (i) if all or a portion of such Property is damaged or destroyed in whole or in part by a Casualty or (ii) if the use, access, occupancy, easement rights or title to such Property or any part thereof is the subject of a Condemnation; provided, however, if a Default or an Event of Default shall have occurred and be continuing or if such award, compensation or insurance proceeds shall exceed $1,000,000, then such award, compensation or insurance proceeds shall be paid directly to Lessor or, if received by Lessee, shall be held in trust for Lessor, and shall be paid over by Lessee to Lessor and held in accordance with the terms of this Article XV. All amounts held by Lessor hereunder on account of any award, 16 21 compensation or insurance proceeds either paid directly to Lessor or turned over to Lessor shall be held as security for the performance of Lessee's obligations hereunder and under the other Operative Agreements and when all such obligations of Lessee with respect to such matters (and all other obligations of Lessee which should have been satisfied pursuant to the Operative Agreements as of such date) have been satisfied, all amounts so held by Lessor shall be paid over to Lessee. (b) Lessee may appear in any proceeding or action to negotiate, prosecute, adjust or appeal any claim for any award, compensation or insurance payment on account of any such Casualty or Condemnation and shall pay all expenses thereof. At Lessee's reasonable request, and at Lessee's sole cost and expense, Lessor and the Agent shall participate in any such proceeding, action, negotiation, prosecution or adjustment. Lessor and Lessee agree that this Lease shall control the rights of Lessor and Lessee in and to any such award, compensation or insurance payment. (c) If Lessee shall receive notice of a Casualty or a Condemnation of the Property or any interest therein where damage to the affected Property is estimated to equal or exceed twenty-five percent (25%) of the Property Cost of such Property, Lessee shall give notice thereof to Lessor promptly after Lessee's receipt of such notice. In the event such a Casualty or Condemnation occurs (regardless of whether Lessee gives notice thereof), then Lessee shall be deemed to have delivered a Termination Notice to Lessor and the provisions of Sections 16.1 and 16.2 shall apply. (d) In the event of a Casualty or a Condemnation (regardless of whether notice thereof must be given pursuant to paragraph (c)), this Lease shall terminate with respect to the applicable Property in accordance with Section 16.1 if Lessee, within thirty (30) days after such occurrence, delivers to Lessor a notice to such effect. (e) If pursuant to this Section 15.1 this Lease shall continue in full force and effect following a Casualty or Condemnation with respect to the affected Property, Lessee shall, at its sole cost and expense (subject to reimbursement in accordance with Section 15.1(a)) promptly and diligently repair any damage to the applicable Property caused by such Casualty or Condemnation in conformity with the requirements of Sections 10.1 and 11.1, using the as-built Plans and Specifications or manufacturer's specifications for the applicable Improvements, Equipment or other components of the applicable Property (as modified to give effect to any subsequent Modifications, any Condemnation affecting the applicable Property and all applicable Legal Requirements), so as to restore the applicable Property to the same or a greater remaining economic value, useful life, utility, condition, operation and function as existed immediately prior to such Casualty or Condemnation (assuming all maintenance and repair standards have been satisfied). In such event, title to the applicable Property shall remain with Lessor. (f) In no event shall a Casualty or Condemnation affect Lessee's obligations to pay Rent pursuant to Article III. 17 22 (g) Notwithstanding anything to the contrary set forth in Section 15.1(a) or Section 15.1(e), if during the Term a Casualty occurs with respect to such Property or Lessee receives notice of a Condemnation with respect to such Property, and following such Casualty or Condemnation, the applicable Property cannot reasonably be restored, repaired or replaced on or before the day one hundred eighty (180) days prior to the Expiration Date or the date nine (9) months after the occurrence of such Casualty or Condemnation (if such Casualty or Condemnation occurs during the Term) to the same or a greater remaining economic value, useful life, utility, condition, operation and function as existed immediately prior to such Casualty or Condemnation (assuming all maintenance and repair standards have been satisfied) or on or before such day such Property is not in fact so restored, repaired or replaced, then Lessee shall be required to exercise its Purchase Option for such Property on the next Payment Date (notwithstanding the limits on such exercise contained in Section 20.2) and pay Lessor the Termination Value for such Property; provided, if any Default or Event of Default has occurred and is continuing, Lessee shall also promptly (and in any event within three (3) Business Days) pay Lessor any award, compensation or insurance proceeds received on account of any Casualty or Condemnation with respect to the Property; provided, further, that if no Default or Event of Default has occurred and is continuing, any Excess Proceeds shall be paid to Lessee. If a Default or an Event of Default has occurred and is continuing and any Loans, Holder Advances or other amounts are owing with respect thereto, then any Excess Proceeds (to the extent of any such Loans, Holder Advances or other amounts owing with respect thereto) shall be paid to Lessor, held as security for the performance of Lessee's obligations hereunder and under the other Operative Agreements and applied to such obligations upon the exercise of remedies in connection with the occurrence of an Event of Default, with the remainder of such Excess Proceeds in excess of such Loans, Holder Advances and other amounts owing with respect thereto being distributed to the Lessee. 15.2 ENVIRONMENTAL MATTERS. Promptly upon Lessee's actual knowledge of the presence of Hazardous Substances in any portion of the Property in concentrations and conditions that constitute an Environmental Violation and which, in the reasonable opinion of Lessee, the cost to undertake any legally required response, clean up, remedial or other action will or might result in a cost to Lessee of more than $15,000, Lessee shall notify Lessor in writing of such condition. In the event of any Environmental Violation (regardless of whether notice thereof must be given), Lessee shall, not later than thirty (30) days after Lessee has actual knowledge of such Environmental Violation, either deliver to Lessor a Termination Notice with respect to the applicable Property pursuant to Section 16.1, if applicable, or, at Lessee's sole cost and expense, promptly and diligently undertake and diligently complete any response, clean up, remedial or other action (including without limitation the pursuit by Lessee of appropriate action against any off-site or third party source for contamination) necessary to remove, cleanup or remediate the Environmental Violation in accordance with all Environmental Laws. Any such undertaking shall be timely completed in accordance with prudent industry standards. If Lessee does not deliver a Termination Notice with respect to such Property pursuant to Section 16.1, Lessee 18 23 shall, upon completion of remedial action by Lessee, cause to be prepared by a reputable environmental consultant acceptable to Lessor a report describing the Environmental Violation and the actions taken by Lessee (or its agents) in response to such Environmental Violation, and a statement by the consultant that the Environmental Violation has been remedied in full compliance with applicable Environmental Law. Not less than sixty (60) days prior to any time that Lessee elects to cease operations with respect to the Property or to remarket the Property pursuant to Section 20.1 hereof or any other provision of any Operative Agreement, Lessee at its expense shall cause to be delivered to Lessor a Phase I environmental site assessment respecting such Property recently prepared (no more than thirty (30) days prior to the date of delivery) by an independent recognized professional acceptable to Lessor in its reasonable discretion and in form, scope and content satisfactory to Lessor in its reasonable discretion. Notwithstanding any other provision of any Operative Agreement, if Lessee fails to comply with the foregoing obligation regarding the Phase I environmental site assessment, Lessee shall be obligated to purchase such Property for its Termination Value and shall not be permitted to exercise (and Lessor shall have no obligation to honor any such exercise) any rights under any Operative Agreement regarding a sale of such Property to a Person other than Lessee. 15.3 NOTICE OF ENVIRONMENTAL MATTERS. Promptly, but in any event within five (5) Business Days from the date Lessee has actual knowledge thereof, Lessee shall provide to Lessor written notice of any pending or threatened claim, action or proceeding involving any Environmental Law or any Release on or in connection with the Property. All such notices shall describe in reasonable detail the nature of the claim, action or proceeding and Lessee's proposed response thereto. In addition, Lessee shall provide to Lessor, within five (5) Business Days of receipt, copies of all material written communications with any Governmental Authority relating to any Environmental Law in connection with the Property. Lessee shall also promptly provide such detailed reports of any such material environmental claims as may reasonably be requested by Lessor. ARTICLE XVI 16.1 TERMINATION UPON CERTAIN EVENTS. If Lessee has delivered, or is deemed to have delivered, written notice of a termination of this Lease with respect to the applicable Property to Lessor in the form described in Section 16.2(a) (a "Termination Notice") pursuant to the provisions of this Lease, then following the applicable Casualty, Condemnation or Environmental Violation, this Lease shall terminate with respect to the affected Property on the applicable Termination Date. 16.2 PROCEDURES. (a) A Termination Notice shall contain: (i) notice of termination of this Lease with respect to the affected Property on a Payment Date not more than sixty (60) days after Lessor's receipt of such Termination Notice (the "Termination Date"); and (ii) a 19 24 binding and irrevocable agreement of Lessee to pay the Termination Value for the applicable Property and purchase such Property on such Termination Date. (b) On the Termination Date, Lessee shall pay to Lessor the Termination Value for the applicable Property, and Lessor shall convey such Property or the remaining portion thereof, if any, to Lessee (or Lessee's designee), all in accordance with Section 20.2. ARTICLE XVII 17.1 LEASE EVENTS OF DEFAULT. If any one (1) or more of the following events (each a "Lease Event of Default") shall occur: (a) Failure of the Lessor to receive payment of (i) any Basic Rent on the date the same has become due and payable or (ii) any Termination Value, on the date any such payment is due and payable, or any payment of Basic Rent or Supplemental Rent due on the due date of any such payment of Termination Value, or (iii) any amount due on the Expiration Date on such date; (b) Lessee shall fail to make payment of any Supplemental Rent (other than Supplemental Rent referred to in Section 17.1(a)(ii)) or any other Credit Party shall fail to make any payment of any amount under any Operative Agreement which has become due and payable within five (5) Business Days after receipt of notice that such payment is due; (c) Lessee shall fail to maintain insurance as required by Article XIV of this Lease or to deliver any requisite annual certificate with respect thereto within ten (10) days of the date such certificate is due under the terms hereof; (d) (i) Lessee shall fail to observe or perform any term, covenant or obligation of Lessee under this Lease (including without limitation the Incorporated Covenants) or any other Operative Agreement to which Lessee is a party other than those set forth in Sections 17.1(a), (b) or (c) hereof, or any other Credit Party shall fail to observe or perform any term, covenant or obligation of such Credit Party under any Operative Agreement other than those set forth in Section 17.1(b) hereof and such failure shall continue for thirty (30) days (or with respect to the Incorporated Covenants, the grace period, if any, applicable thereto) after notice thereof to the Lessee, or such Credit Party, or (ii) any representation or warranty made by Lessee or any other Credit Party set forth in this Lease (including without limitation the Incorporated Representations and Warranties) or in any other Operative Agreement or in any document entered into in connection herewith or therewith or in any document, certificate or financial or other 20 25 statement delivered in connection herewith or therewith shall be false or inaccurate in any material way when made; (e) [Intentionally Reserved]. (f) Any Credit Party or any Subsidiary of any Credit Party shall default (beyond applicable periods of grace and/or notice and cure) in the payment when due of any principal of or interest on any Indebtedness having an outstanding principal amount of at least $10,000,000; or any other event or condition shall occur which results in a default of any such Indebtedness or enables the holder of any such Indebtedness or any Person acting on such holder's behalf to accelerate the maturity thereof; (g) The liquidation or dissolution of any Credit Party, or the suspension of the business of any Credit Party, or the filing by any Credit Party of a voluntary petition or an answer seeking reorganization, arrangement, readjustment of its debts or for any other relief under the United States Bankruptcy Code, as amended, or under any other insolvency act or law, state or federal, now or hereafter existing, or any other action of any Credit Party indicating its consent to, approval of or acquiescence in, any such petition or proceeding; the application by any Credit Party for, or the appointment by consent or acquiescence of any Credit Party of a receiver, a trustee or a custodian of any Credit Party for all or a substantial part of its property; the making by any Credit Party of any assignment for the benefit of creditors; the inability of any Credit Party or the admission by any Credit Party in writing of its inability to pay its debts as they mature or any Credit Party taking any corporate action to authorize any of the foregoing; (h) The filing of an involuntary petition against any Credit Party in bankruptcy or seeking reorganization, arrangement, readjustment of its debts or for any other relief under the United States Bankruptcy Code, as amended, or under any other insolvency act or law, state or federal, now or hereafter existing; or the involuntary appointment of a receiver, a trustee or a custodian of any Credit Party for all or a substantial part of its property; or the issuance of a warrant of attachment, execution or similar process against any substantial part of the property of any Credit Party, and the continuance of any of such events for ninety (90) days undismissed or undischarged; (i) The adjudication of any Credit Party as bankrupt or insolvent; (j) The entering of any order in any proceedings against any Credit Party or any Subsidiary, if any, decreeing the dissolution, divestiture or split-up of any Credit Party or any Subsidiary of any Credit Party, if any, and such order remains in effect for more than sixty (60) days; (k) Any report, certificate, financial statement or other instrument delivered to Lessor by or on behalf of any Credit Party pursuant to the terms of this Lease or any other Operative Agreement is false or misleading in any material respect when made or delivered; 21 26 (l) Any Lessee Credit Agreement Event of Default shall have occurred and be continuing and shall not have been waived; (m) A final judgment or judgments for the payment of money shall be rendered by a court or courts against any Credit Party or any subsidiary of any Credit Party where the amount not covered by insurance (or the amount as to which the insurer denies liability) is in excess of $2,000,000 in the aggregate, and (i) the same shall not be discharged (or provision shall not be made for such discharge), or a stay of execution thereof shall not be procured, within forty-five (45) days from the date of entry thereof, or (ii) any Credit Party or any such Subsidiary, if any, shall not, within said period of forty-five (45) days, or such longer period during which execution of the same shall have been stayed, appeal therefrom and cause the execution thereof to be stayed during such appeal, or (iii) such judgment or judgments shall not be discharged (or provisions shall not be made for such discharge) within forty-five (45) days after a decision has been reached with respect to such appeal and the related stay has been lifted; (n) Any Credit Party or any member of the Controlled Group shall fail to pay when due an amount or amounts aggregating in excess of $2,000,000 which it shall have become liable to pay to the PBGC or to a Pension Plan under Title IV of ERISA; or notice of intent to terminate a Pension Plan or Pension Plans having aggregate Unfunded Liabilities in excess of $2,000,000 shall be filed under Title IV of ERISA by any Credit Party or any member of the Controlled Group, any plan administrator or any combination of the foregoing; or the PBGC shall institute proceedings under Title IV of ERISA to terminate or to cause a trustee to be appointed to administer any such Pension Plan or Pension Plans or a proceeding shall be instituted by a fiduciary of any such Pension Plan or Pension Plans against any Credit Party or any member of the Controlled Group to enforce Section 515 or 4219(c)(5) of ERISA; or a condition shall exist by reason of which the PBGC would be entitled to obtain a decree adjudicating that any such Pension Plan or Pension Plans must be terminated; (o) (i) As a result of one (1) or more transactions after the date of this Lease, any "person" or "group" of persons (other than Persons owning thirty percent (30%) or more of the outstanding common stock of Lessee on the Closing Date shall have "beneficial ownership" (within the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended, and the applicable rules and regulations thereunder) of thirty percent (30%) or more of the outstanding common stock of Lessee; or (ii) without limiting the generality of the foregoing, during any period of twelve (12) consecutive months, commencing after the date of this Lease, individuals who at the beginning of such period of twelve (12) months were directors of Lessee shall cease for any reason (other than death, disability or retirement of an officer of Lessee that is serving as a director at such time so long as another officer of Lessee replaces such Person as a director) to constitute a majority of the board of directors of Lessee, provided, that the relationships among the respective shareholders of Lessee on the Closing Date 22 27 shall not be deemed to constitute all or any combination of them as a "group" for purposes of clause (o)(i); (p) Any Operative Agreement shall cease to be in full force and effect and such cessation is caused by or is a result of Lessee's own actions or failure to act; or (q) The guaranty given by the Guarantor under the Participation Agreement or any material provision thereof shall cease to be in full force and effect, or the Guarantor or any Person acting by or on behalf of the Guarantor shall deny or disaffirm the Guarantor's obligations under such guaranty, or the Guarantor shall default in the due performance or observance of any term, covenant or agreement on its part to be performed or observed pursuant to any guaranty. then, in any such event, Lessor may, in addition to the other rights and remedies provided for in this Article XVII and in Section 18.1, terminate this Lease by giving Lessee five (5) days notice of such termination (provided, notwithstanding the foregoing, this Lease shall be deemed to be automatically terminated without the giving of notice upon the occurrence of a Lease Event of Default under Sections 17.1(g), (h) or (i), and this Lease shall terminate, and all rights of Lessee under this Lease shall cease. Lessee shall, to the fullest extent permitted by law, pay as Supplemental Rent all costs and expenses incurred by or on behalf of Lessor or any other Financing Party, including without limitation reasonable fees and expenses of counsel, as a result of any Lease Event of Default hereunder. A POWER OF SALE HAS BEEN GRANTED IN THIS LEASE. A POWER OF SALE MAY ALLOW LESSOR TO TAKE THE PROPERTY AND SELL THE PROPERTY WITHOUT GOING TO COURT IN A FORECLOSURE ACTION UPON THE OCCURRENCE OF A LEASE EVENT OF DEFAULT. 17.2 SURRENDER OF POSSESSION. If a Lease Event of Default shall have occurred and be continuing, and whether or not this Lease shall have been terminated pursuant to Section 17.1, Lessee shall, upon thirty (30) days written notice, surrender to Lessor possession of the Property. Lessor may enter upon and repossess the Property by such means as are available at law or in equity, and may remove Lessee and all other Persons and any and all personal property and Lessee's equipment and personalty and severable Modifications from the Property. Lessor shall have no liability by reason of any such entry, repossession or removal performed in accordance with applicable law. Upon the written demand of Lessor, Lessee shall return the Property promptly to Lessor, in the manner and condition required by, and otherwise in accordance with the provisions of, Section 22.1(c) hereof. 17.3 RELETTING. If a Lease Event of Default shall have occurred and be continuing, and whether or not this Lease shall have been terminated pursuant to Section 17.1, Lessor may, but shall be 23 28 under no obligation to, relet any or all of the Property, for the account of Lessee or otherwise, for such term or terms (which may be greater or less than the period which would otherwise have constituted the balance of the Term) and on such conditions (which may include concessions or free rent) and for such purposes as Lessor may determine, and Lessor may collect, receive and retain the rents resulting from such reletting. Lessor shall not be liable to Lessee for any failure to relet the Property or for any failure to collect any rent due upon such reletting. 17.4 DAMAGES. Neither (a) the termination of this Lease as to the Property pursuant to Section 17.1; (b) the repossession of the Property; nor (c) the failure of Lessor to relet the Property, the reletting of all or any portion thereof, nor the failure of Lessor to collect or receive any rentals due upon any such reletting, shall relieve Lessee of its liabilities and obligations hereunder, all of which shall survive any such termination, repossession or reletting. If any Lease Event of Default shall have occurred and be continuing and notwithstanding any termination of this Lease pursuant to Section 17.1, Lessee shall forthwith pay to Lessor all Rent and other sums due and payable hereunder to and including without limitation the date of such termination. Thereafter, on the days on which the Basic Rent or Supplemental Rent, as applicable, are payable under this Lease or would have been payable under this Lease if the same had not been terminated pursuant to Section 17.1 and until the end of the Term hereof or what would have been the Term in the absence of such termination, Lessee shall pay Lessor, as current liquidated damages (it being agreed that it would be impossible accurately to determine actual damages) an amount equal to the Basic Rent and Supplemental Rent that are payable under this Lease or would have been payable by Lessee hereunder if this Lease had not been terminated pursuant to Section 17.1, less the net proceeds, if any, which are actually received by Lessor with respect to the period in question of any reletting of the Property or any portion thereof; provided, that Lessee's obligation to make payments of Basic Rent and Supplemental Rent under this Section 17.4 shall continue only so long as Lessor shall not have received the amounts specified in Section 17.6. In calculating the amount of such net proceeds from reletting, there shall be deducted all of Lessor's, any Holder's, the Agent's and any Lender's reasonable expenses in connection therewith, including without limitation repossession costs, brokerage or sales commissions, fees and expenses for counsel and any necessary repair or alteration costs and expenses incurred in preparation for such reletting. To the extent Lessor receives any damages pursuant to this Section 17.4, such amounts shall be regarded as amounts paid on account of Rent. Lessee specifically acknowledges and agrees that its obligations under this Section 17.4 shall be absolute and unconditional under any and all circumstances and shall be paid and/or performed, as the case may be, without notice or demand and without any abatement, reduction, diminution, setoff, defense, counterclaim or recoupment whatsoever. 17.5 POWER OF SALE. Without limiting any other remedies set forth in this Lease, Lessor and Lessee agree that Lessee has granted, pursuant to Section 7.1(b) hereof and the Lease Supplement, a Lien against the Property WITH POWER OF SALE, and that, upon the occurrence and during the continuance of any Lease Event of Default, Lessor shall have the power and authority, to the 24 29 extent provided by law, after prior notice and lapse of such time as may be required by law, to foreclose its interest (or cause such interest to be foreclosed) in all or any part of the Property. 17.6 FINAL LIQUIDATED DAMAGES. If a Lease Event of Default shall have occurred and be continuing, whether or not this Lease shall have been terminated pursuant to Section 17.1 and whether or not Lessor shall have collected any current liquidated damages pursuant to Section 17.4, Lessor shall have the right to recover, by demand to Lessee and at Lessor's election, and Lessee shall pay to Lessor, as and for final liquidated damages, but exclusive of the indemnities payable under Section 11 of the Participation Agreement (which, if requested, shall be paid concurrently), and in lieu of all current liquidated damages beyond the date of such demand (it being agreed that it would be impossible accurately to determine actual damages) the Termination Value. Upon payment of the amount specified pursuant to the first sentence of this Section 17.6, Lessee shall be entitled to receive from Lessor, either at Lessee's request or upon Lessor's election, in either case at Lessee's cost, an assignment of Lessor's entire right, title and interest in and to the Property, Improvements, Fixtures, Modifications, Equipment and all components thereof, in each case in recordable form and otherwise in conformity with local custom and free and clear of the Lien of this Lease (including without limitation the release of any memoranda of Lease and/or the Lease Supplement recorded in connection therewith) and any Lessor Liens. The Property shall be conveyed to Lessee "AS-IS, WHERE-IS" and in their then present physical condition. If any statute or rule of law shall limit the amount of such final liquidated damages to less than the amount agreed upon, Lessor shall be entitled to the maximum amount allowable under such statute or rule of law; provided, however, Lessee shall not be entitled to receive an assignment of Lessor's interest in the Property, the Improvements, Fixtures, Modifications, Equipment or the components thereof unless Lessee shall have paid in full the Termination Value. Lessee specifically acknowledges and agrees that its obligations under this Section 17.6 shall be absolute and unconditional under any and all circumstances and shall be paid and/or performed, as the case may be, without notice or demand and without any abatement, reduction, diminution, setoff, defense, counterclaim or recoupment whatsoever. 17.7 ENVIRONMENTAL COSTS. If a Lease Event of Default shall have occurred and be continuing, and whether or not this Lease shall have been terminated pursuant to Section 17.1, Lessee shall pay directly to any third party (or at Lessor's election, reimburse Lessor for) the cost of any environmental testing and/or remediation work undertaken respecting the Property, as such testing or work is deemed appropriate in the reasonable judgment of Lessor, and shall indemnify and hold harmless Lessor and each other Indemnified Person therefrom. Lessee shall pay all amounts referenced in the immediately preceding sentence within ten (10) days of any request by Lessor for such payment. The provisions of this Section 17.7 shall not limit the obligations of Lessee under any Operative Agreement regarding indemnification obligations, environmental testing, remediation and/or work. 25 30 17.8 WAIVER OF CERTAIN RIGHTS. If this Lease shall be terminated pursuant to Section 17.1, Lessee waives, to the fullest extent permitted by Law, (a) any notice of re-entry or the institution of legal proceedings to obtain re-entry or possession; (b) any right of redemption, re-entry or possession; (c) the benefit of any laws now or hereafter in force exempting property from liability for rent or for debt; and (d) any other rights which might otherwise limit or modify any of Lessor's rights or remedies under this Article XVII. 17.9 ASSIGNMENT OF RIGHTS UNDER CONTRACTS. If a Lease Event of Default shall have occurred and be continuing, and whether or not this Lease shall have been terminated pursuant to Section 17.1, Lessee shall upon Lessor's demand immediately assign, transfer and set over to Lessor all of Lessee's right, title and interest in and to each agreement executed by Lessee in connection with the acquisition, installation, testing, use, development, construction, operation, maintenance, repair, refurbishment and restoration of the Property (including without limitation all right, title and interest of Lessee with respect to all warranty, performance, service and indemnity provisions), as and to the extent that the same relate to the acquisition, installation, testing, use, development, construction, operation, maintenance, repair, refurbishment and restoration of the Property or any of them. 17.10 REMEDIES CUMULATIVE. The remedies herein provided shall be cumulative and in addition to (and not in limitation of) any other remedies available at law, equity or otherwise, including without limitation any mortgage foreclosure remedies. ARTICLE XVIII 18.1 LESSOR'S RIGHT TO CURE LESSEE'S LEASE DEFAULTS. Lessor, without waiving or releasing any obligation or Lease Event of Default, may (but shall be under no obligation to) remedy any Lease Event of Default for the account and at the sole cost and expense of Lessee, including without limitation the failure by Lessee to maintain the insurance required by Article XIV, and may, to the fullest extent permitted by law, and notwithstanding any right of quiet enjoyment in favor of Lessee, enter upon the Property, and take all such action thereon as may be necessary or appropriate therefor. No such entry shall be deemed an eviction of any lessee. All out-of-pocket costs and expenses so incurred (including without limitation fees and expenses of counsel), together with interest thereon at the Overdue Rate from the date on which such sums or expenses are paid by Lessor, shall be paid by Lessee to Lessor on demand. 26 31 ARTICLE XIX 19.1 PROVISIONS RELATING TO LESSEE'S EXERCISE OF ITS PURCHASE OPTION. Subject to Section 19.2, in connection with any termination of this Lease with respect to the Property pursuant to the terms of Section 16.2, or in connection with Lessee's exercise of its Purchase Option, upon the date on which this Lease is to terminate with respect to the Property, and upon tender by Lessee of the amounts set forth in Sections 16.2(b) or 20.2, as applicable, Lessor shall execute and deliver to Lessee (or to Lessee's designee) at Lessee's cost and expense an assignment (by deed or other appropriate instrument) of Lessor's entire interest in such Property, in each case in recordable form and otherwise in conformity with local custom and free and clear of any Lessor Liens attributable to Lessor but without any other warranties (of title or otherwise) from Lessor. Such Property shall be conveyed to Lessee "AS-IS, "WHERE-IS" and in then present physical condition. 19.2 NO PURCHASE OR TERMINATION WITH RESPECT TO LESS THAN ALL OF THE PROPERTY. Lessee shall not be entitled to exercise its Purchase Option or the Sale Option separately with respect to a portion of the Property consisting of Land, Equipment, Improvements but shall be required to exercise its Purchase Option or the Sale Option with respect to the entire Property. ARTICLE XX 20.1 PURCHASE OPTION OR SALE OPTION-GENERAL PROVISIONS. Not less than sixty (60) days and no more than one hundred eighty (180) days prior to the Expiration Date or (respecting the Purchase Option only) any Payment Date, Lessee may give Lessor irrevocable written notice (the "Election Notice") that Lessee (or its designee) is electing to exercise either (a) the option to purchase all, but not less than all, the Property on the Expiration Date or on the Payment Date specified in the Election Notice (the "Purchase Option") or (b) with respect to an Election Notice given in connection with the Expiration Date only, the option to remarket all, but not less than all, the Property to a Person other than Lessee or any Affiliate of Lessee and cause a sale of such Property to occur on the Expiration Date pursuant to the terms of Section 22.1 (the "Sale Option"). If Lessee does not give an Election Notice indicating the Purchase Option or the Sale Option at least sixty (60) days and not more than one hundred eighty (180) days prior to the Expiration Date, then, Lessee shall be deemed to have elected the Purchase Option. If Lessee shall either (i) elect (or be deemed to have elected) to exercise the Purchase Option or (ii) elect the Sale Option and fail to cause all, but not less than all, the Property to be sold in accordance with the terms of Section 22.1 on the Expiration Date, then in either case Lessee shall pay to Lessor on the date on which such purchase or sale is scheduled to occur an amount equal to the Termination Value for all, but not less than all, the Property (which the parties do not intend to be a "bargain" purchase price) and, upon receipt of such amounts and satisfaction of such obligations, Lessor shall transfer to Lessee (or its 27 32 designee) all of Lessor's right, title and interest in and to all, but not less than all, the Property in accordance with Section 20.2. 20.2 LESSEE PURCHASE OPTION. Provided, no Default or Event of Default shall have occurred and be continuing (other than those that will be cured by the payment of the Termination Value for all the Property) and provided, that the Election Notice has been appropriately given specifying the Purchase Option, Lessee (or its designee) shall purchase all the Property on the Expiration Date or Payment Date at a price equal to the Termination Value for the Property (which the parties do not intend to be a "bargain" purchase price). Subject to Section 19.2, in connection with any termination of this Lease with respect to the Property pursuant to the terms of Section 16.2, or in connection with Lessee's exercise of its Purchase Option, upon the date on which this Lease is to terminate with respect to the Property or all of the Property, and upon tender by Lessee (or its designee) of the amounts set forth in Section 16.2(b) or this Section 20.2, as applicable, Lessor shall execute, acknowledge (where required) and deliver to Lessee (or its designee), at Lessee's cost and expense, each of the following: (a) a termination or assignment (as requested by the Lessee) of any applicable and special or limited warranty Deeds conveying the Property to Lessee (or its designee) free and clear of the Lien of this Lease, the Lien of the Credit Documents and any Lessor Liens; (b) a Bill of Sale conveying the Property (to the extent it is personal property) to Lessee (or its designee) free and clear of the Lien of this Lease, the Lien of the Credit Documents and any Lessor Liens; (c) any real estate tax affidavit or other document required by law to be executed and filed in order to record the applicable Deed; and (d) FIRPTA affidavits. All of the foregoing documentation must be in form and substance reasonably satisfactory to Lessor. The applicable Property shall be conveyed to Lessee (or its designee) "AS-IS, WHERE-IS" and in then present physical condition. If the Property is the subject of remediation efforts respecting Hazardous Substances at the Expiration Date which could materially and adversely impact the Fair Market Sales Value of such Property (with materiality determined in Lessor's discretion), then Lessee shall be obligated to purchase the Property pursuant to Section 20.2. On the Expiration Date and/or any Payment Date on which Lessee has elected to exercise its Purchase Option, Lessee shall pay (or cause to be paid) to Lessor, the Agent and all other parties, as appropriate, the sum of all costs and expenses incurred by any such party in connection with the election by Lessee to exercise its Purchase Option and all Rent and all other amounts then due and payable or accrued under this Lease and/or any other Operative Agreement. 20.3 THIRD PARTY SALE OPTION. (a) Provided, that (i) no Default or Event of Default shall have occurred and be continuing and (ii) the Election Notice has been appropriately given specifying the 28 33 Sale Option, Lessee shall undertake to cause a sale of the Property on the Expiration Date (all as specified in the Election Notice) in accordance with the provisions of Section 22.1 hereof. Such Election Date on which a Sale is required may be hereafter referred to as the "Sale Date". (b) In the event Lessee exercises the Sale Option then, as soon as practicable and in all events not less than sixty (60) days prior to the Expiration Date, Lessee shall cause to be delivered to Lessor a Phase I environmental site assessment for the Property recently prepared (no more than thirty (30) days old prior to the Sale Date) by an independent recognized professional reasonably acceptable to Lessor and in form, scope and content reasonably satisfactory to Lessor. In the event that Lessor shall not have received such environmental site assessment by the date sixty (60) days prior to the Expiration Date or in the event that such environmental assessment shall reveal the existence of any material violation of Environmental Laws, other material Environmental Violation or potential material Environmental Violation (with materiality determined in each case by Lessor in its reasonable discretion), then Lessee on the Expiration Date shall pay to Lessor an amount equal to the Termination Value for the Property and any and all other amounts due and owing hereunder. Upon receipt of such payment and all other amounts due under the Operative Agreements, Lessor shall transfer to Lessee all of Lessor's right, title and interest in and to the Property in accordance with Section 19.1. ARTICLE XXI 21.1 [INTENTIONALLY RESERVED]. ARTICLE XXII 22.1 SALE PROCEDURE. (a) During the Marketing Period, Lessee, on behalf of Lessor, shall obtain bids for the cash purchase of the Property in connection with a sale to one (1) or more third party purchasers to be consummated on the Sale Date for the highest price available, shall notify Lessor promptly of the name and address of each prospective purchaser and the cash price which each prospective purchaser shall have offered to pay for each such Property and shall provide Lessor with such additional information about the bids and the bid solicitation procedure as Lessor may reasonably request from time to time. All such prospective purchasers must be Persons other than Lessee or any Affiliate of Lessee. On the Sale Date, Lessee shall pay (or cause to be paid) to Lessor and all other parties, as appropriate, all Rent and all other amounts then due and payable or accrued under this Lease and/or any other Operative Agreement. Lessor may reject any and all bids and may solicit and obtain bids by giving Lessee written notice to that effect; provided, however, that notwithstanding the 29 34 foregoing, Lessor may not reject the bids submitted by Lessee if such bids, in the aggregate, are greater than or equal to the sum of the Limited Recourse Amount for all the Property, and represent bona fide offers from one (1) or more third party purchasers. If the highest price which a prospective purchaser or the prospective purchasers shall have offered to pay for all the Property on the Sale Date is less than the sum of the Limited Recourse Amount for all the Property or if such bids do not represent bona fide offers from one (1) or more third parties or if there are no bids, Lessor may elect to retain the Property by giving Lessee prior written notice of Lessor's election to retain the same, and promptly upon receipt of such notice, Lessee shall surrender, or cause to be surrendered, the Property specified in such notice in accordance with the terms and conditions of Section 10.1. Upon acceptance of any bid, Lessor agrees, at Lessee's request and expense, to execute a contract of sale with respect to such sale, so long as the same is consistent with the terms of this Article 22 and provides by its terms that it is nonrecourse to Lessor. Unless Lessor shall have elected to retain the Property pursuant to the provisions of the preceding paragraph, Lessee shall arrange for Lessor to sell the Property free and clear of the Lien of this Lease and any Lessor Liens attributable to Lessor, without recourse or warranty (of title or otherwise), for cash on the Sale Date to the purchaser or purchasers offering the highest cash sales price, as identified by Lessee or Lessor, as the case may be; provided, however, solely as to Lessor or the Trust Company, in its individual capacity, any Lessor Lien shall not constitute a Lessor Lien so long as Lessor or the Trust Company, in its individual capacity, is diligently and in good faith contesting, at the cost and expense of Lessor or the Trust Company, in its individual capacity, such Lessor Lien by appropriate proceedings in which event the applicable Sale Date, all without penalty or cost to Lessee, shall be delayed for the period of such contest. To effect such transfer and assignment, Lessor shall execute, acknowledge (where required) and deliver to the appropriate purchaser each of the following: (a) special or limited warranty Deeds conveying the Property (to the extent it is real property titled to Lessor) to the appropriate purchaser free and clear of the Lien of this Lease, the Lien of the Credit Documents and any Lessor Liens; (b) a Bill of Sale conveying the Property (to the extent it is personal property) titled to Lessor to the appropriate purchaser free and clear of the Lien of this Lease, the Lien of the Credit Documents and any Lessor Liens; (c) any real estate tax affidavit or other document required by law to be executed and filed in order to record the Deed; and (d) FIRPTA affidavits, as appropriate. All of the foregoing documentation must be in form and substance reasonably satisfactory to Lessor. Lessee shall surrender the Property so sold or subject to such documents to each purchaser in the condition specified in Section 10.1, or in such other condition as may be agreed between Lessee and such purchaser. Lessee shall not take or fail to take any action which would have the effect of unreasonably discouraging bona fide third party bids for the Property. If the Property is not either (i) sold on the Sale Date in accordance with the terms of this Section 22.1, or (ii) retained by Lessor pursuant to an affirmative election made by Lessor pursuant to the second sentence of the second paragraph of this Section 22.1(a), then (x) Lessee shall be obligated to pay Lessor on the Sale Date an amount equal to the aggregate Termination Value for the Property less any sales proceeds 30 35 received by the Lessor, and (y) Lessor shall transfer the Property to Lessee in accordance with Section 20.2. (b) If the Property is sold on a Sale Date to one (1) or more third party purchasers in accordance with the terms of Section 22.1(a) and the aggregate purchase price paid for the Property is less than the sum of the aggregate Property Cost for the Property (hereinafter such difference shall be referred to as the "Deficiency Balance"), then Lessee hereby unconditionally promises to pay to Lessor on the Sale Date all Rent and all other amounts then due and owing pursuant to the Operative Agreements and the lesser of (i) the Deficiency Balance, or (ii) the Maximum Residual Guarantee Amount for the Property. On a Sale Date if (x) Lessor receives the aggregate Termination Value for the Property from one (1) or more third party purchasers, (y) Lessor and such other parties receive all other amounts specified in the last sentence of the first paragraph of Section 22.1(a) and (z) the aggregate purchase price paid for all the Property on such date exceeds the sum of the aggregate Property Cost for all the Property, then Lessee may retain such excess. If the Property are retained by Lessor pursuant to an affirmative election made by Lessor pursuant to the provisions of Section 22.1(a), then Lessee hereby unconditionally promises to pay to Lessor on the Sale Date all Rent and all other amounts then due and owing pursuant to the Operative Agreements and an amount equal to the Maximum Residual Guarantee Amount for the Property so retained. Any payment of the foregoing amounts described in this Section 22.1(b) shall be made together with a payment of all other amounts referenced in the last sentence of the first paragraph of Section 22.1(a). (c) In the event that all the Property is either sold to one (1) or more third party purchasers on the Sale Date or retained by Lessor in connection with an affirmative election made by Lessor pursuant to the provisions of Section 22.1(a), then in either case on the applicable Sale Date Lessee shall provide Lessor or such third party purchaser (unless otherwise agreed by such third party purchaser) with (i) all permits, certificates of occupancy, governmental licenses and authorizations necessary to use, operate, repair, access and maintain the Property for the purpose it is being used by Lessee, and (ii) such manuals, permits, easements, licenses, intellectual property, know-how, rights-of-way and other rights and privileges in the nature of an easement as are reasonably necessary or desirable in connection with the use, operation, repair, access to or maintenance of the Property for its intended purpose or otherwise as Lessor or such third party purchaser(s) shall reasonably request (and a royalty-free license or similar agreement to effectuate the foregoing on terms reasonably agreeable to Lessor or such third party purchaser(s), as applicable). All assignments, licenses, easements, agreements and other deliveries required by clauses (i) and (ii) of this paragraph (c) shall be in form reasonably satisfactory to Lessor or such third party purchaser(s), as applicable, and shall be fully assignable (including without limitation both primary assignments and assignments given in the nature of security) without payment of any fee, cost or other charge. 31 36 22.2 APPLICATION OF PROCEEDS OF SALE. In the event Lessee receives any proceeds of sale of the Property, such proceeds shall be deemed to have been received in trust on behalf of Lessor and Lessee shall promptly remit such proceeds to Lessor. Lessor shall apply the proceeds of sale of the Property in the following order of priority: (a) FIRST, to pay or to reimburse Lessor (and/or the Agent, as the case may be) for the payment of all reasonable costs and expenses incurred by Lessor (and/or the Agent, as the case may be) in connection with the sale (to the extent Lessee has not satisfied its obligation to pay such costs and expenses); (b) SECOND, so long as the Credit Agreement is in effect and any Loans or Holder Advances or any amount is owing to the Financing Parties under any Operative Agreement, to the Agent to be applied pursuant to intercreditor provisions among Lessor, the Lenders and the Holders contained in the Operative Agreements; and (c) THIRD, to Lessee. 22.3 INDEMNITY FOR EXCESSIVE WEAR. If the proceeds of the sale described in Section 22.1 with respect to the Property shall be less than the Limited Recourse Amount with respect to the Property, and at the time of such sale it shall have been reasonably determined (pursuant to the Appraisal Procedure) that the Fair Market Sales Value of the Property shall have been impaired by greater than expected wear and tear during the term of the Lease, Lessee shall pay to Lessor within ten (10) days after receipt of Lessor's written statement (i) the amount of such excess wear and tear determined by the Appraisal Procedure or (ii) the amount of the Sale Proceeds Shortfall, whichever amount is less. 22.4 APPRAISAL PROCEDURE. For determining the Fair Market Sales Value of the Property or any other amount which may, pursuant to any provision of any Operative Agreement, be determined by an appraisal procedure, Lessor and Lessee shall use the following procedure (the "Appraisal Procedure"). Lessor and Lessee shall endeavor to reach a mutual agreement as to such amount for a period of ten (10) days from commencement of the Appraisal Procedure under the applicable section of the Lease, and if they cannot agree within ten (10) days, then two (2) qualified appraisers, one (1) chosen by Lessee and one (1) chosen by Lessor, shall mutually agree thereupon, but if either party shall fail to choose an appraiser within twenty (20) days after notice from the other party of the selection of its appraiser, then the appraisal by such appointed appraiser shall be binding on Lessee and Lessor. If the two (2) appraisers cannot agree within twenty (20) days after both shall have been appointed, then a third 32 37 appraiser shall be selected by the two (2) appraisers or, failing agreement as to such third appraiser within thirty (30) days after both shall have been appointed, by the American Arbitration Association. The decisions of the three (3) appraisers shall be given within twenty (20) days of the appointment of the third appraiser and the decision of the appraiser most different from the average of the other two (2) shall be discarded and such average shall be binding on Lessor and Lessee; provided, that if the highest appraisal and the lowest appraisal are equidistant from the third appraisal, the third appraisal shall be binding on Lessor and Lessee. The fees and expenses of the appraiser appointed by Lessee shall be paid by Lessee; the fees and expenses of the appraiser appointed by Lessor shall be paid by Lessor (such fees and expenses not being indemnified pursuant to Section 11 of the Participation Agreement); and the fees and expenses of the third appraiser shall be divided equally between Lessee and Lessor. 22.5 CERTAIN OBLIGATIONS CONTINUE. During the Marketing Period, the obligation of Lessee to pay Rent with respect to the Property (including without limitation the installment of Basic Rent due on the Expiration Date) shall continue undiminished until payment in full to Lessor of the sale proceeds, if any, the Maximum Residual Guarantee Amount, the amount due under Section 22.3, if any, and all other amounts due to Lessor or any other Person with respect to all Property or any Operative Agreement. Lessor shall have the right, but shall be under no duty, to solicit bids, to inquire into the efforts of Lessee to obtain bids or otherwise to take action in connection with any such sale, other than as expressly provided in this Article XXII. ARTICLE XXIII 23.1 HOLDING OVER. If Lessee shall for any reason remain in possession of the Property after the expiration or earlier termination of this Lease as to such Property (unless such Property is conveyed to Lessee), such possession shall be as a tenancy at sufferance during which time Lessee shall continue to pay Supplemental Rent that would be payable by Lessee hereunder were the Lease then in full force and effect with respect to such Property and Lessee shall continue to pay Basic Rent at the lesser of the highest lawful rate and one hundred ten percent (110%) of the last payment of Basic Rent due with respect to such Property prior to such expiration or earlier termination of this Lease. Such Basic Rent shall be payable from time to time upon demand by Lessor and such additional amount of Basic Rent shall be applied by Lessor ratably to the Lenders and the Holders based on their relative amounts of the then outstanding aggregate Property Cost for the Property. During any period of tenancy at sufferance, Lessee shall, subject to the second preceding sentence, be obligated to perform and observe all of the terms, covenants and conditions of this Lease, but shall have no rights hereunder other than the right, to the extent given by law to tenants at sufferance, to continue their occupancy and use of such Property. Nothing contained in this Article XXIII shall constitute the consent, express or implied, of Lessor to the holding over of Lessee after the expiration or earlier termination of this Lease as to the Property (unless such Property is conveyed to Lessee) and nothing contained herein shall be read or construed as preventing Lessor from maintaining a suit for possession of such Property or exercising any other remedy available to Lessor at law or in equity. 33 38 ARTICLE XXIV 24.1 RISK OF LOSS. During the Term, unless Lessee shall not be in actual possession of the Property in question solely by reason of Lessor's exercise of its remedies of dispossession under Article XVII, the risk of loss or decrease in the enjoyment and beneficial use of such Property as a result of the damage or destruction thereof by fire, the elements, casualties, thefts, riots, wars or otherwise is assumed by Lessee, and Lessor shall in no event be answerable or accountable therefor. ARTICLE XXV 25.1 ASSIGNMENT. (a) Lessee may not assign this Lease or any of its rights or obligations hereunder or with respect to the Property in whole or in part to any Person without the prior written consent of the Agent, the Lenders, the Holders and Lessor, which consent shall be in such parties' absolute discretion. Notwithstanding anything in this Lease to the contrary, Lessee shall have the right, without obtaining Lessor's consent, but with prior written notice to the Lessor, to assign this Lease to an Affiliate, Subsidiary or successor by merger or transfer of substantially all of Lessee's assets; provided, after the effective date of such assignment, Lessee shall remain in compliance with all of its covenants, agreements and obligations under the Operative Agreements, including without limitation compliance with the Incorporated Representations and Warranties and the Incorporated Covenants. (b) No assignment by Lessee (referenced in this Section 25.1 or otherwise) or other relinquishment of possession to the Property shall in any way discharge or diminish any of the obligations of Lessee to Lessor hereunder and Lessee shall remain directly and primarily liable under the Operative Agreements as to any rights or obligations assigned by Lessee or regarding the Property in which rights or obligations have been assigned or otherwise transferred. In connection with any such assignment, Guarantor shall reaffirm the guaranties set forth in Section 6B of the Participation Agreement. 25.2 SUBLEASES. (a) Promptly, but in any event within five (5) Business Days, following the execution and delivery of any sublease permitted by this Article XXV, Lessee shall notify Lessor of the execution of such sublease. As of the Closing Date, Lessee shall lease the respective Property described in such Lease Supplement from Lessor, and any existing tenant respecting such Property shall automatically be deemed to be a subtenant of Lessee and not a tenant of Lessor. 34 39 (b) Without the prior written consent of the Agent, any Lender, any Holder or Lessor and subject to the other provisions of this Section 25.2, Lessee may sublet the Property or portion thereof to any wholly-owned Subsidiary of Lessee or any other Person reasonably acceptable to the Agent; provided, (i) all subleasing shall be done on market terms and shall in no way diminish the fair market value or useful life of any applicable Property, (ii) no sublease (referenced in this Section 25.2 or otherwise) or other relinquishment of possession of the Property shall in any way discharge or diminish any of Lessee's obligations to Lessor hereunder and Lessee shall remain directly and primarily liable under this Lease as to the Property, or portion thereof, so sublet, (iii) the term of any such sublease shall not extend beyond the Term, and (iv) each sublease shall be expressly subject and subordinate to this Lease. Except as referenced in the immediately preceding sentence, no other sublease shall be permitted unless consented to in writing by Lessor which consent shall not be unnecessarily withheld, delayed or conditioned. All sublessees shall be in all respects subject and subordinate to the Lease and shall in no way diminish the fair market value or useful life of the Property. (c) No sublease (referenced in this Section 25.2 or otherwise) or other relinquishment of possession to the Property shall in any way discharge or diminish any of Lessee's obligations to Lessor hereunder and Lessee shall remain directly and primarily liable under this Lease as to such Property, or portion thereof, so sublet. ARTICLE XXVI 26.1 NO WAIVER. No failure by Lessor or Lessee to insist upon the strict performance of any term hereof or to exercise any right, power or remedy upon a default hereunder, and no acceptance of full or partial payment of Rent during the continuance of any such default, shall constitute a waiver of any such default or of any such term. To the fullest extent permitted by law, no waiver of any default shall affect or alter this Lease, and this Lease shall continue in full force and effect with respect to any other then existing or subsequent default. ARTICLE XXVII 27.1 ACCEPTANCE OF SURRENDER. No surrender to Lessor of this Lease or of all or any portion of the Property or of any part of any thereof or of any interest therein shall be valid or effective unless agreed to and accepted in writing by Lessor and no act by Lessor or the Agent or any representative or agent of Lessor or the Agent, other than a written acceptance, shall constitute an acceptance of any such surrender. 35 40 27.2 NO MERGER OF TITLE. There shall be no merger of this Lease or of the leasehold estate created hereby by reason of the fact that the same Person may acquire, own or hold, directly or indirectly, in whole or in part, (a) this Lease or the leasehold estate created hereby or any interest in this Lease or such leasehold estate, (b) any right, title or interest in the Property, (c) any Notes, or (d) a beneficial interest in Lessor. ARTICLE XXVIII 28.1 INCORPORATION OF COVENANTS. Reference is made to the Lessee Credit Agreement and the representations and warranties contained in Article VII of the Lessee Credit Agreement and the covenants contained in Articles VIII and IX of the Lessee Credit Agreement. Such representations and warranties and such covenants, other than (a) those solely relating to an earlier point in time, (b) those concerning only the Lessee Credit Agreement facility or related loan documents and which could not, under any reasonable interpretation, be deemed applicable in connection with the transactions contemplated under the Operative Agreements, and (c) those the subject matter of which is already covered by a provision contained in Section 6.2 of the Participation Agreement (in the case of representations and warranties) or Section 8.3 of the Participation Agreement (in the case of such covenants), shall hereinafter be referred to as the "Incorporated Representations and Warranties" and the "Incorporated Covenants," respectively. Lessee agrees with Lessor that the Incorporated Representations and Warranties and the Incorporated Covenants (and all other relevant provisions of the Lessee Credit Agreement related thereto, including without limitation the defined terms contained in Article I thereof which are used in the Incorporated Representations and Warranties and the Incorporated Covenants, hereinafter referred to as the "Additional Incorporated Terms") are hereby incorporated by reference into this Lease to the same extent and with the same effect as if set forth fully herein and shall inure to the benefit of Lessor, without giving effect to any waiver, amendment, modification or replacement of the Lessee Credit Agreement or any term or provision of the Incorporated Representations and Warranties or the Incorporated Covenants occurring subsequent to the date of this Lease, except to the extent otherwise specifically provided in the following provisions of this paragraph. Lessee shall be deemed to make each of the Incorporated Representations and Warranties as to the parties and the matters specified therein and agrees to cause Guarantor, and to the extent applicable, its Subsidiaries, to comply with the Incorporated Covenants as to the matters specified therein, except that the term "Material Adverse Effect" as used therein shall mean Material Adverse Effect as defined in Appendix A to the Participation Agreement, the terms "Agent," "Required Lenders," and "Lenders" as used therein (except as used in Sections 9.3(a), 9.4(b), and 9.16 thereof), shall mean the Lessor, the terms "Default" or "Event of Default" shall mean Default or Event of Default as defined in Appendix A to the Participation Agreement, and the term "Loan Documents" as used in Section 9.7 shall mean the Operative Agreements, unless, in any case, such interpretation is inappropriate under any reasonable interpretation. In the event a waiver is granted under the Lessee Credit Agreement or an amendment or modification is 36 41 executed with respect to the Lessee Credit Agreement, and such waiver, amendment and/or modification affects the Incorporated Representations and Warranties, the Incorporated Covenants or the Additional Incorporated Terms, then such waiver, amendment or modification shall be effective with respect to the Incorporated Representations and Warranties, the Incorporated Covenants and the Additional Incorporated Terms as incorporated by reference into this Lease only if consented to in writing by the Agent (acting upon the direction of the Majority Secured Parties). In the event of any replacement of the Lessee Credit Agreement with a similar credit facility (the "New Facility") the representations and warranties, covenants and additional terms contained in the New Facility which correspond to the representations and warranties, covenants contained in Article VII and Articles VIII and IX, respectively, and such additional terms (each of the foregoing contained in the Lessee Credit Agreement) shall become the Incorporated Representations and Warranties, the Incorporated Covenants and the Additional Incorporated Terms only if consented to in writing by the Agent (acting upon the direction of the Majority Secured Parties) and, if such consent is not granted or if the Lessee Credit Agreement is terminated and not replaced, then the representations and warranties and covenants contained in Article VII and Articles VIII and IX, respectively, and such additional terms (each of the foregoing contained in the Lessee Credit Agreement (together with any modifications or amendments approved in accordance with this paragraph)) shall continue to be the Incorporated Representations and Warranties, the Incorporated Covenants and the Additional Incorporated Terms hereunder. ARTICLE XXIX 29.1 NOTICES. All notices required or permitted to be given under this Lease shall be in writing and delivered as provided in the Participation Agreement. ARTICLE XXX 30.1 MISCELLANEOUS. Anything contained in this Lease to the contrary notwithstanding, all claims against and liabilities of Lessee or Lessor arising from events commencing prior to the expiration or earlier termination of this Lease shall survive such expiration or earlier termination. If any provision of this Lease shall be held to be unenforceable in any jurisdiction, such unenforceability shall not affect the enforceability of any other provision of this Lease and such jurisdiction or of such provision or of any other provision hereof in any other jurisdiction. 37 42 30.2 AMENDMENTS AND MODIFICATIONS. Neither this Lease nor any Lease Supplement may be amended, waived, discharged or terminated except in accordance with the provisions of Section 12.4 of the Participation Agreement. 30.3 SUCCESSORS AND ASSIGNS. All the terms and provisions of this Lease shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. 30.4 HEADINGS AND TABLE OF CONTENTS. The headings and table of contents in this Lease are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. 30.5 COUNTERPARTS. This Lease may be executed in any number of counterparts, each of which shall be an original, but all of which shall together constitute one (1) and the same instrument. 30.6 GOVERNING LAW. THIS LEASE SHALL BE GOVERNED BY AND CONSTRUED, INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH CAROLINA, EXCEPT TO THE EXTENT THE LAWS OF THE STATE WHERE A PARTICULAR PROPERTY IS LOCATED ARE REQUIRED TO APPLY. 30.7 CALCULATION OF RENT. All calculation of Rent payable hereunder shall be computed based on the actual number of days elapsed over a year of three hundred sixty (360) days or, to the extent such Rent is based on the Prime Lending Rate, three hundred sixty-five (365) (or three hundred sixty-six (366), as applicable) days. 30.8 MEMORANDA OF LEASE AND LEASE SUPPLEMENTS. This Lease shall not be recorded; provided, Lessor and Lessee shall promptly record (a) a memorandum of this Lease and the applicable Lease Supplement (in substantially the form of Exhibit B attached hereto) or a short form lease (in form and substance reasonably satisfactory to Lessor) regarding the Property promptly after the acquisition thereof in the local filing office with respect thereto and as required under applicable law to sufficiently evidence this Lease and any such Lease Supplement in the applicable real estate filing records. 38 43 30.9 ALLOCATIONS BETWEEN THE LENDERS AND THE HOLDERS. Notwithstanding any other term or provision of this Lease to the contrary, the allocations of the proceeds of the Property and any and all other Rent and other amounts received hereunder shall be subject to the inter-creditor provisions between the Lenders and the Holders contained in the Operative Agreements (or as otherwise agreed among the Lenders and the Holders from time to time). 30.10 LIMITATIONS ON RECOURSE. Notwithstanding anything contained in this Lease to the contrary, Lessee agrees to look solely to Lessor's estate and interest in the Property (and in no circumstance to the Agent, the Lenders, the Holders, the Owner Trustee, the Trust Company or otherwise to Lessor) for the collection of any judgment requiring the payment of money by Lessor in the event of liability by Lessor, and no other property or assets of Lessor or any shareholder, owner or partner (direct or indirect) in or of Lessor, or any director, officer, employee, beneficiary, Affiliate of any of the foregoing shall be subject to levy, execution or other enforcement procedure for the satisfaction of the remedies of Lessee under or with respect to this Lease, the relationship of Lessor and Lessee hereunder or Lessee's use of the Property or any other liability of Lessor to Lessee. Nothing in this Section shall be interpreted so as to limit the terms of Sections 6.1 or 6.2 or the provisions of Section 12.9 of the Participation Agreement. 30.11 WAIVERS OF JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY, TO THE FULLEST EXTENT ALLOWED BY APPLICABLE LAW, WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS LEASE AND FOR ANY COUNTERCLAIM THEREIN. 30.12 EXERCISE OF LESSOR RIGHTS. Lessee hereby acknowledges and agrees that the rights and powers of Lessor under this Lease have been assigned to the Agent pursuant to the terms of the Security Agreement and the other Operative Agreements. Lessor and Lessee hereby acknowledge and agree that (a) the Agent shall, in its discretion, direct and/or act on behalf of Lessor pursuant to the provisions of Sections 8.2(h) and 8.6 of the Participation Agreement, (b) all notices to be given to Lessor shall be given to the Agent and (c) all notices to be given by Lessor may be given by the Agent, at its election. 30.13 SUBMISSION TO JURISDICTION; VENUE. THE PROVISIONS OF THE PARTICIPATION AGREEMENT RELATING TO SUBMISSION TO JURISDICTION AND VENUE ARE HEREBY INCORPORATED BY REFERENCE HEREIN, MUTATIS MUTANDIS. 39 44 30.14 USURY SAVINGS PROVISION. IT IS THE INTENT OF THE PARTIES HERETO TO CONFORM TO AND CONTRACT IN STRICT COMPLIANCE WITH APPLICABLE USURY LAW FROM TIME TO TIME IN EFFECT. TO THE EXTENT ANY RENT OR PAYMENTS HEREUNDER ARE HEREINAFTER CHARACTERIZED BY ANY COURT OF COMPETENT JURISDICTION AS THE REPAYMENT OF PRINCIPAL AND INTEREST THEREON, THIS SECTION 30.14 SHALL APPLY. ANY SUCH RENT OR PAYMENTS SO CHARACTERIZED AS INTEREST MAY BE REFERRED TO HEREIN AS "INTEREST." ALL AGREEMENTS AMONG THE PARTIES HERETO ARE HEREBY LIMITED BY THE PROVISIONS OF THIS PARAGRAPH WHICH SHALL OVERRIDE AND CONTROL ALL SUCH AGREEMENTS, WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER WRITTEN OR ORAL. IN NO WAY, NOR IN ANY EVENT OR CONTINGENCY (INCLUDING WITHOUT LIMITATION PREPAYMENT OR ACCELERATION OF THE MATURITY OF ANY OBLIGATION), SHALL ANY INTEREST TAKEN, RESERVED, CONTRACTED FOR, CHARGED, OR RECEIVED UNDER THIS LEASE OR OTHERWISE, EXCEED THE MAXIMUM NONUSURIOUS AMOUNT PERMISSIBLE UNDER APPLICABLE LAW. IF, FROM ANY POSSIBLE CONSTRUCTION OF ANY OF THE OPERATIVE AGREEMENTS OR ANY OTHER DOCUMENT OR AGREEMENT, INTEREST WOULD OTHERWISE BE PAYABLE IN EXCESS OF THE MAXIMUM NONUSURIOUS AMOUNT, ANY SUCH CONSTRUCTION SHALL BE SUBJECT TO THE PROVISIONS OF THIS PARAGRAPH AND SUCH AMOUNTS UNDER SUCH DOCUMENTS OR AGREEMENTS SHALL BE AUTOMATICALLY REDUCED TO THE MAXIMUM NONUSURIOUS AMOUNT PERMITTED UNDER APPLICABLE LAW, WITHOUT THE NECESSITY OF EXECUTION OF ANY AMENDMENT OR NEW DOCUMENT OR AGREEMENT. IF LESSOR SHALL EVER RECEIVE ANYTHING OF VALUE WHICH IS CHARACTERIZED AS INTEREST WITH RESPECT TO THE OBLIGATIONS OWED HEREUNDER OR UNDER APPLICABLE LAW AND WHICH WOULD, APART FROM THIS PROVISION, BE IN EXCESS OF THE MAXIMUM LAWFUL AMOUNT, AN AMOUNT EQUAL TO THE AMOUNT WHICH WOULD HAVE BEEN EXCESSIVE INTEREST SHALL, WITHOUT PENALTY, BE APPLIED TO THE REDUCTION OF THE COMPONENT OF PAYMENTS DEEMED TO BE PRINCIPAL AND NOT TO THE PAYMENT OF INTEREST, OR REFUNDED TO LESSEE OR ANY OTHER PAYOR THEREOF, IF AND TO THE EXTENT SUCH AMOUNT WHICH WOULD HAVE BEEN EXCESSIVE EXCEEDS THE COMPONENT OF PAYMENTS DEEMED TO BE PRINCIPAL. THE RIGHT TO DEMAND PAYMENT OF ANY AMOUNTS EVIDENCED BY ANY OF THE OPERATIVE AGREEMENTS DOES NOT INCLUDE THE RIGHT TO RECEIVE ANY INTEREST WHICH HAS NOT OTHERWISE ACCRUED ON THE DATE OF SUCH DEMAND, AND LESSOR DOES NOT INTEND TO CHARGE OR RECEIVE ANY UNEARNED INTEREST IN THE EVENT OF SUCH DEMAND. ALL INTEREST PAID OR AGREED TO BE PAID TO LESSOR SHALL, TO THE EXTENT PERMITTED BY APPLICABLE LAW, BE AMORTIZED, PRORATED, ALLOCATED, AND SPREAD THROUGHOUT THE FULL STATED TERM (INCLUDING WITHOUT LIMITATION ANY RENEWAL OR EXTENSION) OF THIS LEASE SO THAT THE AMOUNT OF INTEREST ON ACCOUNT 40 45 OF SUCH PAYMENTS DOES NOT EXCEED THE MAXIMUM NONUSURIOUS AMOUNT PERMITTED BY APPLICABLE LAW. [signature page follows] 41 46 IN WITNESS WHEREOF, the parties have caused this Lease to be duly executed and delivered as of the date first above written. FIRST SECURITY BANK, NATIONAL ASSOCIATION, not individually, but solely as the Owner Trustee under the Dolphin Realty Trust 1999-1, as Lessor By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- CATALINA MARKETING SALES CORPORATION, as Lessee By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- Receipt of this original counterpart of the foregoing Lease is hereby acknowledged as the date hereof FIRST UNION NATIONAL BANK, as the Agent By: ------------------------------- Name: ----------------------------- Title: ---------------------------- 47 EXHIBIT A TO THE LEASE LEASE SUPPLEMENT NO. ___ THIS LEASE SUPPLEMENT NO. ___ (this "Lease Supplement") dated as of ________, between FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking association, not individually, but solely as the Owner Trustee under the Dolphin Realty Trust 1999-1, as lessor (the "Lessor") and Catalina Marketing SALES Corporation, a Delaware corporation, as lessee (the "Lessee"). WHEREAS, Lessor is the owner or will be the owner of the Property described on Schedule 1 hereto (the "Leased Property") and wishes to lease the same to Lessee; NOW, THEREFORE, in consideration of the premises and the mutual agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: SECTION 1. DEFINITIONS; RULES OF USAGE. For purposes of this Lease Supplement, capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to them in Appendix A to the Participation Agreement, dated as of October 21, 1999, among Lessee, Catalina Marketing Corporation, as Guarantor, Lessor, not individually, except as expressly stated therein, but solely as the Owner Trustee under the Dolphin Realty Trust 1999-1, the various banks and other lending institutions which are parties thereto from time to time, as the Holders, the various banks and other lending institutions which are parties thereto from time to time, as the Lenders, and First Union National Bank, as the Agent for the Lenders and respecting the Security Documents, as the Agent for the Lenders and Holders, to the extent of their interests, as such may be amended, modified, extended, supplemented, restated and/or replaced from time to time. SECTION 2. THE PROPERTY. Attached hereto as Schedule 1 is the description of the Leased Property, with an Equipment Schedule attached hereto as Schedule 1-A, an Improvement Schedule attached hereto as Schedule 1-B and a legal description of the Land attached hereto as Schedule 1-C. Effective upon the execution and delivery of this Lease Supplement by Lessor and Lessee, the Leased Property shall be subject to the terms and provisions of the Lease. Without further action, any and all additional Equipment funded under the Operative Agreements and any and all additional Improvements made to the Land shall be deemed to be titled to the Lessor and subject to the terms and conditions of the Lease and this Lease Supplement. This Lease Supplement shall constitute a mortgage, deed of trust, security agreement and financing statement under the laws of the state in which the Leased Property is situated. The maturity date of the obligations secured hereby shall be the Basic Term Expiration Date. For purposes of provisions of the Lease and this Lease Supplement related to the creation and enforcement of the Lease and this Lease Supplement as a security agreement and a fixture A-1 48 filing, Lessee is the debtor and Lessor is the secured party. The mailing addresses of the debtor (Lessee herein) and of the secured party (Lessor herein) from which information concerning security interests hereunder may be obtained are set forth on the signature pages hereto. A carbon, photographic or other reproduction of the Lease and this Lease Supplement or of any financing statement related to the Lease and this Lease Supplement shall be sufficient as a financing statement for any of the purposes referenced herein. SECTION 3. USE OF PROPERTY. At all times during the Term with respect to the Property, Lessee will comply with all obligations under and (to the extent no Event of Default exists and provided, that such exercise will not impair the value of such Property) shall be permitted to exercise all rights and remedies under, all operation and easement agreements and related or similar agreements applicable to such Property. SECTION 4. RATIFICATION; INCORPORATION BY REFERENCE. Except as specifically modified hereby, the terms and provisions of the Lease and the Operative Agreements are hereby ratified and confirmed and remain in full force and effect. The Lease is hereby incorporated herein by reference as though restated herein in its entirety. SECTION 5. ORIGINAL LEASE SUPPLEMENT. The single executed original of this Lease Supplement marked "THIS COUNTERPART IS THE ORIGINAL EXECUTED COUNTERPART" on the signature page thereof and containing the receipt of the Agent therefor on or following the signature page thereof shall be the original executed counterpart of this Lease Supplement (the "Original Executed Counterpart"). To the extent that this Lease Supplement constitutes chattel paper, as such term is defined in the Uniform Commercial Code as in effect in any applicable jurisdiction, no security interest in this Lease Supplement may be created through the transfer or possession of any counterpart other than the Original Executed Counterpart. SECTION 6. GOVERNING LAW. THIS LEASE SUPPLEMENT SHALL BE GOVERNED BY AND CONSTRUED, INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE LAW OF THE STATE OF North Carolina, EXCEPT TO THE EXTENT THE LAWS OF THE STATE WHERE A PARTICULAR PROPERTY IS LOCATED ARE REQUIRED TO APPLY. SECTION 7. MORTGAGE; POWER OF SALE. Without limiting any other remedies set forth in the Lease, in the event that a court of competent jurisdiction rules that the Lease constitutes a mortgage, deed of trust or other secured financing as is the intent of the parties, then Lessor and Lessee agree that Lessee hereby grants a Lien against the Leased Property WITH POWER OF SALE, and that, upon the occurrence of any Lease Event of Default, Lessor shall have the power and authority, to the extent provided by law, after prior notice and lapse of such time as may be required by law, to foreclose its interest (or cause such interest to be foreclosed) in all or any part of the Leased Property. SECTION 8. COUNTERPART EXECUTION. This Lease Supplement may be executed in any number of counterparts and by each of the parties hereto in separate counterparts, all such counterparts together constituting but one (1) and the same instrument. A-2 49 For purposes of the provisions of this Lease Supplement concerning this Lease Supplement constituting a security agreement and fixture filing, the addresses of the debtor (Lessee herein) and the secured party (Lessor herein), from whom information may be obtained about this Lease Supplement, are as set forth on the signature pages hereto. [The remainder of this page has been intentionally left blank.] A-3 50 IN WITNESS WHEREOF, each of the parties hereto has caused this Lease Supplement to be duly executed by an officer thereunto duly authorized as of the date and year first above written. FIRST SECURITY BANK, NATIONAL ASSOCIATION, not individually, but solely as the Owner Trustee under the Dolphin Realty Trust 1999-1, as Lessor By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- First Security Bank, National Association 79 South Main Street, 3rd Floor Salt Lake City, Utah 84111 Attn: Val T. Orton Vice President CATALINA MARKETING SALES CORPORATION, as Lessee By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- Catalina Marketing Sales Corporation 11300 Ninth Street North St. Petersburg, Florida 33716 Attn: Chris Wolf A-4 51 Receipt of this original counterpart of the foregoing Lease Supplement is hereby acknowledged as the date hereof. FIRST UNION NATIONAL BANK, as the Agent By: ------------------------------- Name: ----------------------------- Title: ---------------------------- First Union National Bank c/o First Union Capital Markets Group 301 South College Street, DC-6 Charlotte, North Carolina 28288-0166 Attn: Christy Lee Foster A-5 52 [CONFORM TO STATE LAW REQUIREMENTS] STATE OF _______________ ) ) ss: COUNTY OF ______________ ) The foregoing Lease Supplement was acknowledged before me, the undersigned Notary Public, in the County of _________________ this _____ day of ______________, by ________________, as __________________ of FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking association, not individually, but solely as the Owner Trustee under the Dolphin Realty Trust 1999-1, on behalf of the Owner Trustee. [Notarial Seal] ---------------------------------------- Notary Public My commission expires: --------------- STATE OF _______________ ) ) ss: COUNTY OF ______________ ) The foregoing Lease Supplement was acknowledged before me, the undersigned Notary Public, in the County of _________________ this _____ day of ______________, by ________________, as __________________ of CATALINA MARKETING SALES CORPORATION, a Delaware corporation, on behalf of the corporation. [Notarial Seal] ---------------------------------------- Notary Public My commission expires: --------------- STATE OF _______________ ) ) ss: COUNTY OF ______________ ) The foregoing Lease Supplement was acknowledged before me, the undersigned Notary Public, in the County of ________________ this ____ day of ___________, by _____________, as __________________ of FIRST UNION NATIONAL BANK, a national banking association, as the Agent. [Notarial Seal] ---------------------------------------- Notary Public My commission expires:____________ A-6 53 SCHEDULE 1 TO LEASE SUPPLEMENT NO. ____ (Description of the Leased Property) A-7 54 SCHEDULE 1-A TO LEASE SUPPLEMENT NO. ____ (Equipment) A-8 55 SCHEDULE 1-B TO LEASE SUPPLEMENT NO. ____ (Improvements) A-9 56 SCHEDULE 1-C TO LEASE SUPPLEMENT NO. ____ [(LAND)] A-10 57 EXHIBIT B TO THE LEASE Prepared by and after recordation return to: Lea Stromire Johnson Moore & Van Allen, PLLC 100 North Tryon Street, Floor 47 Charlotte, NC 28202-4003 Space above this line for Recorder's use - ------------------------------------------------------------------------------- MEMORANDUM OF LEASE AGREEMENT AND LEASE SUPPLEMENT NO. 1 THIS MEMORANDUM OF LEASE AGREEMENT AND LEASE SUPPLEMENT NO. 1 ("Memorandum"), dated as of _____________, _____, is by and between FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking association, not individually, but solely as the Owner Trustee under the Dolphin Realty Trust 1999-1, with an office at 79 South Main Street, Salt Lake City, Utah 84111 (hereinafter referred to as "Lessor") and CATALINA MARKETING SALES CORPORATION, a Delaware corporation, with an office at 11300 Ninth Street North, St. Petersburg, Florida 33716 (hereinafter referred to as "Lessee"). WITNESSETH: That for value received, Lessor and Lessee do hereby covenant, promise and agree as follows: 1. DEMISED PREMISES AND DATE OF LEASE. Lessor has leased to Lessee, and Lessee has leased from Lessor, for the Term (as hereinafter defined), certain real property and other property located in ________________ County, Florida which is described in the attached Schedule 1 (the "Property"), pursuant to the terms of a Lease Agreement between Lessor and Lessee dated as of October 21, 1999 (as such may be amended, modified, extended, supplemented, restated and/or replaced from time to time, "Lease") and a Lease Supplement No. _____ between Lessor and Lessee dated as of ______________ (the "Lease Supplement"). 2. TERM AND PURCHASE OPTION. The term of the Lease for the Property ("Term") commenced as of __________, 19__ and shall end as of _________, 19__, unless the Term is extended or earlier terminated in accordance with the provisions of the Lease. The tenant has a purchase option under the Lease. B-1 58 3. TAX PAYER NUMBERS. Lessor's tax payer number: __________________. Lessee's tax payer number: __________________. 4. EFFECT OF MEMORANDUM. The purpose of this instrument is to give notice of the Lease and the Lease Supplement and their respective terms, covenants and conditions. This Memorandum shall not modify in any manner the terms, conditions or intent of the Lease or the Lease Supplement and the parties agree that this Memorandum is not intended nor shall it be used to interpret the Lease or the Lease Supplement or determine the intent of the parties under the Lease or the Lease Supplement. [The remainder of this page has been intentionally left blank.] B-2 59 IN WITNESS WHEREOF, the parties hereto have duly executed this instrument as of the day and year first written. LESSOR: FIRST SECURITY BANK, NATIONAL ASSOCIATION, not individually, but solely as the Owner Trustee under the Dolphin Realty Trust 1999-1 By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- First Security Bank, National Association 79 South Main Street Third Floor Salt Lake City, Utah 84111 Attn: Val T. Orton Vice President LESSEE: CATALINA MARKETING SALES CORPORATION By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- Catalina Marketing Sales Corporation 11300 Ninth Street North St. Petersburg, Florida 33716 Attn: Chris Wolf 60 STATE OF ____________ ss. ss. COUNTY OF ___________ ss. The foregoing instrument was acknowledged before me this _____ day of ____________, _____ by __________ as ________ of First Security Bank, National Association, a national banking association, not individually but solely as Owner Trustee under the Dolphin Realty Trust 1999-1, on behalf of the national banking association. He/she personally appeared before me and is/are personally known to me or produced _________________ as identification. Notary: --------------------------------- [NOTARIAL SEAL] Printed Name: --------------------------- Notary Public, State of ----------------- 61 STATE OF ____________ ss. ss. COUNTY OF ___________ ss. The foregoing instrument was acknowledged before me this _____ day of ____________, ____ by __________ as ________ of Catalina Marketing Sales Corporation, a ____________ corporation, on behalf of the corporation. He/she personally appeared before me and is/are personally known to me or produced _________________ as identification. Notary: --------------------------------- [NOTARIAL SEAL] Printed Name: --------------------------- Notary Public, State of ----------------- 62 SCHEDULE 1 (Description of Property) EX-10.28 4 PARTICIPATION AGREEMENT 1 Exhibit 10.28 - -------------------------------------------------------------------------------- PARTICIPATION AGREEMENT Dated as of October 21, 1999 among CATALINA MARKETING sales CORPORATION, as the Lessee, CATALINA MARKETING CORPORATION, as Guarantor, FIRST SECURITY BANK, NATIONAL ASSOCIATION, not individually, except as expressly stated herein, but solely as the Owner Trustee under the Dolphin Realty Trust 1999-1, as Lessor and Borrower, 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, and FIRST UNION NATIONAL BANK, as the Agent for the Lenders and respecting the Security Documents, as the Agent for the Lenders and the Holders, to the extent of their interests - -------------------------------------------------------------------------------- 2 TABLE OF CONTENTS
PAGE ---- SECTION 1A. INITIAL LENDER AND INITIAL HOLDER.....................................................................1 SECTION 1. THE LOANS AND HOLDER ADVANCES.........................................................................1 SECTION 2. INTENTIONALLY OMITTED.................................................................................2 SECTION 3. SUMMARY OF TRANSACTIONS...............................................................................2 3.1. Operative Agreements..................................................................................2 3.2. Property Purchase.....................................................................................2 3.3. [Intentionally Reserved]..............................................................................2 3.4. Ratable Interests of the Holders and the Lenders......................................................2 SECTION 4. THE CLOSINGS..........................................................................................2 SECTION 5. CLOSING CONDITIONS....................................................................................3 5.1. General...............................................................................................3 5.2. Procedures for Funding................................................................................3 5.3. Conditions Precedent for the Lessor, the Agent, the Lenders and the Holders Relating to the Closing Date and the Property Closing Date............................................................4 5.4. [Intentionally Reserved]..............................................................................9 5.5. [Intentionally Reserved]..............................................................................9 5.6. [Intentionally Reserved]..............................................................................9 5.8. Payments..............................................................................................9 5.9. Maintenance of the Lessee as a Wholly-Owned Entity....................................................9 5.10 Liability of Credit Parties Limited to Transactions Contemplated by the Operative Agreements..........9 5.11 Payment of Early Termination Amount...................................................................9 SECTION 6. REPRESENTATIONS AND WARRANTIES.......................................................................10 6.1. Representations and Warranties of the Borrower.......................................................10 6.2. Representations and Warranties of the Credit Parties.................................................12 SECTION 6B. GUARANTY.............................................................................................15 6B.1. Guaranty of Payment and Performance..................................................................15 6B.2. Guaranty of Payment and Performance..................................................................16 6B.3. Modifications........................................................................................17 6B.4. Waiver of Rights.....................................................................................17 6B.5. Reinstatement........................................................................................18 6B.6. Remedies.............................................................................................18 6B.7. Limitation of Guaranty...............................................................................18 6B.8. Payment of Amounts to the Agent......................................................................18 SECTION 7. PAYMENT OF CERTAIN EXPENSES..........................................................................19 7.1. Transaction Expenses.................................................................................19
i 3
7.2. Brokers' Fees........................................................................................19 7.3. Certain Fees and Expenses............................................................................19 7.4. Unused Fees..........................................................................................20 SECTION 8. OTHER COVENANTS AND AGREEMENTS.......................................................................20 8.1. Cooperation with the Lessee..........................................................................20 8.2. Covenants of the Owner Trustee, the Trust Company, the Lessor and the Holders........................20 8.3. Credit Party Covenants, Consent and Acknowledgment...................................................22 8.4. Sharing of Certain Payments..........................................................................25 8.5. Grant of Easements, etc..............................................................................25 8.6. Appointment by the Agent, the Lenders, the Holders and the Lessor....................................25 8.7. Collection and Allocation of Payments and Other Amounts..............................................26 8.8. Release of Property, etc.............................................................................29 SECTION 9. CREDIT AGREEMENT AND TRUST AGREEMENT.................................................................29 9.1. The Lessee's Credit Agreement Rights.................................................................29 9.2. The Lessee's Trust Agreement Rights..................................................................30 SECTION 10. TRANSFER OF INTEREST.................................................................................30 10.1. Restrictions on Transfer.............................................................................30 10.2. Effect of Transfer...................................................................................31 SECTION 11. INDEMNIFICATION......................................................................................32 11.1. General Indemnity....................................................................................32 11.2. General Tax Indemnity................................................................................34 11.3. Increased Costs, Illegality, etc.....................................................................38 11.4. Funding/Contribution Indemnity.......................................................................40 11.5. Express Indemnification for Ordinary Negligence, Strict Liability, etc...............................41 11.6. Indemnity Prior to Completion Date/Construction Period Termination Date..............................41 SECTION 12. MISCELLANEOUS........................................................................................42 12.1. Survival of Agreements...............................................................................42 12.2. Notices..............................................................................................42 12.3. Counterparts.........................................................................................44 12.4. Terminations, Amendments, Waivers, Etc.; Unanimous Vote Matters......................................44 12.5. Headings, etc........................................................................................45 12.6. Parties in Interest..................................................................................46 12.7. Governing Law; Submission to Jurisdiction; Waiver of Jury Trial; Venue...............................46 12.8. Severability.........................................................................................46 12.9. Liability Limited....................................................................................47 12.10. Rights of the Credit Parties.........................................................................48 12.11. Further Assurances...................................................................................48 12.12. Calculations under Operative Agreements..............................................................48 12.13. Confidentiality......................................................................................49 12.14. Financial Reporting/Tax Characterization.............................................................49 12.15. Set-off..............................................................................................49
ii 4 EXHIBITS - -------- A - Form of Requisition - Sections 4, 5.2 and 5.3 B - Form of Outside Counsel Opinion for the Lessee - Section 5.3(j) C - Form of Officer's Certificate - Section 5.3(w) D - Form of Secretary's Certificate - Section 5.3(x) E - Form of Officer's Certificate - Section 5.3(y) F - Form of Secretary's Certificate - Section 5.3(z) G - Form of Outside Counsel Opinion for the Owner Trustee - Section 5.3(aa) H - Form of Outside Counsel Opinion for the Lessee - Section 5.3(bb) J - Description of Material Litigation - Section 6.2(d) Appendix A - Rules of Usage and Definitions iii 5 PARTICIPATION AGREEMENT THIS PARTICIPATION AGREEMENT dated as of October 21, 1999 (as amended, modified, extended, supplemented, restated and/or replaced from time to time, this "Agreement") is by and among CATALINA MARKETING SALES CORPORATION, a Delaware corporation (the "Lessee"); CATALINA MARKETING CORPORATION, a Delaware corporation (the "Guarantor"); FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking association, not individually (in its individual capacity, the "Trust Company"), except as expressly stated herein, but solely as the Owner Trustee under the Dolphin Realty Trust 1999-1 (the "Owner Trustee", the "Borrower" or the "Lessor"); the various banks and other lending institutions which are parties hereto from time to time as holders of certificates issued with respect to the Dolphin Realty Trust 1999-1 (subject to the definition of Holders in Appendix A hereto, individually, a "Holder" and collectively, the "Holders"); the various banks and other lending institutions which are parties hereto from time to time as lenders (subject to the definition of Lenders in Appendix A hereto, individually, a "Lender" and collectively, the "Lenders"); and FIRST UNION NATIONAL BANK, a national banking association, as the agent for the Lenders and respecting the Security Documents, as the agent for the Lenders and the Holders, to the extent of their interests (in such capacity, the "Agent"). Capitalized terms used but not otherwise defined in this Agreement shall have the meanings set forth in Appendix A hereto. In consideration of the mutual agreements herein contained and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto hereby agree as follows: SECTION 1A. INITIAL LENDER AND INITIAL HOLDER. Notwithstanding the various references in the Operative Agreements to multiple Lenders and multiple Holders, First Union National Bank is the only Lender and the only Holder as of the date of this Agreement. Additional Lenders and additional Holders may become parties to the Operative Agreements subsequent to the date hereof pursuant to the assignment provisions set forth in the applicable Operative Agreements. SECTION 1. THE LOANS AND HOLDER ADVANCES. Subject to the terms and conditions of this Agreement and the other Operative Agreements and in reliance on the representations and warranties of each of the parties hereto contained herein or made pursuant hereto, the Lenders have agreed to make Loans to the Lessor and the Holders have agreed to make Holder Advances to the Lessor pursuant to the terms of the Credit Agreement, the Trust Agreement and the other Operative Agreements in an aggregate principal amount of up to the sum of the aggregate Commitments plus the aggregate Holder Commitments. The Loans and Holder Advances and the obligations of the Lessor under the Operative Agreements shall be secured by the Collateral. 1 6 SECTION 2. INTENTIONALLY OMITTED SECTION 3. SUMMARY OF TRANSACTIONS. 3.1. OPERATIVE AGREEMENTS. On the date hereof, each of the respective parties hereto and thereto shall execute and deliver this Agreement, the Lease, the Credit Agreement, the Notes, the Trust Agreement, the Certificates, 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 Section 5 of this Agreement and the terms and provisions of the Trust Agreement, (b) the Lenders will each make Loans in accordance with Section 5 of this Agreement and the terms and provisions of the Credit Agreement, (c) the Lessor will purchase and acquire good and marketable title to the Property pursuant to a Deed or Bill of Sale, as the case may be, and grant the Agent a lien on such Property by execution of the required Security Documents, (d) the Agent, the Lessee and the Lessor shall execute and deliver a Lease Supplement relating to such Property and (e) the Basic Term shall commence with respect to such Property. 3.3. [INTENTIONALLY RESERVED] 3.4. RATABLE INTERESTS OF THE HOLDERS AND THE LENDERS. Each Holder and Lender agrees at all times to hold the same ratable portion of the aggregate Lender Commitment for Tranche A Loans, the aggregate Lender Commitment for Tranche B Loans and the aggregate Holder Commitment. SECTION 4. THE CLOSINGS. All documents and instruments required to be delivered on the Closing Date shall be delivered at the offices of Moore & Van Allen, PLLC, Charlotte, North Carolina, or at such other location as may be determined by the Lessor, the Agent and the Lessee. The Lessor shall deliver to the Agent a requisition (a "Requisition"), in the form attached hereto as Exhibit A or in such other form as is satisfactory to the Agent, in its reasonable discretion, in connection with the Loans and Holder Advances to be extended on the Closing Date and on the Property Closing Date. 2 7 SECTION 5. CLOSING CONDITIONS. 5.1. GENERAL. (a) To the extent funds have been advanced to the Lessor as Loans by the Lenders and to the Lessor as Holder Advances by the Holders, the Lessor will use such funds from time to time in accordance with the terms and conditions of this Agreement and the other Operative Agreements (i) at the direction of the Lessee to acquire the Properties in accordance with the terms of this Agreement and the other Operative Agreements, and (ii) to pay Transaction Expenses, fees, expenses and other disbursements payable by the Lessor under Sections 7.1. (b) In lieu of the payment of interest on the Loans and Holder Yield on the Holder Advances on any Scheduled Interest Payment Date during the period prior to the initial Property Closing Date, (i) each Lender's Loan shall automatically be increased by the amount of interest accrued and unpaid on such Loan for such period (except to the extent that at any time such increase would cause such Lender's Loan to exceed such Lender's Available Commitment, in which case the Lessee shall pay such excess amount to such Lender in immediately available funds on the date such Lender's Available Commitment was exceeded), and (ii) each Holder's Holder Advance shall automatically be increased by the amount of Holder Yield accrued and unpaid on such Holder Advance for such period (except to the extent that at any time such increase would cause the Holder Advance of such Holder to exceed such Holder's Available Holder Commitment, in which case the Lessee shall pay such excess amount to such Holder in immediately available funds on the date the Available Holder Commitment of such Holder was exceeded). Such increases in a Lender's Loan and a Holder's Holder Advance shall occur without any disbursement of funds by any Person. 5.2. PROCEDURES FOR FUNDING. (a) The Lessee shall deliver to the Agent, not less than three (3) Business Days prior to the Closing Date and the Property Closing Date, as applicable, a Requisition as described in Section 4 hereof (including without limitation a legal description of the Land, if any, a schedule of the Improvements, if any, and a schedule of the Equipment, if any, acquired or to be acquired on the Property Closing Date, each of the foregoing in a form reasonably acceptable to the Agent). (b) Subject to the satisfaction of the conditions precedent set forth in Section 5.3 on the Closing Date and on the Property Closing Date, (i) the Lenders shall make Loans based on their respective Lender Commitments to the Lessor in an aggregate amount equal to ninety-seven percent (97%) of the amounts requested in the Requisition ratably between the Tranche A Lenders and the Tranche B Lenders with the Tranche A Lenders funding eighty-four percent (84%) of the amounts and the Tranche B Lenders funding thirteen percent (13%) of such amounts, up to an aggregate principal amount equal to the aggregate of the Holder Commitments and Lender Commitments, (ii) the Holders shall make Holder Advances based on their respective Holder Commitments in 3 8 an aggregate amount equal to three percent (3%) of the balance of the amounts requested in such Requisition up to the aggregate advanced amount equal to the aggregate of the Holder Commitments; and (iii) the total amount of such Loans and Holder Advances made on the Closing Date and on the Property Closing Date shall be used by the Lessor to purchase the Property and pay the Transactions Expenses related thereto. (c) [Intentionally Reserved] (d) All Operative Agreements which are to be delivered to the Lessor, the Agent, the Lenders or the Holders shall be delivered to the Agent, on behalf of the Lessor, the Agent, the Lenders or the Holders, and such items (except for Notes, Certificates, Bills of Sale, with respect to which in each case there shall be only one original) shall be delivered with originals sufficient for the Lessor, the Agent, each Lender and each Holder. All other items which are to be delivered to the Lessor, the Agent, the Lenders or the Holders shall be delivered to the Agent, on behalf of the Lessor, the Agent, the Lenders or the Holders, and such other items shall be held by the Agent. To the extent any such other items are requested in writing from time to time by the Lessor, any Lender or any Holder, the Agent shall provide a copy of such item to the party requesting it. (e) Notwithstanding the completion of any closing under this Agreement pursuant to Section 5.3, each condition precedent in connection with any such closing may be subsequently enforced by the Agent (unless such has been expressly waived in writing by the Agent). 5.3. CONDITIONS PRECEDENT FOR THE LESSOR, THE AGENT, THE LENDERS AND THE HOLDERS RELATING TO THE CLOSING DATE AND THE PROPERTY CLOSING DATE. The obligations on the Closing Date and the Property Closing Date of the Lessor, the Agent, the Lenders and the Holders to enter into the transactions contemplated by this Agreement, including without limitation the obligation to execute and deliver the applicable Operative Agreements to which each is a party are subject to the satisfaction or waiver of the following conditions precedent on or prior to the Closing Date or the Property Closing Date, as the case may be (to the extent such conditions precedent require the delivery of any agreement, certificate, instrument, memorandum, legal or other opinion, appraisal, commitment, title insurance commitment, lien report or any other document of any kind or type, such shall be in form and substance satisfactory to the Agent, in its reasonable discretion; notwithstanding the foregoing, the obligations of each party shall not be subject to any conditions contained in this Section 5.3 which are required to be performed by such party): (a) the correctness of the representations and warranties of the parties to this Agreement contained herein, in each of the other Operative Agreements and each certificate delivered pursuant to any Operative Agreement (including without limitation the Incorporated Representations and Warranties) on each such date; 4 9 (b) the performance by the parties to this Agreement of their respective agreements contained herein and in the other Operative Agreements to be performed by them on or prior to each such date; (c) the Agent shall have received a fully executed counterpart copy of the Requisition, appropriately completed; (d) as of the Property Closing Date, title to the Property shall conform to the representations and warranties set forth in Section 6.2(l) hereof; (e) as of the Property Closing Date, the Lessee shall have delivered (or shall have caused to be delivered) to the Agent a good standing certificate for the Lessee in the state where the Property is located, the Deed with respect to the Land and existing Improvements (if any), and a copy of the Bill of Sale with respect to the Equipment (if any), respecting such of the foregoing as are being acquired on the Property Closing Date with the proceeds of the Loans and Holder Advances or which have been previously acquired with the proceeds of the Loans and Holder Advances; (f) there shall not have occurred and be continuing any Default or Event of Default under any of the Operative Agreements and no Default or Event of Default under any of the Operative Agreements will have occurred after giving effect to the Advance requested by each such Requisition; (g) as of the Property Closing Date, the Lessee shall have delivered (or shall have caused to be delivered) to the Agent a title insurance commitment to issue a policy respecting the Property, with such endorsements as the Agent deems necessary, in favor of the Lessor and the Agent from a title insurance company acceptable to the Agent, but only with such title exceptions thereto as are acceptable to the Agent; (h) as of the Property Closing Date, the Lessee shall have delivered (or shall have caused to be delivered) to the Agent an environmental site assessment, including without limitation a Phase I environmental audit, respecting the Property prepared by an independent recognized professional acceptable to the Agent and evidencing no pre-existing environmental condition with respect to which there is more than a remote risk of loss; (i) as of the Property Closing Date, the Lessee shall have delivered (or shall have caused to be delivered) to the Agent a survey (with a flood hazard certification) respecting the Property prepared (i) by an independent recognized professional acceptable to the Agent and (ii) in a manner and including such information as is required by the Agent; (j) as of the Property Closing Date, Lessee shall have caused to be delivered to the Agent a legal opinion in the form attached hereto as Exhibit B or in such other form as is acceptable to the Agent with respect to local law real property issues respecting the state in which the Property is located addressed to the Lessor, the Agent, 5 10 the Lenders and the Holders, from counsel located in the state where the Property is located, prepared by counsel acceptable to the Agent and a separate flood hazard certificate respecting the Property prepared by an independent recognized professional acceptable to the Agent; (k) [Intentionally Reserved] (l) the Lessee shall have delivered to the Agent invoices for, or other reasonably satisfactory evidence of, the various Transaction Expenses and other fees, expenses and disbursements referenced in Section 7.1 of this Agreement, as appropriate; (m) as of the Property Closing Date, the Lessee shall have caused to be delivered to the Agent a Mortgage Instrument (in the form attached hereto as Schedule 5.3(m) or in such other form as is acceptable to the Agent, with revisions as necessary to conform to applicable state law), Lessor Financing Statements and Lender Financing Statements respecting each such Property, all fully executed and in recordable form; (n) as of the Property Closing Date, the Lessee shall have delivered to the Agent with respect to the Property a Lease Supplement and a memorandum (or short form lease) regarding the Lease and such Lease Supplement (such memorandum or short form lease to be in the form attached to the Lease as Exhibit B or in such other form as is acceptable to the Agent, with modifications as necessary to conform to applicable state law, and in form suitable for recording); (o) [Intentionally Reserved] (p) as of the Property Closing Date, the Property shall have been substantially completed in accordance with the Plans and Specifications related to the Property, such that a certificate of occupancy shall have been issued with respect to the Property (with only immaterial punch list items remaining to be completed); (q) as of the Property Closing Date, the Lessee shall have provided evidence to the Agent of insurance with respect to the Property as provided in the Lease; (r) not later than thirty (30) days after the Closing Date, the Lessee shall have caused an Appraisal regarding the Property to be provided to the Agent from an appraiser selected by the Agent; (s) the Lessee shall cause (i) Uniform Commercial Code lien searches, tax lien searches and judgment lien searches regarding the Lessee to be conducted (and copies thereof to be delivered to the Agent) in such jurisdictions as determined by the Agent by a nationally recognized search company acceptable to the Agent and (ii) the liens referenced in such lien searches which are objectionable to the Agent to be either removed or otherwise handled in a manner satisfactory to the Agent; 6 11 (t) all taxes, fees and other charges in connection with the execution, delivery, recording, filing and registration of the Operative Agreements and/or documents related thereto shall have been paid or provisions for such payment shall have been made to the satisfaction of the Agent; (u) (i) in the opinion of the Agent and its counsel, the transactions contemplated by the Operative Agreements do not and will not subject the Lessor, the Lenders, the Agent or the Holders to any adverse regulatory prohibitions, constraints, penalties or fines; and (ii) each of the Operative Agreements to be entered into on such date shall have been duly authorized, executed and delivered by the parties thereto, and shall be in full force and effect, and the Agent shall have received a fully executed copy of each of the Operative Agreements; (v) as of the Closing Date and the Property Closing Date, since the date of the most recent audited financial statements (as delivered pursuant to the requirements of the Lessee Credit Agreement) of the Lessee, there shall not have occurred any event, condition or state of facts which shall have or could reasonably be expected to have a Material Adverse Effect, other than as specifically contemplated by the Operative Agreements; (w) as of the Closing Date, the Agent shall have received an Officer's Certificate, dated as of the Closing Date, of the Lessee in the form attached hereto as Exhibit C or in such other form as is acceptable to the Agent stating that (i) each and every representation and warranty of each Credit Party contained in the Operative Agreements to which it is a party is true and correct on and as of the Closing Date; (ii) no Lease Default or Lease Event of Default has occurred and is continuing under any Operative Agreement; (iii) each Operative Agreement to which any Credit Party is a party is in full force and effect with respect to it; and (iv) each Credit Party has duly performed and complied with all covenants, agreements and conditions contained herein or in any Operative Agreement required to be performed or complied with by it on or prior to the Closing Date; (x) as of the Closing Date, the Agent shall have received (i) a certificate of the Secretary or an Assistant Secretary of each Credit Party, dated as of the Closing Date, in the form attached hereto as Exhibit D or in such other form as is acceptable to the Agent attaching and certifying as to (1) the resolutions of the Board of Directors of such Credit Party duly authorizing the execution, delivery and performance by such Credit Party of each of the Operative Agreements to which it is or will be a party, (2) the articles of incorporation of such Credit Party (or state equivalent) certified as of a recent date by the Secretary of State of its state of incorporation and its by-laws and (3) the incumbency and signature of persons authorized to execute and deliver on behalf of such Credit Party the Operative Agreements to which it is or will be a party and (ii) a good standing certificate (or local equivalent) from the respective states where such Credit Party is incorporated and where the principal place of business of such Credit Party is located as to its good standing in each such state. To the extent any Credit Party is a partnership, a limited liability company or is otherwise organized, such Person shall deliver to the Agent (in 7 12 form and substance satisfactory to the Agent) as of the Closing Date (A) a certificate regarding such Person and any corporate general partners covering the matters described in Exhibit D and (B) a good standing certificate, a certificate of limited partnership or a local equivalent of either of the foregoing, as applicable; (y) as of the Closing Date, the Agent shall have received an Officer's Certificate of the Lessor dated as of the Closing Date in the form attached hereto as Exhibit E or in such other form as is acceptable to the Agent, stating that (i) each and every representation and warranty of the Lessor contained in the Operative Agreements to which it is a party is true and correct on and as of the 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 Closing Date; (z) as of the Closing Date, the Agent shall have received (i) a certificate of the Secretary, an Assistant Secretary, Trust Officer or Vice President of the Trust Company in the form attached hereto as Exhibit F or in such other form as is acceptable to the Agent, attaching and certifying as to (A) the signing resolutions duly authorizing the execution, delivery and performance by the Lessor of each of the Operative Agreements to which it is or will be a party, (B) its articles of association or other equivalent charter documents and its by-laws, as the case may be, certified as of a recent date by an appropriate officer of the Trust Company and (C) the incumbency and signature of persons authorized to execute and deliver on its behalf the Operative Agreements to which it is a party and (ii) a good standing certificate from the Office of the Comptroller of the Currency; (aa) as of the Closing Date, counsel for the Lessor acceptable to the Agent shall have issued to the Lessee, the Holders, the Lenders and the Agent its opinion in the form attached hereto as Exhibit G or in such other form as is reasonably acceptable to the Agent; (bb) as of the Closing Date, the Lessee shall have caused to be delivered to the Agent a legal opinion in the form attached hereto as Exhibit H or in such other form as is acceptable to the Agent, addressed to the Lessor, the Agent, the Lenders and the Holders, from counsel acceptable to the Agent; and (cc) as of the Closing Date, the Lessee shall cause (i) tax lien searches and judgment lien searches regarding each Credit Party to be conducted (and copies thereof to be delivered to the Agent) in such jurisdictions as determined by the Agent by a nationally-recognized search company acceptable to the Agent and (ii) the liens referenced in such lien searches which are objectionable to the Agent to be either removed or otherwise handled in a manner satisfactory to the Agent. 8 13 5.4. [INTENTIONALLY RESERVED] 5.5. [INTENTIONALLY RESERVED] 5.6. [INTENTIONALLY RESERVED] 5.7. [INTENTIONALLY RESERVED] 5.8. PAYMENTS. All payments of principal, interest, Holder Advances, Holder Yield and other amounts to be made by the Lessee under this Agreement or any other Operative Agreements (excluding Excepted Payments which shall be paid directly to the party to whom such payments are owed) shall be made to the Agent at the office designated by the Agent from time to time in Dollars and in immediately available funds, without setoff, deduction, or counterclaim. Subject to the definition of "Interest Period" in Appendix A attached hereto, whenever any payment under this Agreement or any other Operative Agreements shall be stated to be due on a day that is not a Business Day, such payment may be made on the next succeeding Business Day, and such extension of time in such case shall be included in the computation of interest, Holder Yield and fees payable pursuant to the Operative Agreements, as applicable and as the case may be. 5.9. MAINTENANCE OF THE LESSEE AS A WHOLLY-OWNED ENTITY. From the Closing Date and thereafter until such time as all obligations of all Credit Parties under the Operative Agreements have been satisfied and performed in full, Guarantor shall retain the Lessee as a Wholly-Owned Entity. 5.10 LIABILITY OF CREDIT PARTIES LIMITED TO TRANSACTIONS CONTEMPLATED BY THE OPERATIVE AGREEMENTS. Notwithstanding the right under Section 2.1 or the Trust Agreement of the Owner Trustee to act as Owner Trustee in other transactions similar to the transactions contemplated by the Operative Agreements, the parties hereto acknowledge and agree that the Credit Parties shall not be liable for costs or expenses of the Trust or the Owner Trustee arising solely as a result of such other similar transactions entered into by the Owner Trustee, and that the Credit Parties shall only be liable for costs and expenses of the Trust and the Owner Trustee to the extent such costs and expenses are attributable to the transactions contemplated by the Operative Agreements. 5.11 PAYMENT OF EARLY TERMINATION AMOUNT. The Lessee hereby agrees to pay to the Owner Trustee on June 29, 2001 (the "Early Termination Date"), an amount (the "Early Termination Amount") equal to the product of ninety-seven percent (97%) times the sum of (a) all Loans then outstanding, together with any accrued but unpaid interest on such Loans, plus (b) all Holder Advances then outstanding, together with any accrued but unpaid Holder Yield on such Holder Advances, plus (c) any other 9 14 amounts payable by the Owner Trustee to the Agent, the Lenders or the Holders as of such date pursuant to the Operative Agreements; provided, the Lessee shall not be required to pay such Early Termination Amount if the Property Closing Date shall have occurred on or prior to the Early Termination Date and an amount equal to the sum of all Loans outstanding on such Property Closing Date, together with any accrued but unpaid interest on such Loans as of such Property Closing Date, plus all Holder Advances outstanding on such Property Closing Date, together with any accrued but unpaid Holder Yield on such Holder Advances as of such Property Closing Date, plus any other amounts payable by the Owner Trustee to the Agent, the Lenders or the Holders as of such Property Closing Date pursuant to the Operative Agreements, shall have been added to the Property Cost for the Property on such Property Closing Date. SECTION 6. REPRESENTATIONS AND WARRANTIES. 6.1. REPRESENTATIONS AND WARRANTIES OF THE BORROWER. The Trust Company in its individual capacity and as the Borrower, as indicated, represents and warrants to each of the other parties hereto as follows, provided, that the representations in the following paragraphs (h), (j) and (k) are made solely in its capacity as the Borrower: (a) It is a national banking association and is duly organized and validly existing and in good standing under the laws of the United States of America and has the power and authority to enter into and perform its obligations under the Trust Agreement and (assuming due authorization, execution and delivery of the Trust Agreement by the Holders) has the corporate and trust power and authority to act as the Owner Trustee and to enter into and perform the obligations under each of the other Operative Agreements to which the Trust Company or the Owner Trustee, as the case may be, is or will be a party and each other agreement, instrument and document to be executed and delivered by it on or before the Closing Date in connection with or as contemplated by each such Operative Agreement to which the Trust Company or the Owner Trustee, as the case may be, is or will be a party; (b) The execution, delivery and performance of each Operative Agreement to which it is or will be a party, either in its individual capacity or (assuming due authorization, execution and delivery of the Trust Agreement by the Holders) as the Owner Trustee, as the case may be, has been duly authorized by all necessary action on its part and neither the execution and delivery thereof, nor the consummation of the transactions contemplated thereby, nor compliance by it with any of the terms and provisions thereof (i) does or will require any approval or consent of any trustee or holders of any of its indebtedness or obligations, (ii) does or will contravene any Legal Requirement relating to its banking or trust powers, (iii) does or will contravene or result in any breach of or constitute any default under, or result in the creation of any Lien upon any of its property under, (A) its charter or by-laws, or (B) any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement or other agreement or instrument to which it is a party or by which it or its properties may be bound or affected, which contravention, breach, default or Lien under clause (B) 10 15 would materially and adversely affect its ability, in its individual capacity or as the Owner Trustee, to perform its obligations under the Operative Agreements to which it is a party or (iv) does or will require any Governmental Action by any Governmental Authority regulating its banking or trust powers; (c) The Trust Agreement and, assuming the Trust Agreement is the legal, valid and binding obligation of the Holders, each other Operative Agreement to which the Trust Company or the Owner Trustee, as the case may be, is or will be a party have been, or on or before the Closing Date will be, duly executed and delivered by the Trust Company or the Owner Trustee, as the case may be, and the Trust Agreement and each such other Operative Agreement to which the Trust Company or the Owner Trustee, as the case may be, is a party constitutes, or upon execution and delivery will constitute, a legal, valid and binding obligation enforceable against the Trust Company or the Owner Trustee, as the case may be, in accordance with the terms thereof; (d) There is no action or proceeding pending or, to its knowledge, threatened to which it is or will be a party, either in its individual capacity or as the Owner Trustee, before any Governmental Authority that, if adversely determined, would materially and adversely affect its ability, in its individual capacity or as the Owner Trustee, to perform its obligations under the Operative Agreements to which it is a party or would question the validity or enforceability of any of the Operative Agreements to which it is or will become a party; (e) It, either in its individual capacity or as the Owner Trustee, has not assigned or transferred any of its right, title or interest in or under the Lease, or its interest in the Property or any portion thereof, except in accordance with the Operative Agreements; (f) No Default or Event of Default under the Operative Agreements attributable to it has occurred and is continuing; (g) The Owner Trustee's principal place of business, chief executive office and office where the documents, accounts and records relating to the transactions contemplated by this Agreement and each other Operative Agreement are kept are located at 79 South Main Street, Third Floor, Salt Lake City, Utah 84111; (h) The Owner Trustee is not engaged principally in, and does not have as one (1) of its important activities, the business of extending credit for the purpose of purchasing or carrying any margin stock (within the meaning of Regulation U of the Board of Governors of the Federal Reserve System of the United States), and no part of the proceeds of the Loans or the Holder Advances will be used by it to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any such margin stock or for any purpose that violates, or is inconsistent with, the provisions of Regulations T, U, or X of the Board of Governors of the Federal Reserve System of the United States; 11 16 (i) The Owner Trustee is not an "investment company" or a company controlled by an "investment company" within the meaning of the Investment Company Act; (j) The Property is free and clear of all Lessor Liens attributable to the Owner Trustee, either in its individual capacity or as the Owner Trustee; and (k) The Owner Trustee, in its trust capacity, is not a party to any documents, instruments or agreements other than the Operative Agreements executed by the Owner Trustee, in its trust capacity. 6.2. REPRESENTATIONS AND WARRANTIES OF THE CREDIT PARTIES. Each Credit Party represents and warrants as of the Closing Date and the Property Closing Date (unless otherwise specified) to each of the other parties hereto that: (a) The Incorporated Representations and Warranties are true and correct (unless such relate solely to an earlier point in time) and the Lessee has delivered to the Agent the financial statements and other reports referred to in Article VIII of the Lessee Credit Agreement; (b) The execution and delivery by each Credit Party of this Agreement and the other applicable Operative Agreements as of such date and the performance by each Credit Party of its respective obligations under this Agreement and the other applicable Operative Agreements are within the corporate, partnership or limited liability company (as the case may be) powers of each Credit Party, have been duly authorized by all necessary corporate, partnership or limited liability company (as the case may be) action on the part of each Credit Party (including without limitation any necessary shareholder action), have been duly executed and delivered, have received all necessary governmental approval, and do not and will not (i) violate any Legal Requirement which is binding on any Credit Party or any of its Subsidiaries, (ii) contravene or conflict with, or result in a breach of, any provision of the Articles of Incorporation, By-Laws or other organizational documents of any Credit Party or any of its Subsidiaries or of any agreement, indenture, instrument or other document which is binding on any Credit Party or any of its Subsidiaries or (iii) result in, or require, the creation or imposition of any Lien (other than pursuant to the terms of the Operative Agreements) on any asset of any Credit Party or any of its Subsidiaries; (c) This Agreement and the other applicable Operative Agreements executed prior to and as of such date by any Credit Party constitute the legal, valid and binding obligation of such Credit Party, as applicable, enforceable against such Credit Party, as applicable, in accordance with their terms. Each Credit Party has executed the various Operative Agreements required to be executed by such Credit Party as of such date; (d) There are no material actions, suits or proceedings pending or, to our knowledge, threatened against any Credit Party in any court or before any Governmental 12 17 Authority (nor shall any order, judgment or decree have been issued or proposed to be issued by any Governmental Authority to set aside, restrain, enjoin or prevent the full performance of any Operative Agreement or any transaction contemplated thereby) that (i) concern the Property or any Credit Party's interest therein, (ii) question the validity or enforceability of any Operative Agreement or any transaction described in the Operative Agreements or (iii) shall have or could reasonably be expected to have a Material Adverse Effect; provided, for purposes of disclosure, the Credit Parties have described the litigation set forth on Exhibit J; (e) No Governmental Action by any Governmental Authority or other authorization, registration, consent, approval, waiver, notice or other action by, to or of any other Person pursuant to any Legal Requirement, contract, indenture, instrument or agreement or for any other reason is required to authorize or is required in connection with (i) the execution, delivery or performance of any Operative Agreement, (ii) the legality, validity, binding effect or enforceability of any Operative Agreement, (iii) the acquisition, ownership, completion, occupancy, operation, leasing or subleasing of the Property or (iv) any Advance, in each case, except those which have been obtained and are in full force and effect; (f) Upon the execution and delivery of the 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 such Property, subject only to the Permitted Liens, and (ii) no offset will exist with respect to any Rent or other sums payable under the Lease; (g) [Intentionally Reserved] (h) All information heretofore or contemporaneously herewith furnished by each Credit Party or any of its Subsidiaries to the Agent, the Owner Trustee, any Lender or any Holder for purposes of or in connection with this Agreement and the transactions contemplated hereby is, and all information hereafter furnished by or on behalf of each Credit Party or any of its Subsidiaries to the Agent, the Owner Trustee, any Lender or any Holder pursuant hereto or in connection herewith will be, true and accurate in every material respect on the date as of which such information is dated or certified, and such information, taken as a whole, does not and will not omit to state any material fact necessary to make such information, taken as a whole, not misleading; (i) The principal place of business, chief executive office and office of the Lessee where the documents, accounts and records relating to the transactions contemplated by this Agreement and each other Operative Agreement are kept are located at 11300 Ninth Street North, St. Petersburg, Florida 33716 and the states of formation and the chief executive offices of each other Credit Party are located at the places set forth in Schedule 6.2(i); (j) The representations and warranties of each Credit Party set forth in any of the Operative Agreements are true and correct in all material respects on and as of each 13 18 such date as if made on and as of such date. Each Credit Party is in all material respects in compliance with its obligations under the Operative Agreements and there exists no Lease Default or Lease Event of Default under any of the Operative Agreements which is continuing and which has not been cured within any cure period expressly granted under the terms of the applicable Operative Agreement or otherwise waived in accordance with the applicable Operative Agreement; (k) [Intentionally Reserved]; (l) As of the Property Closing Date only, the Lessor has good and marketable fee simple title to the Property, subject only to Permitted Liens; (m) As of the Property Closing Date only, no portion of the Property is located in an area identified as a special flood hazard area by the Federal Emergency Management Agency or other applicable agency, or if the such Property is located in an area identified as a special flood hazard area by the Federal Emergency Management Agency or other applicable agency, then flood insurance has been obtained for such Property in accordance with Section 14.2(b) of the Lease and in accordance with the National Flood Insurance Act of 1968, as amended; (n) As of the Property Closing Date only, the Property complies with all Insurance Requirements and all standards of Lessee with respect to similar properties owned by Lessee; (o) As of the Property Closing Date only, the Property complies with all Legal Requirements as of such date (including without limitation all zoning and land use laws and Environmental Laws), except to the extent that failure to comply therewith, individually or in the aggregate, shall not have and could not reasonably be expected to have a Material Adverse Effect; (p) As of the Property Closing Date only, all utility services and facilities necessary for the operation of the Improvements and the operation of the Equipment regarding the Property (including without limitation gas, electrical, water and sewage services and facilities) are available at the applicable Land; (q) [Intentionally Reserved]; (r) (i) The Security Documents create, as security for the Obligations (as such term is defined in the Security Agreement), valid and enforceable security interests in, and Liens on, all of the Collateral, in favor of the Agent, for the ratable benefit of the Lenders and the Holders, as their respective interests appear in the Operative Agreements, and such security interests and Liens are subject to no other Liens other than Liens that are expressly set forth as title exceptions on the title commitment issued under Section 5.3(g) with respect to the Property. Upon recordation of the Mortgage Instrument in the appropriate real estate recording office, the Lien created by the Mortgage Instrument in the real property 14 19 described therein shall be a perfected first priority mortgage Lien on such real property in favor of the Agent, for the ratable benefit of the Lenders and the Holders, as their respective interests appear in the Operative Agreements. To the extent that the security interests in the portion of the Collateral comprised of personal property can be perfected by filing in the filing offices in the state where the Property is located, upon filing of the Lender Financing Statements in such filing offices, the security interests created by the Security Agreement shall be perfected first priority security interests in such personal property in favor of the Agent, for the ratable benefit of the Lenders and the Holders, as their respective interests appear in the Operative Agreements; (ii) The Lease Agreement creates, as security for the obligations of the Lessee under the Lease Agreement, valid and enforceable security interests in, and Liens on, the Property leased thereunder, in favor of the Lessor, and such security interests and Liens are subject to no other Liens other than Liens that are expressly set forth as title exceptions on the title commitment issued under Section 5.3(g) with respect to the Property. Upon recordation of the memorandum of the Lease Agreement (or a short form lease) in the appropriate real estate recording office, the Lien created by the Lease Agreement in the real property described therein shall be a perfected first priority mortgage Lien on such real property in favor of the Agent, for the ratable benefit of the Lenders and the Holders, as their respective interests appear in the Operative Agreements. To the extent that the security interests in the portion of the Property comprised of personal property can be perfected by the filing in the filing offices in the state where the Property is located, a security interest created by the Lease Agreement shall be perfected first priority security interests in such personal property in favor of the Lessor, which rights pursuant to the Lessor Financing Statements are assigned to the Agent, for the ratable benefit of the Lenders and the Holders, as their respective interests appear in the Operative Agreements; and (s) As of the Property Closing Date only, each of the representations and warranties made in the Purchase Agreement by each of the parties thereto is true and correct in all material respects, and such representations and warranties are hereby incorporated herein by reference with the same effect as though set forth in their entirety herein, as qualified therein. SECTION 6B. GUARANTY. 6B.1. GUARANTY OF PAYMENT AND PERFORMANCE. Subject to Section 6B.7, the Guarantor hereby unconditionally guarantees to each Financing Party the prompt payment and performance of the Company Obligations in full when due (whether at stated maturity, as a mandatory prepayment, by acceleration or otherwise) or when such is otherwise to be performed; provided, notwithstanding the foregoing, the obligations of the Guarantor under this Section 6B shall not constitute a direct guaranty of the indebtedness of the Lessor evidenced by the Notes but rather a guaranty of the Company Obligations arising 15 20 under the Operative Agreements. This Section 6B is a guaranty of payment and performance and not of collection and is a continuing guaranty and shall apply to all Company Obligations whenever arising. All rights granted to the Financing Parties under this Section 6B shall be subject to the provisions of Section 8.2(h) and 8.6. 6B.2. GUARANTY OF PAYMENT AND PERFORMANCE. The Guarantor agrees that the obligations of the Guarantor hereunder are absolute and unconditional, irrespective of the value, genuineness, validity, regularity or enforceability of any of the Operative Agreements, or any other agreement or instrument referred to therein, or any substitution, release or exchange of any other guarantee of or security for any of the Company Obligations, and, to the fullest extent permitted by applicable law, irrespective of any other circumstance whatsoever which might otherwise constitute a legal or equitable discharge or defense of a surety, guarantor or co-obligor, it being the intent of this Section 6B.2 that the obligations of the Guarantor hereunder shall be absolute and unconditional under any and all circumstances. The Guarantor agrees that this Section 6B may be enforced by the Financing Parties without the necessity at any time of resorting to or exhausting any other security or collateral and without the necessity at any time of having recourse to the Notes, the Certificates or any other of the Operative Agreements or any collateral, if any, hereafter securing the Company Obligations or otherwise and the Guarantor hereby waives the right to require the Financing Parties to proceed against the Lessee or any other Person (including without limitation a co-guarantor) or to require the Financing Parties to pursue any other remedy or enforce any other right. The Guarantor further agrees that it hereby waives any and all right of subrogation, indemnity, reimbursement or contribution against the Lessee for amounts paid under this Section 6B until such time as the Loans, Holder Advances, accrued but unpaid interest, accrued but unpaid Holder Yield and all other amounts owing under the Operative Agreements have been paid in full. Without limiting the generality of the waiver provisions of this Section 6B, the Guarantor hereby waives any rights to require the Financing Parties to proceed against the Lessee or any co-guarantor or to require Lessor to pursue any other remedy or enforce any other right, including without limitation, any and all rights under N.C. Gen. Stat. 26-7 through 26-9. The Guarantor further agrees that nothing contained herein shall prevent the Financing Parties from suing on any Operative Agreement or foreclosing any security interest in or Lien on any collateral, if any, securing the Company Obligations or from exercising any other rights available to it under any Operative Agreement, or any other instrument of security, if any, and the exercise of any of the aforesaid rights and the completion of any foreclosure proceedings shall not constitute a discharge of the Guarantor's obligations hereunder; it being the purpose and intent of the Guarantor that its obligations hereunder shall be absolute, independent and unconditional under any and all circumstances; provided that any amounts due under this Section 6B which are paid to or for the benefit of any Financing Party shall reduce the Company Obligations by a corresponding amount (unless required to be rescinded at a later date). Neither the Guarantor's obligations under this Section 6B nor any remedy for the enforcement thereof shall be impaired, modified, changed or released in any manner whatsoever by an impairment, modification, change, release or limitation of the liability of the Lessee or by reason of the bankruptcy or insolvency of the Lessee. The Guarantor waives any and all notice of the creation, renewal, extension or accrual of any of the Company Obligations and notice of or proof of reliance by any Financing Party upon this Section 6B or acceptance of this Section 6B. The Company 16 21 Obligations shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon this Section 6B. All dealings between the Lessee and the Guarantor, on the one hand, and the Financing Parties, on the other hand, likewise shall be conclusively presumed to have been had or consummated in reliance upon this Section 6B. 6B.3. MODIFICATIONS. The Guarantor agrees that (a) all or any part of the security now or hereafter held for the Company Obligations, if any, may be exchanged, compromised or surrendered from time to time; (b) no Financing Party shall have any obligation to protect, perfect, secure or insure any such security interests, liens or encumbrances now or hereafter held, if any, for the Company Obligations or the properties subject thereto; (c) the time or place of payment of the Company Obligations may be changed or extended, in whole or in part, (d) the Lessee and any other party liable for payment under the Operative Agreements may be granted indulgences generally; (e) any of the provisions of the Notes, the Certificates or any of the other Operative Agreements may be modified, amended or waived; (f) any party (including any co-guarantor) liable for the payment thereof may be granted indulgences or be released; and (g) any deposit balance for the credit of the Lessee or any other party liable for the payment of the Company Obligations or liable upon any security therefor may be released, in whole or in part, at, before or after the stated, extended or accelerated maturity of the Company Obligations, all without notice to or further assent by the Guarantor, which shall remain bound thereon, notwithstanding any such exchange, compromise, surrender, extension, renewal, acceleration, modification, indulgence or release. 6B.4. WAIVER OF RIGHTS. The Guarantor expressly waives to the fullest extent permitted by applicable law: (a) notice of acceptance of this Section 6B by any Financing Party and of all extensions of credit or other Advances to the Lessee by the Lenders pursuant to the terms of the Operative Agreements; (b) presentment and demand for payment or performance of any of the Company Obligations; (c) protest and notice of dishonor or of default with respect to the Company Obligations or with respect to any security therefor; (d) notice of any Financing Party obtaining, amending, substituting for, releasing, waiving or modifying any security interest, lien or encumbrance, if any, hereafter securing the Company Obligations, or any Financing Party's subordinating, compromising, discharging or releasing such security interests, liens or encumbrances, if any; and (e) all other notices to which the Guarantor might otherwise be entitled. Notwithstanding anything to the contrary herein, (i) the Guarantor's payments hereunder shall be due five (5) Business Days after written demand by the Agent for such payment (unless the Company Obligations are automatically accelerated pursuant to the applicable provisions of the Operative Agreements in which case the Guarantor's payments shall be automatically due) and (ii) any modification of the Operative Agreements which has the effect of increasing the Company Obligations shall not be enforceable against the Guarantor unless the Guarantor executes the document evidencing such modification or otherwise reaffirms its guaranty in writing in connection with such modification. 17 22 6B.5. REINSTATEMENT. The obligations of the Guarantor under this Section 6B shall be automatically reinstated if and to the extent that for any reason any payment by or on behalf of any Person in respect of the Company Obligations is rescinded or must be otherwise restored by any holder of any of the Company Obligations, whether as a result of any proceedings in bankruptcy or reorganization or otherwise, and the Guarantor agrees that it will indemnify each Financing Party on demand for all reasonable costs and expenses (including, without limitation, reasonable fees of counsel) incurred by any Financing Party in connection with such rescission or restoration, including without limitation any such costs and expense incurred in defending against any claim alleging that such payment constituted a preference, fraudulent transfer or similar payment under any bankruptcy, insolvency or similar law. 6B.6. REMEDIES. The Guarantor agrees that, as between the Guarantor, on the one hand, and each Financing Party, on the other hand, the Company Obligations may be declared to be forthwith due and payable as provided in the applicable provisions of the Operative Agreements (and shall be deemed to have become automatically due and payable in the circumstances provided therein) notwithstanding any stay, injunction or other prohibition preventing such declaration (or preventing such Company Obligations from becoming automatically due and payable) as against any other Person and that, in the event of such declaration (or such Company Obligations being deemed to have become automatically due and payable), such Company Obligations (whether or not due and payable by any other Person) shall forthwith become due and payable by the Guarantor in accordance with the applicable provisions of the Operative Agreements. 6B.7. LIMITATION OF GUARANTY. Notwithstanding any provision to the contrary contained herein or in any of the other Operative Agreements, to the extent the obligations of the Guarantor shall be adjudicated to be invalid or unenforceable for any reason (including without limitation because of any applicable state or federal law relating to fraudulent conveyances or transfers) then the obligations of the Guarantor hereunder shall be limited to the maximum amount that is permissible under applicable law (whether federal or state and including without limitation the Bankruptcy Code). Subject to Section 6B.5, upon the satisfaction of the Company Obligations in full, regardless of the source of payment, the Guarantor's obligations hereunder shall be deemed satisfied, discharged and terminated other than indemnifications set forth herein that expressly survive. 6B.8. PAYMENT OF AMOUNTS TO THE AGENT. Each Financing Party hereby instructs the Guarantor, and the Guarantor hereby acknowledges and agrees, that until such time as the Loans and the Holder Advances are paid in full and the Liens evidenced by the Security Agreement and the Mortgage Instruments have been released any and all Rent (excluding Excepted Payments which shall be payable to each Holder 18 23 or other Person as appropriate) and any and all other amounts of any kind or type under any of the Operative Agreements due and owing or payable to any Person shall instead be paid directly to the Agent (excluding Excepted Payments which shall be payable to each Holder or other Person as appropriate) or as the Agent may direct from time to time for allocation and distribution in accordance with the procedures set forth in Section 8.7 hereof. SECTION 7. PAYMENT OF CERTAIN EXPENSES. 7.1. TRANSACTION EXPENSES. (a) The Lessor agrees on the Closing Date and the Property Closing Date, as the case may be, to pay, or cause to be paid, all Transaction Expenses arising from the transactions consummated on the Closing Date and the Property Closing Date, as the case may be, including without limitation 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, the initial fees and expenses of the Owner Trustee due and payable on the Closing Date and the Property Closing Date, as the case may be, all fees, taxes and expenses for the recording, registration and filing of documents and all other reasonable fees, expenses and disbursements incurred in connection with the Closing Date and the Property Closing Date, as the case may be; provided, however, the Lessor shall pay such amounts described in this Section 7.1 only from the proceeds of Loans and Holder Advances received by the Owner Trustee. The Lessee agrees to timely pay all amounts referenced to in this Section 7.1 to the extent not paid by the Owner Trustee. 7.2. BROKERS' FEES. The Lessee agrees to pay or cause to be paid any and all brokers' fees, if any, including without limitation any interest and penalties thereon, which are payable in connection with the transactions contemplated by this Agreement and the other Operative Agreements. 7.3. CERTAIN FEES AND EXPENSES. The Lessee agrees to pay or cause to be paid (a) the initial and annual Owner Trustee's fee and all reasonable expenses of the Owner Trustee and any co-trustees (including without limitation reasonable counsel fees and expenses) or any successor owner trustee and/or co-trustee, for acting as the owner trustee under the Trust Agreement (but only to the extent such fees and expenses are attributable to the transactions contemplated by this Agreement and the other Operative Agreements), (b) all reasonable costs and expenses incurred by the Credit Parties, the Agent, the Lenders, the Holders or the Lessor in entering into any Lease Supplement and any future amendments, modifications, supplements, restatements and/or replacements with respect to any of the Operative Agreements, whether or not such Lease Supplement, amendments, modifications, supplements, restatements and/or replacements are ultimately entered into, or giving or withholding of waivers of consents hereto or thereto, which have been requested by any Credit Party, the Agent, the Lenders, the Holders or the Lessor, (c) all reasonable costs and expenses incurred by the Credit Parties, the Agent, the Lenders, the Holders 19 24 or the Lessor in connection with any exercise of remedies under any Operative Agreement or the purchase of the Property by the Lessee or any third party and (d) all reasonable costs and expenses incurred by the Lessee, the Agent, the Lenders, the Holders or the Lessor in connection with any transfer or conveyance of the Property, whether or not such transfer or conveyance is ultimately accomplished. 7.4. UNUSED FEES. During the Commitment Period, the Lessor agrees to pay to the Agent for the account of (a) the Lenders, respectively, an unused fee (the "Lender Unused Fee") equal to the product of the average daily Available Commitment of each Lender multiplied by a rate of one-tenth of one percent (0.10%) per annum and (b) the Holders, respectively, an unused fee (the "Holder Unused Fee") equal to the product of the average daily Available Holder Commitment of each Holder multiplied by a rate of one-tenth of one percent (0.10%) per annum; provided, however, the Lessor shall pay such amounts described in this Section 7.4 only from the proceeds of Loans and Holder Advances received by the Owner Trustee. Such Unused Fees shall be payable quarterly in arrears on each Unused Fee Payment Date. If all or a portion of any such Unused Fee shall not be paid when due, such overdue amount shall bear interest, payable by the Lessee on demand, at a rate per annum equal to the ABR (or in the case of Holder Yield, the ABR plus the Applicable Percentage for Eurodollar Holder Advances) plus two percent (2%) from the date of such non-payment until such amount is paid in full (as well as before judgment). The Lessee agrees to timely pay all amounts referenced in this Section 7.4 to the extent not paid by the Owner Trustee. SECTION 8. OTHER COVENANTS AND AGREEMENTS. 8.1. COOPERATION WITH THE LESSEE. The Holders, the Lenders, the Lessor (at the direction of the Majority Secured Parties) and the Agent shall, at the expense of and to the extent reasonably requested by the Lessee (but without assuming additional liabilities on account thereof and only to the extent such is acceptable to the Holders, the Lenders, the Lessor (at the direction of the Majority Secured Parties) and the Agent in their reasonable discretion), cooperate with the Lessee in connection with the Lessee satisfying its covenant obligations contained in the Operative Agreements including without limitation at any time and from time to time, promptly and duly executing and delivering any and all such further instruments, documents and financing statements (and continuation statements related thereto). 8.2. COVENANTS OF THE OWNER TRUSTEE, THE TRUST COMPANY, THE LESSOR AND THE HOLDERS. Each of the Owner Trustee, the Trust Company, the Lessor and the Holders hereby agrees that so long as this Agreement is in effect: (a) None of the Owner Trustee, the Lessor, the Trust Company or any Holder will create or permit to exist at any time, and each of them will, at its own cost and 20 25 expense, promptly take such action as may be necessary duly to discharge, or to cause to be discharged, all Lessor Liens on the Property attributable to it; provided, however, that the Owner Trustee, the Lessor, the Trust Company and the Holders shall not be required to so discharge any such Lessor Lien while the same is being contested in good faith by appropriate proceedings diligently prosecuted so long as such proceedings shall not materially and adversely affect the rights of the Lessee under the Lease and the other Operative Agreements or involve any material danger of impairment of the Liens of the Security Documents or of the sale, forfeiture or loss of, and shall not interfere with the use or disposition of, the Property or title thereto or any interest therein or the payment of Rent; (b) Without prejudice to any right under the Trust Agreement of the Owner Trustee to resign (subject to the requirement set forth in the Trust Agreement that such resignation shall not be effective until a successor shall have agreed to accept such appointment), or the Holders' rights under the Trust Agreement to remove the institution acting as the Owner Trustee (after consent to such removal by the Agent as provided in the Trust Agreement), each of the Owner Trustee and the Holders hereby agrees with the Lessee and the Agent (i) not to terminate or revoke the trust created by the Trust Agreement except as permitted by Article VIII of the Trust Agreement, (ii) not to amend, supplement, terminate or revoke or otherwise modify any provision of the Trust Agreement in such a manner as to adversely affect the rights of any such party without the prior written consent of such party and (iii) to comply with all of the terms of the Trust Agreement, the nonperformance of which would adversely affect such party; (c) The Owner Trustee or any successor may resign or be removed by the Holders as the Owner Trustee, a successor Owner Trustee may be appointed and a corporation may become the Owner Trustee under the Trust Agreement, only in accordance with the provisions of Article IX of the Trust Agreement and, with respect to such appointment, with the consent of the Lessee (so long as there shall be no Lease Event of Default that shall have occurred and be continuing), which consent shall not be unreasonably withheld or delayed; (d) The Owner Trustee, in its capacity as the Owner Trustee under the Trust Agreement, and not in its individual capacity, shall not contract for, create, incur or assume any Indebtedness, or enter into any business or other activity or enter into any contracts or agreements, other than pursuant to or under the Operative Agreements; (e) The Holders will not instruct the Owner Trustee to take any action in violation of the terms of any Operative Agreement; (f) Neither any Holder nor the Owner Trustee shall (i) commence any case, proceeding or other action with respect to the Owner Trustee under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization, arrangement, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (ii) seek appointment of a receiver, trustee, custodian or other similar official with respect to the Owner Trustee or for all or any 21 26 substantial benefit of the creditors of the Owner Trustee; and neither any Holder nor the Owner Trustee shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in this paragraph; (g) The Owner Trustee shall give prompt notice to the Lessee, the Holders and the Agent if the Owner Trustee's principal place of business or chief executive office, or the office where the records concerning the accounts or contract rights relating to the 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; and (h) The Owner Trustee shall take or refrain from taking such actions and grant or refrain from granting such approvals with respect to the Operative Agreements and/or relating to the Property in each case as directed in writing by the Agent (until such time as the Loans are paid in full, and then by the Majority Holders) or, in connection with Sections 8.5 and 9.2 hereof, the Lessee; provided, however, that notwithstanding the foregoing provisions of this subparagraph (h) the Owner Trustee, the Agent, the Lenders and the Holders each acknowledge, covenant and agree that neither the Owner Trustee nor the Agent shall act or refrain from acting, regarding each Unanimous Vote Matter, until such party has received the approval of each Lender and each Holder affected by such matter. 8.3. CREDIT PARTY COVENANTS, CONSENT AND ACKNOWLEDGMENT. (a) Each Credit Party acknowledges and agrees that the Owner Trustee, pursuant to the terms and conditions of the Security Agreement and the Mortgage Instruments, shall create Liens respecting the various personal property, fixtures and real property described therein in favor of the Agent. Each Credit Party hereby irrevocably consents to the creation, perfection and maintenance of such Liens. Each Credit Party shall, to the extent reasonably requested by any of the other parties hereto, cooperate with the other parties in connection with their covenants herein or in the other Operative Agreements and shall from time to time duly execute and deliver any and all such future instruments, documents and financing statements (and continuation statements related thereto) as any other party hereto may reasonably request. (b) The Lessor hereby instructs each Credit Party, and each Credit Party hereby acknowledges and agrees, that until such time as the Loans and the Holder Advances are paid in full and the Liens evidenced by the Security Agreement and the Mortgage Instruments have been released (i) any and all Rent (excluding Excepted Payments which shall be payable to each Holder or other Person as appropriate) and any and all other amounts of any kind or type under any of the Operative Agreements due and owing or payable to any Person shall instead be paid directly to the Agent (excluding Excepted Payments which shall be payable to each Holder or other Person as appropriate) or as the Agent may direct from time to time for allocation and distribution in accordance with the procedures set forth in Section 8.7 hereof, (ii) all rights of the Lessor under the Lease shall be exercised by the Agent and (iii) each Credit Party shall cause all notices, certificates, financial statements, communications and other information which are 22 27 delivered, or are required to be delivered, to the Lessor, to also be delivered at the same time to the Agent. (c) No Credit Party shall consent to or permit any amendment, supplement or other modification of the terms or provisions of any Operative Agreement except in accordance with Section 12.4 of this Agreement. (d) The Lessee hereby covenants and agrees to cause an Appraisal or reappraisal (in form and substance satisfactory to the Agent and from an appraiser selected by the Agent) to be issued respecting the Property as requested by the Agent from time to time (i) at each and every time as such shall be required to satisfy any regulatory requirements imposed on the Agent, the Lessor, the Trust Company, any Lender and/or any Holder and (ii) after the occurrence of an Event of Default. (e) Each Credit Party hereby covenants and agrees that, except for amounts payable as Basic Rent, any and all payment obligations owing from time to time under the Operative Agreements by any Person to the Agent, the Lessor, any Lender, any Holder or any other Person shall (without further action) be deemed to be Supplemental Rent obligations payable by the Lessee and guaranteed by the other Credit Parties. Without limitation, such obligations of the Credit Parties shall include the Supplement Rent obligations pursuant to Section 3.3 of the Lease, arrangement fees, administrative fees, participation fees, commitment fees, prepayment penalties, breakage costs, indemnities, property taxes, insurance costs, trustee fees and transaction expenses incurred by the parties hereto in connection with the transactions contemplated by the Operative Agreements. (f) At any time the Lessor or the Agent is entitled under the Operative Agreements to possession of a Property or any component thereof, the Lessee hereby covenants and agrees, at its own cost and expense, to assemble and make the same available to the Agent (on behalf of the Lessor). (g) The Lessee hereby covenants and agrees that it shall give prompt notice to the Agent if the Lessee's principal place of business or chief executive office, or the office where the records concerning the accounts or contract rights relating to the Property are kept, shall cease to be located at 11300 Ninth Street North, St. Petersburg, Florida 33716 or if it shall change its name. (h) [Intentionally Reserved] (i) Each Credit Party shall promptly notify the Agent, or cause the Agent to be promptly notified, upon such Credit Party gaining knowledge of the occurrence of any Default or Event of Default which is continuing at such time. In any event, such notice shall be provided to the Agent within ten (10) days of when such Credit Party gains such knowledge. 23 28 (j) Until all of the obligations under the Operative Agreements have been finally and indefeasibly paid and satisfied in full unless consent has been obtained from the Majority Secured Parties, each Credit Party will: (i) except as permitted by the express provisions of the Lessee Credit Agreement, preserve and maintain its separate legal existence and all rights, franchises, licenses and privileges necessary to the conduct of its business, and qualify and remain qualified as a foreign corporation (or partnership, limited liability company or other such similar entity, as the case may be) and authorized to do business in each jurisdiction in which the failure to so qualify would have a Material Adverse Effect; (ii) pay and perform all obligations of Credit Parties under the Operative Agreements and pay and perform (A) all taxes, assessments and other governmental charges that may be levied or assessed upon it or any of its property, and (B) all other indebtedness, obligations and liabilities in accordance with customary trade practices, which if not paid would have a Material Adverse Effect; provided that any Credit Party may contest any item described in this Section 8.3(n)(ii) in good faith so long as adequate reserves are maintained with respect thereto in accordance with GAAP; (iii) to the extent failure to do so would have a Material Adverse Effect, observe and remain in compliance with all applicable Laws and maintain in full force and effect all Governmental Actions, in each case applicable to the conduct of its business; keep in full force and effect all licenses, certifications or accreditations necessary for any Facility to carry on its business; and not permit the termination of any insurance reimbursement program available to any Facility; and (iv) provided that the Agent, the Lenders and the Holders use reasonable efforts to minimize disruption to the business of the Lessee, permit representatives of the Agent or any Lender or Holder, from time to time, to visit and inspect its properties; inspect, audit and make extracts from its books, records and files, including without limitation management letters prepared by independent accountants; and discuss with its principal officers, and its independent accountants, its business, assets, liabilities, financial condition, results of operations and business prospects. (k) The Lessee shall, as soon as practical and in any event within 50 days after the end of each fiscal quarter of the Guarantor (except for the last fiscal quarter of the Guarantor's fiscal year, in which case as soon as practical and in any event within 95 days after the end of such fiscal year), furnish to the Agent a written notice setting forth the Guarantor's calculation, in reasonable detail, of the Consolidated Leverage Ratio for the immediately preceding fiscal quarter of the Guarantor. 24 29 (l) Lessee shall take all action necessary to assure that Lessee's computer based systems are able to operate and effectively process data including dates on and after January 1, 2000. At the request of the Agent, Lessee shall provide Agent assurance acceptable to Agent of Lessee's Year 2000 compatibility. 8.4. SHARING OF CERTAIN PAYMENTS. Except for Excepted Payments, the parties hereto acknowledge and agree that all payments due and owing by any Credit Party to the Lessor under the Lease or any of the other Operative Agreements shall be made by such Credit Party directly to the Agent as more particularly provided in Section 8.3 hereof. The Lessor, the Holders, the Agent, the Lenders and the Credit Parties acknowledge the terms of Section 8.7 of this Agreement regarding the allocation of payments and other amounts made or received from time to time under the Operative Agreements and agree, that all such payments and amounts are to be allocated as provided in Section 8.7 of this Agreement. 8.5. GRANT OF EASEMENTS, ETC. The Agent, the Lenders and the Holders hereby agree that, so long as no Event of Default shall have occurred and be continuing, the Owner Trustee shall, from time to time at the request of the Lessee (and with the prior consent of the Agent), in connection with the transactions contemplated by the Lease or the other Operative Agreements, (i) grant easements and other rights in the nature of easements with respect to the Property, (ii) release existing easements or other rights in the nature of easements which are for the benefit of the 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, testing or operation of the Property, including without limitation reciprocal easement agreements, operating agreements, development agreements, plats, replats or subdivision documents; provided, that each of the agreements referred to in this Section 8.5 shall be of the type normally executed by the Lessee in the ordinary course of the Lessee's business and shall be on commercially reasonable terms so as not to diminish the value of the Property in any material respect. 8.6. APPOINTMENT BY THE AGENT, THE LENDERS, THE HOLDERS AND THE LESSOR. The Holders hereby appoint the Agent to act as collateral agent for the Holders in connection with the Lien granted by the Security Documents to secure the Holder Amount. The Lenders and the Holders acknowledge and agree and direct that the rights and remedies of the beneficiaries of the Lien of the Security Documents shall be exercised by the Agent on behalf of the Lenders and the Holders as directed from time to time by the Majority Secured Parties or, pursuant to Sections 8.2(h) and 12.4, all of the Lenders and the Holders, as the case may be; provided, in all cases, the Agent shall allocate payments and other amounts received in accordance with Section 8.7. The Agent is further appointed to provide notices under the Operative Agreements on behalf of the Owner Trustee (as determined by the Agent, in its reasonable discretion), to receive notices under the Operative Agreements on behalf of the Owner Trustee and (subject to Sections 8.5 and 9.2) to take such other action under the Operative 25 30 Agreements on behalf of the Owner Trustee as the Agent shall determine in its reasonable discretion from time to time. The Agent hereby accepts such appointments. For purposes hereof, the provisions of Section 7 of the Credit Agreement, together with such other terms and provisions of the Credit Agreement and the other Operative Agreements as required for the full interpretation and operation of Section 7 of the Credit Agreement are hereby incorporated by reference as if restated herein for the mutual benefit of the Agent and each Holder as if each Holder were a Lender thereunder. Outstanding Holder Advances and outstanding Loans shall each be taken into account for purposes of determining Majority Secured Parties. Further, the Agent shall be entitled to take such action on behalf of the Owner Trustee as is delegated to the Agent under any Operative Agreement (whether express or implied) as may be reasonably incidental thereto. The parties hereto hereby agree to the provisions contained in this Section 8.6. Any appointment of a successor agent under Section 7.9 of the Credit Agreement shall also be effective as an appointment of a successor agent for purposes of this Section 8.6. 8.7. COLLECTION AND ALLOCATION OF PAYMENTS AND OTHER AMOUNTS. (a) Each Credit Party has agreed pursuant to Section 5.8 and otherwise in accordance with the terms of this Agreement to pay to (i) the Agent any and all Rent (excluding Excepted Payments) and any and all other amounts of any kind or type under any of the Operative Agreements due and owing or payable to any Person and (ii) each Person as appropriate the Excepted Payments. Promptly after receipt, the Agent shall apply and allocate, in accordance with the terms of this Section 8.7, such amounts received from any Credit Party and all other payments, receipts and other consideration of any kind whatsoever received by the Agent pursuant to the Security Agreement or otherwise received by the Agent, the Holders or any of the Lenders in connection with the Collateral, the Security Documents or any of the other Operative Agreements. Ratable distributions among the Lenders and the Holders under this Section 8.7 shall be made based on (in the case of the Lenders) the ratio of the outstanding Loans to the Property Cost and (in the case of the Holders) the ratio of the outstanding Holder Advances to the Property Cost. Ratable distributions among the Tranche A Lenders under this Section 8.7 shall be made based on the ratio of the individual Tranche A Lender's Commitment for Tranche A Loans to the aggregate of all the Tranche A Lenders' Commitments for Tranche A Loans. Ratable distributions among the Tranche B Lenders under this Section 8.7 shall be made based on the ratio of the individual Tranche B Lender's Commitment for Tranche B Loans to the aggregate of all the Tranche B Lenders' Commitments for Tranche B Loans. Ratable distributions among the Lenders (in situations where the Tranche A Lenders are not differentiated from the Tranche B Lenders) shall be made based on the ratio of the individual Lender's Commitment to the aggregate of all the Lenders' Commitments. Ratable distributions among the Holders under this Section 8.7 shall be based on the ratio of the individual Holder's Holder Commitment to the aggregate of all the Holders' Holder Commitments. (b) Payments and other amounts received by the Agent from time to time in accordance with the terms of subparagraph (a) shall be applied and allocated as follows (subject in all cases to Section 8.7(c)): 26 31 (i) Any such payment or amount identified as or deemed to be Basic Rent shall be applied and allocated by the Agent first, ratably to the Lenders and the Holders for application and allocation to the payment of interest on the Loans and thereafter the principal of the Loans which is due and payable on such date and to the payment of accrued Holder Yield with respect to the Holder Advances and thereafter the portion of the Holder Advances which is due on such date; and second, if no Default or Event of Default is in effect, any excess shall be paid to such Person or Persons as the Lessee may designate; provided, that if a Default or Event of Default is in effect, such excess (if any) shall instead be held by the Agent until the earlier of (I) the first date thereafter on which no Default or Event of Default shall be in effect (in which case such payments or returns shall then be made to such other Person or Persons as the Lessee may designate) and (II) the Maturity Date or the Expiration Date, as the case may be (or, if earlier, the date of any Acceleration), in which case such amounts shall be applied and allocated in the manner contemplated by Section 8.7(b)(iv). (ii) If on any date the Agent or the Lessor shall receive any amount in respect of (A) any Casualty or Condemnation pursuant to Sections 15.1(a) or 15.1(g) of the Lease (excluding any payments in respect thereof which are payable to the Lessee in accordance with the Lease), or (B) the Termination Value in connection with the delivery of a Termination Notice pursuant to Article XVI of the Lease, or (C) the Termination Value in connection with the exercise of the Purchase Option under Section 20.1 of the Lease or the exercise of the option of the Lessor to transfer the Property to the Lessee pursuant to Section 20.3 of the Lease, then in each case, the Lessor shall be required to pay such amount received (1) if no Acceleration has occurred, to prepay the principal balance of the Loans and the Holder Advances, such amount to be distributed first to the Lenders and thereafter to the Holders or (2) if an Acceleration has occurred, to apply and allocate the proceeds respecting Sections 8.7(b)(ii)(A) through 8.7(b)(ii)(C) in accordance with Section 8.7(b)(iii) hereof. (iii) An amount equal to any payment identified as proceeds of the sale or other disposition (or lease upon the exercise of remedies) of the Property or any portion thereof, whether pursuant to Article XXII of the Lease or the exercise of remedies under the Security Documents or otherwise, the execution of remedies set forth in the Lease and any payment in respect of excess wear and tear pursuant to Section 22.3 of the Lease shall be applied and allocated by the Agent first, ratably to the payment of the principal and interest of the Tranche B Loans then outstanding, second, to the extent such amount exceeds the maximum amount to be returned pursuant to the foregoing provisions of this paragraph (iii), ratably to the payment of the principal and interest of the Tranche A Loans then outstanding, third, to any and all other amounts owing under the Operative Agreements to the Lenders under the Tranche B Loans, fourth, to any and all other amounts owing under the Operative Agreements to the Lenders under the Tranche A Loans, fifth, ratably to the payment to the Holders of the outstanding principal balance of all Holder Advances plus all outstanding Holder Yield with 27 32 respect to such outstanding Holder Advances, sixth, to any and all other amounts owing under the Operative Agreements to the Holders, and seventh, to the extent moneys remain after application and allocation pursuant to clauses first through sixth above, to the Owner Trustee (on behalf of the Lessor) for application and allocation to any and all other amounts owing to the Holders, the Owner Trustee or the Lessor and as the Holders shall determine; provided, where no Event of Default shall exist and be continuing and a prepayment is made for any reason with respect to less than the full amount of the outstanding principal amount of the Loans and the outstanding Holder Advances, the proceeds shall be applied and allocated ratably to the Lenders and to the Holders. (iv) An amount equal to (A) any such payment identified as a payment pursuant to Section 22.1(b) of the Lease (or otherwise) of the Maximum Residual Guarantee Amount (and any such lesser amount as may be required by Section 22.1(b) of the Lease) in respect of the Property and (B) any other amount payable upon any exercise of remedies after the occurrence of an Event of Default not covered by Sections 8.7(b)(i) or 8.7(b)(iii) above (including without limitation any amount received in connection with an Acceleration which does not represent proceeds from the sale or liquidation of the Property), and (C) any other amount payable by any Guarantor pursuant to Section 6B shall be applied and allocated by the Agent first, ratably, to the payment of the principal and interest balance of Tranche A Loans then outstanding, second, ratably to the payment of the principal and interest balance of the Tranche B Loans then outstanding, third, ratably to the payment of the principal balance of all Holder Advances plus all outstanding Holder Yield with respect to such outstanding Holder Advances, fourth, to the payment of any other amounts owing to the Lenders hereunder or under any of the other Operative Agreement, and fifth, to the extent moneys remain after application and allocation pursuant to clauses first through fourth above, to the Owner Trustee for application and allocation to Holder Advances and Holder Yield and any other amounts owing to the Holders, the Owner Trustee as the Holders shall determine. (v) An amount equal to any such payment identified as Supplemental Rent shall be applied and allocated by the Agent to the payment of any amounts then owing to the Agent, the Lenders, the Holders and the other parties to the Operative Agreements (or any of them) (other than any such amounts payable pursuant to the preceding provisions of this Section 8.7(b)) as shall be determined by the Agent in its reasonable discretion; provided, however, that Supplemental Rent received upon the exercise of remedies after the occurrence and continuance of an Event of Default in lieu of or in substitution of the Maximum Residual Guarantee Amount or as a partial payment thereon shall be applied and allocated as set forth in Section 8.7(b)(iv). (vi) The Agent in its reasonable judgment shall identify the nature of each payment or amount received by the Agent and apply and allocate each such amount in the manner specified above. 28 33 (c) Upon the payment in full of the Loans, the Holder Advances and all other amounts then due and owing by the Owner Trustee hereunder or under any Credit Document and the payment in full of all other amounts then due and owing to the Lenders, the Holders, the Agent, the Owner Trustee and the other Financing Parties pursuant to the Operative Agreements, any moneys remaining with the Agent shall be returned to the Lessee. In the event of an Acceleration it is agreed that, prior to the application and allocation of amounts received by the Agent in the order described in Section 8.7(b) above or any distribution of money to the Lessee, any such amounts shall first be applied and allocated to the payment of (i) any and all sums advanced by the Agent in order to preserve the Collateral or to preserve its Lien thereon, (ii) the expenses of retaking, holding, preparing for sale or lease, selling or otherwise disposing or realizing on the Collateral, or of any exercise by the Agent of its rights under the Security Documents, together with reasonable attorneys' fees and expenses and court costs and (iii) any and all other amounts reasonably owed to the Agent under or in connection with the transactions contemplated by the Operative Agreements (including without limitation any accrued and unpaid administration fees). 8.8. RELEASE OF PROPERTY, ETC. If the Lessee shall at any time purchase the Property pursuant to the Lease, or if the Property shall be sold in accordance with Article XXII of the Lease, then, upon satisfaction by the Owner Trustee of its obligation to prepay the Loans, Holder Advances and all other amounts owing to the Lenders and the Holders under the Operative Agreements, the Agent is hereby authorized and directed to release such Property from the Liens created by the Security Documents to the extent of its interest therein. In addition, upon payment in full of the Loans, the Holder Advances and all other amounts owing by the Owner Trustee and the Lessee hereunder or under any other Operative Agreement the Agent is hereby authorized and directed to release all of the Property from the Liens created by the Security Documents to the extent of its interest therein. Upon request of the Owner Trustee following any such release, the Agent shall, at the sole cost and expense of the Lessee, execute and deliver to the Owner Trustee and the Lessee such documents as the Owner Trustee or the Lessee shall reasonably request to evidence such release. SECTION 9. CREDIT AGREEMENT AND TRUST AGREEMENT. 9.1. THE LESSEE'S CREDIT AGREEMENT RIGHTS. Notwithstanding anything to the contrary contained in the Credit Agreement, the Agent, the Lenders, the Holders, the Credit Parties and the Owner Trustee hereby agree that, prior to the occurrence and continuation of any Default or Event of Default, the Lessee shall have the following rights: (a) the right to terminate or reduce the Commitments pursuant to Section 2.5(a) of the Credit Agreement; 29 34 (b) the right to exercise the conversion and continuation options pursuant to Section 2.7 of the Credit Agreement; (c) the right to receive any notice and any certificate, in each case issued pursuant to Section 2.8(a) of the Credit Agreement; (d) the right to replace any Lender pursuant to Section 2.8(b) of the Credit Agreement; (e) the right to approve any successor agent pursuant to Section 7.9 of the Credit Agreement; and (f) 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. 9.2. THE LESSEE'S TRUST AGREEMENT RIGHTS. Notwithstanding anything to the contrary contained in the Trust Agreement, the Credit Parties, the Owner Trustee and the Holders hereby agree that, prior to the occurrence and continuation of any Default or Event of Default, the Lessee shall have the following rights: (a) the right to exercise the conversion and continuation options pursuant to Section 3.8 of the Trust Agreement; (b) the right to receive any notice and any certificate, in each case issued pursuant to Section 3.9(a) of the Trust Agreement; (c) the right to replace any Holder pursuant to Section 3.9(b) of the Trust Agreement; (d) the right to exercise the removal options contained in Section 9.1 of the Trust Agreement; provided, however, that no removal of the Owner Trustee and appointment of a successor Owner Trustee by the Holders 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. SECTION 10. TRANSFER OF INTEREST. 10.1. RESTRICTIONS ON TRANSFER. Each Lender may participate, assign or transfer all or a portion of its interest hereunder and under the other Operative Agreements in accordance with Sections 9.7 and 9.8 of the Credit Agreement; provided, each participant, assignee or transferee must obtain the same ratable interest in Tranche A Loans and Tranche B Loans (and to the extent the selling Lender is also a Holder (or an Affiliate of a Holder), each such participant, assignor or transferee must also obtain the same ratable interest in and to the Holder Advances, and the Trust Estate); provided 30 35 further, that each Lender that participates, assigns or transfers all or a portion of its interest hereunder and under the other Operative Agreements shall deliver to the Agent a copy of each Assignment and Acceptance (as referenced in Section 9.8 of the Credit Agreement) for purposes of maintaining the Register. The Holders may, directly or indirectly, assign, convey or otherwise transfer any of their right, title or interest in or to the Trust Estate or the Trust Agreement with the prior written consent of the Agent and the Lessee (which consent shall not be unreasonably withheld or delayed) and in accordance with the terms of Section 11.8(b) of the Trust Agreement; provided, to the extent the selling Holder is also a Lender (or an Affiliate of a Lender), each such assignee, receiver of a conveyance or other transferee must also obtain the same ratable interest in and to the Tranche A Loans and Tranche B Loans. The Owner Trustee may, subject to the rights of the Lessee under the Lease and the other Operative Agreements and to the Lien of the applicable Security Documents but only with the prior written consent of the Agent (which consent may be withheld by the Agent in its sole discretion) and (provided, no Default or Event of Default has occurred and is continuing) with the consent of the Lessee, directly or indirectly, assign, convey, appoint an agent with respect to enforcement of, or otherwise transfer any of its right, title or interest in or to the Property, the Lease, the Trust Agreement and the other Operative Agreements (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 Property to the Lessee or a third party purchaser pursuant to Article XXII of the Lease upon payment for such Property in accordance with the terms and conditions of the Lease. No Credit Party may assign any of the Operative Agreements or any of their respective rights or obligations thereunder or with respect to the Property in whole or in part to any Person without the prior written consent of the Agent, the Lenders, the Holders and the Lessor. 10.2. EFFECT OF TRANSFER. From and after any transfer effected in accordance with this Section 10, the transferor shall be released, to the extent of such transfer, from its liability hereunder and under the other 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 shall remain liable hereunder and under such other documents to the extent that the transferee shall not have assumed the obligations of the transferor thereunder. Upon any transfer by the Owner Trustee, a Holder or a Lender as above provided, any such transferee shall assume the obligations of the Owner Trustee, the Holder or the Lender, as the case may be, and shall be deemed an "Owner Trustee", "Holder", or "Lender", as the case may be, for all purposes of such 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 10, the transferor shall be entitled to all benefits accrued and all rights vested prior to such transfer including without limitation rights to indemnification under any such document. 31 36 SECTION 11. INDEMNIFICATION. 11.1. GENERAL INDEMNITY. Whether or not any of the transactions contemplated hereby shall be consummated, the Indemnity Provider hereby assumes liability for and agrees to defend, indemnify and hold harmless each Indemnified Person on an After Tax Basis from and against any Claims, which may be imposed on, incurred by or asserted against an Indemnified Person by any third party, including without limitation Claims arising from the negligence of an Indemnified Person (but not to the extent such Claims arise from the gross negligence or willful misconduct of such Indemnified Person itself, as determined by a court of competent jurisdiction, as opposed to gross negligence or willful misconduct imputed to such Indemnified Person) in any way relating to or arising or alleged to arise out of the execution, delivery, performance or enforcement of this Agreement, the Lease or any other Operative Agreement or on or with respect to the Property or any component thereof, including without limitation Claims in any way relating to or arising or alleged to arise out of (a) the financing, refinancing, purchase, acceptance, rejection, ownership, design, delivery, acceptance, nondelivery, leasing, subleasing, possession, use, occupancy, operation, maintenance, repair, modification, transportation, condition, sale, return, repossession (whether by summary proceedings or otherwise), or any other disposition of the Property or any part thereof, including without limitation the acquisition, holding or disposition of any interest in the Property, lease or agreement comprising a portion of any thereof; (b) any latent or other defects in the Property or any portion thereof whether or not discoverable by an Indemnified Person or the Indemnity Provider; (c) a violation of Environmental Laws, Environmental Claims or other loss of or damage to the Property or the environment relating to the Property, the Lease, or the Indemnity Provider; (d) the Operative Agreements, or any transaction contemplated thereby; (e) any breach by the Indemnity Provider of any of its representations or warranties under the Operative Agreements to which the Indemnity Provider is a party or failure by the Indemnity Provider to perform or observe any covenant or agreement to be performed by it under any of the Operative Agreements; (f) the transactions contemplated hereby or by any other Operative Agreement, in respect of the application of Parts 4 and 5 of Subtitle B of Title I of ERISA; (g) personal injury, death or property damage, including without limitation Claims based on strict or absolute liability in tort; and (h) any fees, expenses and/or other assessments by any business park or any other applicable entity with oversight responsibility for the applicable Property. If a written Claim is made against any Indemnified Person or if any proceeding shall be commenced against such Indemnified Person (including without limitation a written notice of such proceeding), for any Claim, such Indemnified Person shall promptly notify the Indemnity Provider in writing and shall not take action with respect to such Claim without the consent of the Indemnity Provider for thirty (30) days after the receipt of such notice by the Indemnity Provider; provided, however, that in the case of any such Claim, if action shall be required by law or regulation to be taken prior to the end of such period of thirty (30) days, such Indemnified Person shall endeavor to, in such notice to the Indemnity Provider, inform the Indemnity Provider of such shorter period, and no action shall be taken with respect to such Claim without the consent of 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 32 37 to in this sentence shall not diminish the Indemnity Provider's obligation hereunder except to the extent such failure precludes in all respects the Indemnity Provider from contesting such Claim. If, within thirty (30) days of receipt of such notice from the Indemnified Person (or such shorter period as the Indemnified Person has notified the Indemnity Provider is required by law or regulation for the Indemnified Person to respond to such Claim), the Indemnity Provider shall request in writing that such Indemnified Person respond to such Claim, the Indemnified Person shall, at the expense of the Indemnity Provider, in good faith conduct and control such action (including without limitation by pursuit of appeals) (provided, however, that (A) if such Claim, in the Indemnity Provider's reasonable discretion, can be pursued by the Indemnity Provider on behalf of or in the name of such Indemnified Person, the Indemnified Person, at the Indemnity Provider's request, shall allow the Indemnity Provider to conduct and control the response to such Claim and (B) in the case of any Claim (and notwithstanding the provisions of the foregoing subsection (A)), the Indemnified Person may request the Indemnity Provider to conduct and control the response to such Claim (with counsel to be selected by the Indemnity Provider and consented to by such Indemnified Person, such consent not to be unreasonably withheld; provided, however, that any Indemnified Person may retain separate counsel at the expense of the Indemnity Provider in the event of a conflict of interest between such Indemnified Person and the Indemnity Provider)) by, in the sole discretion of the Person conducting and controlling the response to such Claim (1) resisting payment thereof, (2) not paying the same except under protest, if protest is necessary and proper, (3) if the payment be made, using reasonable efforts to obtain a refund thereof in appropriate administrative and judicial proceedings, or (4) taking such other action as is reasonably requested by the Indemnity Provider from time to time. The party controlling the response to any Claim shall consult in good faith with the non-controlling party and shall keep the non-controlling party reasonably informed as to the conduct of the response to such Claim; provided, that all decisions ultimately shall be made in the discretion of the controlling party. The parties agree that an Indemnified Person may at any time decline to take further action with respect to the response to such Claim and may settle such Claim if such Indemnified Person shall waive its rights to any indemnity from the Indemnity Provider that otherwise would be payable in respect of such Claim (and any future Claim, the pursuit of which is precluded by reason of such resolution of such Claim) and shall pay to the Indemnity Provider any amount previously paid or advanced by the Indemnity Provider pursuant to this Section 11.1 by way of indemnification or advance for the payment of an amount regarding such Claim. Notwithstanding the foregoing provisions of this Section 11.1, an Indemnified Person shall not be required to take any action and the Indemnity Provider shall not be permitted to respond to any Claim in 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 such Claim, including without limitation all reasonable legal, accounting and investigatory fees and disbursements and, if the Indemnified Person has informed the Indemnity Provider that it intends to contest such Claim (whether or not the control of the contest is then assumed by the Indemnity Provider), the Indemnity Provider shall have agreed 33 38 that the Claim is an indemnifiable Claim hereunder, (B) in the case of a Claim that must be pursued in the name of an Indemnified Person (or an Affiliate thereof), the amount of the potential indemnity (taking into account all similar or logically related Claims that have been or could be raised for which the Indemnity Provider may be liable to pay an indemnity under this Section 11.1) exceeds $25,000 (or such lesser amount as may be subsequently agreed between the Indemnity Provider and the Indemnified Person), (C) the Indemnified Person shall have reasonably determined that the action to be taken will not result in any material danger of sale, forfeiture or loss of the Property, or any part thereof or interest therein, will not interfere with the payment of Rent, and will not result in risk of criminal liability, (D) 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) prior to the date such payment is due, (E) 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 Indemnity Provider and reasonably satisfactory to the Indemnified Person stating that a reasonable basis exists to contest such Claim (or, in the case of an appeal of an adverse determination, an opinion of such counsel to the effect that the position asserted in such appeal will more likely than not prevail) and (F) no Event of Default shall have occurred and be continuing. In no event shall an Indemnified Person be required to appeal an adverse judicial determination to the United States Supreme Court. In addition, an Indemnified Person shall not be required to contest any Claim in its name (or that of an Affiliate) if the subject matter thereof shall be of a continuing nature and shall have previously been decided adversely by a court of competent jurisdiction pursuant to the contest provisions of this Section 11.1, unless there shall have been a change in law (or interpretation thereof) and the Indemnified Person shall have received, at the Indemnity Provider's expense, an opinion of independent counsel selected by the Indemnity Provider and reasonably acceptable to the Indemnified Person stating that as a result of such change in law (or interpretation thereof), it is more likely than not that the Indemnified Person will prevail in such contest. In no event shall the Indemnity Provider be permitted to adjust or settle any Claim without the consent of the Indemnified Person to the extent any such adjustment or settlement involves, or is reasonably likely to involve, any performance by or adverse admission by or with respect to the Indemnified Person. 11.2. GENERAL TAX INDEMNITY. (a) The Indemnity Provider shall pay and assume liability for, and does hereby agree to indemnify, protect and defend the Property and all Indemnified Persons, and hold them harmless against, all Impositions on an After Tax Basis, and all payments pursuant to the Operative Agreements shall be made free and clear of and without deduction for any and all present and future Impositions. (b) Notwithstanding anything to the contrary in Section 11.2(a) hereof, the following shall be excluded from the indemnity required by Section 11.2(a) (collectively, the "Excluded Taxes"): 34 39 (i) Taxes (other than Taxes that are, or are in the nature of, sales, use, rental, value added, transfer or property taxes) that are imposed on a Indemnified Person (other than the Lessor, the Owner Trustee and the Trust) by the United States federal government that are based on or measured by the net income (including without limitation taxes based on capital gains and minimum taxes) of such Person; provided, that this clause (i) shall not be interpreted to prevent a payment from being made on an After Tax Basis if such payment is otherwise required to be so made; (ii) Taxes (other than Taxes that are, or are in the nature of, sales, use, rental, value added, transfer or property taxes) that are imposed on any Indemnified Person (other than the Lessor, the Owner Trustee and the Trust) by any state or local jurisdiction or taxing authority within any state or local jurisdiction and that are based upon or measured by the net income (including without limitation taxes based on capital gains and minimum taxes) of such Person; provided that such Taxes shall not be excluded under this subparagraph (ii) to the extent such Taxes would have been imposed had the location, possession or use of the Property in, the location or the operation of the Lessee in, or the Lessee's making payments under the Operative Agreements from, the jurisdiction imposing such Taxes been the sole connection between such Indemnified Person and the jurisdiction imposing such Taxes; provided, further, that this clause (ii) shall not be interpreted to prevent a payment from being made on an After Tax Basis if such payment is otherwise required to be so made; (iii) any Tax to the extent it relates to any act, event or omission that occurs after the termination of the Lease and redelivery or sale of the Property in accordance with the terms of the Lease (but not any Tax that relates to such termination, redelivery or sale and/or to any period prior to such termination, redelivery or sale); and (iv) any Taxes which are imposed on an Indemnified Person as a result of the gross negligence or willful misconduct of such Indemnified Person itself, as determined by a court of competent jurisdiction (as opposed to gross negligence or willful misconduct imputed to such Indemnified Person), but not Taxes imposed as a result of ordinary negligence of such Indemnified Person; (c) (i) Subject to the terms of Section 11.2(f), the Indemnity Provider shall pay or cause to be paid all Impositions directly to the taxing authorities where feasible and otherwise to the Indemnified Person, as appropriate, and the Indemnity Provider shall at its own expense, upon such Indemnified Person's reasonable request, furnish to such Indemnified Person copies of official receipts or other satisfactory proof evidencing such payment. (ii) In the case of Impositions for which no contest is conducted pursuant to Section 11.2(f) and which the Indemnity Provider pays directly to the taxing authorities, the Indemnity Provider shall pay such Impositions prior to the 35 40 latest time permitted by the relevant taxing authority for timely payment. In the case of Impositions for which the Indemnity Provider reimburses an Indemnified Person, the Indemnity Provider shall do so within thirty (30) days after receipt by the Indemnity Provider of demand by such Indemnified Person describing in reasonable detail the nature of the Imposition and the basis for the demand (including without limitation the computation of the amount payable), accompanied by receipts or other reasonable evidence of such demand. In the case of Impositions for which a contest is conducted pursuant to Section 11.2(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 11.2(f). (iii) At the Indemnity Provider's request, the amount of any indemnification payment by the Indemnity Provider pursuant to subsection (a) shall be verified and certified by an independent public accounting firm mutually acceptable to the Indemnity Provider and the Indemnified Person. The fees and expenses of such independent public accounting firm shall be paid by the Indemnity Provider unless such verification shall result in an adjustment in the Indemnity Provider's favor of fifteen percent (15%) or more of the payment as computed by the Indemnified Person, in which case such fee shall be paid by the Indemnified Person. (d) The Indemnity Provider shall be responsible for preparing and filing any real and personal property or ad valorem tax returns in respect of the Property and any other tax returns required for the Owner Trustee and any other Lessor respecting the transactions described in the Operative Agreements. In case any other report or tax return shall be required to be made with respect to any obligations of the Indemnity Provider under or arising out of subsection (a) and of which the Indemnity Provider has knowledge or should have knowledge, the Indemnity Provider, at its sole cost and expense, shall notify the relevant Indemnified Person of such requirement and (except if such Indemnified Person notifies the Indemnity Provider that such Indemnified Person intends to prepare and file such report or return) (A) to the extent required or permitted by and consistent with Legal Requirements, make and file in the Indemnity Provider's name such return, statement or report; and (B) in the case of any other such return, statement or report required to be made in the name of such Indemnified Person, advise such Indemnified Person of such fact and prepare such return, statement or report for filing by such Indemnified Person or, where such return, statement or report shall be required to reflect items in addition to any obligations of the Indemnity Provider under or arising out of subsection (a), provide such Indemnified Person at the Indemnity Provider's expense with information sufficient to permit such return, statement or report to be properly made with respect to any obligations of the Indemnity Provider under or arising out of subsection (a). Such Indemnified Person shall, upon the Indemnity Provider's request and at the Indemnity Provider's expense, provide any data maintained by such Indemnified Person (and not otherwise available to or within the control of the 36 41 Indemnity Provider) with respect to the Property which the Indemnity Provider may reasonably require to prepare any required tax returns or reports. (e) As between the Indemnity Provider on one hand, and each Financing Party on the other hand, the Indemnity Provider shall be responsible for, and the Indemnity Provider shall indemnify and hold harmless each Financing Party (without duplication of any indemnification required by subsection (a)) on an After Tax Basis against, any obligation for United States or foreign withholding taxes or similar levies, imposts, charges, fees, deductions or withholdings (collectively, "Withholdings") imposed in respect of the interest payable on the Notes, Holder Yield payable on the Certificates or with respect to any other payments under the Operative Agreements (all such payments being referred to herein as "Exempt Payments" to be made without deduction, withholding or set off) (and, if any Financing Party receives a demand for such payment from any taxing authority or a Withholding is otherwise required with respect to any Exempt Payment, the Indemnity Provider shall discharge such demand on behalf of such Financing Party); provided, however, that the obligation of the Indemnity Provider under this Section 11.2(e) shall not apply to: (i) Withholdings on any Exempt Payment to any Financing Party which is a non-U.S. Person unless such Financing Party is, on the date hereof (or on the date it becomes a Financing Party hereunder) and on the date of any change in the principal place of business or the lending office of such Financing Party, entitled to submit a Form 1001 (relating to such Financing Party and entitling it to a complete exemption from Withholding on such Exempt Payment) or Form 4224 or is otherwise subject to exemption from Withholding with respect to such Exempt Payment (except where the failure of the exemption results from a change in the principal place of business of the Lessee; provided if a failure of exemption for any Financing Party results from a change in the principal place of business or lending office of any other Financing Party, then such other Financing Party shall be liable for any Withholding or indemnity with respect thereto), or (ii) Any U.S. Taxes imposed solely by reason of the failure by a non-U.S. Person to comply with applicable certification, information, documentation or other reporting requirements concerning the nationality, residence, identity or connections with the United States of America of such non-U.S. Person if such compliance is required by statute or regulation of the United States of America as a precondition to relief or exemption from such U.S. Taxes. For the purposes of this Section 11.2(e), (A) "U.S. Person" shall mean a citizen, national or resident of the United States of America, a corporation, partnership or other entity created or organized in or under any laws of the United States of America or any State thereof, or any estate or trust that is subject to Federal income taxation regardless of the source of its income, (B) "U.S. Taxes" shall mean any present or future tax, assessment or other charge or levy imposed by or on behalf of the United States of America or any taxing authority thereof or therein, (C) "Form 1001" shall mean Form 1001 (Ownership, Exemption, or Reduced Rate Certificate) of the Department of the Treasury of the United 37 42 States of America and (D) "Form 4224" shall mean Form 4224(R) (Exemption from Withholding of Tax on Income Effectively Connected with the Conduct of a Trade or Business in the United States) of the Department of Treasury of the United States of America (or in relation to either such Form such successor and related forms as may from time to time be adopted by the relevant taxing authorities of the United States of America to document a claim to which such Form relates). Each of the Forms referred to in the foregoing clauses (C) and (D) shall include such successor and related forms as may from time to time be adopted by the relevant taxing authorities of the United States of America to document a claim to which such Form relates. If a Financing Party or an Affiliate with whom such Financing Party files a consolidated tax return (or equivalent) subsequently receives the benefit in any country of a tax credit or an allowance resulting from U.S. Taxes with respect to which it has received a payment of an additional amount under this Section 11.2(e), such Financing Party will pay to the Indemnity Provider such part of that benefit as in the opinion of such Financing Party will leave it (after such payment) in a position no more and no less favorable than it would have been in if no additional payment had been required to be paid, provided always that (i) such Financing Party will be the sole judge of the amount of any such benefit and of the date on which it is received, (ii) such Financing Party will have the absolute discretion as to the order and manner in which it employs or claims tax credits and allowances available to it and (iii) such Financing Party will not be obliged to disclose to the Indemnity Provider any information regarding its tax affairs or tax computations. Each non-U.S. Person that shall become a Financing Party after the date hereof shall, upon the effectiveness of the related transfer or otherwise upon becoming a Financing Party hereunder, be required to provide all of the forms and statements referenced above or other evidences of exemption from Withholdings. (f) If a written Claim is made against any Indemnified Person or if any proceeding shall be commenced against such Indemnified Person (including without limitation a written notice of such proceeding), for any Impositions, the provisions in Section 11.1 relating to notification and rights to contest shall apply; provided, however, that the Indemnity Provider shall have the right to conduct and control such contest only if such contest involves a Tax other than a Tax on net income of the Indemnified Person and can be pursued independently from any other proceeding involving a Tax liability of such Indemnified Person. 11.3. INCREASED COSTS, ILLEGALITY, ETC. (a) If, due to either (i) the introduction of or any change in or in the interpretation of any law or regulation or (ii) the compliance with any guideline or request hereafter adopted, promulgated or made by any central bank or other governmental authority (whether or not having the force of law), there shall be any increase in the cost to any Financing Party of agreeing to make or making, funding or maintaining the Advance, then the Lessee shall from time to time, upon demand by such 38 43 Financing Party (with a copy of such demand to the Agent but subject to the terms of Section 2.8 of the Credit Agreement and 3.9 of the Trust Agreement, as the case may be), pay to the Agent for the account of such Financing Party additional amounts sufficient to compensate such Financing Party for such increased cost. A certificate as to the amount of such increased cost, submitted to the Lessee and the Agent by such Financing Party, shall be conclusive and binding for all purposes, absent manifest error. (b) If any Financing Party determines that compliance with any law or regulation or any guideline or request from any central bank or other governmental authority (whether or not having the force of law, but in each case promulgated or made after the date hereof) affects or would affect the amount of capital required or expected to be maintained by such Financing Party or any corporation controlling such Financing Party and that the amount of such capital is increased by or based upon the existence of such Financing Party's commitment to make the Advance and other commitments of this type or upon the Advance, then, upon demand by such Financing Party (with a copy of such demand to the Agent but subject to the terms of Section 2.8 of the Credit Agreement and 3.9 of the Trust Agreement), the Lessee shall pay to the Agent for the account of such Financing Party, from time to time as specified by such Financing Party, additional amounts sufficient to compensate such Financing Party or such corporation in the light of such circumstances, to the extent that such Financing Party reasonably determines such increase in capital to be allocable to the existence of such Financing Party's commitment to make such the Advance. A certificate as to such amounts submitted to the Lessee and the Agent by such Financing Party shall be conclusive and binding for all purposes, absent manifest error. (c) Without limiting the effect of the foregoing, the Lessee shall pay to each Financing Party on the last day of the Interest Period therefor so long as such Financing Party is maintaining reserves against "Eurocurrency liabilities" under Regulation D an additional amount (determined by such Financing Party and notified to the Lessee through the Agent) equal to the product of the following for each Eurodollar Loan or Eurodollar Holder Advance, as the case may be, for each day during such Interest Period: (i) the principal amount of such Eurodollar Loan or Eurodollar Holder Advance, as the case may be, outstanding on such day; and (ii) the remainder of (x) a fraction the numerator of which is the rate (expressed as a decimal) at which interest accrues on such Eurodollar Loan or Eurodollar Holder Advance, as the case may be, for such Interest Period as provided in the Credit Agreement or the Trust Agreement, as the case may be (less the Applicable Percentage), and the denominator of which is one (1) minus the effective rate (expressed as a decimal) at which such reserve requirements are imposed on such Financing Party on such day minus (y) such numerator; and (iii) 1/360. 39 44 (d) Without affecting its rights under Sections 11.3(a), 11.3(b) or 11.3(c) or any other provision of any Operative Agreement, each Financing Party agrees that if there is any increase in any cost to or reduction in any amount receivable by such Financing Party with respect to which the Lessee would be obligated to compensate such Financing Party pursuant to Sections 11.3(a) or 11.3(b), such Financing Party shall use reasonable efforts to select an alternative office for the Advance which would not result in any such increase in any cost to or reduction in any amount receivable by such Financing Party; provided, however, that no Financing Party shall be obligated to select an alternative office for the Advance if such Financing Party determines that (i) as a result of such selection such Financing Party would be in violation of any applicable law, regulation, treaty, or guideline, or would incur additional costs or expenses or (ii) such selection would be inadvisable for regulatory reasons or materially inconsistent with the interests of such Financing Party. (e) With reference to the obligations of the Lessee set forth in Sections 11.3(a) through 11.3(d), the Lessee shall not have any obligation to pay to any Financing Party amounts owing under such Sections for any period which is more than one (1) year prior to the date upon which the request for payment therefor is delivered to the Lessee. (f) Notwithstanding any other provision of this Agreement, if any Financing Party shall notify the Agent that the introduction of or any change in or in the interpretation of any law or regulation makes it unlawful, or any central bank or other governmental authority asserts that it is unlawful, for any Financing Party to perform its obligations hereunder to make or maintain Eurodollar Loans or Eurodollar Holder Advances, as the case may be, then (i) each Eurodollar Loan or Eurodollar Holder Advance, as the case may be, will automatically, at the earlier of the end of the Interest Period for such Eurodollar Loan or Eurodollar Holder Advance, as the case may be, or the date required by law, convert into an ABR Loan or an ABR Holder Advance, as the case may be, and (iii) the obligation of the Financing Parties to make, convert or continue Eurodollar Loans or Eurodollar Holder Advances, as the case may be, shall be suspended until the Agent shall notify the Lessee that such Financing Party has determined that the circumstances causing such suspension no longer exist. 11.4. FUNDING/CONTRIBUTION INDEMNITY. Subject to the provisions of Section 2.8(a) of the Credit Agreement and 3.9(a) of the Trust Agreement, as the case may be, the Lessee agrees to indemnify each Financing Party and to hold each Financing Party harmless from any loss or reasonable expense which such Financing Party may sustain or incur as a consequence of (a) any default in connection with the drawing of funds for any Advance, (b) any default in making any prepayment after a notice thereof has been given in accordance with the provisions of the Operative Agreements or (c) the making of a voluntary or involuntary payment of Eurodollar Loans or Eurodollar Holder Advances, as the case may be, on a day which is not the last day of an Interest Period with respect thereto. Such indemnification shall be in an amount equal to the excess, if any, of (x) the amount of interest or Holder Yield, as the case may be, which would have accrued on the amount so paid, or not so borrowed, accepted, converted or continued for the period from the date of 40 45 such payment or of such failure to borrow, accept, convert or continue to the last day of such Interest Period (or, in the case of a failure to borrow, accept, convert or continue, the Interest Period that would have commenced on the date of such failure) in each case at the applicable Eurodollar Rate plus the Applicable Percentage for such Loan or Holder Advance, as the case may be, for such Interest Period over (y) the amount of interest (as determined by such Financing Party in its reasonable discretion) which would have accrued to such Financing Party on such amount by (i) (in the case of the Lenders) reemploying such funds in loans of the same type and amount during the period from the date of payment or failure to borrow to the last day of the then applicable Interest Period (or, in the case of a failure to borrow, the Interest Period that would have commenced on the date of such failure) and (ii) (in the case of the Holders) placing such amount on deposit for a comparable period with leading banks in the relevant interest rate market. This covenant shall survive the termination of the Operative Agreements and the payment of all other amounts payable hereunder. 11.5. EXPRESS INDEMNIFICATION FOR ORDINARY NEGLIGENCE, STRICT LIABILITY, ETC. WITHOUT LIMITING THE GENERALITY OF THE INDEMNIFICATION PROVISIONS OF ANY AND ALL OF THE OPERATIVE AGREEMENTS, EACH PERSON PROVIDING INDEMNIFICATION OF ANOTHER PERSON UNDER ANY OPERATIVE AGREEMENT HEREBY FURTHER EXPRESSLY RELEASES EACH BENEFICIARY OF ANY SUCH INDEMNIFICATION FROM ALL CLAIMS FOR LOSS OR DAMAGE, DESCRIBED IN ANY OPERATIVE AGREEMENT, CAUSED BY ANY ACT OR OMISSION ON THE PART OF ANY SUCH BENEFICIARY ATTRIBUTABLE TO THE ORDINARY NEGLIGENCE (WHETHER SOLE OR CONTRIBUTORY) OR STRICT LIABILITY OF ANY SUCH BENEFICIARY, AND INDEMNIFIES, EXONERATES AND HOLDS EACH SUCH BENEFICIARY FREE AND HARMLESS FROM AND AGAINST ANY AND ALL ACTIONS, CAUSES OF ACTION, SUITS, CLAIMS, LOSSES, COSTS, LIABILITIES, DAMAGES AND EXPENSES (INCLUDING WITHOUT LIMITATION ATTORNEY'S FEES AND EXPENSES), DESCRIBED ABOVE, INCURRED BY ANY SUCH BENEFICIARY (IRRESPECTIVE OF WHETHER ANY SUCH BENEFICIARY IS A PARTY TO THE ACTION FOR WHICH INDEMNIFICATION UNDER THIS AGREEMENT OR ANY OTHER OPERATIVE AGREEMENT IS SOUGHT) ATTRIBUTABLE TO THE ORDINARY NEGLIGENCE (WHETHER SOLE OR CONTRIBUTORY) OR STRICT LIABILITY OF ANY SUCH BENEFICIARY. 11.6. INDEMNITY PRIOR TO COMPLETION DATE / CONSTRUCTION PERIOD TERMINATION DATE. Notwithstanding the provisions of Sections 11.1, 11.2, 11.3, 11.4 and 11.5, the Owner Trustee shall be the only beneficiary of the provisions set forth in Sections 11.1, 11.2, 11.3, 11.4 and 11.5 with respect to any Claim arising under such Sections and shall only be entitled to indemnification for Claims that are caused by or is a result of the Indemnity Provider's own actions or failure to act for the period from the Closing Date to the Property Closing Date. Notwithstanding the foregoing, to the extent that the Owner Trustee becomes obligated to any Indemnified Person pursuant to the next succeeding paragraph of Section 11.6, the Owner 41 46 Trustee shall be entitled to further indemnity from the Indemnity Provider under Sections 11.1, 11.2, 11.3, 11.4 and 11.5, as applicable, with respect to all amounts owing or paid by it under this Section 11.6. To the extent the Indemnity Provider is not obligated to indemnify any Indemnified Person with respect to Claims arising under Sections 11.1, 11.2, 11.3, 11.4 or 11.5 during the period from the Closing Date to the Property Closing Date, the Owner Trustee shall provide such indemnities in favor of such Indemnified Person in accordance with the relevant provisions of Sections 11.1, 11.2, 11.3, 11.4 or 11.5 as the case may be. It is acknowledged and agreed that any amount for which the Owner Trustee becomes obligated to any Indemnified Person pursuant hereto shall become a Claim for which the Owner Trustee is entitled to indemnity from the Indemnity Provider; provided, the Owner Trustee shall only be entitled to indemnity for such Claims from the Indemnity Provider to the extent such Claims are caused by or are a result of the Indemnity Provider's own actions or failures to act. THE INDEMNITY OBLIGATIONS UNDERTAKEN BY THE OWNER TRUSTEE PURSUANT TO THIS SECTION 11.6 ARE IN ALL RESPECTS SUBJECT TO THE LIMITATIONS ON LIABILITY REFERENCED IN SECTION 12.9. SECTION 12. MISCELLANEOUS. 12.1. 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 the Property to the Owner Trustee, the acquisition of the Property (or any of its components), any disposition of any interest of the Owner Trustee in the Property or any interest of the Holders in the Trust Estate, 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. 12.2. NOTICES. All notices required or permitted to be given under any Operative Agreement shall be in writing. Notices may be served by certified or registered mail, postage paid with return receipt requested; by private courier, prepaid; by telex, facsimile, or other telecommunication device capable of transmitting or creating a written record; or personally. Mailed notices shall be deemed delivered five (5) days after mailing, properly addressed. Couriered notices shall be deemed delivered when delivered as addressed, or if the addressee refuses delivery, when presented for delivery notwithstanding such refusal. Telex or telecommunicated notices shall be deemed delivered when receipt is either confirmed by confirming transmission equipment or 42 47 acknowledged by the addressee or its office. Personal delivery shall be effective when accomplished. Unless a party changes its address by giving notice to the other party as provided herein, notices shall be delivered to the parties at the following addresses: If to the Lessee, to it at the following address: Catalina Marketing Sales Corporation 11300 Ninth Street North St. Petersburg, Florida 33716 Attention: Chris Wolf Telephone: (727) 579-5218 Telecopy: (727) 579-5327 If to the Guarantor, to it at the following address: Catalina Marketing Corporation 11300 Ninth Street North St. Petersburg, Florida 33716 Attention: Chris Wolf Telephone: (727) 579-5218 Telecopy: (727) 579-5327 If to the Trust Company, the Owner Trustee or the Lessor, to it at the following address: First Security Bank, National Association Third Floor 79 South Main Street Salt Lake City, Utah 84111 Attention: Val T. Orton, Vice President Telephone: (801) 246-5300 Telecopy: (801) 246-5053 If to the Holders, to each such Holder at the address set forth for such Holder on Schedule I of the Trust Agreement. 43 48 If to the Agent, to it at the following address: First Union National Bank c/o First Union Capital Markets Group DC-6 301 South College Street Charlotte, North Carolina 28288-0166 Attention: Christy Lee Foster, Capital Markets Services Telephone: (704) 383-5398 Telecopy: (704) 383-7989 If to any Lender, to it at the address set forth for such Lender in Schedule 2.1 of the Credit Agreement. From time to time any party may designate additional parties and/or another address for notice purposes by notice to each of the other parties hereto. Each notice hereunder shall be effective upon receipt or refusal thereof. 12.3. COUNTERPARTS. This Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one (1) and the same instrument. 12.4. TERMINATIONS, AMENDMENTS, WAIVERS, ETC.; UNANIMOUS VOTE MATTERS. Each Basic Document may be terminated, amended, supplemented, waived or modified only by an instrument in writing signed by, subject to Article VIII of the Trust Agreement regarding termination of the Trust Agreement, the Majority Secured Parties and each Credit Party (to the extent such Credit Party is a party to such Basic Document); provided, to the extent no Default or Event of Default shall have occurred and be continuing, the Majority Secured Parties shall not amend, supplement, waive or modify any provision of any Basic Document in such a manner as to adversely affect the rights of any Credit Party without the prior written consent (not to be unreasonably withheld or delayed) of such Credit Party. Each Operative Agreement which is not a Basic Document may be terminated, amended, supplemented, waived or modified only by an instrument in writing signed by the parties thereto and (without the consent of any other Financing Party) the Agent. In addition, the Unanimous Vote Matters shall require the consent of each Lender and each Holder affected by such matter. Notwithstanding the foregoing, no such termination, amendment, supplement, waiver or modification shall, without the consent of the Agent and, to the extent affected thereby, each Lender and each Holder (collectively, the "Unanimous Vote Matters") (i) reduce the amount of any Note or Certificate, extend the scheduled date of maturity of any Note, extend the scheduled Expiration Date, extend any payment date of any Note or Certificate, reduce the stated rate of interest payable on any Note, reduce the stated Holder Yield payable on any Certificate (other than as a result of waiving the applicability of any post-default increase in interest rates or 44 49 Holder Yields), modify the priority of any Lien in favor of the Agent under any Security Document, subordinate any obligation owed to such Lender or Holder, or (ii) terminate, amend, supplement, waive or modify any provision of this Section 12.4 or reduce the percentages specified in the definitions of Majority Lenders, Majority Holders or Majority Secured Parties, or consent to the assignment or transfer by the Owner Trustee of any of its rights and obligations under any Credit Document or release a material portion of the Collateral (except in accordance with Section 8.8) or release any Credit Party from its obligations under any Operative Agreement or otherwise alter any payment obligations of any Credit Party to the Lessor or any Financing Party under the Operative Agreements, or (iii) terminate, amend, supplement, waive or modify any provision of Section 7 of the Credit Agreement (which shall also require the consent of the Agent). Any such termination, amendment, supplement, waiver or modification shall apply equally to each of the Lenders and the Holders and shall be binding upon all the parties to this Agreement. In the case of any waiver, each party to this Agreement shall be restored to its former position and rights under the Operative Agreements, and any Default or Event of Default waived shall be deemed to be cured and not continuing; but no such waiver shall extend to any subsequent or other Default or Event of Default, or impair any right consequent thereon. If at a time when the conditions precedent set forth in the Operative Agreements to any Loan are, in the opinion of the Majority Lenders, satisfied, any Lender shall fail to fulfill its obligations to make such Loan (any such Lender, a "Defaulting Lender") then, for so long as such failure shall continue, the Defaulting Lender shall (unless the Lessee and the Majority Lenders, determined as if the Defaulting Lender were not a "Lender", shall otherwise consent in writing) be deemed for all purposes relating to terminations, amendments, supplements, waivers or modifications under the Operative Agreements to have no Loans, shall not be treated as a "Lender" when performing the computation of Majority Lenders or Majority Secured Parties, and shall have no rights under this Section 12.4; provided that any action taken pursuant to the second paragraph of this Section 12.4 shall not be effective as against the Defaulting Lender. If at a time when the conditions precedent set forth in the Operative Agreements to any Holder Advance are, in the opinion of the Majority Holders, satisfied, any Holder shall fail to fulfill its obligations to make such Holder Advance (any such Holder, a "Defaulting Holder") then, for so long as such failure shall continue, the Defaulting Holder shall (unless the Lessee and the Majority Holders, determined as if the Defaulting Holder were not a "Holder", shall otherwise consent in writing) be deemed for all purposes relating to terminations, amendments, supplements, waivers or modifications under the Operative Agreements to have no Holder Advances, shall not be treated as a "Holder" when performing the computation of Majority Holders or Majority Secured Parties, and shall have no rights under this Section 12.4; provided that any action taken pursuant to the second paragraph of this Section 12.4 shall not be effective as against the Defaulting Holder. 12.5. HEADINGS, ETC. The Table of Contents and headings of the various Articles and Sections of this Agreement are for convenience of reference only and shall not modify, define, expand or limit any of the terms or provisions hereof. 45 50 12.6. PARTIES IN INTEREST. Except as expressly provided herein, none of the provisions of this Agreement are intended for the benefit of any Person except the parties hereto. 12.7. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL; VENUE. (a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED, INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH CAROLINA. Any legal action or proceeding with respect to this Agreement or any other Operative Agreement may be brought in the courts of the State of North Carolina in Mecklenburg County or of the United States for the Western District of North Carolina, and, by execution and delivery of this Agreement, each of the parties to this Agreement hereby irrevocably accepts for itself and in respect of its property, generally and unconditionally, the nonexclusive jurisdiction of such courts. Each of the parties to this Agreement further irrevocably consents to the service of process out of any of the aforementioned courts in any such action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to it at the address set out for notices pursuant to Section 12.2, such service to become effective three (3) days after such mailing. Nothing herein shall affect the right of any party to serve process in any other manner permitted by Law or to commence legal proceedings or to otherwise proceed against any party in any other jurisdiction. (b) EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY, TO THE FULLEST EXTENT ALLOWED BY APPLICABLE LAW, WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, ANY OTHER OPERATIVE AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN. (c) Each of the parties to this Agreement hereby irrevocably waives any objection which it may now or hereafter have to the laying of venue of any of the aforesaid actions or proceedings arising out of or in connection with this Agreement or any other Operative Agreement brought in the courts referred to in subsection (a) above and hereby further irrevocably waives and agrees not to plead or claim in any such court that any such action or proceeding brought in any such court has been brought in an inconvenient forum. 12.8. SEVERABILITY. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 46 51 12.9. LIABILITY LIMITED. (a) The Lenders, the Agent, the Credit Parties, the Owner Trustee and the Holders each acknowledge and agree that the Owner Trustee is (except as otherwise expressly provided herein or therein) entering into this Agreement and the other Operative Agreements to which it is a party (other than the Trust Agreement and to the extent otherwise provided in Section 6.1 of this Agreement), solely in its capacity as trustee under the Trust Agreement and not in its individual capacity and that the Trust Company shall not be liable or accountable under any circumstances whatsoever in its individual capacity for or on account of any statements, representations, warranties, covenants or obligations stated to be those of the Owner Trustee, except for its own gross negligence or willful misconduct and as otherwise expressly provided herein or in the other Operative Agreements. (b) Anything to the contrary contained in this Agreement, the Credit Agreement, the Notes or in any other Operative Agreement notwithstanding, no Exculpated Person shall be personally liable in any respect for any liability or obligation arising hereunder or in any other Operative Agreement including without limitation the payment of the principal of, or interest on, the Notes, or for monetary damages for the breach of performance of any of the covenants contained in the Credit Agreement, the Notes, this Agreement, the Security Agreement or any of the other Operative Agreements. The Lenders, the Holders and the Agent agree that, in the event any remedies under any Operative Agreement are pursued, neither the Lenders, the Holders nor the Agent shall have any recourse against any Exculpated Person, for any deficiency, loss or Claim for monetary damages or otherwise resulting therefrom and recourse shall be had solely and exclusively against the Trust Estate (excluding Excepted Payments) and the Credit Parties (with respect to the Credit Parties' obligations under the Operative Agreements); but nothing contained herein shall be taken to prevent recourse against or the enforcement of remedies against the Trust Estate (excluding Excepted Payments) in respect of any and all liabilities, obligations and undertakings contained herein and/or in any other Operative Agreement. Notwithstanding the provisions of this Section, nothing in any Operative Agreement shall: (i) constitute a waiver, release or discharge of any indebtedness or obligation evidenced by the Notes and/or the Certificates arising under any Operative Agreement or secured by any Operative Agreement, but the same shall continue until paid or discharged; (ii) relieve any Exculpated Person from liability and responsibility for (but only to the extent of the damages arising by reason of): active waste knowingly committed by any Exculpated Person with respect to the Property, any fraud, gross negligence or willful misconduct on the part of any Exculpated Person; (iii) relieve any Exculpated Person from liability and responsibility for (but only to the extent of the moneys misappropriated, misapplied or not turned over) (A) except for Excepted Payments, misappropriation or misapplication by the Lessor (i.e., application in a manner contrary to any of the Operative Agreements) of any insurance proceeds or condemnation award paid or delivered to the Lessor by any Person other than the Agent, (B) except for Excepted Payments, any deposits or any escrows or amounts owed by the Lessee held by the Lessor or (C) except for Excepted Payments, any rent or other income received by the 47 52 Lessor from any Credit Party that is 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 rights and powers of the Agent under the Operative Agreements or to obtain a judgment against the Lessee's interest in the Property or the Agent's rights and powers to obtain a judgment against the Lessor or any Credit Party (provided, that no deficiency judgment or other money judgment shall be enforced against any Exculpated Person except to the extent of the Lessor's interest in the Trust Estate (excluding Excepted Payments) or to the extent the Lessor may be liable as otherwise contemplated in clauses (ii) and (iii) of this Section 12.9(b)). 12.10. RIGHTS OF THE CREDIT PARTIES. If at any time all obligations (i) of the Owner Trustee under the Credit Agreement, the Security Documents and the other Operative Agreements and (ii) of the Credit Parties under the Operative Agreements have in each case been satisfied or discharged in full, then the Credit Parties shall be entitled to (a) terminate the Lease and guaranty obligations under Section 6B and (b) receive all amounts then held under the Operative Agreements and all proceeds with respect to the Property. Upon the termination of the Lease and Section 6B 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, the Lien of the Security Documents and all Lessor Liens in and to the Property then subject to the Lease and any amounts or proceeds referred to in the foregoing clause (b) shall be paid over to the Lessee. 12.11. FURTHER ASSURANCES. The parties hereto shall promptly cause to be taken, executed, acknowledged or delivered, at the sole expense of the Lessee, all such further acts, conveyances, documents and assurances as the other parties may from time to time reasonably request in order to carry out and effectuate the intent and purposes of this Participation Agreement, the other Operative Agreements and the transactions contemplated hereby and thereby (including without limitation the preparation, execution and filing of any and all Uniform Commercial Code financing statements, filings of Mortgage Instruments and other filings or registrations which the parties hereto may from time to time request to be filed or effected). The Lessee, at its own expense and without need of any prior request from any other party, shall take such action as may be necessary (including without limitation any action specified in the preceding sentence), or (if the Owner Trustee shall so request) as so requested, in order to maintain and protect all security interests provided for hereunder or under any other Operative Agreement. In addition, in connection with the sale or other disposition of the Property or any portion thereof, the Lessee agrees to execute such instruments of conveyance as may be reasonably required in connection therewith. 12.12. CALCULATIONS UNDER OPERATIVE AGREEMENTS. The parties hereto agree that all calculations and numerical determinations to be made under the Operative Agreements by the Owner Trustee shall be made by the Agent and that such 48 53 calculations and determinations shall be conclusive and binding on the parties hereto in the absence of manifest error. 12.13. CONFIDENTIALITY. Each Financing Party agrees to keep confidential any information furnished or made available to it by any Credit Party or any of its Subsidiaries pursuant to this Agreement that is marked confidential; provided that nothing herein shall prevent any Financing Party from disclosing such information (a) to any other Financing Party or any Affiliate of any Financing Party, or any officer, director, employee, agent, or advisor of any Financing Party or Affiliate of any Financing Party, (b) to any other Person if reasonably incidental to the administration of the credit facility provided herein, (c) as required by any law, rule, or regulation, (d) upon the order of any court or administrative agency, (e) upon the request or demand of any regulatory agency or authority, (f) that is or becomes available to the public or that is or becomes available to any Financing Party other than as a result of a disclosure by any Financing Party prohibited by this Agreement, (g) in connection with any litigation to which such Financing Party or any of its Affiliates may be a party, (h) to the extent necessary in connection with the exercise of any remedy under this Agreement or any other Operative Agreement, and (i) subject to provisions substantially similar to those contained in this Section, to any actual or proposed participant or assignee. 12.14. FINANCIAL REPORTING/TAX CHARACTERIZATION. Lessee agrees to obtain advice from its own accountants and tax counsel regarding the financial reporting treatment and the tax characterization of the transactions described in the Operative Agreements. Lessee further agrees that Lessee shall not rely upon any statement of any Financing Party or any of their respective Affiliates and/or Subsidiaries regarding any such financial reporting treatment and/or tax characterization. 12.15. SET-OFF. In addition to any rights now or hereafter granted under applicable Law and not by way of limitation of any such rights, upon and after the occurrence of any Event of Default and during the continuance thereof, the Lenders, the Holders, their respective Affiliates and any assignee or participant of a Lender or a Holder in accordance with the applicable provisions of the Operative Agreements are hereby authorized by the Credit Parties at any time or from time to time, without notice to the Credit Parties or to any other Person, any such notice being hereby expressly waived, to set-off and to appropriate and to apply any and all deposits (general or special, time or demand, including without limitation indebtedness evidenced by certificates of deposit, whether matured or unmatured) and any other indebtedness at any time held or owing by the Lenders, the Holders, their respective Affiliates or any assignee or participant of a Lender or a Holder in accordance with the applicable provisions of the Operative Agreements to or for the credit or the account of any Credit Party against and on account of the obligations of any Credit Party under the Operative Agreements irrespective of whether or not (a) the Lenders or the Holders shall have made any demand under any Operative Agreement or (b) the Agent shall have declared any or all of the obligations of any Credit Party under the Operative Agreements to be due and 49 54 payable and although such obligations shall be contingent or unmatured. Notwithstanding the foregoing, neither the Agent nor any other Financing Party shall exercise, or attempt to exercise, any right of setoff, banker's lien, or the like, against any deposit account or property of any Credit Party held by the Agent or any other Financing Party, without the prior written consent of the Majority Secured Parties, and any Financing Party violating this provision shall indemnify the Agent and the other Financing Parties from any and all costs, expenses, liabilities and damages resulting therefrom. The contractual restriction on the exercise of setoff rights provided in the foregoing sentence is solely for the benefit of the Agent and the Financing Parties and may not be enforced by any Credit Party. [signature pages follow] 50 55 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. LESSEE: CATALINA MARKETING SALES CORPORATION, as the Lessee By: _________________________________________ Name: _______________________________________ Title: ______________________________________ GUARANTOR: CATALINA MARKETING CORPORATION, as the Guarantor By: _________________________________________ Name: _______________________________________ Title: ______________________________________ OWNER TRUSTEE AND LESSOR: FIRST SECURITY BANK, NATIONAL ASSOCIATION, not individually, except as expressly stated herein, but solely as the Owner Trustee under the Dolphin Realty Trust 1999-1 By: _________________________________________ Name: _______________________________________ Title: ______________________________________ AGENT AND LENDERS: FIRST UNION NATIONAL BANK, as a Lender and as the Agent By: _________________________________________ Name: _______________________________________ Title: ______________________________________ Participation Agreement Dolphin Realty Trust 1999-1 56 HOLDERS: FIRST UNION NATIONAL BANK, as a Holder By: _________________________________________ Name: _______________________________________ Title: ______________________________________ Participation Agreement Dolphin Realty Trust 1999-1 57 SCHEDULE 6.2(i) [LIST OF STATES OF FORMATION AND CHIEF EXECUTIVE OFFICES OF CREDIT PARTIES]
STATE OF PRINCIPAL PLACE OF BUSINESS/ CREDIT PARTY STATE OF INCORPORATION/FORMATION CHIEF EXECUTIVE OFFICE - ------------ -------------------------------- ---------------------- Catalina Marketing Delaware Florida Sales Corporation Catalina Marketing Delaware Florida Corporation
58 EXHIBIT A REQUISITION FORM (Pursuant to Sections 4, 5.2 and 5.3 of the Participation Agreement) CATALINA MARKETING SALES CORPORATION, a Delaware corporation (the "Company") hereby certifies as true and correct and delivers the following Requisition to FIRST UNION NATIONAL BANK, as the agent for the Lenders (hereinafter defined) and respecting the Security Documents, as the agent for the Lenders and the Holders (hereinafter defined), to the extent of their interests (the "Agent"): Reference is made herein to that certain Participation Agreement dated as of October 21, 1999 (as amended, modified, extended, supplemented, restated and/or replaced from time to time, the "Participation Agreement") among the Company, in its capacity as the Lessee, Catalina Marketing Corporation, as the Guarantor, First Security Bank, National Association, as the Owner Trustee, the various banks and other lending institutions which are parties thereto from time to time, as holders (the "Holders"), the various banks and other lending institutions which are parties thereto from time to time, as lenders (the "Lenders"), and the Agent. Capitalized terms used herein but not otherwise defined herein shall have the meanings set forth therefor in the Participation Agreement. PROPERTY CLOSING DATE:_________________ (three (3) Business Days prior notice required for Advance) 1. Transaction Expenses and other fees, expenses and disbursements under Section 7.1 of the Participation Agreement and any and all other amounts contemplated to be financed under the Participation Agreement (with supporting invoices or closing statement attached): Party to Whom Amount Owed Amount is Owed (in U.S. Dollars) -------------- ----------------- -------------- ----------------- -------------- ----------------- -------------- ----------------- -------------- ----------------- 2. Description of Land (which shall be a legal description of the Land in connection with an Advance): See attached Schedule 1 3. Description of Improvements: See attached Schedule 2 4. Description of Equipment: See attached Schedule 3 A-1 59 In connection with this Requisition, the Company hereby requests that the Lenders make Loans to the Lessor in the amount of $______________ and that the Holders make Holder Advances to the Lessor in the amount of $________________. The Company hereby certifies (i) that the foregoing amounts requested do not exceed the total aggregate of the Available Commitments plus the Available Holder Commitments and (ii) each of the provisions of the Participation Agreement applicable to the Loans and Holder Advances requested hereunder have been complied with as of the date of this Requisition. The Company requests the Loans be allocated as follows: $______________ ABR Loans $______________ Eurodollar Loans The Company requests the Holder Advances be allocated as follows: $______________ ABR Holder Advances $______________ Eurodollar Holder Advances The Company has caused this Requisition to the executed by its duly authorized officer as of this _____ day of __________, ______. CATALINA MARKETING SALES CORPORATION By: __________________________________ Name: ________________________________ Title: _______________________________ A-2 60 Schedule 1 Description of Land (Legal Description and Street Address) A-3 61 Schedule 2 Description of Improvements A-4 62 Schedule 3 Description of Equipment
General Description Make Model Serial Number - ----------------------- ------------------- --------------------- ------------------------- - ----------------------- ------------------- --------------------- ------------------------- - ----------------------- ------------------- --------------------- ------------------------- - ----------------------- ------------------- --------------------- ------------------------- - ----------------------- ------------------- --------------------- ------------------------- - ----------------------- ------------------- --------------------- ------------------------- - ----------------------- ------------------- --------------------- ------------------------- - ----------------------- ------------------- --------------------- ------------------------- - ----------------------- ------------------- --------------------- ------------------------- - ----------------------- ------------------- --------------------- -------------------------
A-5 63 EXHIBIT B [Outside Counsel Opinion for the Lessee] (Pursuant to Section 5.3(j) of the Participation Agreement) __________ ___, 1999 TO THOSE ON THE ATTACHED DISTRIBUTION LIST Re: Synthetic Lease Financing Provided in favor of Catalina Marketing Sales Corporation Dear Sirs: We have acted as special counsel to Catalina Marketing Sales Corporation, a Delaware corporation (the "Lessee") and Catalina Marketing Corporation, a Delaware corporation (the "Guarantor"; individually the Lessee and the Guarantor may be referred to herein as a "Credit Party" or collectively as the "Credit Parties") in connection with certain transactions contemplated by the Participation Agreement dated as of October 21, 1999 (the "Participation Agreement"), among the Lessee, the Guarantor, First Security Bank, National Association, as the Owner Trustee (the "Owner Trustee"), the various banks and other lending institutions which are parties thereto from time to time, as holders (the "Holders"), the various banks and other lending institutions which are parties thereto from time to time, as lenders (the "Lenders") and First Union National Bank, as the agent for the Lenders and respecting the Security Documents, as the agent for the Lenders and the Holders, to the extent of their interests (the "Agent"). This opinion is delivered pursuant to Section 5.3(j) of the Participation Agreement. All capitalized terms used herein, and not otherwise defined herein, shall have the meanings assigned thereto in Appendix A to the Participation Agreement. In connection with the foregoing, we have examined originals, or copies certified to our satisfaction, of [IDENTIFY THE APPLICABLE OPERATIVE AGREEMENTS, INCLUDING THE MORTGAGE INSTRUMENT, RELATED UCC FIXTURE FILINGS, ADDITIONAL UCCS (HEREINAFTER DEFINED), DEEDS AND MEMORANDA OF LEASE] and such other corporate documents and records of the Credit Parties, certificates of public officials and representatives of the Credit Parties as to certain factual matters, and such other instruments and documents which we have deemed necessary or advisable to examine for the purpose of this opinion. With respect to such examination, we have assumed (i) the statements of fact made in all such certificates, documents and instruments are true, accurate and complete; (ii) except as to the Credit Parties, the due authorization, execution and delivery of the Operative Agreements by the parties thereto; (iii) the genuineness of all signatures (except as to the Credit Parties), the authenticity and completeness of all documents, certificates, instruments, records and corporate records submitted to us as originals and the conformity to the original instruments of all documents submitted to us as copies, and the B-1 64 authenticity and completeness of the originals of such copies; (iv) except as to the Credit Parties, that all parties have all requisite corporate power and authority to execute, deliver and perform the Operative Agreements; and (v) except as to the Credit Parties, the enforceability of the Mortgage Instrument, the Memorandum of Lease and the UCC financing statements against all parties thereto. Based on the foregoing, and having due regard for such legal considerations as we deem relevant, and subject to the limitations and assumptions set forth herein, including without limitation the matters set forth in the last two (2) paragraphs hereof, we are of the opinion that: (a) The Mortgage Instrument and Memorandum of Lease are enforceable in accordance with their respective terms, except as limited by laws generally affecting the enforcement of creditors' rights, which laws will not materially prevent the realization of the benefits intended by such documents. (b) The form of Mortgage Instrument and UCC fixture filing relating thereto, attached hereto as Schedules 1 and 2, respectively, is in proper form for filing and recording with the office of [IDENTIFY THE RECORDING OFFICE OF THE COUNTY CLERK WHERE THE PROPERTY IS LOCATED]. Upon filing of the Mortgage Instrument and UCC fixture filing in [IDENTIFY THE RECORDING OFFICE OF THE COUNTY CLERK WHERE THE PROPERTY IS LOCATED], the Agent will have a valid, perfected lien and security interest in that portion of the Collateral described in such Mortgage Instrument or UCC fixture filing to the extent such Collateral is comprised of real property and/or fixtures. (c) The forms of UCC financing statements relating to the Security Documents, attached hereto as Schedule 3 (the "Additional UCCs"), are in proper form for filing and recording with the offices of [IDENTIFY (I) THE RECORDING OFFICE OF THE COUNTY CLERK WHERE THE PROPERTY IS LOCATED AND (II) THE SECRETARY OF STATE WHERE THE PROPERTY IS LOCATED]. Upon filing of the Additional UCCs in [IDENTIFY (I) THE RECORDING OFFICE OF THE COUNTY CLERK WHERE THE PROPERTY IS LOCATED AND (II) THE SECRETARY OF STATE WHERE THE PROPERTY IS LOCATED], the Agent will have a valid, perfected lien and security interest in that portion of the Collateral which can be perfected by filing UCC-1 financing statements under Article 9 of the UCC. (d) The form of Deed and Memorandum of Lease is in appropriate form for filing and recording with the [IDENTIFY THE RECORDING OFFICE OF THE COUNTY CLERK FOR THE COUNTY WHERE THE PROPERTY IS LOCATED]. (e) The Memorandum of Lease, when filed and recorded with the [IDENTIFY THE RECORDING OFFICE OF THE COUNTY CLERK FOR THE COUNTY WHERE THE PROPERTY IS LOCATED], will have been filed and recorded in all public offices in the State of [__________] in which filing or recording is necessary to provide constructive notice of the Lease to third Persons and to establish of record the interest of the Lessor thereunder as to the Property described in the Memorandum of Lease. (f) Title to the Property located in the State of [___________] may be held in the name of the Owner Trustee as follows: First Security Bank, National Association, not individually, but solely as the Owner Trustee under the Dolphin Realty Trust 1999-1. B-2 65 (g) The execution and delivery by First Security Bank, National Association, individually or as the Owner Trustee, as the case may be, of the Operative Agreements to which it is a party and compliance by First Security Bank, National Association, individually or as the Owner Trustee, with all of the provisions thereof do not and will not contravene any law, rule or regulation of [IDENTIFY THE STATE]. (h) By reason of their participation in the transaction contemplated under the Operative Agreements, none of the Agent, the Lenders, the Holders or the Owner Trustee has to (a) qualify as a foreign corporation in [IDENTIFY THE STATE], (b) file any application or any designation for service of process in [IDENTIFY THE STATE] or (c) pay any franchise, income, sales, excise, stamp or other taxes of any kind to [IDENTIFY THE STATE]. (i) The provisions in the Operative Agreements concerning Rent, interest, fees, prepayment premiums and other similar charges do not violate the usury laws or other similar laws regulating the use or forbearance of money of [IDENTIFY THE STATE]. (j) If the transactions contemplated by the Operative Agreements are characterized as a lease transaction by a court of competent jurisdiction, the Lease and the applicable Lease Supplement shall demise to the Lessee a valid leasehold interest in the Property described in such Lease Supplement. (k) If the transactions contemplated by the Operative Agreements are characterized as a loan transaction by a court of competent jurisdiction, the combination of the Mortgage Instruments, the Deeds, the Lease and the applicable Lease Supplements (and the other Operative Agreements incorporated therein by reference) are sufficient to create a valid, perfected lien or security interest in the Property therein described, enforceable as a mortgage in [IDENTIFY THE STATE]. This opinion is limited to the matters stated herein and no opinion is implied or may be inferred beyond the matters stated herein. This opinion is based on and is limited to the laws of the State of [___________] and the federal laws of the United States of America. Insofar as the foregoing opinion relates to matters of law other than the foregoing, no opinion is hereby given. This opinion is for the sole benefit of the Lessee, the Guarantor, the Owner Trustee, the Holders, the Lenders, the Agent, the Arranger and their respective successors and assigns and may not be relied upon by any other person other than such parties and their respective successors and assigns without the express written consent of the undersigned. The opinions expressed herein are as of the date hereof and we make no undertaking to amend or supplement such opinions if facts come to our attention or changes in the current law of the jurisdictions mentioned herein occur which could affect such opinions. Very truly yours, [LESSEE'S OUTSIDE COUNSEL] B-3 66 Distribution List First Union National Bank, as the Agent, a Holder and a Lender The various banks and other lending institutions which are parties to the Participation Agreement from time to time, as additional Holders The various banks and other lending institutions which are parties to the Participation Agreement from time to time, as additional Lenders Catalina Marketing Sales Corporation, as the Lessee Catalina Marketing Corporation, as the Guarantor First Security Bank, National Association, not individually, but solely as the Owner Trustee under the Dolphin Realty Trust 1999-1 B-4 67 Schedule 1 Form of Mortgage Instrument B-5 68 Schedule 2 Forms of UCC Fixture Filings B-6 69 Schedule 3 Forms of UCC Financing Statements B-7 70 EXHIBIT C CATALINA MARKETING SALES CORPORATION OFFICER'S CERTIFICATE (Pursuant to Section 5.3(w) of the Participation Agreement) Catalina Marketing Sales Corporation, a Delaware corporation (the "Company"), DOES HEREBY CERTIFY as follows: 1. Each and every representation and warranty of each Credit Party contained in the Operative Agreements to which it is a party is true and correct on and as of the date hereof. 2. No Lease Default or Lease Event of Default has occurred and is continuing under any Operative Agreement. 3. Each Operative Agreement to which any Credit Party is a party is in full force and effect with respect to it. 4. Each Credit Party has duly performed and complied with all covenants, agreements and conditions contained in the Participation Agreement (hereinafter defined) or in any Operative Agreement required to be performed or complied with by it on or prior to the date hereof. Capitalized terms used in this Officer's Certificate and not otherwise defined herein have the respective meanings ascribed thereto in the Participation Agreement dated as of October 21, 1999 among the Company, as the Lessee, Catalina Marketing Corporation, as the Guarantor, First Security Bank, National Association, as the Owner Trustee, the various banks and other lending institutions which are parties thereto from time to time, as holders (the "Holders"), the various banks and other lending institutions which are parties thereto from time to time, as lenders (the "Lenders") and First Union National Bank, as the agent for the Lenders and respecting the Security Documents, as the agent for the Lenders and the Holders, to the extent of their interests (the "Agent"). IN WITNESS WHEREOF, the Company has caused this Officer's Certificate to be duly executed and delivered as of this _____ day of __________, ______. CATALINA MARKETING SALES CORPORATION By: ________________________________ Name: ______________________________ Title: _____________________________ C-1 71 EXHIBIT D [NAME OF CREDIT PARTY] SECRETARY'S CERTIFICATE (Pursuant to Section 5.3(x) of the Participation Agreement) [NAME OF CREDIT PARTY], a ______________ corporation (the "Company") DOES HEREBY CERTIFY as follows: 1. Attached hereto as Schedule 1 is a true, correct and complete copy of the resolutions of the Board of Directors of the Company duly adopted by the Board of Directors of the Company on __________. Such resolutions have not been amended, modified or rescinded since their date of adoption and remain in full force and effect as of the date hereof. 2. Attached hereto as Schedule 2 is a true, correct and complete copy of the Articles of Incorporation of the Company on file in the Office of the Secretary of State of __________. Such Articles of Incorporation have not been amended, modified or rescinded since their date of adoption and remain in full force and effect as of the date hereof. 3. Attached hereto as Schedule 3 is a true, correct and complete copy of the Bylaws of the Company. Such Bylaws have not been amended, modified or rescinded since their date of adoption and remain in full force and effect as of the date hereof. 4. The persons named below now hold the offices set forth opposite their names, and the signatures opposite their names and titles are their true and correct signatures.
Name Office Signature ---- ------ --------- ------------------- ----------------------- ------------------------- ------------------- ----------------------- -------------------------
D-1 72 IN WITNESS WHEREOF, the Company has caused this Secretary's Certificate to be duly executed and delivered as of this _____ day of ___________, ______. [NAME OF CREDIT PARTY] By: ________________________________ Name: ______________________________ Title: _____________________________ D-2 73 Schedule 1 Board Resolutions D-3 74 Schedule 2 Articles of Incorporation D-4 75 Schedule 3 Bylaws D-5 76 EXHIBIT E FIRST SECURITY BANK, NATIONAL ASSOCIATION OFFICER'S CERTIFICATE (Pursuant to Section 5.3(y) of the Participation Agreement) FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking association, not individually (except with respect to paragraph 1 below, to the extent any such representations and warranties are made in its individual capacity) but solely as the owner trustee under the Dolphin Realty Trust 1999-1 (the "Owner Trustee"), DOES HEREBY CERTIFY as follows: 1. Each and every representation and warranty of the Owner Trustee contained in the Operative Agreements to which it is a party is true and correct on and as of the date hereof. 2. Each Operative Agreement to which the Owner Trustee is a party is in full force and effect with respect to it. 3. The Owner Trustee has duly performed and complied with all covenants, agreements and conditions contained in the Participation Agreement (hereinafter defined) or in any Operative Agreement required to be performed or complied with by it on or prior to the date hereof. Capitalized terms used in this Officer's Certificate and not otherwise defined herein have the respective meanings ascribed thereto in the Participation Agreement dated as of October 21, 1999 among Catalina Marketing Sales Corporation, as the Lessee, Catalina Marketing Corporation, as the Guarantor, the Owner Trustee, the various banks and other lending institutions which are parties thereto from time to time, as holders (the "Holders"), the various banks and other lending institutions which are parties thereto from time to time, as lenders (the "Lenders") and First Union National Bank, as the agent for the Lenders and respecting the Security Documents, as the agent for the Lenders and the Holders, to the extent of their interests (the "Agent"). E-1 77 IN WITNESS WHEREOF, the Owner Trustee has caused this Officer's Certificate to be duly executed and delivered as of this _____ day of __________, ______. FIRST SECURITY BANK, NATIONAL ASSOCIATION, not individually, except as expressly stated herein, but solely as the Owner Trustee under the Dolphin Realty Trust 1999-1 By: ________________________________ Name: ______________________________ Title: _____________________________ E-2 78 EXHIBIT F FIRST SECURITY BANK, NATIONAL ASSOCIATION SECRETARY'S CERTIFICATE (Pursuant to Section 5.3(z) of the Participation Agreement) CERTIFICATE OF ASSISTANT SECRETARY I, ______________________, duly elected and qualified Assistant Secretary of the Board of Directors of First Security Bank, National Association (the "Association"), hereby certify as follows: 1. The Association is a National Banking Association duly organized, validly existing and in good standing under the laws of the United States. With respect thereto the following is noted: A. Pursuant to Revised Statutes 324, et seq., as amended, 12 U.S.C. 1, et seq., the Comptroller of the Currency charters and exercises regulatory and supervisory authority over all National Banking Associations; B. On December 9, 1881, the First National Bank of Ogden, Utah was chartered as a National Banking Association under the laws of the United States and under Charter No. 2597; C. On October 2, 1922, in connection with a consolidation of The First National Bank of Ogden, Ogden, Utah, and The Utah National Bank of Ogden, Ogden, Utah, the title was changed to "The First & Utah National Bank of Ogden"; on January 18, 1923, The First & Utah National Bank of Ogden changed its title to "First Utah National Bank of Ogden"; on January 19, 1926, the title was changed to "First National Bank of Ogden"; on February 24, 1934, the title was changed to "First Security Bank of Utah, National Association"; on June 21, 1996, the title was changed to "First Security Bank, National Association"; and D. First Security Bank, National Association, Ogden, Utah, continues to hold a valid certificate to do business as a National Banking Association. 2. The Association's Articles of Association, as amended, are in full force and effect, and a true, correct and complete copy is attached hereto as Schedule A and incorporated herein by reference. Said Articles were last amended October 20, 1975, as required by law on notice at a duly called special meeting of the shareholders of the Association. F-1 79 3. The Association's By-Laws, as amended, are in full force and effect; and a true, correct and complete copy is attached hereto as Schedule B and incorporated herein by reference. Said By-Laws, still in full force and effect, were adopted September 17, 1942, by resolution, after proper notice of consideration and adoption of By-Laws was given to each and every shareholder, at a regularly called meeting of the Board of Directors with a quorum present. 4. Pursuant to the authority vested in it by an Act of Congress approved December 23, 1913 and known as the Federal Reserve Act, as amended, the Federal Reserve Board (now the Board of Governors of the Federal Reserve System) has granted to the Association now known as "First Security Bank, National Association" of Ogden, Utah, the right to act, when not in contravention of State or local law, as trustee, executor, administrator, registrar of stocks and bonds, guardian of estates, assignee, receiver, committee of estates of lunatics, or in any other fiduciary capacity in which State banks, trust companies or other corporations which come into competition with National Banks are permitted to act under the laws of the State of Utah; and under the provisions of applicable law, the authority so granted remains in full force and effect. 5. Pursuant to authority vested by Act of Congress (12 U.S.C. 92a and 12 U.S.C. 481, as amended) the Comptroller of the Currency has issued Regulation 9, as amended, dealing, in part, with the Fiduciary Powers of National Banks, said regulation providing in subparagraph 9.7 (a) (1-2): (1) The board of directors is responsible for the proper exercise of fiduciary powers by the Bank. All matters pertinent thereto, including the determination of policies, the investment and disposition of property held in fiduciary capacity, and the direction and review of the actions of all officers, employees, and committees utilized by the Bank in the exercise of its fiduciary powers, are the responsibility of the board. In discharging this responsibility, the board of directors may assign, by action duly entered in the minutes, the administration of such of the Bank's fiduciary powers as it may consider proper to assign to such director(s), officer(s), employee(s) or committee(s) as it may designate. (2) No fiduciary account shall be accepted without the prior approval of the board, or of the director(s), officer(s), or committee(s) to whom the board may have designated the performance of that responsibility. . . . 6. A Resolution relating to Exercise of Fiduciary Powers was adopted by the Board of Directors at a meeting held July 26, 1994 at which time there was a quorum present; said resolution is still in full force and effect and has not been rescinded. Said resolution is attached hereto as Schedule C and incorporated herein by reference. 7. A Resolution relating to the Designation of Officers and Employees to Exercise Fiduciary Powers was adopted by the Trust Policy Committee at a meeting held February 7, F-2 80 1996 at which time a quorum was present; said resolution is still in full force and effect and has not been rescinded. Said resolution is attached hereto as Schedule D and is incorporated herein by reference. 8. Attached hereto as Schedule E and incorporated herein by reference, is a listing of facsimile signatures of persons authorized (herein "Authorized Signatory or Signatories") on behalf of the Association and its Trust Group to act in exercise of its fiduciary powers subject to the resolutions in Paragraphs 6 and 7, above. 9. The principal office of the First Security Bank, National Association, Trust Group and of its departments, except for the St. George, Utah, Ogden, Utah, and Provo, Utah, branch offices, is located at 79 South Main Street, Salt Lake City, Utah 84111 and all records relating to fiduciary accounts are located at such principal office of the Trust Group or in storage facilities within Salt Lake County, Utah, except for those of the Ogden, Utah, St. George, Utah, and Provo, Utah, branch offices, which are located at said office. 10. Each Authorized Signatory (i) is a duly elected or appointed, duly qualified officer or employee of the Association; (ii) holds the office or job title set forth below his or her name on the date hereof; (iii) and the facsimile signature appearing opposite the name of each such officer or employee is a true replica of his or her signature. F-3 81 IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of the Association this __________ day of _________________, ______. (SEAL) ________________________________________ R. James Steenblik Senior Vice President Assistant Secretary F-4 82 Schedule A Articles of Association F-5 83 Schedule B Bylaws F-6 84 Schedule C Resolution Relating to Exercise of Fiduciary Powers F-7 85 Schedule D Resolution Relating to the Designation of Officers and Employees To Exercise Fiduciary Powers F-8 86 Schedule E Authorized Signatory or Signatories F-9 87 EXHIBIT G [Outside Counsel Opinion for the Owner Trustee] (Pursuant to Section 5.3(aa) of the Participation Agreement) October 21, 1999 TO THOSE ON THE ATTACHED DISTRIBUTION LIST Re: Trust Agreement dated as of October 21, 1999 Dear Sirs: We have acted as special counsel for First Security Bank, National Association, a national banking association, in its individual capacity ("FSB") and in its capacity as trustee (the "Owner Trustee") under the Trust Agreement dated as of October 21, 1999 (the "Trust Agreement") by and among it and the various banks and other lending institutions which are parties thereto from time to time, as holders (the "Holders"), in connection with the execution and delivery by the Owner Trustee of the Operative Agreements to which it is a party. Except as otherwise defined herein, the terms used herein shall have the meanings set forth in Appendix A to the Participation Agreement dated as of October 21, 1999 (the "Participation Agreement") by and among Catalina Marketing Sales Corporation (the "Lessee"), Catalina Marketing Corporation (the "Guarantor"), First Security Bank, National Association, as the Owner Trustee, the Holders, the various banks and other lending institutions which are parties thereto from time to time, as lenders (the "Lenders") and First Union National Bank, as the agent for the Lenders and respecting the Security Documents, as the agent for the Lenders and the Holders, to the extent of their interests (the "Agent"). We have examined originals or copies, certified or otherwise identified to our satisfaction, of such documents, corporate records and other instruments as we have deemed necessary or advisable for the purpose of rendering this opinion. Based upon the foregoing, we are of the opinion that: 1. FSB is a national banking association duly organized, validly existing and in good standing under the laws of the United States of America and each of FSB and the Owner Trustee has under the laws of the State of Utah and federal banking law the power and authority to enter into and perform its obligations under the Trust Agreement and each other Operative Agreement to which it is a party. 2. The Owner Trustee is the duly appointed trustee under the Trust Agreement. G-1 88 3. The Trust Agreement has been duly authorized, executed and delivered by one (1) of the officers of FSB and, assuming due authorization, execution and delivery by the Holders, is a legal, valid and binding obligation of the Owner Trustee (and to the extent set forth therein, against FSB), enforceable against the Owner Trustee (and to the extent set forth therein, against FSB) in accordance with its terms, and the Trust Agreement creates under the laws of the State of Utah for the Holders the beneficial interest in the Trust Estate it purports to create and is a valid trust under the laws of the State of Utah. 4. The Operative Agreements to which it is party have been duly authorized, executed and delivered by FSB, and, assuming due authorization, execution and delivery by the other parties thereto, are legal, valid and binding obligations of FSB, enforceable against FSB in accordance with their respective terms. 5. The Operative Agreements to which it is party have been duly authorized, executed and delivered by the Owner Trustee, and, assuming due authorization, execution and delivery by the other parties thereto, are legal, valid and binding obligations of the Owner Trustee, enforceable against the Owner Trustee in accordance with their respective terms. The Notes and Certificates have been duly issued, executed and delivered by the Owner Trustee, pursuant to authorization contained in the Trust Agreement, and the Certificates are entitled to the benefits and security afforded by the Trust Agreement in accordance with its terms and the terms of the Trust Agreement. 6. The execution and delivery by each of FSB and the Owner Trustee of the Trust Agreement and the Operative Agreements to which it is a party, and compliance by FSB or the Owner Trustee, as the case may be, with all of the provisions thereof do not and will not contravene any Laws applicable to or binding on FSB, or as the Owner Trustee, or contravene the provisions of, or constitute a default under, its charter documents or by-laws or, to our knowledge after due inquiry, any indenture, mortgage contract or other agreement or instrument to which FSB or Owner Trustee is a party or by which it or any of its property may be bound or affected. 7. The execution and delivery of the Operative Agreements by each of FSB and the Owner Trustee and the performance by each of FSB and the Owner Trustee of their respective obligations thereunder does not require on or prior to the date hereof the consent or approval of, the giving of notice to, the registration or filing with, or the taking of any action in respect of any Governmental Authority or any court. 8. Assuming that the trust created by the Trust Agreement is treated as a grantor trust for federal income tax purposes within the contemplation of Section 671 through 678 of the Internal Revenue Code of 1986, there are no fees, taxes, or other charges (except taxes imposed on fees payable to the Owner Trustee) payable to the State of Utah or any political subdivision thereof in connection with the execution, delivery or performance by the Owner Trustee, the Agent, the Lenders, the Lessee or the Holders, as the case may be, of the Operative Agreements or in connection with the acquisition of the Property by the Owner Trustee or in connection with the making by any Holder of its investment in the Trust or its acquisition of the beneficial interest in the Trust Estate or in connection with the issuance and acquisition of the Certificates, G-2 89 or the Notes, and neither the Owner Trustee, the Trust Estate nor the trust created by the Trust Agreement will be subject to any fee, tax or other governmental charge (except taxes on fees payable to the Owner Trustee) under the laws of the State of Utah or any political subdivision thereof on, based on or measured by, directly or indirectly, the gross receipts, net income or value of the Trust Estate by reason of the creation or continued existence of the trust under the terms of the Trust Agreement pursuant to the laws of the State of Utah or the Owner Trustee's performance of its duties under the Trust Agreement. 9. There is no fee, tax or other governmental charge under the laws of the State of Utah or any political subdivision thereof in existence on the date hereof on, based on or measured by any payments under the Certificates, Notes or the beneficial interest in the Trust Estate, by reason of the creation of the trust under the Trust Agreement pursuant to the laws of the State of Utah or the Owner Trustee's performance of its duties under the Trust Agreement within the State of Utah. 10. Upon the filing of the financing statement on form UCC-1 in the form attached hereto as Schedule 1 with the Utah Division of Corporation and Commercial Code, the Agent's security interest in the Trust Estate, for the benefit of the Lenders and the Holders, will be perfected, to the extent that such perfection is governed by Article 9 of the Uniform Commercial Code as in effect in the State of Utah (the "Utah UCC"). Your attention is directed to the Utah UCC, which provides, in part, that a filed financing statement which does not state a maturity date or which states a maturity date of more than five (5) years is effective only for a period of five (5) years from the date of filing, unless within six (6) months prior to the expiration of said period a continuation statement is filed in the same office or offices in which the original statement was filed. The continuation statement must be signed by the secured party, identify the original statement by file number and state that the original statement is still effective. Upon the timely filing of a continuation statement, the effectiveness of the original financing statement is continued for five (5) years after the last date to which the original statement was effective. Succeeding continuation statements may be filed in the same manner to continue the effectiveness of the original statement. The foregoing opinions are subject to the following assumptions, exceptions and qualifications: A. We are attorneys admitted to practice in the State of Utah and in rendering the foregoing opinions we have not passed upon, or purported to pass upon, the laws of any jurisdictions other than the State of Utah and the federal banking law governing the banking and trust powers of FSB. In addition, without limiting the foregoing we express no opinion with respect to (i) federal securities laws, including the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and the Trust Indenture Act of 1939, as amended, (ii) the Federal Aviation Act of 1958, as amended, (iii) the Federal Communications Act of 1934, as amended, or (iv) state securities or blue sky laws. Insofar as the foregoing opinions relate to the legality, validity, binding effect and enforceability of the documents involved in these transactions, which by their terms are governed by the laws of a state other than Utah, we have assumed that the laws of such state (as to which we express no opinion), are in all material aspects identical to the laws of the State of Utah. G-3 90 B. The opinions set forth in paragraphs 3, 4, and 5 above are subject to the qualification that enforceability of the Trust Agreement and the other Operative Agreements to which FSB and the Owner Trustee are parties, in accordance with their respective terms, may be limited by (i) bankruptcy, insolvency, reorganization, moratorium, receivership or similar laws affecting enforcement of creditors' rights generally, and (ii) general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law. C. As to the documents involved in these transactions, we have assumed that each is a legal, valid and binding obligation of each party thereto, other than FSB or the Owner Trustee, and is enforceable against each such party in accordance with their respective terms. D. We have assumed that all signatures, other than those of the Owner Trustee or FSB, on documents and instruments involved in these transactions are genuine, that all documents and instruments submitted to us as originals are authentic, and that all documents and instruments submitted to us as copies conform with the originals, which facts we have not independently verified. E. We do not purport to be experts in respect of, or express any opinion concerning laws, rules or regulations applicable to the particular nature of the equipment or property involved in these transactions. F. We have made no investigation of, and we express no opinion concerning, the nature of the title to any part of the equipment or property involved in these transactions or the priority of any mortgage or security interest. G. We have assumed that the Participation Agreement and the transactions contemplated thereby are not within the prohibitions of Section 406 of the Employee Retirement Income Security Act of 1974. H. In addition to any other limitation by operation of law upon the scope, meaning, or purpose of this opinion, the opinions expressed herein speak only as of the date hereof. We have no obligation to advise the recipients of this opinion (or any third party) and make no undertaking to amend or supplement such opinions if facts come to our attention or changes in the current law of the jurisdictions mentioned herein occur which could affect such opinions the legal analysis, a legal conclusion or any information confirmation herein. G-4 91 I. This opinion is for the sole benefit of the Lessee, the Guarantor, the Owner Trustee, the Holders, the Lenders, the Agent, the Arranger and their respective successors and assigns in matters directly related to the Participation Agreement or the transaction contemplated thereunder and may not be relied upon by any other person other than such parties and their respective successors and assigns without the express written consent of the undersigned. The opinions expressed in this letter are limited to the matter set forth in this letter, and no other opinions should be inferred beyond the matters expressly stated. Very truly yours, RAY, QUINNEY & NEBEKER M. John Ashton G-5 92 Distribution List First Union National Bank, as the Agent, a Holder and a Lender The various banks and other lending institutions which are parties to the Participation Agreement from time to time, as additional Holders The various banks and other lending institutions which are parties to the Participation Agreement from time to time, as additional Lenders Catalina Marketing Sales Corporation, as the Lessee Catalina Marketing Corporation, as the Guarantor First Security Bank, National Association, not individually, but solely as the Owner Trustee under the Dolphin Realty Trust 1999-1 G-6 93 EXHIBIT H [Outside Counsel Opinion for the Lessee] (Pursuant to Section 5.3(bb) of the Participation Agreement) October 21, 1999 TO THOSE ON THE ATTACHED DISTRIBUTION LIST Re: Synthetic Lease Financing Provided in favor of Catalina Marketing Sales Corporation Dear Sirs: We have acted as special counsel to Catalina Marketing Sales Corporation, a Delaware corporation (the "Lessee") and Catalina Marketing Corporation, a Delaware corporation (the "Guarantor") in connection with certain transactions contemplated by the Participation Agreement dated as of October 21, 1999 (the "Participation Agreement"), among the Lessee, the Guarantor, First Security Bank, National Association, as the Owner Trustee (the "Owner Trustee"), the various banks and other lending institutions which are parties thereto from time to time, as holders (the "Holders"), the various banks and other lending institutions which are parties thereto from time to time, as lenders (the "Lenders") and First Union National Bank, as the agent for the Lenders and respecting the Security Documents, as the agent for the Lenders and the Holders, to the extent of their interests (the "Agent"). This opinion is delivered pursuant to Section 5.3(bb) of the Participation Agreement. All capitalized terms used herein, and not otherwise defined herein, shall have the meanings assigned thereto in Appendix A to the Participation Agreement. In connection with the foregoing, we have examined originals, or copies certified to our satisfaction, of the Operative Agreements, and such other corporate, partnership or limited liability company documents and records of the Credit Parties, certificates of public officials and representatives of the Credit Parties as to certain factual matters, and such other instruments and documents which we have deemed necessary or advisable to examine for the purpose of this opinion. With respect to such examination, we have assumed (i) the statements of fact made in all such certificates, documents and instruments are true, accurate and complete; (ii) the due authorization, execution and delivery of the Operative Agreements by the parties thereto other than the Credit Parties; (iii) the genuineness of all signatures (other than the signatures of persons signing on behalf of the Credit Parties), the authenticity and completeness of all documents, certificates, instruments, records and corporate records submitted to us as originals and the conformity to the original instruments of all documents submitted to us as copies, and the authenticity and completeness of the originals of such copies; (iv) that all parties other than the Credit Parties have all requisite corporate power and authority to execute, deliver and perform H-1 94 the Operative Agreements; and (v) the enforceability of the Operative Agreements against all parties thereto other than the Credit Parties and respecting the opinion set forth below in section (i), First Security Bank, National Association, individually or as the Owner Trustee, as the case may be. We have further assumed that the laws of the States of [STATE OF LAWYER'S ADMISSION] and [GOVERNING LAW OF PARTICIPATION AGREEMENT] are substantively identical. Based on the foregoing, and having due regard for such legal considerations as we deem relevant, and subject to the limitations and assumptions set forth herein, including without limitation the matters set forth in the last two (2) paragraphs hereof, we are of the opinion that: (a) Each Credit Party is a [CORPORATION, PARTNERSHIP OR LIMITED LIABILITY COMPANY] duly [INCORPORATED OR ORGANIZED], validly existing and in good standing under the laws of the state of its ______ and has the power and authority to conduct its business as presently conducted and to execute, deliver and perform its obligations under the Operative Agreements to which it is a party. Each Credit Party is duly qualified to do business in all jurisdictions in which its failure to so qualify would materially impair its ability to perform its obligations under the Operative Agreements to which it is a party or its financial position or its business as now and now proposed to be conducted. (b) The execution, delivery and performance by each Credit Party of the Operative Agreements to which it is a party have been duly authorized by all necessary corporate action on the part of each Credit Party and the Operative Agreements to which each Credit Party is a party have been duly executed and delivered by each Credit Party. (c) The Operative Agreements to which each Credit Party is a party constitute valid and binding obligations of each Credit Party enforceable against each Credit Party in accordance with the terms thereof, subject to bankruptcy, insolvency, liquidation, reorganization, fraudulent conveyance, and similar laws affecting creditors' rights generally, and general principles of equity (regardless of whether the application of such principles is considered in a proceeding in equity or at law). (d) The execution and delivery by each Credit Party of the Operative Agreements to which it is a party and compliance by each Credit Party with all of the provisions thereof do not and will not (i) contravene the provisions of, or result in any breach of or constitute any default under, or result in the creation of any Lien (other than Permitted Liens and Lessor Liens) upon any of its property under, its [ARTICLES OF INCORPORATION, BY-LAWS, OPERATING AGREEMENT, PARTNERSHIP AGREEMENT OR OTHER SIMILAR DOCUMENT OF FORMATION] or any indenture, mortgage, chattel mortgage, deed of trust, lease, conditional sales contract, bank loan or credit agreement or other agreement or instrument to which any Credit Party is a party or by which any Credit Party or any property of any Credit Party may be bound or affected, or (ii) contravene any Laws or any order of any Governmental Authority applicable to or binding on any Credit Party. (e) No Governmental Action by, and no notice to or filing with, any Governmental Authority is required for the due execution, delivery or performance by any Credit Party of any of the Operative Agreements to which any Credit Party is a party or for the acquisition or ownership of the Property, except for those which have been obtained. H-2 95 (f) Except as set forth on Schedule 1 hereto, there are no actions, suits or proceedings pending or to our knowledge, threatened against any Credit Party in any court or before any Governmental Authority, that concern the Property or the interest of any Credit Party therein or that question the validity or enforceability of any Operative Agreement to which any Credit Party is a party or the overall transaction described in the Operative Agreements to which any Credit Party is a party. (g) Neither the nature of the Property, nor any relationship between any Credit Party and any other Person, nor any circumstance in connection with the execution, delivery and performance of the Operative Agreements to which any Credit Party is a party is such as to require any approval of stockholders of, or approval or consent of any trustee or holders of indebtedness of, any Credit Party, except for such approvals and consents which have been duly obtained and are in full force and effect. (h) The Security Documents which have been executed and delivered as of the date of this opinion create, for the benefit of the Agent, the security interests in the Collateral described therein which by their terms such Security Documents purport to create. Upon filing of the UCC-1 financing statements (attached hereto as Schedule 2) relating to the Security Documents in the recording offices of (A) the respective county clerk where the principal place of business of the Lessee is located and (B) the Secretary of State where the principal place of business of the Lessee is located, the Agent will have a valid, perfected lien and security interest in that portion of the Collateral which can be perfected by the filing of UCC-1 financing statements under Article 9 of the UCC in [IDENTIFY THE STATE]. (i) The Operative Agreements to which First Security Bank, National Association, individually or as the Owner Trustee, is a party constitute valid and binding obligations of such party and are enforceable against First Security Bank, National Association, individually or as the Owner Trustee, as the case may be, in accordance with the terms thereof, subject to bankruptcy, insolvency, liquidation, reorganization, fraudulent conveyance, and similar laws affecting creditors, rights generally, and general principles of equity (regardless of whether the application of such principles is considered in a proceeding in equity or at law). (j) The offer, issuance, sale and delivery of the Notes and the offer, issuance, sale and delivery of the Certificates under the circumstances contemplated by the Participation Agreement do not, under existing law, require registration of the Notes or the Certificates being issued on the date hereof under the Securities Act of 1933, as amended, or the qualification of the Loan Agreement under the Trust Indenture Act of 1939, as amended. This opinion is limited to the matters stated herein and no opinion is implied or may be inferred beyond the matters stated herein. This opinion is based on and is limited to the laws of the States of [__________], and the federal laws of the United States of America. Insofar as the foregoing opinion relates to matters of law other than the foregoing, no opinion is hereby given. H-3 96 This opinion is for the sole benefit of the Lessee, the Guarantor, the Owner Trustee, the Holders, the Lenders, the Agent, the Arranger and their respective successors and assigns and may not be relied upon by any other person other than such parties and their respective successors and assigns without the express written consent of the undersigned. The opinions expressed herein are as of the date hereof and we make no undertaking to amend or supplement such opinions if facts come to our attention or changes in the current law of the jurisdictions mentioned herein occur which could affect such opinions. Very truly yours, [LESSEE'S OUTSIDE COUNSEL] H-4 97 Distribution List First Union National Bank, as the Agent, a Holder and a Lender The various banks and other lending institutions which are parties to the Participation Agreement from time to time, as additional Holders The various banks and other lending institutions which are parties to the Participation Agreement from time to time, as additional Lenders Catalina Marketing Sales Corporation, as the Lessee Catalina Marketing Corporation, as the Guarantor First Security Bank, National Association, not individually, but solely as the Owner Trustee under the Dolphin Realty Trust 1999-1 H-5 98 Schedule 1 (Litigation) H-6 99 Schedule 2 (UCC-1 Financing Statements) H-7 100 EXHIBIT I [INTENTIONALLY RESERVED] I-1 101 EXHIBIT J (Pursuant to Section 6.2(d) of the Participation Agreement) OUTSTANDING MAJOR LITIGATION AND CLAIMS (as of 21 Oct 99) INTER*ACT SYSTEMS, INC. VS. CATALINA MARKETING CORPORATION; CATALINA MARKETING INTERNATIONAL, INC. VS. INTER*ACT SYSTEMS INC., et al Civil Case No. 3:96cv274(AWT), US District Court, CT (Hartford) Civil Case No. 3:98cv422(AWT), US District Court, CT (Hartford) Matter: (Alleged infringement: by CMC of the Murphy Patent; and by Inter*Act of the Off '868 Patent; and by Inter*Act of the Lemon Patent) INTER*ACT SYSTEMS, INC. VS. CATALINA MARKETING CORPORATION Civil Case No. 3:98cv988(AWT), US District Court, CT (Hartford) Matter: (Alleged infringement: by CMC of the Deaton Patents) CATALINA MARKETING INTERNATIONAL, INC. VS. CREDIT VERIFICATION CORPORATION Civil Action No. 98-4135-SAC,, US District Court, KS (Topeka) Matter: (Alleged infringement: by CVC of CMC patent - Off '868 (Counterclaim by CVC to declare the Off `868 patent invalid) COOLSAVINGS.COM, INC. VS. CATALINA MARKETING CORPORATION Case No. 98C-6668 (Judge Grady, Magistrate Nolan), US District Court, IL Matter: (Alleged infringement: by CMC of "Golden Patent, '648) SOCIETE ORANGINA FRANCE S.A. VS. CATALINA MARKETING FRANCE S.A.; COCA-COLA BEVERAGES S.A.; SOGEC S.A. Appellate Court of Lyon [France] Matter: (alleged unfair competition from CMF coupon system) INFOMIL SARL VS. CATALINA MARKETING CORP. AND CATALINA MARKETING FRANCE, S.A. (Le Tribunal de Grande Instance de Paris [France]) Matter: (to declare CMC European patent in France INvalid) J-1 102 USPTO INTERFERENCE Matter: (Effort to have Catalina Checkout Direct patent issue, and conflicting Deaton patents declared invalid) J-2 103 - -------------------------------------------------------------------------------- Appendix A Rules of Usage and Definitions - -------------------------------------------------------------------------------- I. Rules of Usage The following rules of usage shall apply to this Appendix A and the Operative Agreements (and each appendix, schedule, exhibit and annex to the foregoing) unless otherwise required by the context or unless otherwise defined therein: (a) Except as otherwise expressly provided, any definitions set forth herein or in any other document shall be equally applicable to the singular and plural forms of the terms defined. (b) Except as otherwise expressly provided, references in any document to articles, sections, paragraphs, clauses, annexes, appendices, schedules or exhibits are references to articles, sections, paragraphs, clauses, annexes, appendices, schedules or exhibits in or to such document. (c) The headings, subheadings and table of contents used in any document are solely for convenience of reference and shall not constitute a part of any such document nor shall they affect the meaning, construction or effect of any provision thereof. (d) References to any Person shall include such Person, its successors, permitted assigns and permitted transferees. (e) Except as otherwise expressly provided, reference to any agreement means such agreement as amended, modified, extended, supplemented, restated and/or replaced from time to time in accordance with the applicable provisions thereof. (f) Except as otherwise expressly provided, references to any law includes any amendment or modification to such law and any rules or regulations issued thereunder or any law enacted in substitution or replacement therefor. (g) When used in any document, words such as "hereunder", "hereto", "hereof" and "herein" and other words of like import shall, unless the context clearly indicates to the contrary, refer to the whole of the applicable document and not to any particular article, section, subsection, paragraph or clause thereof. (h) References to "including" means including without limiting the generality of any description preceding such term and for purposes hereof the rule of ejusdem generis shall not be applicable to limit a general statement, followed by or referable to an enumeration of specific matters, to matters similar to those specifically mentioned. Appendix A - 1 104 (i) References herein to "attorney's fees", "legal fees", "costs of counsel" or other such references shall be deemed to include the allocated cost of in-house counsel. (j) Each of the parties to the Operative Agreements and their counsel have reviewed and revised, or requested revisions to, the Operative Agreements, and the usual rule of construction that any ambiguities are to be resolved against the drafting party shall be inapplicable in the construction and interpretation of the Operative Agreements and any amendments or exhibits thereto. (k) Capitalized terms used in any Operative Agreements which are not defined in this Appendix A but are defined in another Operative Agreement shall have the meaning so ascribed to such term in the applicable Operative Agreement. II. Definitions "ABR" shall mean, for any day, a rate per annum equal to the greater of (a) the Prime Lending Rate in effect on such day, and (b) one-half of one percent (0.5%) plus the Federal Funds Effective Rate in effect on such day. For purposes hereof: "Prime Lending Rate" shall mean the rate which the Agent announces from time to time as its prime lending rate as in effect from time to time. The Prime Lending Rate is a reference rate and does not necessarily represent the lowest or best rate actually charged to any customer. Any Lender may make commercial loans or other loans at rates of interest at, above or below the Prime Lending Rate. The Prime Lending Rate shall change automatically and without notice from time to time as and when the prime lending rate of the Agent changes. "Federal Funds Effective Rate" shall mean, for any period, a fluctuating interest rate per annum equal for each day during such period to the weighted average of the rates on overnight Federal funds transactions with members or the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by the Agent from three (3) Federal funds brokers of recognized standing selected by it. Any change in the ABR due to a change in the Prime Lending Rate or the Federal Funds Effective Rate shall be effective as of the opening of business on the effective day of such change in the Prime Lending Rate or the Federal Funds Effective Rate, respectively. "ABR Holder Advance" shall mean a Holder Advance bearing a Holder Yield based on the ABR. "ABR Loans" shall mean Loans the rate of interest applicable to which is based upon the ABR. "Acceleration" shall have the meaning given to such term in Section 6 of the Credit Agreement. Appendix A - 2 105 "Accounts" shall have the meaning given to such term in Section 1 of the Security Agreement. "Additional Incorporated Terms" shall have the meaning given to such term in Section 28.1 of the Lease. "Advance" shall mean the Loans and/or Holder Advances extended on the Property Closing Date. "Affiliate" shall mean, with respect to any Person, any Person or group acting in concert in respect of the Person in question that, directly or indirectly, controls or is controlled by or is under common control with such Person. "After Tax Basis" shall mean, with respect to any payment to be received, the amount of such payment increased so that, after deduction of the amount of all taxes required to be paid by the recipient calculated at the then maximum marginal rates generally applicable to Persons of the same type as the recipients with respect to the receipt by the recipient of such amounts (less any tax savings realized as a result of the payment of the indemnified amount), such increased payment (as so reduced) is equal to the payment otherwise required to be made. "Agent" shall mean First Union National Bank, as agent for the Lenders pursuant to the Credit Agreement, or any successor agent appointed in accordance with the terms of the Credit Agreement and respecting the Security Documents, for the Lenders and the Holders, to the extent of their interests. "Applicable Percentage" shall mean for Eurodollar Loans and Eurodollar Holder Advances, the appropriate applicable percentages corresponding to the Consolidated Leverage Ratio in effect as of the most recent Calculation Date as shown below:
Applicable Applicable Percentage Percentage for for Eurodollar Pricing Consolidated Eurodollar Holder Level Leverage Ratio Loans Advances ----------------------------------------------------------------------- Level I < 0.75 0.50% 1.25% Level II > = 0.75 < 1.5 0.75% 1.50% Level III > = 1.5 < 2.25 1.00% 1.75% Level IV > = 2.25 < 2.75 1.25% 2.00% Level V > = 2.75 1.625% 2.375%
The Applicable Percentage for Eurodollar Loans and Eurodollar Holder Advances shall, in each case, be determined and adjusted quarterly on the first day of each fiscal quarter of the Guarantor (each a "Calculation Date"); provided, however, that (i) the initial Applicable Percentage, in each case, shall be based on Pricing Level I (as shown above) and shall remain at Pricing Level I until the occurrence of the Calculation Date relating to the second fiscal quarter Appendix A - 3 106 of the Lessee occurring in fiscal year 1999 and, thereafter, the Pricing Level shall be determined by the then current Consolidated Leverage Ratio, and (ii) if the Lessee fails to provide the written notice required by Section 8.3(k) of the Participation Agreement to the Agent on or before the most recent Calculation Date, the Applicable Percentage, in each case, from such Calculation Date shall be based on Pricing Level V until such time that such written notice is provided whereupon the Pricing Level shall be determined by the then current Consolidated Leverage Ratio as specified in such notice. Each Applicable Percentage shall be effective from one Calculation Date until the next Calculation Date. Any adjustment in the Applicable Percentage shall be applicable to all existing Eurodollar Loans and Eurodollar Holder Advances as well as any new Eurodollar Loans and Eurodollar Holder Advances made or issued. "Appraisal" shall mean, with respect to the Property, an appraisal to be delivered in connection with the Participation Agreement or in accordance with the terms of the Lease, in each case prepared by a reputable appraiser reasonably acceptable to the Agent, which in the judgment of counsel to the Agent, complies with all of the provisions of the Financial Institutions Reform, Recovery and Enforcement Act of 1989, as amended, the rules and regulations adopted pursuant thereto, and all other applicable Legal Requirements. "Appraisal Procedure" shall have the meaning given such term in Section 22.4 of the Lease. "Appurtenant Rights" shall mean (a) all agreements, easements, rights of way or use, rights of ingress or egress, privileges, appurtenances, tenements, hereditaments and other rights and benefits at any time belonging or pertaining to the Land underlying the Improvements or the Improvements, including without limitation the use of any streets, ways, alleys, vaults or strips of land adjoining, abutting, adjacent or contiguous to the Land and (b) all permits, licenses and rights, whether or not of record, appurtenant to such Land or the Improvements. "Assignment and Acceptance" shall mean the Assignment and Acceptance in the form attached to the Credit Agreement as Exhibit B. "Available Commitment" shall mean, as to any Lender at any time, an amount equal to the excess, if any, of (a) the amount of such Lender's Commitment over (b) the aggregate outstanding principal amount of all Loans made by such Lender as of such date. "Available Holder Commitments" shall mean an amount equal to the excess, if any, of (a) the aggregate amount of the Holder Commitments over (b) the aggregate outstanding amount of the Holder Advances made since the Closing Date. "Bankruptcy Code" shall mean Title 11 of the U. S. Code entitled "Bankruptcy," as now or hereafter in effect or any successor thereto. "Basic Documents" shall mean the following: the Participation Agreement, the Trust Agreement, the Certificates, the Credit Agreement, the Notes, the Lease and the Security Agreement. Appendix A - 4 107 "Basic Rent" shall mean, the sum of (a) the scheduled interest due on the Loans on any Scheduled Interest Payment Date pursuant to the Credit Agreement, but not including any overdue amounts under Section 2.8(b) of the Credit Agreement or otherwise and (b) the scheduled Holder Yield due on the Holder Advances on any Scheduled Interest Payment Date pursuant to the Trust Agreement but not including interest on overdue amounts under the Trust Agreement or otherwise, each calculated as of the applicable date on which Basic Rent is due. "Basic Term" shall have the meaning specified in Section 2.2 of the Lease. "Basic Term Commencement Date" shall have the meaning specified in Section 2.2 of the Lease. "Basic Term Expiration Date" shall have the meaning specified in Section 2.2 of the Lease. "Benefited Lender" shall have the meaning specified in Section 9.10(a) of the Credit Agreement. "Bill of Sale" shall mean a Bill of Sale regarding Equipment in form and substance satisfactory to the Agent. "Board" shall mean the Board of Governors of the Federal Reserve System of the United States (or any successor). "Borrower" shall mean the Owner Trustee, not in its individual capacity, but as Borrower under the Credit Agreement. "Borrowing Date" shall mean any Business Day specified in a notice delivered pursuant to Section 2.2(b) of the Credit Agreement as a date on which the Lessor requests the Lenders to make Loans thereunder. "Business Day" shall mean a day other than a Saturday, Sunday or other day on which commercial banks in North Carolina or any other states from which the Agent, any Lender or any Holder funds or engages in administrative activities with respect to the transactions under the Operative Agreements are authorized or required by law to close; provided, however, that when used in connection with a Eurodollar Loan, the term "Business Day" shall also exclude any day on which banks are not open for dealings in dollar deposits in the London interbank market. "Capital Leases" means all leases which have been or should be capitalized in accordance with GAAP as in effect from time to time including Statement No. 13 of the Financial Accounting Standards Board and any successor thereof. "Capital Stock" shall mean any nonredeemable capital stock of any Credit Party or any of its Subsidiaries, whether common or preferred. Appendix A - 5 108 "Capitalized Lease" shall mean, as applied to any Person, any lease of property (whether real, personal, tangible, intangible or mixed of such Person) by such Person as the lessee which would be capitalized on a balance sheet of such Person prepared in accordance with GAAP. "Casualty" shall mean any damage or destruction of all or any portion of the Property as a result of a fire or other casualty. "CERCLA" shall mean the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, 42 U.S.C. ss. 9601 et seq., as amended by the Superfund Amendments and Reauthorization Act of 1986. "Certificate" shall mean a Certificate in favor of each Holder issued pursuant to the terms and conditions of the Trust Agreement in favor of each Holder. "Chattel Paper" shall have the meaning given to such term in Section 1 of the Security Agreement. "Claims" shall mean any and all obligations, liabilities, losses, actions, suits, penalties, claims, demands, costs and expenses (including without limitation reasonable attorney's fees and expenses) of any nature whatsoever. "Closing Date" shall mean October 21, 1999. "Code" shall mean the Internal Revenue Code of 1986 together with rules and regulations promulgated thereunder, as amended from time to time, or any successor statute thereto. "Collateral" shall mean all assets of the Lessor, and the Lessee, now owned or hereafter acquired, upon which a Lien is purported to be created by one or more of the Security Documents. "Commitment Period" shall mean the period from and including the Closing Date to and including the Property Closing Date. "Company Obligations" shall mean the obligations of the Lessee, in any and all capacities, under and with respect to the Operative Agreements and each Property. "Condemnation" shall mean any taking or sale of the use, access, occupancy, easement rights or title to the Property or any part thereof, wholly or partially (temporarily or permanently), by or on account of any actual or threatened eminent domain proceeding or other taking of action by any Person having the power of eminent domain, including without limitation an action by a Governmental Authority to change the grade of, or widen the streets adjacent to, the Property or alter the pedestrian or vehicular traffic flow to the Property so as to result in a change in access to such Property, or by or on account of an eviction by paramount title or any transfer made in lieu of any such proceeding or action. Appendix A - 6 109 "Consistent Basis" in reference to the application of GAAP means the accounting principles observed in the period referred to are comparable in all material respects to those applied in the preparation of the audited financial statements of the Guarantor and its Subsidiaries referred to in Section 7.6(a) of the Lessee Credit Agreement. "Consolidated EBITDA" means, with respect to the Guarantor and its Subsidiaries for any Four-Quarter Period ending on the date of computation thereof, the sum of, without duplication, (i) Consolidated Net Income (excluding (a) non-cash restructuring charges incurred in the fourth fiscal quarter of 1997 in the amount of $1,430,000 in connection with discontinuance of operations of Catalina Electronic Clearing Services Inc. and (b) non-cash charges associated with investments in an aggregate amount net of tax benefits not to exceed $4,000,000 during the term of the Lessee Credit Agreement), (ii) Consolidated Interest Expense, (iii) taxes on income, (iv) amortization, and (v) depreciation minus minority interest in losses of Subsidiaries or plus minority interest in profits of Subsidiaries, all determined on a consolidated basis in accordance with GAAP applied on a Consistent Basis. "Consolidated Funded Indebtedness" means, without duplication, all Indebtedness for Money Borrowed and all Guaranties of the Guarantor and its Subsidiaries, all determined on a consolidated basis. "Consolidated Interest Expense" means, with respect to any period of computation thereof, the gross interest expense of the Guarantor and its Subsidiaries, including without limitation (i) the current amortized portion of debt discounts to the extent included in gross interest expense, (ii) the current amortized portion of all fees (including fees payable in respect of any Swap Agreement) payable in connection with the incurrence of Indebtedness to the extent included in gross interest expense and (iii) the portion of any payments made in connection with Capital Leases allocable to interest expense, all determined on a consolidated basis in accordance with GAAP applied on a Consistent Basis. "Consolidated Leverage Ratio" means, as of the date of computation thereof, the ratio of (i) the sum of (without duplication) Consolidated Funded Indebtedness (determined as at such date) to (ii) Consolidated EBITDA (for the Four-Quarter Period ending on (or most recently ended prior to) such date). "Consolidated Net Income" means, for any period of computation thereof, the gross revenues from operations of the Guarantor and its Subsidiaries (excluding payments received by the Lessee and its Subsidiaries of (a) interest income, and (b) dividends and distributions made in the ordinary course of their businesses by Persons in which investment is permitted pursuant to the Lessee Credit Agreement and not related to an extraordinary event), less all operating and non-operating expenses of the Guarantor and its Subsidiaries including taxes on income, all determined on a consolidated basis in accordance with GAAP applied on a Consistent Basis; but excluding as income: (i) net gains or losses on the sale, conversion or other disposition of capital assets, (ii) net gains or losses on the acquisition, retirement, sale or other disposition of capital stock and other securities of the Guarantor or its Subsidiaries, (iii) net gains or losses on the collection of proceeds of life insurance policies, (iv) any write-up of any asset, and (v) any other Appendix A - 7 110 net gain or loss or credit of an extraordinary nature as determined in accordance with GAAP applied on a Consistent Basis. "Contingent Obligation" of any Person means all contingent liabilities required (or which, upon the creation or incurring thereof, would be required) to be included in the financial statements (including footnotes) of such Person in accordance with GAAP applied on a Consistent Basis, including Statement No. 5 of the Financial Accounting Standards Board, all Letters of Credit, Rate Hedging Obligations and any obligation of such Person guaranteeing or in effect guaranteeing any Indebtedness, dividend or other obligation of any other Person (the "primary obligor") in any manner, whether directly or indirectly, including obligations of such Person however incurred: (1) to purchase such Indebtedness or other obligation or any property or assets constituting security therefor; (2) to advance or supply funds in any manner (i) for the purchase or payment of such Indebtedness or other obligation, or (ii) to maintain a minimum working capital, net worth or other balance sheet condition or any income statement condition of the primary obligor; (3) to grant or convey any lien, security interest, pledge, charge or other encumbrance on any property or assets of such Person to secure payment of such Indebtedness or other obligation; (4) to lease property or to purchase securities or other property or services primarily for the purpose of assuring the owner or holder of such Indebtedness or obligation of the ability of the primary obligor to make payment of such Indebtedness or other obligation; or (5) otherwise to assure the owner of the Indebtedness or such obligation of the primary obligor against loss in respect thereof. "Controlled Group" shall mean all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control which, together with any Credit Party, are treated as a single employer under Section 414 of the Code. "Co-Owner Trustee" shall have the meaning specified in Section 9.2 of the Trust Agreement. "Credit Agreement" shall mean the Credit Agreement, dated on or about the Closing Date, among the Lessor, the Agent and the Lenders, as specified therein. "Credit Agreement Default" shall mean any event or condition which, with the lapse of time or the giving of notice, or both, would constitute a Credit Agreement Event of Default. Appendix A - 8 111 "Credit Agreement Event of Default" shall mean any event or condition defined as an "Event of Default" in Section 6 of the Credit Agreement. "Credit Documents" shall mean the Participation Agreement, the Credit Agreement, the Notes and the Security Documents. "Credit Parties" shall mean the Lessee and the Guarantor. "Deed" shall mean a warranty deed regarding the Land and/or Improvements in form and substance satisfactory to the Agent. "Default" shall mean any event, act or condition which with notice or lapse of time, or both, would constitute an Event of Default. "Defaulting Holder" shall have the meaning given to such term in Section 12.4 of the Participation Agreement. "Defaulting Lender" shall have the meaning given to such term in Section 12.4 of the Participation Agreement. "Deficiency Balance" shall have the meaning given in Section 22.1(b) of the Lease Agreement. "Documents" shall have the meaning given to such term in Section 1 of the Security Agreement. "Dollars" and the symbol "$" means dollars constituting legal tender for the payment of public and private debts in the United States of America. "Dolphin Realty Trust 1999-1" shall mean the grantor trust created pursuant to the terms and conditions of the Trust Agreement. "Early Termination Amount" shall have the meaning given to such term in Section 5.11 of the Participation Agreement. "Early Termination Date" shall have the meaning given to such term in Section 5.11 of the Participation Agreement. "Election Notice" shall have the meaning given to such term in Section 20.1 of the Lease. "Eligible Assignee" shall mean (i) a Lender or a Holder, as the case may be; (ii) an Affiliate of a Lender or a Holder, as the case may be; and (iii) any other Person approved by the Agent and, unless an Event of Default has occurred and is continuing at the time any assignment is effected in accordance with the Operative Agreements, the Lessee, such approval not to be unreasonably withheld or delayed by the Lessee and such approval to be deemed given by the Lessee if no objection is received by the assigning Lender or Holder and the Agent from the Appendix A - 9 112 Lessee within two Business Days after notice of such proposed assignment has been provided by the assigning Lender or Holder to the Lessee; provided, however, that neither the Lessee nor an Affiliate of the Lessee shall qualify as an Eligible Assignee. "Employee Benefit Plan" or "Plan" shall mean an employee benefit plan (within the meaning of Section 3(3) of ERISA, including without limitation any Multiemployer Plan), or any "plan" as defined in Section 4975(e)(1) of the Code and as interpreted by the Internal Revenue Service and the Department of Labor in rules, regulations, releases or bulletins in effect on the Closing Date. "Environmental Claims" shall mean any investigation, notice, violation, demand, allegation, action, suit, injunction, judgment, order, consent decree, penalty, fine, lien, proceeding, or claim (whether administrative, judicial, or private in nature) arising (a) pursuant to, or in connection with, an actual or alleged violation of, any Environmental Law, (b) in connection with any Hazardous Substance, (c) from any abatement, removal, remedial, corrective, or other response action in connection with a Hazardous Substance, Environmental Law, or other order of a Tribunal or (d) from any actual or alleged damage, injury, threat, or harm to health, safety, natural resources, or the environment. "Environmental Laws" shall mean any Law, permit, consent, approval, license, award, or other authorization or requirement of any Tribunal relating to emissions, discharges, releases, threatened releases of any Hazardous Substance into ambient air, surface water, ground water, publicly owned treatment works, septic system, or land, or otherwise relating to the handling, storage, treatment, generation, use, or disposal of Hazardous Substances, pollution or to the protection of health or the environment, including without limitation CERCLA, the Resource Conservation and Recovery Act, 42 U.S.C. ss. 6901, et seq., and state statutes analogous thereto. "Environmental Violation" shall mean any activity, occurrence or condition that violates or threatens (if the threat requires remediation under any Environmental Law and is not remediated during any grace period allowed under such Environmental Law) to violate or results in or threatens (if the threat requires remediation under any Environmental Law and is not remediated during any grace period allowed under such Environmental Law) to result in noncompliance with any Environmental Law. "Equipment" shall mean equipment, apparatus, furnishings, fittings and personal property of every kind and nature whatsoever purchased, leased or otherwise acquired using the proceeds of the Loans or the Holder Advances by the Lessee or the Lessor and all improvements and modifications thereto and replacements thereof, whether or not now owned or hereafter acquired or now or subsequently attached to, contained in or used or usable in any way in connection with any operation of any Improvements, including but without limiting the generality of the foregoing, all equipment described in the Appraisal including without limitation all heating, electrical, and mechanical equipment, lighting, switchboards, plumbing, ventilation, air conditioning and air-cooling apparatus, refrigerating, and incinerating equipment, escalators, elevators, loading and unloading equipment and systems, cleaning systems (including without limitation window cleaning apparatus), telephones, communication systems (including without limitation satellite dishes and antennae), televisions, computers, sprinkler systems and other fire Appendix A - 10 113 prevention and extinguishing apparatus and materials, security systems, motors, engines, machinery, pipes, pumps, tanks, conduits, appliances, fittings and fixtures of every kind and description. "Equipment Schedule" shall mean (a) each Equipment Schedule attached to the applicable Requisition and (b) each Equipment Schedule attached to the applicable Lease Supplement. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended. "ERISA Affiliate" shall mean each entity required to be aggregated with the Lessee pursuant to the requirements of Section 414(b) or (c) of the Code. "Eurocurrency Reserve Requirements" shall mean for any day as applied to a Eurodollar Loan, the aggregate (without duplication) of the maximum rates (expressed as a decimal) of reserve requirements in effect on such day (including without limitation basic, supplemental, marginal and emergency reserves under any regulations of the Board or other Governmental Authority having jurisdiction with respect thereto) dealing with reserve requirements prescribed on eurocurrency funding (currently referred to as "Eurocurrency liabilities" in Regulation D) maintained by a member bank of the Federal Reserve System. "Eurodollar Holder Advance" shall mean a Holder Advance bearing a Holder Yield based on the Eurodollar Rate. "Eurodollar Loans" shall mean Loans the rate of interest applicable to which is based upon the Eurodollar Rate. "Eurodollar Rate" means, for any Eurodollar Loan or Eurodollar Holder Advance comprising part of the same borrowing or advance (including without limitation conversions, extensions and renewals), for any Interest Period therefor, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on Telerate Page 3750 (or any successor page) as the London interbank offered rate for deposits in Dollars at approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period. If for any reason such rate is not available, the term "Eurodollar Rate" shall mean, for any Eurodollar Loan or Eurodollar Holder Advance for any Interest Period therefor, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as the London interbank offered rate for deposits in Dollars at approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period; provided, however, if more than one rate is specified on Reuters Screen LIBO Page, the applicable rate shall be the arithmetic mean of all such rates (rounded upwards, if necessary, to the nearest 1/100 of 1%). As used herein, "Reuters Screen LIBO Page" means the display designated as page "LIBO" on the Reuters Monitor Money Rates Service (or such other page as may replace the LIBO page on that service for the purpose of displaying London interbank offered rates of major banks) ("RMMRS"). In the event the RMMRS is not then quoting such offered rates, "Eurodollar Rate" shall mean for the Interest Period for each Eurodollar Loan or Appendix A - 11 114 Eurodollar Holder Advance comprising part of the same borrowing or advance (including without limitation conversions, extensions and renewals), the average (rounded upward to the nearest one sixteenth (1/16) of one percent (1%)) per annum rate of interest determined by the office of the Agent (each such determination to be conclusive and binding) as of two (2) Business Days prior to the first day of such Interest Period, as the effective rate at which deposits in immediately available funds in U.S. dollars are being, have been, or would be offered or quoted by the Agent to major banks in the applicable interbank market for Eurodollar deposits at any time during the Business Day which is the second Business Day immediately preceding the first day of such Interest Period, for a term comparable to such Interest Period and in the amount of the requested Eurodollar Loan and/or Eurodollar Holder Advance. If no such offers or quotes are generally available for such amount, then the Agent shall be entitled to determine the Eurodollar Rate by estimating in its reasonable judgment the per annum rate (as described above) that would be applicable if such quote or offers were generally available. "Event of Default" shall mean a Lease Event of Default or a Credit Agreement Event of Default. "Excepted Payments" shall mean: (a) all indemnity payments (including without limitation indemnity payments made pursuant to Section 11 of the Participation Agreement), whether made by adjustment to Basic Rent or otherwise, to which the Owner Trustee, any Holder or any of their respective Affiliates, agents, officers, directors or employees is entitled; (b) any amounts (other than Basic Rent or Termination Value) payable under any Operative Agreement to reimburse the Owner Trustee, any Holder or any of their respective Affiliates (including without limitation the reasonable expenses of the Owner Trustee, the Trust Company and the Holders incurred in connection with any such payment) for performing or complying with any of the obligations of any Credit Party under and as permitted by any Operative Agreement; (c) any amount payable to a Holder by any transferee of such interest of a Holder as the purchase price of such Holder's interest in the Trust Estate (or a portion thereof); (d) any insurance proceeds (or payments with respect to risks self-insured or policy deductibles) under liability policies other than such proceeds or payments payable to the Agent or any Lender; (e) any insurance proceeds under policies maintained by the Owner Trustee or any Holder; (f) Transaction Expenses or other amounts, fees, disbursements or expenses paid or payable to or for the benefit of the Owner Trustee or any Holder; (g) all right, title and interest of any Holder or the Owner Trustee to the Property or any portion thereof or any other property to the extent any of the foregoing Appendix A - 12 115 has been released from the Liens of the Security Documents and the Lease pursuant to the terms thereof; (h) upon termination of the Credit Agreement pursuant to the terms thereof, all remaining property covered by the Lease or Security Documents; (i) all payments in respect of the Holder Yield; (j) any payments in respect of interest to the extent attributable to payments referred to in clauses (a) through (i) above; and (k) any rights of either the Owner Trustee or the Trust Company to demand, collect, sue for or otherwise receive and enforce payment of any of the foregoing amounts, provided that such rights shall not include the right to terminate the Lease. "Excess Proceeds" shall mean the excess, if any, of the aggregate of all awards, compensation or insurance proceeds payable in connection with a Casualty or Condemnation over the Termination Value paid by the Lessee pursuant to the Lease with respect to such Casualty or Condemnation. "Excluded Taxes" shall have the meaning given to such term in Section 11.2(b) of the Participation Agreement. "Exculpated Persons" shall mean the Trust Company (except with respect to the representations and warranties and the other obligations of the Trust Company pursuant to the Operative Agreements expressly undertaken in its individual capacity, including without limitation the representations and warranties of the Trust Company pursuant to Section 6.1 of the Participation Agreement, the obligations of the Trust Company pursuant to Section 8.2 of the Participation Agreement and the obligations of the Trust Company pursuant to the Trust Agreement), the Holders (except with respect to the obligations of the Holders pursuant to the Participation Agreement and the Trust Agreement expressly undertaken in their respective individual capacities) and the Owner Trustee, their officers, directors, shareholders, partners and members. "Exempt Payments" shall have the meaning specified in Section 11.2(e) of the Participation Agreement. "Expiration Date" shall mean either (a) the Basic Term Expiration Date or (b) the last day of the applicable Renewal Term; provided, in no event shall the Expiration Date be later than the annual anniversary of the Closing Date occurring in the year 2020, unless such later date has been expressly agreed to in writing by each of the Lessor, the Lessee, the Agent, the Lenders and the Holders. "Fair Market Sales Value" shall mean, with respect to the Property, the amount, which in any event, shall not be less than zero (0), that would be paid in cash in an arms-length transaction between an informed and willing purchaser and an informed and willing seller, neither of whom Appendix A - 13 116 is under any compulsion to purchase or sell, respectively, such Property. Fair Market Sales Value of the Property shall be determined based on the assumption that, except for purposes of Section 17 of the Lease, such Property is in the condition and state of repair required under Section 10.1 of the Lease and each Credit Party is in compliance with the other requirements of the Operative Agreements. "Federal Funds Effective Rate" shall have the meaning given to such term in the definition of ABR. "Financing Parties" shall mean the Lessor, the Owner Trustee, in its trust capacity, the Agent, the Holders and the Lenders. "Fixtures" shall mean all fixtures relating to the Improvements, including without limitation all components thereof, located in or on the Improvements, together with all replacements, modifications, alterations and additions thereto. "Force Majeure Event" shall mean any event beyond the control of the Lessee, other than a Casualty or Condemnation, including without limitation strikes or lockouts (but only when the Lessee is legally prevented from securing replacement labor or materials as a result thereof), adverse soil conditions, acts of God, adverse weather conditions, inability to obtain labor or materials after all possible efforts have been expended by the Lessee, governmental activities, civil commotion and enemy action; but excluding any event, cause or condition that results from the Lessee's financial condition. "Form 1001" shall have the meaning specified in Section 11.2(e) of the Participation Agreement. "Form 4224" shall have the meaning specified in Section 11.2(e) of the Participation Agreement. "Four-Quarter Period" means a period of four full consecutive fiscal quarters of the Lessee and its Subsidiaries, taken together as one accounting period. "GAAP" or "Generally Accepted Accounting Principles" means generally accepted accounting principles, being those principles of accounting set forth in pronouncements of the Financial Accounting Standards Board, the American Institute of Certified Public Accountants or which have other substantial authoritative support and are applicable in the circumstances as of the date of a report. "Governmental Action" shall mean all permits, authorizations, registrations, consents, approvals, waivers, exceptions, variances, orders, judgments, written interpretations, decrees, licenses, exemptions, publications, filings, notices to and declarations of or with, or required by, any Governmental Authority, or required by any Legal Requirement, and shall include, without limitation, all environmental and operating permits and licenses that are required for the full use, occupancy, zoning and operating of the Property. Appendix A - 14 117 "Governmental Authority" shall mean any nation or government, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. "Guaranties" means all obligations of the Guarantor or any of its Subsidiaries directly or indirectly, or in effect, guaranteeing, any Indebtedness or other obligation to pay money of any other Person. "Guarantor" shall mean Catalina Marketing Corporation, a Delaware corporation. "Hazardous Substance" shall mean any of the following: (a) any petroleum or petroleum product, explosives, radioactive materials, asbestos, formaldehyde, polychlorinated biphenyls, lead and radon gas; (b) any substance, material, product, derivative, compound or mixture, mineral, chemical, waste, gas, medical waste, or pollutant, in each case whether naturally occurring, man-made or the by-product of any process, that is toxic, harmful or hazardous to the environment or human health or safety as determined in accordance with any Environmental Law; or (c) any substance, material, product, derivative, compound or mixture, mineral, chemical, waste, gas, medical waste or pollutant that would support the assertion of any claim under any Environmental Law, whether or not defined as hazardous as such under any Environmental Law. "Holder Advance" shall mean any advance made by any Holder to the Owner Trustee pursuant to the terms of the Trust Agreement or the Participation Agreement. "Holder Amount" shall mean as of any date, the aggregate amount of Holder Advances made by each Holder to the Trust Estate pursuant to Section 2 of the Participation Agreement and Section 3.1 of the Trust Agreement less any payments of any Holder Advances received by the Holders pursuant to Section 3.4 of the Trust Agreement. "Holder Commitments" shall mean $780,000, as such amount may be increased or reduced from time to time in accordance with the provisions of the Operative Agreements; provided, if there shall be more than one (1) Holder, the Holder Commitment of each Holder shall be as set forth in Schedule I to the Trust Agreement as such Schedule I may be amended and replaced from time to time. "Holder Overdue Rate" shall mean the lesser of (a) the then current rate of Holder Yield respecting the particular amount in question plus two percent (2%) and (b) the highest rate permitted by applicable law. "Holder Property Cost" shall mean with respect to a Property an amount equal to the outstanding Holder Advances with respect thereto. "Holder Unused Fee" shall have the meaning given to such term in Section 7.4 of the Participation Agreement. Appendix A - 15 118 "Holder Yield" shall mean with respect to Holder Advances from time to time either the Eurodollar Rate plus the Applicable Percentage or the ABR as elected by the Owner Trustee from time to time with respect to such Holder Advances in accordance with the terms of the Trust Agreement; provided, however, (a) upon delivery of the notice described in Section 3.7(c) of the Trust Agreement, the outstanding Holder Advances of each Holder shall bear a yield at the ABR applicable from time to time from and after the dates and during the periods specified in Section 3.7(c) of the Trust Agreement, and (b) upon the delivery by a Holder of the notice described in Section 11.3(f) of the Participation Agreement, the Holder Advances of such Holder shall bear a yield at the ABR plus the Applicable Percentage applicable from time to time after the dates and during the periods specified in Section 11.3(f) of the Participation Agreement. "Holders" shall mean First Union National Bank and shall include the other banks and financial institutions which may be from time to time holders of Certificates in connection with the Dolphin Realty Trust 1999-1. "Impositions" shall mean any and all liabilities, losses, expenses, costs, charges and Liens of any kind whatsoever for fees, taxes, levies, imposts, duties, charges, assessments or withholdings ("Taxes") including but not limited to (i) real and personal property taxes, including without limitation personal property taxes on the Property covered by the Lease that is classified by Governmental Authorities as personal property, and real estate or ad valorem taxes in the nature of property taxes; (ii) sales taxes, use taxes and other similar taxes (including rent taxes and intangibles taxes); (iii) excise taxes; (iv) real estate transfer taxes, conveyance taxes, stamp taxes and documentary recording taxes and fees; (v) taxes that are or are in the nature of franchise, income, value added, privilege and doing business taxes, license and registration fees; (vi) assessments on the Property, including without limitation all assessments for public Improvements or benefits, whether or not such improvements are commenced or completed within the Term; and (vii) taxes, Liens, assessments or charges asserted, imposed or assessed by the PBGC or any governmental authority succeeding to or performing functions similar to, the PBGC; and in each case all interest, additions to tax and penalties thereon, which at any time prior to, during or with respect to the Term or in respect of any period for which the Lessee shall be obligated to pay Supplemental Rent, may be levied, assessed or imposed by any Governmental Authority upon or with respect to (a) the Property or any part thereof or interest therein; (b) the leasing, financing, refinancing, substitution, subleasing, assignment, control, condition, occupancy, servicing, maintenance, repair, ownership, possession, activity conducted on, delivery, insuring, use, operation, improvement, sale, transfer of title, return or other disposition of such Property or any part thereof or interest therein; (c) the Notes, other indebtedness with respect to the Property, or the Certificates, or any part thereof or interest therein; (d) the rentals, receipts or earnings arising from the Property or any part thereof or interest therein; (e) the Operative Agreements, the performance thereof, or any payment made or accrued pursuant thereto; (f) the income or other proceeds received with respect to the Property or any part thereof or interest therein upon the sale or disposition thereof; (g) any contract relating to the acquisition or delivery of the Improvements or any part thereof or interest therein; (h) the issuance of the Notes or the Certificates; (i) the Owner Trustee, the Trust or the Trust Estate; or (j) otherwise in connection with the transactions contemplated by the Operative Agreements. Appendix A - 16 119 "Improvements" shall mean, with respect to the construction, renovations and/or Modifications on any Land, all buildings, structures, Fixtures, and other improvements of every kind existing at any time and from time to time on or under the Land purchased or otherwise acquired using the proceeds of the Loans or the Holder Advances, together with any and all appurtenances to such buildings, structures or improvements, including without limitation sidewalks, utility pipes, conduits and lines, parking areas and roadways, and including without limitation all Modifications and other additions to or changes in the Improvements at any time, including without limitation any Improvements existing as of the Property Closing Date as such Improvements may be referenced on the applicable Requisition. "Incorporated Covenants" shall have the meaning given to such term in Section 28.1 of the Lease. "Incorporated Representations and Warranties" shall have the meaning given to such term in Section 28.1 of the Lease. "Indebtedness" means with respect to any Person, without duplication, all Indebtedness for Money Borrowed, all indebtedness of such Person for the acquisition of property or arising under Rate Hedging Obligations, all indebtedness secured by any Lien on the property of such Person whether or not such indebtedness is assumed, all liability of such Person by way of endorsements (other than for collection or deposit in the ordinary course of business), all Contingent Obligations, all Guaranties, that portion of obligations with respect to Capital Leases and other items which in accordance with GAAP is required to be classified as a liability on a balance sheet; but excluding all accounts payable in the ordinary course of business so long as payment therefor is due within one year; provided that in no event shall the term Indebtedness include surplus and retained earnings, lease obligations (other than pursuant to Capital Leases), reserves for deferred income taxes and investment credits, other deferred credits or reserves. "Indebtedness for Money Borrowed" means with respect to any Person, without duplication, all indebtedness in respect of money borrowed, including without limitation all Capital Leases and the deferred purchase price of any property or asset, evidenced by a promissory note, bond, debenture or similar written obligation for the payment of money (including conditional sales or similar title retention agreements), other than trade payables incurred in the ordinary course of business. "Indemnified Person" shall mean the Lessor, the Owner Trustee, in its individual and its trust capacity, the Trust, the Trust Company, the Agent, the Holders, the Lenders and their respective successors, assigns, directors, shareholders, partners, officers, employees, agents and Affiliates. "Indemnity Provider" shall mean, respecting the Property, the Lessee. "Instruments" shall have the meaning given to such term in Section 1 of the Security Agreement. Appendix A - 17 120 "Insurance Requirements" shall mean all terms and conditions of any insurance policy either required by the Lease to be maintained by the Lessee, and all requirements of the issuer of any such policy and, regarding self insurance, any other requirements of the Lessee. "Interest Period" shall mean as to any Eurodollar Loan or Eurodollar Holder Advance (i) with respect to the initial Interest Period, the period beginning on the date of the first Eurodollar Loan and Eurodollar Holder Advance and ending one (1) month, two (2) months, three (3) months or (to the extent available to all Lenders and all Holders) six (6) months thereafter, as selected by the Lessor (in the case of a Eurodollar Loan) or the Owner Trustee (in the case of a Eurodollar Holder Advance) in its applicable notice given with respect thereto and (ii) thereafter, each period commencing on the last day of the next preceding Interest Period applicable to such Eurodollar Loan or Eurodollar Holder Advance and ending one (1) month, two (2) months, three (3) months or (to the extent available to all Lenders and all Holders) six (6) months thereafter, as selected by the Lessor by irrevocable notice to the Agent (in the case of a Eurodollar Loan) or by the Owner Trustee (in the case of a Eurodollar Holder Advance) in each case not less than three (3) Business Days prior to the last day of the then current Interest Period with respect thereto; provided, however, that all of the foregoing provisions relating to Interest Periods are subject to the following: (A) if any Interest Period would end on a day which is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day (except that where the next succeeding Business Day falls in the next succeeding calendar month, then on the next preceding Business Day), (B) no Interest Period shall extend beyond the Maturity Date or the Expiration Date, as the case may be, (C) where an Interest Period begins on a day for which there is no numerically corresponding day in the calendar month in which the Interest Period is to end, such Interest Period shall end on the last Business Day of such calendar month, (D) there shall not be more than four (4) Interest Periods outstanding at any one (1) time. "Investment Company Act" shall mean the Investment Company Act of 1940, as amended, together with the rules and regulations promulgated thereunder. "Issuing Bank" means initially NationsBank and thereafter any lender which is successor to NationsBank as issuer of Letters of Credit under Article III of the Lessee Credit Agreement. "Land" shall mean a parcel of real property described on (a) the Requisition issued by the Lessee in connection with the Property Closing Date relating to such parcel and (b) the schedules to each applicable Lease Supplement executed and delivered in accordance with the requirements of Section 2.4 of the Lease. "Law" shall mean any statute, law, ordinance, regulation, rule, directive, order, writ, injunction or decree of any Tribunal. "Lease" or "Lease Agreement" shall mean the Lease Agreement dated on or about the Closing Date, between the Lessor and the Lessee, together with any Lease Supplements thereto. "Lease Default" shall mean any event or condition which, with the lapse of time or the giving of notice, or both, would constitute a Lease Event of Default. Appendix A - 18 121 "Lease Event of Default" shall have the meaning specified in Section 17.1 of the Lease. "Lease Supplement" shall mean each Lease Supplement substantially in the form of Exhibit A to the Lease, together with all attachments and schedules thereto. "Legal Requirements" shall mean all foreign, federal, state, county, municipal and other governmental statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions affecting the Owner Trustee, any Holder, the Lessor, any Credit Party, the Agent, any Lender or the Property, Land, Improvement, Equipment or the taxation or use of such Improvements, whether now or hereafter enacted and in force, including without limitation any that require repairs, modifications or alterations in or to the Property or in any way limit the use and enjoyment thereof (including without limitation all building, zoning and fire codes and the Americans with Disabilities Act of 1990, 42 U.S.C. ss. 12101 et. seq., and any other similar federal, state or local laws or ordinances and the regulations promulgated thereunder) and any that may relate to environmental requirements (including without limitation all Environmental Laws), and all permits, certificates of occupancy, licenses, authorizations and regulations relating thereto, and all covenants, agreements, restrictions and encumbrances contained in any instruments which are either of record or known to any Credit Party affecting the Property or the Appurtenant Rights. "Lender Commitments" shall mean $25,220,000, as such amount may be increased or reduced from time to time in accordance with the provisions of the Operative Agreements; provided, if there shall be more than one (1) Lender, the Lender Commitment of each Lender shall be as set forth in Schedule 2.1 to the Credit Agreement as such Schedule 2.1 may be amended and replaced from time to time. "Lender Financing Statements" shall mean UCC financing statements and fixture filings appropriately completed and executed for filing in the applicable jurisdiction in order to procure a security interest in favor of the Agent in the Collateral subject to the Security Documents. "Lender Unused Fee" shall have the meaning given to such term in Section 7.4 of the Participation Agreement. "Lenders" shall mean First Union National Bank and shall include the other banks and financial institutions which may be from time to time party to the Participation Agreement and the Credit Agreement. "Lessee" shall have the meaning set forth in the Lease. "Lessee Credit Agreement" shall mean that certain Credit Agreement dated as of September 30, 1997 among the Guarantor and NationsBank, as agent and as a lender, and the lenders parties thereto from time to time, as such may hereafter be amended, modified, supplemented, restated and/or replaced from time to time. "Lessee Credit Agreement Event of Default" shall mean an Event of Default as defined in Section 10.1 of the Lessee Credit Agreement. Appendix A - 19 122 "Lessor" shall mean the Owner Trustee, not in its individual capacity, but as the Lessor under the Lease. "Lessor Basic Rent" shall mean the scheduled Holder Yield due on the Holder Advances on any Scheduled Interest Payment Date pursuant to the Trust Agreement (but not including interest on (a) any such scheduled Holder Yield due on the Holder Advances prior to the Rent Commencement Date with respect to the Property to which such Holder Advances relate or (b) overdue amounts under the Trust Agreement or otherwise). "Lessor Financing Statements" shall mean UCC financing statements and fixture filings appropriately completed and executed for filing in the applicable jurisdictions in order to protect the Lessor's interest under the Lease to the extent the Lease is a security agreement or a mortgage. "Lessor Lien" shall mean any Lien, true lease or sublease or disposition of title arising as a result of (a) any claim against the Lessor, the Owner Trustee or the Trust Company, in its individual capacity, not resulting from the transactions contemplated by the Operative Agreements, (b) any act or omission of the Lessor, the Owner Trustee or the Trust Company, in its individual capacity, which is not required by the Operative Agreements or is in violation of any of the terms of the Operative Agreements, (c) any claim against the Lessor, the Owner Trustee or the Trust Company, in its individual capacity, with respect to Taxes or Transaction Expenses against which the Lessee is not required to indemnify the Lessor or the Trust Company, in its individual capacity, pursuant to Section 11 of the Participation Agreement or (d) any claim against the Lessor arising out of any transfer by the Lessor of all or any portion of the interest of the Lessor in the Property, the Trust Estate or the Operative Agreements other than the transfer of title to or possession of the Property by the Lessor pursuant to and in accordance with the Lease, the Credit Agreement, the Security Agreement or the Participation Agreement or pursuant to the exercise of the remedies set forth in Article XVII of the Lease. "Letter of Credit" means a standby or commercial letter of credit issued by the Issuing Bank for the account of the Guarantor in favor of a Person advancing credit or securing an obligation on behalf of the Guarantor. "Lien" shall mean any mortgage, pledge, security interest, encumbrance, lien, option or charge of any kind. "Limited Recourse Amount" shall mean with respect to all the Property on an aggregate basis, an amount equal to the sum of the Termination Values with respect to all the Property on an aggregate basis on each Payment Date, less the Maximum Residual Guarantee Amount as of such date with respect to all the Property on an aggregate basis. "Line of Credit Facility" means the facility described in Section 2.1(b) of the Lessee Credit Agreement providing for Line of Credit Loans to the Guarantor by the lenders in the original principal amount of the Total Line of Credit Commitment. Appendix A - 20 123 "Line of Credit Loan" means a loan made pursuant to the Line of Credit Facility in accordance with Section 2.1(b) of the Lessee Credit Agreement. "Line of Credit Notes" means, collectively, the promissory notes of the Guarantor evidencing Line of Credit Loans executed and delivered to the lenders as provided in Section 2.5(b) of the Lessee Credit Agreement. "Loan Basic Rent" shall mean the scheduled interest due on the Loans on any Scheduled Interest Payment Date pursuant to the Credit Agreement but not including any overdue amounts under Section 2.8(b) of the Credit Agreement or otherwise). "Loan Property Cost" shall mean, with respect to the Property at any date of determination, an amount equal to the aggregate principal amount all Loans outstanding with respect to the Property. "Loans" shall mean the loans extended pursuant to the Credit Agreement and shall include both the Tranche A Loans and the Tranche B Loans. "Majority Holders" shall mean at any time, Holders whose Holder Advances outstanding represent at least fifty-one percent (51%) of (a) the aggregate Holder Advances outstanding or (b) to the extent there are no Holder Advances outstanding, the aggregate Holder Commitments. "Majority Lenders" shall mean at any time, Lenders whose Loans outstanding represent at least fifty-one percent (51%)of (a) the aggregate Loans outstanding or (b) to the extent there are no Loans outstanding, the aggregate of the Lender Commitments. "Majority Secured Parties" shall mean at any time, Lenders and Holders whose Loans and Holder Advances outstanding represent at least fifty-one percent (51%) of (a) the aggregate Advances outstanding or (b) to the extent there are no Advances outstanding, the sum of the aggregate Holder Commitments plus the aggregate Lender Commitments. "Marketing Period" shall mean, if the Lessee has given a Sale Notice in accordance with Section 20.1 of the Lease, the period commencing on the date such Sale Notice is given and ending on the Expiration Date. "Master Indenture Default" shall have the meaning set forth therefor in Section 17.1(e) of the Lease. "Material Adverse Effect" shall, mean a material adverse effect on (a) the business, condition (financial or otherwise), assets, liabilities or operations of the Credit Parties (on a consolidated basis), which has caused or could reasonably be expected to cause the consolidated net worth of the Guarantor to fall by ten percent (10%) or more from the then-current book net worth, in each case determined in accordance with GAAP, (b) the ability of any Credit Party to perform its respective obligations under any Operative Agreement to which it is a party, (c) the validity or enforceability of any Operative Agreement or the rights and remedies of the Agent, the Lenders, the Holders, or the Lessor thereunder, (d) the validity, priority or enforceability of Appendix A - 21 124 any Lien on the Property created by any of the Operative Agreements, or (e) the value, utility or useful life of the Property, which has caused or could reasonably be expected to cause a diminution of the fair market value of any such Property of ten percent (10%) or more from the then-current fair market value of such Property, or the use, or ability of the Lessee to use, the Property for the purpose for which it was intended. "Maturity Date" shall mean the Expiration Date. "Maximum Residual Guarantee Amount" shall mean an amount equal to the product of the aggregate Property Cost for all of Property times eighty-four percent (84%). "Modifications" shall have the meaning specified in Section 11.1(a) of the Lease. "Mortgage Instrument" shall mean any mortgage, deed of trust or any other instrument executed by the Owner Trustee and the Lessee in favor of the Agent (for the benefit of the Lenders and the Holders) and evidencing a Lien on the Property, in form and substance reasonably acceptable to the Agent. "Multiemployer Plan" shall mean any plan described in Section 4001(a)(3) of ERISA to which contributions are or have been made or required by any Credit Party or any of its Subsidiaries or ERISA Affiliates. "Multiple Employer Plan" shall mean a plan to which any Credit Party or any ERISA Affiliate and at least one (1) other employer other than an ERISA Affiliate is making or accruing an obligation to make, or has made or accrued an obligation to make, contributions. "NationsBank" means NationsBank, National Association. "New Facility" shall have the meaning given to such term in Section 28.1 of the Lease. "Notes" shall mean those notes issued to the Lenders pursuant to the Credit Agreement and shall include both the Tranche A Notes and the Tranche B Notes. "Obligations" shall have the meaning given to such term in Section 1 of the Security Agreement. "Officer's Certificate" with respect to any person shall mean a certificate executed on behalf of such person by a Responsible Officer who has made or caused to be made such examination or investigation as is necessary to enable such Responsible Officer to express an informed opinion with respect to the subject matter of such Officer's Certificate. "Operative Agreements" shall mean the following: the Participation Agreement, the Trust Agreement, the Certificates, the Credit Agreement, the Notes, the Lease, the Lease Supplements (and memoranda of the Lease and each Lease Supplement in a form reasonably acceptable to the Agent), the Security Agreement, the Mortgage Instruments, the other Security Documents, the Appendix A - 22 125 Purchase Agreement, the Deeds and the Bills of Sale and any and all other agreements, documents and instruments executed in connection with any of the foregoing. "Original Executed Counterpart" shall have the meaning given to such term in Section 5 of Exhibit A to the Lease. "Overdue Interest" shall mean any interest payable pursuant to Section 2.8(b) of the Credit Agreement. "Overdue Rate" shall mean (a) with respect to the Loan , and any other amount owed under or with respect to the Credit Agreement or the Security Documents, the rate specified in Section 2.5(b) of the Credit Agreement, (b) with respect to the Holder Advances, the Holder Yield and any other amount owed under or with respect to the Trust Agreement, the Holder Overdue Rate, and (c) with respect to any other amount, the amount referred to in clause (y) of Section 2.5(b) of the Credit Agreement. "Owner Trustee," "Borrower" or "Lessor" shall mean First Security Bank, National Association, not individually, except as expressly stated in the various Operative Agreements, but solely as the Owner Trustee under the Dolphin Realty Trust 1999-1, and any successor, replacement and/or additional Owner Trustee expressly permitted under the Operative Agreements. "Participant" shall have the meaning given to such term in Section 9.7 of the Credit Agreement. "Participation Agreement" shall mean the Participation Agreement dated on or about the Closing Date, among the Lessee, the Guarantor, the Owner Trustee, not in its individual capacity except as expressly stated therein, the Holders, the Lenders and the Agent. "Payment Date" shall mean any Scheduled Interest Payment Date and any date on which interest or Holder Yield in connection with a prepayment of principal on the Loans or of the Holder Advances is due under the Credit Agreement or the Trust Agreement. "PBGC" shall mean the Pension Benefit Guaranty Corporation created by Section 4002(a) of ERISA or any successor thereto. "Pension Plan" shall mean a "pension plan", as such term is defined in section 3(2) of ERISA, which is subject to title IV of ERISA (other than a Multiemployer Plan), and to which any Credit Party or any ERISA Affiliate may have any liability, including without limitation any liability by reason of having been a substantial employer within the meaning of section 4063 of ERISA at any time during the preceding five (5) years, or by reason of being deemed to be a contributing sponsor under section 4069 of ERISA. "Permitted Facility" shall mean a headquarters building to be selected, used and operated by the Lessee in its ordinary course of business as of the Closing Date. Appendix A - 23 126 "Permitted Liens" shall mean: (a) the respective rights and interests of the parties to the Operative Agreements as provided in the Operative Agreements; (b) the rights of any sublessee or assignee under a sublease or an assignment expressly permitted by the terms of the Lease for no longer than the duration of the Lease; (c) Liens for Taxes that either are not yet due or are being contested in accordance with the provisions of Section 13.1 of the Lease; (d) Liens arising by operation of law, materialmen's, mechanics', workmen's, repairmen's, employees', carriers', warehousemen's and other like Liens relating to the construction of the Improvements or in connection with any Modifications or arising in the ordinary course of business for amounts that either are not more than thirty (30) days past due or are being diligently contested in good faith by appropriate proceedings, so long as such proceedings satisfy the conditions for the continuation of proceedings to contest Taxes set forth in Section 13.1 of the Lease; (e) Liens of any of the types referred to in clause (d) above that have been bonded for not less than the full amount in dispute (or as to which other security arrangements satisfactory to the Lessor and the Agent have been made), which bonding (or arrangements) shall comply with applicable Legal Requirements, and shall have effectively stayed any execution or enforcement of such Liens; (f) Liens arising out of judgments or awards with respect to which appeals or other proceedings for review are being prosecuted in good faith and for the payment of which adequate reserves have been provided as required by GAAP or other appropriate provisions have been made, so long as such proceedings have the effect of staying the execution of such judgments or awards and satisfy the conditions for the continuation of proceedings to contest Taxes set forth in Section 13.1 of the Lease; and (g) Liens in favor of municipalities to the extent agreed to by the Lessor. "Person" shall mean any individual, corporation, partnership, limited liability company, joint venture, association, joint stock company, trust, unincorporated organization, governmental authority or any other entity. "Plans and Specifications" shall mean, with respect to Improvements, the plans and specifications for such Improvements already existing, as such Plans and Specifications may be amended, modified or supplemented from time to time in accordance with the terms of the Operative Agreements. "Prime Lending Rate" shall have the meaning given to such term in the definition of ABR. Appendix A - 24 127 "Property" shall mean the Permitted Facility described on the schedules to the Lease Supplement and in the attachments to the Mortgage Instrument (including, without limitation, all Improvements and Equipment related thereto). "Property Closing Date" shall mean the date on which the Lessor purchases the Property. "Property Cost" shall mean with respect to the Property the aggregate amount of the Loan Property Cost plus the Holder Property Cost for the Property. "Purchase Agreement" shall mean that certain Purchase and Sales Agreement dated on or about October 21, 1999 between Echelon International Corporation and the Guarantor. "Purchase Option" shall have the meaning given to such term in Section 20.1 of the Lease. "Purchasing Lender" shall have the meaning given to such term in Section 9.8(a) of the Credit Agreement. "Rate Hedging Obligations" means any and all obligations of the Guarantor or any Subsidiary, whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor), under (i) any and all agreements, devices or arrangements designed to protect at least one of the parties thereto from the fluctuations of interest rates, exchange rates or forward rates applicable to such party's assets, liabilities or exchange transactions, including, but not limited to, Dollar-denominated or cross-currency interest rate exchange agreements, forward currency exchange agreements, interest rate cap or collar protection agreements, forward rate currency or interest rate options, puts, warrants and those commonly known as interest rate "swap" agreements; and (ii) any and all cancellations, buybacks, reversals, terminations or assignments of any of the foregoing. "Register" shall have the meaning given to such term in Section 9.9(a) of the Credit Agreement. "Regulation D" shall mean Regulation D of the Board of Governors of the Federal Reserve System (or any successor), as the same may be modified and supplemented and in effect from time to time. "Release" shall mean any release, pumping, pouring, emptying, injecting, escaping, leaching, dumping, seepage, spill, leak, flow, discharge, disposal or emission of a Hazardous Substance. "Renewal Term" shall have the meaning specified in Section 2.2 of the Lease. "Rent" shall mean, collectively, the Basic Rent and the Supplemental Rent, in each case payable under the Lease. Appendix A - 25 128 "Reportable Event" shall have the meaning specified in ERISA. "Requisition" shall have the meaning specified in Section 4.2 of the Participation Agreement. "Responsible Officer" shall mean the Chairman or Vice Chairman of the Board of Directors, the Chairman or Vice Chairman of the Executive Committee of the Board of Directors, the President, any Senior Vice President or Executive Vice President, any Vice President, the Secretary, any Assistant Secretary, the Treasurer, or any Assistant Treasurer, except that when used with respect to the Trust Company or the Owner Trustee, "Responsible Officer" shall also include the Cashier, any Assistant Cashier, any Trust Officer or Assistant Trust Officer, the Controller and any Assistant Controller or any other officer of the Trust Company or the Owner Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "Revolver Notes" means, collectively, the Line of Credit Notes, the Revolving Notes, and the Swing Line Note. "Revolving Credit Facility" means the facility described in Section 2.1(a) of the Lessee Credit Agreement providing for loans to the Guarantor by the lenders in the aggregate principal amount of the Total Revolving Credit Commitment. "Revolving Loan" means any borrowing pursuant to an advance under the Revolving Credit Facility in accordance with Section 2.1(a) of the Lessee Credit Agreement. "Revolving Notes" means, collectively, the promissory notes of the Guarantor evidencing Revolving Loans executed and delivered to the lenders as provided in Section 2.5(a) of the Lessee Credit Agreement. "Sale Date" shall have the meaning given to such term in Section 20.3(a) of the Lease. "Sale Notice" shall mean a notice given to the Lessor in connection with the election by the Lessee of its Sale Option. "Sale Option" shall have the meaning given to such term in Section 20.1 of the Lease. "Sale Proceeds Shortfall" shall mean the amount by which the proceeds of a sale described in Section 22.1 of the Lease are less than the Limited Recourse Amount with respect to the Property if it has been determined that the Fair Market Sales Value of the Property at the expiration of the term of the Lease has been impaired by greater than ordinary wear and tear during the Term of the Lease. Appendix A - 26 129 "Scheduled Interest Payment Date" shall mean (a) as to any Eurodollar Loan or Eurodollar Holder Advance, the last day of the Interest Period applicable to such Eurodollar Loan or Eurodollar Holder Advance (or respecting any Eurodollar Loan or Eurodollar Holder Advance having an Interest Period of six (6) months, the three (3) month anniversary of such Interest Period), (b) as to any ABR Loan or any ABR Holder Advance, the fifteenth day of each month, unless such day is not a Business Day and in such case on the next occurring Business Day and (c) as to all Loans and Holder Advances, the date of any voluntary or involuntary payment, prepayment, return or redemption, and the Maturity Date or the Expiration Date, as the case may be. "Secured Parties" shall have the meaning given to such term in the Security Agreement. "Securities Act" shall mean the Securities Act of 1933, as amended, together with the rules and regulations promulgated thereunder. "Security Agreement" shall mean the Security Agreement dated on or about the Closing Date between the Lessor and the Agent, for the benefit of the Secured Parties, and accepted and agreed to by the Lessee. "Security Documents" shall mean the collective reference to the Security Agreement, the Mortgage Instruments, (to the extent the Lease is construed as a security instrument) the Lease, the UCC Financing Statements and all other security documents hereafter delivered to the Agent granting a lien on any asset or assets of any Person to secure the obligations and liabilities of the Lessor under the Credit Agreement and/or under any of the other Credit Documents or to secure any guarantee of any such obligations and liabilities. "Soft Costs" shall mean all costs which are ordinarily and reasonably incurred in relation to the acquisition of the Property other than hard costs, including without limitation structuring fees, administrative fees, legal fees, upfront fees, fees and expenses related to appraisals, title examinations, title insurance, document recordation, surveys, environmental site assessments, geotechnical soil investigations and similar costs and professional fees customarily associated with a real estate closing, fees and expenses of the Owner Trustee payable or reimbursable under the Operative Agreements and costs and expenses incurred pursuant to Sections 7.3(a) and 7.3(b) of the Participation Agreement. "Subsidiary" means any corporation or other entity in which more than 50% of its outstanding voting stock or more than 50% of all equity interests is owned directly or indirectly by a Person and/or by one or more of such Person's Subsidiaries. "Supplemental Amounts" shall have the meaning given to such term in Section 9.18 of the Credit Agreement. "Supplemental Rent" shall mean all amounts, liabilities and obligations (other than Basic Rent) which the Lessee assumes or agrees to pay to the Lessor, the Trust Company, the Holders, the Agent, the Lenders or any other Person under the Lease or under any of the other Operative Agreements including without limitation payments of the Termination Value and the Maximum Residual Guarantee Amount and all indemnification amounts, liabilities and obligations. Appendix A - 27 130 "Swap Agreement" means one or more agreements between the Guarantor and any lender with respect to Indebtedness evidenced by any or all of the Revolver Notes, on terms mutually acceptable to the Guarantor and such lender, which agreements create Rate Hedging Obligations. "Swing Line Loans" means loans made by NationsBank to the Guarantor pursuant to Section 2.14 of the Lessee Credit Agreement. "Swing Line Note" means the promissory note of the Guarantor evidencing Swing Line Loans executed and delivered to NationsBank as provided in Section 2.5(c) of the Lessee Credit Agreement. "Taxes" shall have the meaning specified in the definition of "Impositions". "Term" shall mean the Basic Term and each Renewal Term, if any. "Termination Date" shall have the meaning specified in Section 16.2(a) of the Lease. "Termination Event" shall mean (a) with respect to any Pension Plan, the occurrence of a Reportable Event or an event described in Section 4062(e) of ERISA, (b) the withdrawal of any Credit Party or any ERISA Affiliate from a Multiple Employer Plan during a plan year in which it was a substantial employer (as such term is defined in Section 4001(a)(2) of ERISA), or the termination of a Multiple Employer Plan, (c) the distribution of a notice of intent to terminate a Plan or Multiemployer Plan pursuant to Section 4041(a)(2) or 4041A of ERISA, (d) the institution of proceedings to terminate a Plan or Multiemployer Plan by the PBGC under Section 4042 of ERISA, (e) any other event or condition which might constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan or Multiemployer Plan, or (f) the complete or partial withdrawal of any Credit Party or any ERISA Affiliate from a Multiemployer Plan. "Termination Notice" shall have the meaning specified in Section 16.1 of the Lease. "Termination Value" shall mean the sum of (a) the aggregate outstanding Property Cost for the Property plus (b) any and all accrued but unpaid interest on the Loans and any and all Holder Yield on the Holder Advances plus (c) to the extent the same is not duplicative of the amounts payable under clause (b) above, all other Rent and other amounts then due and payable or accrued under Lease and/or under any other Operative Agreement (including without limitation amounts under Sections 11.1 and 11.2 of the Participation Agreement and all costs and expenses referred to in clause FIRST of Section 22.2 of the Lease). "Total Line of Credit Commitment" means a principal amount equal to $50,000,000, as reduced from time to time in accordance with Section 2.7 of the Lessee Credit Agreement. "Total Revolving Credit Commitment" means a principal amount equal to $100,000,000, as reduced from time to time in accordance with Section 2.7 of the Lessee Credit Agreement. Appendix A - 28 131 "Tranche A Commitments" shall mean the obligation of the Tranche A Lenders to make the Tranche A Loans to the Borrower in an aggregate principal amount at any one (1) time outstanding not to exceed the aggregate of the amounts set forth opposite each Tranche A Lender's name on Schedule 2.1 to the Credit Agreement, provided, no Tranche A Lender shall be obligated to make Tranche A Loans in excess of such Tranche A Lender's share of the Tranche A Commitments as set forth adjacent to such Tranche A Lender's name on Schedule 2.1 to Credit Agreement. "Tranche A Lenders" shall mean First Union National Bank and shall include the several banks and other financial institutions from time to time party to the Credit Agreement that commit to make the Tranche A Loans. "Tranche A Loans" shall mean the Loans made pursuant to the Tranche A Commitment. "Tranche A Note" shall have the meaning given to it in Section 2.2 of the Credit Agreement. "Tranche B Commitments" shall mean the obligation of the Tranche B Lenders to make the Tranche B Loans to the Borrower in an aggregate principal amount at any one (1) time outstanding not to exceed the aggregate of the amounts set forth opposite each Tranche B Lender's name on Schedule 2.1 to the Credit Agreement, provided, no Tranche B Lender shall be obligated to make Tranche B Loans in excess of such Tranche B Lender's share of the Tranche B Commitments as set forth adjacent to such Tranche B Lender's name on Schedule 2.1 to Credit Agreement. "Tranche B Lenders" shall mean First Union National Bank and shall include the several banks and other financial institutions from time to time party to the Credit Agreement that commit to make the Tranche B Loans. "Tranche B Loan" shall mean the Loans made pursuant to the Tranche B Commitment. "Tranche B Note" shall have the meaning given to it in Section 2.2 of the Credit Agreement. "Transaction Expenses" shall mean all Soft Costs and all other costs and expenses incurred in connection with the preparation, execution and delivery of the Operative Agreements and the transactions contemplated by the Operative Agreements including without limitation all costs and expenses described in Section 7.1 of the Participation Agreement and the following: (a) the reasonable fees, out-of-pocket expenses and disbursements of counsel in negotiating the terms of the Operative Agreements and the other transaction documents, preparing for the closings under, and rendering opinions in connection with, such transactions and in rendering other services customary for counsel representing parties to transactions of the types involved in the transactions contemplated by the Operative Agreements; Appendix A - 29 132 (b) the reasonable fees, out-of-pocket expenses and disbursements of accountants for any Credit Party in connection with the transaction contemplated by the Operative Agreements; (c) any and all other reasonable fees, charges or other amounts payable to the Lenders, the Agent, the Holders, the Owner Trustee or any broker which arises under any of the Operative Agreements; (d) any other reasonable fee, out-of-pocket expenses, disbursement or cost of any party to the Operative Agreements or any of the other transaction documents; and (e) any and all Taxes and fees incurred in recording or filing any Operative Agreement or any other transaction document, any deed, declaration, mortgage, security agreement, notice or financing statement with any public office, registry or governmental agency in connection with the transactions contemplated by the Operative Agreement. "Tribunal" shall mean any state, commonwealth, federal, foreign, territorial, or other court or government body, subdivision agency, department, commission, board, bureau or instrumentality of a governmental body. "Trust" shall mean the Dolphin Realty Trust 1999-1. "Trust Agreement" shall mean the Trust Agreement dated on or about the Closing Date between the Holders and the Owner Trustee. "Trust Company" shall mean First Security Bank, National Association, in its individual capacity, and any successor owner trustee under the Trust Agreement in its individual capacity. "Trust Estate" shall have the meaning specified in Section 2.2 of the Trust Agreement. "Type" shall mean, as to any Loan, whether it is an ABR Loan or a Eurodollar Loan. "UCC Financing Statements" shall mean collectively the Lender Financing Statements and the Lessor Financing Statements. "Unanimous Vote Matters" shall have the meaning given it in Section 12.4 of the Participation Agreement. "Unfunded Liability" shall mean, with respect to any Plan, at any time, the amount (if any) by which (a) the present value of all benefits under such Plan exceeds (b) the fair market value of all Plan assets allocable to such benefits, all determined as of the then most recent valuation date for such Plan, but only to the extent that such excess represents a potential liability of the Company or any member of the Controlled Group to the PBGC or such Plan under Title IV of ERISA. Appendix A - 30 133 "Uniform Commercial Code" and "UCC" shall mean the Uniform Commercial Code as in effect in any applicable jurisdiction. "United States Bankruptcy Code" shall mean Title 11 of the United States Code. "Unused Fee" shall mean, collectively, the Holder Unused Fee and the Lender Unused Fee. "Unused Fee Payment Date" shall mean the last Business Day of each March, April, September and December and the last Business Day of the Commitment Period. "U.S. Person" shall have the meaning specified in Section 11.2(e) of the Participation Agreement. "U.S. Taxes" shall have the meaning specified in Section 11.2(e) of the Participation Agreement. "Wholly-Owned Entity" shall mean a Person, all of the shares of Capital Stock or other ownership interest of which are owned by the Guarantor and/or one of its wholly-owned Subsidiaries or other wholly-owned entities. "Withholdings" shall have the meaning specified in Section 11.2(e) of the Participation Agreement. "Year 2000" shall mean the calendar year beginning January 1, 2000 and ending December 31, 2000. Appendix A - 31 EX-10.29 5 PURCHASE AND SALE AGREEMENT 1 EXHIBIT 10.29 PURCHASE AND SALE AGREEMENT by and among 200 CARILLON, L.L.C., as Seller, ECHELON INTERNATIONAL CORPORATION, as a Developer, and CATALINA MARKETING SALES CORPORATION, as Buyer October 21, 1999 Property: Pinellas County, Florida 2 TABLE OF CONTENTS 1. DEFINITIONS................................................................2 1.1 DEAL TERMS AND DEADLINES..............................................2 1.2 STANDARD DEFINED TERMS; DEVELOPMENT AGREEMENT TERMS...................3 2. DEVELOPMENT, PURCHASE AND SALE.............................................3 3. SELLER DELIVERABLES........................................................4 A. GEOTECHNICAL REPORT................................................4 B. ENVIRONMENTAL REPORT...............................................4 C. SURVEY.............................................................4 D. TITLE COMMITMENT...................................................4 4. DESIGN AND CONSTRUCTION OF BUILDING AND IMPROVEMENTS.......................4 4.1 DESIGN-BUILD TURNKEY PROJECT..........................................4 A. DEVELOPER ACKNOWLEDGMENT...........................................4 4.2 PLANS AND SPECIFICATIONS FOR PROJECT..................................5 A. LEGAL REQUIREMENTS.................................................5 B. CERTIFICATIONS.....................................................5 4.3 CLAIMS................................................................5 A. FORCE MAJEURE......................................................5 B. DUTY TO PROCEED/RESOLUTION.........................................5 4.4 MISCELLANEOUS DESIGN/CONSTRUCTION ISSUES..............................6 5. PURCHASE PRICE AND PAYMENT.................................................6 5.1 PURCHASE PRICE........................................................6 A. LAND AND BASE BUILDING.............................................7 B. TENANT IMPROVEMENTS................................................7 C. FINANCING COSTS....................................................7 D. BUYER-DIRECTED CHANGE ORDERS.......................................8 5.2 PAYMENT...............................................................8 6. CONDITIONS TO CLOSING......................................................9 6.1 BUYER'S OBLIGATION: CONDITIONS PRECEDENT.............................9
2 3 A. ACCURACY OF REPRESENTATIONS........................................9 B ENVIRONMENTAL CONDITION............................................9 C TITLE AND SURVEY UPDATES...........................................9 i. MARKED TITLE COMMITMENT............................................9 ii. UPDATED SURVEY...................................................10 iii. CURRENT UCC SEARCHES............................................10 D. ASSUMPTION OF LEASES..............................................10 E. OTHER CONDITIONS..................................................10 6.2 SELLER'S OBLIGATION: CONDITIONS PRECEDENT...........................10 A. ACCURACY OF REPRESENTATIONS.......................................10 B. OTHER CONDITIONS..................................................10 6.3 NON-SATISFACTION OF CONDITIONS.......................................10 7. CLOSING...................................................................11 8. PRORATIONS, CREDITS, CLOSING COSTS, AND CLOSING DELIVERIES................11 8.1 PRORATION ITEMS......................................................11 A. REAL ESTATE TAXES AND ASSESSMENTS.................................11 B. UTILITY EXPENSES AND PAYMENTS.....................................12 C. UTILITY DEPOSITS..................................................12 8.2 CLOSING STATEMENT AND SCHEDULES......................................12 8.3 REPRORATION AFTER CLOSING............................................12 8.4 SELLER'S CLOSING COSTS...............................................13 8.5 BUYER'S CLOSING COSTS................................................13 8.6 SELLER'S DELIVERIES..................................................13 A. DEED..............................................................13 B. BILL OF SALE......................................................14 C. ASSIGNMENT OF WARRANTIES AND OTHER INTERESTS......................14 D. WARRANTY AND OTHER ESTOPPELS......................................14 E. DELIVERY OF KEYS AND PROPERTY DOCUMENTS...........................15 F. AFFIDAVIT OF TITLE................................................15 G. AFFIDAVIT OF TITLE................................................15
3 4 H. CLOSING STATEMENT.................................................15 I. EVIDENCE OF AUTHORITY................................................15 J. REAFFIRMATION........................................................16 K. COMPLIANCE WITH LAND USE REQUIREMENTS.............................16 (i) CERTIFICATE OF OCCUPANCY.......................................16 (ii) LAND USE AFFIDAVIT.............................................16 (iii) ZONING LETTER..................................................16 (iv) ARCHITECT/ENGINEER CERTIFICATE.................................17 (v) CONTRACTOR CERTIFICATE.........................................17 L. TRANSFER OF PERMITS...............................................17 M. DEVELOPER'S WARRANTY..............................................17 N. OPERATIONS AND MAINTENANCE MANUALS................................17 O. LEASE TERMINATION AGREEMENT.......................................17 P. OTHER INSTRUMENTS.................................................17 Q. TITLE AND SURVEY UPDATES..........................................18 R. AS BUILT DRAWINGS.................................................18 S. ASSUMPTION OF LEASES..............................................18 T. OPTION AGREEMENT..................................................18 U. PROPERTY MANAGEMENT AGREEMENT.....................................18 8.7 BUYER'S DELIVERIES...................................................18 A. NET PURCHASE PRICE................................................18 B. CLOSING DOCUMENT COUNTERPARTS.....................................18 C. LEASE TERMINATION AGREEMENT.......................................18 D. OTHER INSTRUMENTS.................................................19 9. REPRESENTATIONS AND WARRANTIES............................................19 9.1 SELLER'S REPRESENTATIONS AND WARRANTIES..............................19 A. TITLE TO REAL PROPERTY............................................19 B. TITLE TO PERSONAL PROPERTY........................................19 C. ORGANIZATION, POWER AND AUTHORITY.................................19 D. NO UNDISCLOSED CONTRACTS..........................................20 E. ACCURACY AND COMPLETENESS OF OTHER PROPERTY DOCUMENTS.............20
4 5 F. COMPLIANCE OF REAL PROPERTY AND IMPROVEMENTS......................20 G. FLOOD, WETLANDS AND OTHER DISTRICTS...............................20 H. ENVIRONMENTAL MATTERS.............................................20 I. TAXES AND ASSESSMENTS.............................................21 J. CONDEMNATION PROCEEDINGS..........................................21 K. LITIGATION PROCEEDINGS............................................21 L. BANKRUPTCY........................................................21 M. AVAILABILITY OF UTILITIES.........................................22 N. DISCLOSURE........................................................22 9.2 REAFFIRMATION AT CLOSING.............................................22 9.3 SURVIVAL.............................................................22 9.4 REMEDIES PRIOR TO CLOSING............................................22 9.5 REMEDIES AFTER CLOSING...............................................23 9.6 BUYER'S REPRESENTATIONS AND WARRANTIES...............................24 A. ORGANIZATION, POWER AND AUTHORITY.................................24 B. NO BANKRUPTCY.....................................................24 10. SELLER'S COVENANTS........................................................24 10.1 NO ALTERATION OF TITLE............................................24 10.2 NO ALTERATION OF SITE CONDITIONS..................................25 10.3 COMPLIANCE WITH LAWS, LEASES, CONTRACTS...........................25 10.4 REPRESENTATIONS AND WARRANTIES....................................25 10.5 PERSONAL PROPERTY.................................................25 10.6 PERMITS AND ZONING................................................26 11. NOTICES...................................................................26 12. CASUALTY AND CONDEMNATION.................................................26 12.1 CASUALTY..........................................................26 A. MAJOR CASUALTY....................................................26 B. MINOR CASUALTY....................................................27 12.2 CONDEMNATION......................................................27 A. MAJOR CONDEMNATION................................................27
5 6 B. MINOR CONDEMNATION................................................28 13. ADVISORS..................................................................28 14. INDEMNITY.................................................................28 A. ENVIRONMENTAL INDEMNIFICATION.....................................29 B. MECHANIC'S LIENS..................................................30 15. DEFAULT...................................................................30 15.1 BUYER DEFAULT.....................................................30 15.2 SELLER DEFAULT....................................................30 16. GENERAL PROVISIONS........................................................31 16.1 TERMINATION.......................................................31 16.2 EXECUTION NECESSARY...............................................31 16.3 COUNTERPARTS......................................................32 16.4 SUCCESSORS AND ASSIGNS............................................32 16.5 ENTIRE AGREEMENT..................................................33 16.6 TIME IS OF THE ESSENCE............................................33 16.7 GOVERNING LAW.....................................................33 16.8 SURVIVAL..........................................................33 16.8 FURTHER ASSURANCES................................................33 16.10 EXCLUSIVE APPLICATION.............................................33 16.11 PARTIAL INVALIDITY................................................34 16.12 INTERPRETATION....................................................34 A. DEFINED TERMS.....................................................34 B. PRONOUNS..........................................................34 16.13 WAIVER RIGHTS.....................................................34 16.14 NO IMPLIED WAIVER.................................................35 16.15 RIGHTS CUMULATIVE.................................................35 16.16 ATTORNEY'S FEES...................................................35 16.17 EXHIBITS AND SCHEDULES............................................35 16.18 CONFIDENTIALITY...................................................36 16.19 FACSIMILE AS WRITING..............................................36
6 7 PURCHASE AND SALE AGREEMENT THIS PURCHASE AND SALE AGREEMENT (this "AGREEMENT") is made and entered into as of October 21, 1999, by and between 200 CARILLON L.L.C., a Delaware limited liability company ("SELLER"), ECHELON INTERNATIONAL CORPORATION, a Florida corporation ("ECHELON INTERNATIONAL" or "DEVELOPER"), and CATALINA MARKETING SALES CORPORATION, a Delaware corporation ("BUYER"). R E C I T A L S: WHEREAS, Seller owns a certain tract or parcel of land described on EXHIBIT A, attached hereto and made a part hereof (the "LAND") containing approximately 6.29 acres, which Land was formerly owned by Gateway Joint Venture, a Florida general partnership ("GATEWAY"), of which Echelon International was a general partner; and WHEREAS, Gateway and Echelon International, together as Landlord, and Buyer as Tenant, entered into a Lease Agreement ("LEASE"), and Echelon International and Buyer entered into a Development Agreement ("LEASE DEVELOPMENT AGREEMENT"), both dated as of July 13, 1999, pertaining to the Land and Developer's obligations to design, construct and complete (or cause to be designed, constructed and completed) on the Land a five (5) story office building with approximately 142,857 rentable square feet (as measured by BOMA 1996 measurement standards for multi-tenant buildings), constructed of structural steel frame with an architectural pre-cast concrete exterior, with interior tenant improvements and surface and structured parking for approximately 670 automobiles (a ratio of approximately 4.7 spaces per 1,000 rentable square feet), and other amenities and improvements as hereinafter set forth, which development shall be known as the Catalina Marketing Building or such other name as may be selected by Buyer ("PROJECT" or "IMPROVEMENTS"); and WHEREAS, Seller and Buyer have agreed that upon Developer's completion of the Improvements, Seller and Developer shall sell to Buyer, and Buyer shall purchase from Seller and Developer, the Land and Improvements (together, the "Property") in accordance with the terms and provisions of this Agreement. In contemplation of the transaction governed hereby (the "TRANSACTION"), Buyer has also requested Developer to enter into an agreement substantially identical to the terms and conditions of the Lease Development Agreement ("SALE DEVELOPMENT AGREEMENT") to govern the rights, liabilities and obligations of Buyer and Developer with respect to the design and construction of the Improvements, which Sale Development Agreement shall conditionally control over and supersede the rights, terms and conditions of the Lease Development Agreement until such time that this Agreement (together with the Sale Development Agreement) is 7 8 terminated, and Developer has agreed to enter into the Sale Development Agreement subject to such terms and understandings; and WHEREAS, Seller and Echelon International are affiliated entities, and as an inducement to Buyer to purchase the Property, Seller has caused Echelon International to enter into the Sale Development Agreement with Buyer for the development of the Project, and the parties understand, conform, and agree that credits and other adjustments under the Sale Development Agreement will be adjustments to the Purchase Price paid to Seller hereunder; and WHEREAS, Buyer and Seller each acknowledge and agree that the terms and conditions of the Lease shall continue to run and be binding upon Buyer and Seller, even in the event of the termination of this Agreement for any reason whatsoever, until such time that the Transaction contemplated by this Agreement closes, whereupon Buyer, Developer and Seller shall cause the Lease (and the Lease Development Agreement) to be terminated; NOW, THEREFORE, for and in consideration of the promises, covenants, representations and warranties hereinafter set forth, the sum of One Hundred Dollars ($100.00) and other good and valuable consideration in hand paid by Seller and Developer to Buyer and by Buyer to Seller and Developer upon the execution of this Agreement, the receipt and sufficiency of which are hereby acknowledged by each of Seller, Developer, and Buyer, Buyer, Developer, and Seller hereby agree as follows: 1. DEFINITIONS. Wherever used in this Agreement, the following terms shall have the meanings set forth below: 1.1 DEAL TERMS AND DEADLINES. "ADVISOR" shall mean Cushman & Wakefield of Florida, Inc., which Advisor has been retained by Buyer. "CLOSING DEADLINE" shall mean the date of February 7, 2001, subject to the same adjustments of time as are made to the Completion Deadline and the Substantial Completion Date. "CLOSING DATE" shall mean the date selected by Developer upon no less than ten (10) days' prior notice to Buyer, but in no event later than sixty (60) days after the Substantial Completion of all construction of the Improvements in accordance with this Agreement and the Sale Development Agreement (including the receipt of certificates of occupancy from appropriate governmental authorities which permit occupation of the Improvements); in no event shall the Closing Date be after the Closing Deadline unless 8 9 extended by Buyer. Developer shall use commercially reasonable, good faith, diligent efforts to reduce the time between Substantial Completion and the Closing Date, including without limitation, satisfying all prerequisites to Closing as quickly as possible following Substantial Completion. "COMPLETION DEADLINE" or "SUBSTANTIAL COMPLETION DATE" shall mean July 7, 2000, subject to adjustment of time as provided herein, in the Development Agreement, or as mutually agreed by Developer and Buyer. "PROJECT BUDGET" shall mean the development and construction budget for the Property set forth on EXHIBIT B, as the same may be amended from time to time only in accordance with this Agreement. "PROJECT NAME" shall mean Catalina Marketing Building. "SALE DEVELOPMENT AGREEMENT" has the meaning set forth in Section 4 of this Agreement. "PROPERTY" shall mean the Land and Improvements. "TITLE COMPANY" shall mean Lawyers Title Insurance Company or such other title insurance company reasonable acceptable to Buyer to insure Buyer's title to the Real Property. 1.2 STANDARD DEFINED TERMS; DEVELOPMENT AGREEMENT TERMS. Other terms not defined herein shall have the meanings ascribed to such terms by the Sale Development Agreement. Such terms include, but are not limited to, "SUBSTANTIAL COMPLETION", "BASE BUILDING ARCHITECT", "BASE BUILDING CONTRACTOR", "COST OF CONSTRUCTION", "TENANT IMPROVEMENTS ARCHITECT", "TENANT IMPROVEMENTS CONTRACTOR", "BUYER DELAYS", "FINAL BASE BUILDING DESIGN", and "FINAL TI DESIGN". 2. DEVELOPMENT, PURCHASE AND SALE. Developer agrees to develop the Property as described herein, and Seller agrees to sell, transfer and assign the Property to Buyer on the terms, conditions and provisions set forth in this Agreement. Upon completion of the development of the Property, as described below, Buyer agrees to purchase, accept and assume the Property on the terms, conditions and provisions set forth in this Agreement. 3. SELLER DELIVERABLES. Buyer acknowledges that it has received from Seller copies of the following: A. GEOTECHNICAL REPORT. Subsurface investigation geotechnical reports. 9 10 B. ENVIRONMENTAL REPORT. Environmental reports including, but not limited to, the following documents prepared by Dames & Moore, dated July 30, 1999. C. SURVEY. Survey of the Land, prepared by Polaris, Inc., bearing Job No. 001-236, last revision date August 26, 1999. D. TITLE COMMITMENT. ALTA Commitment for Title Insurance, prepared by Lawyers Title Insurance Corporation, Commitment No. 99-06268 pertaining to the Real Property, dated September 1, 1999. 4. DESIGN AND CONSTRUCTION OF BUILDING AND IMPROVEMENTS. 4.1 DESIGN-BUILD TURNKEY PROJECT. To conform the obligations of Buyer and Developer under the Lease Development Agreement to the Transaction contemplated by this Agreement, Buyer and Developer have entered into the development agreement attached hereto as EXHIBIT C (the "SALE DEVELOPMENT AGREEMENT"). The terms and conditions, rights and liabilities arising under the Sale Development Agreement shall control over and supersede the Lease Development Agreement until such time that this Agreement is terminated. Developer's use of separate entities to perform design and construction work in no way relieves Seller of its design/build delivery obligations. A. DEVELOPER ACKNOWLEDGMENT. Developer acknowledges its obligation to provide a complete and fully constructed Project on a turnkey delivery basis and that it is required to provide all items (labor, material, equipment) necessary to complete the Project. Omissions from the documents provided by Buyer to Developer or inadequate descriptions of details of the Project in such documents which are manifestly necessary or which are customarily performed, shall not release the Developer from performing such necessary or customary details of the Project. Developer acknowledges that the Project is a turnkey project and represents that it has experience with such project deliveries. Developer represents that it fully understands the general scope of work required to be performed. Developer further acknowledges its obligation to coordinate the design and construction work of each member of the Design and Construction Team so that all design details, plans, drawings and specifications adequately describe and depict the construction work. Buyer shall not be responsible for any changes, increased costs, claims or delays, except as expressly provided in the Sale Development Agreement. Buyer reserves the right to employ an architect and consultant of its own choosing to review all aspects of the Work under the Sale Development Agreement, including, but not limited to, the determination of Punchlist work. 10 11 4.2 PLANS AND SPECIFICATIONS FOR PROJECT. A. LEGAL REQUIREMENTS. Developer shall be responsible for ensuring that the Base Building Conceptual Design and the Final Base Building Design (the "BASE BUILDING DESIGN DOCUMENTS") comply in all material respects with all applicable federal, state, and local laws, codes, ordinances, regulations and orders in effect at the date of the issuance of the permit for the construction of the Improvements, including, but not limited to, The Americans With Disabilities Act ("LEGAL REQUIREMENTS"), and with any Legal Requirements adopted subsequent to such date to the extent necessary to obtain final certificates of occupancy for the Improvements. B. CERTIFICATIONS. Within five (5) days after receipt of the Final Base Building Design, Buyer may request certifications in the form of EXHIBIT D attached hereto from any or all members of the Design and Construction Team (or, where applicable, Developer's civil engineer). Developer shall use good faith, diligent efforts to cause the execution and delivery to Buyer of Certifications within twenty (20) days of Buyer's request. 4.3 CLAIMS A. FORCE MAJEURE. The provisions of the Sale Development Agreement shall govern with respect to any and all claims by Developer (or any member of the Design and Construction Team) of Force Majeure delay, Buyer Delay, Buyer - Directed Change Orders, and any other demand or assertion by such parties seeking an adjustment to the Substantial Completion Date, the Outside Delay Date, or the Purchase Price (a "CLAIM"). B. DUTY TO PROCEED/RESOLUTION. Pending final resolution of a Claim, unless otherwise agreed to in writing, Developer shall proceed diligently with the design and construction of the Project. 4.4 MISCELLANEOUS DESIGN/CONSTRUCTION ISSUES. Buyer, in its sole discretion, shall have the right to require changes to the Tenant Improvement design documents. Subject to Developer's approval, which approval shall not be unreasonably withheld or delayed, Buyer shall have the right to direct changes to the final Base Building design documents, and to any aspect of the Project design and construction so long as such changes do not result in a cardinal change. Such changes shall only be valid if issued by Buyer in writing as a Buyer-directed change order (a "BUYER-DIRECTED CHANGE ORDER"). At Closing, Buyer will pay Developer any direct cost increases reasonably incurred as a result of a Buyer-Directed 11 12 Change Order. In the event this Agreement is terminated prior to Closing, Buyer shall cause the Tenant under the Lease to pay such amount together with the rent payment next due and owing. To the extent such Buyer-Directed Change Order results in delay to critical path of the Detailed Critical Path Method Schedule, it shall constitute a "Buyer Delay" under the Sale Development Agreement. Seller and Developer shall convey to Buyer all of their respective right, title and interest in and to the Final Base Building Design, including all copyrights thereto. Developer is entitled only to provide copies thereof to the Base Building Contractor (and such other Design and Construction Team members as necessary to cause the completion of the Improvements in accordance with this Agreement) as defined below for the sole purpose of constructing the Base Building. After the Final Base Building Design has been approved by Buyer, Developer may not make any changes to it without Buyer's written approval, which approval may be given or withheld in Buyer's sole discretion (except that Developer shall be permitted to make changes not deemed to be material changes resulting from a governmental official's code interpretation without the Buyer's written approval). In performing the Base Building construction work, Developer shall assume an agency role, on behalf of Buyer, and act in the best interests of Buyer in performing all Base Building-related work. 5. PURCHASE PRICE AND PAYMENT. The Purchase Price, subject to the prorations and credits set forth herein, shall be due and payable as follows: 5.1 PURCHASE PRICE. The purchase price of the Property is as set forth herein, subject to adjustment for unused or unauthorized allowances. No costs, other than those set forth herein, shall be due and owing to Seller. Any Tenant Improvements Allowance not used or authorized by Buyer shall be deducted from the Purchase Price. The Purchase Price shall be deemed to include the Land and Base Building, the cost of the Tenant Improvements, Buyer-Directed Change Orders, all costs of managing the Tenant Improvements, all costs of financing inclusive of lender's fees, appraisal, interest rate fluctuations, lender engineering review, and all other related costs. A. LAND AND BASE BUILDING. Buyer shall pay Seller a lump sum, fixed price of Twenty Four Million Five Hundred Thousand Five Hundred Eighty Three and No/100 Dollars ($24,500,583.00) for the Land, and the design, construction and completion of the Base Building and all Base Building Systems. Except to the extent expressly provided elsewhere, this price includes all costs associated therewith including, but not limited to (1) all Land acquisition costs, (2) all environmental, soil, geotechnical investigations and reports, (3) all architect fees and design work, (4) all 12 13 permits, licenses, and insurance (including, without limitation, Buyer's owner's policy of title insurance, to be issued at closing, in the amount of the purchase price), (5) general and administrative overhead, (6) profit, (7) the Base Building construction work and Building Systems, (8) a reduction of $290,000.00 as consideration for Buyer's execution of the Property Management Agreement described in Section 8.6U below, and (9) all other obligations under this Agreement. B. TENANT IMPROVEMENTS. As part of the Purchase Price, Buyer shall pay Seller for the Tenant Improvement Work as follows: the cost to design and construct all Tenant Improvement Work calculated in accordance with Section 9 of the Sale Development Agreement, management fee equal to 3.5% of the total cost to design and construct the Tenant Improvements ("MANAGEMENT FEE"); actual out-of-pocket interest costs paid by Developer in connection with that portion of the Cost of Construction, if any, incurred after disbursement of the entire Tenant Improvement Allowance; and the Tenant Improvement Contractor Mark-Up as set forth herein. Provided, however, that Seller shall provide Buyer with a Tenant Improvements Allowance in an amount of Three Million Eight Hundred Fifty Seven Thousand One Hundred Thirty Nine and No/100 Dollars ($3,857,139.00) ("TENANT IMPROVEMENTS ALLOWANCE"). Developer shall act as Buyer's agent in managing the Tenant Improvements and processing invoices for the Tenant Improvement Architect and the Tenant Improvements Contractor, and Buyer shall compensate Seller with the Management Fee for such services. C. FINANCING COSTS. Developer shall provide all project financing through the turnover of the Project up to and including Closing. Except as provided in Section 5.1B above, Seller and Developer acknowledge and represent that the lump sum, fixed price stated above is the sole and exclusive compensation for all financing costs including, but not limited to, lenders fees, appraisal costs, interest rate fluctuation, lender engineering review, and all other costs and risks of increased costs associated with project financing. D. BUYER-DIRECTED CHANGE ORDERS. As part of the Purchase Price, Buyer shall pay Seller any direct cost increases (netted out against any direct cost reductions resulting from Buyer-Directed Change Orders) reasonably incurred by Developer as a result of Buyer-Directed Change Orders. 5.2 PAYMENT. At Closing, Buyer shall pay to Seller the Purchase Price, subject to the credits, prorations and adjustments set forth herein, in cash by federal reserve bank wire transfer to such account and bank as Seller shall 13 14 designate in writing to Buyer at or prior to Closing to be confirmed received in Seller's account on or before 12:00 Noon, Tampa, Florida time on the Closing Date, or, if no such notice is delivered by Seller to Buyer, by Federal Reserve Funds check drawn for value received on an account in the metropolitan area in which the Closing is to take place and dated no earlier than the day prior to the Closing Date. Seller shall deliver to Buyer wire instructions at least 48 hours prior to closing. In addition, the amount of liquidated delay damages owed to Buyer may be withheld. At Closing only minor Punchlist items shall remain, none of which shall materially affect Buyer's ability to use any portion of the Improvements for its intended uses. Two Hundred Percent (200%) of the value of the uncompleted work on the Punchlist shall be escrowed at Closing. Developer shall have forty-five (45) days after issuance of the Punchlist to complete the Punchlist Work (except those items which reasonably require more than 45 days to complete, shall be completed in diligent fashion, but no later than 120 days after the date the Punchlist is issued). At the end of such cure period, Buyer shall pay Seller the funds retained for the Punchlist Work performed (being the funds equal to 200% of the value of the previously uncompleted work) and Seller shall forfeit the remaining withheld funds for Punchlist Work not performed or completed, unless Developer in good faith disputes Buyer's rejection of Punchlist Work, in which event such funds shall continue to remain in escrow pending resolution of such dispute. The parties expressly agree that if issuance of a final occupancy permit is delayed, but that all other requirements for Substantial Completion have been met (including without limitation that Buyer may occupy the Real Property for the use for which it is intended under a temporary certificate of occupancy), and Buyer has no reason to believe that the final occupancy permit will not promptly issue upon completion of the Punchlist items, then the Closing shall nevertheless proceed; provided that Developer's obligations under this Agreement and the Sale Development Agreement to complete the Project and deliver a final, unconditional certificate of occupancy, shall survive closing and be in full force and effect. The sum of Two Hundred Fifty Thousand and No/100 Dollars ($250,000.00) shall be deducted from the Purchase Price to be paid to Seller at Closing and escrowed at Closing until issuance of the final occupancy certificate. 6. CONDITIONS TO CLOSING. 6.1 BUYER'S OBLIGATION: CONDITIONS PRECEDENT. The obligation of the Buyer to consummate the Closing hereunder shall be subject to the satisfaction at or prior to Closing of the following conditions precedent: A. ACCURACY OF REPRESENTATIONS. All of the warranties and representations of Seller and Developer contained in this Agreement shall be true in all material respects, in each case as of the date of this Agreement and as of 14 15 the Closing Date except (i) for changes specifically permitted by this Agreement and (ii) for those representations and warranties which expressly address matters only as of a particular date, which representations and warranties shall remain true and correct in all material respects as of such date. B. ENVIRONMENTAL CONDITION. On the Closing Date, the Property shall be free of any and all Hazardous Substances either within the Improvements or on or under the surface of the Property, except for Hazardous Substances used in the ordinary course of Seller's construction in strict compliance with all Environmental Laws. C. TITLE AND SURVEY UPDATES. At the time of Closing, Seller shall possess title to the Real Property free and clear of all encumbrances except for the Permitted Title Exceptions. In addition, at time of Closing, Seller shall have delivered, or cause to be delivered to Buyer: i. MARKED TITLE COMMITMENT. A "marked" Title Commitment, endorsed by the Title Company to (i) remove all references to payment of premium and charges for the policy and all references to expiration of the Title Commitment; (ii) indicate that all requirements to be performed on the part of Seller or others have been satisfied; (iii) delete any general survey exception (and replace with a reference to the specific matters shown on the Survey, as updated by Buyer), any exception relating to rights of parties in possession, and easements, liens, taxes or assessments not shown by the public records; and (iv) delete any exception for any matters first appearing of record after the date of the Commitment and prior to the effective date of the final policy; ii. UPDATED SURVEY. An "as-built" Survey showing no matters which are not Permitted Title Exceptions. iii. CURRENT UCC SEARCHES. All applicable UCC searches, dated no more than thirty (30) days prior to Closing, showing no matters which are not Permitted Title Exceptions (except for liens securing construction financing to be satisfied at Closing). D. ASSUMPTION OF LEASES. On or before Substantial Completion and effective on the earlier of the commencement of the Lease Term or Closing, Echelon Gateway, Inc. shall have assumed the existing leasehold obligations at these certain two facilities of Buyer located on Ninth Street, St. Petersburg, Florida, which assumption shall be guaranteed by Echelon International or the Assignee (as defined in Section 16.4, below), and Echelon International shall have fully cooperated with Buyer in Buyer's efforts to obtain all required landlord and other consents in connection therewith. Echelon 15 16 International's obligation to cooperate shall not include any obligation to pay money or other consideration to obtain such consents. E. OTHER CONDITIONS. Seller and Developer shall comply with all other conditions to closing set forth elsewhere in this Agreement. 6.2 SELLER'S OBLIGATION: CONDITIONS PRECEDENT. The obligation of Seller to consummate the Closing hereunder shall be subject to the satisfaction at or prior to Closing of the following conditions precedent: A. ACCURACY OF REPRESENTATIONS. All of the warranties and representations of Buyer contained in this Agreement shall be true in all material respects, in each case of the date of this Agreement and as of the Closing Date except (i) for changes specifically permitted by this Agreement and (ii) for those representations and warranties which expressly address matters only as of a particular date, which representations and warranties shall remain true and correct in all material respects as of such date. B. OTHER CONDITIONS. Buyer shall comply with all other conditions to closing set forth elsewhere in this Agreement. 6.3 NON-SATISFACTION OF CONDITIONS. If any condition set forth in this Section 6 is not satisfied as of the date specified for satisfaction, the party whose obligation to close is conditioned thereon may either (a) waive satisfaction of such condition and proceed to Closing; (b) following notice of such unsatisfied condition the other party's failure to satisfy such condition within fifteen (15) days after such notice, elect to terminate this Agreement and the Sale Development Agreement; or (c) if appropriate or applicable, declare that the failure of such condition to be a default by the other party, and, in the event of the failure of Subsections 6.1.A or 6.2.A, proceed in accordance with Section 9.4 or 9.5 hereof as applicable, or in the event of the failure of any other condition, proceed in accordance with the applicable provisions of Section 15. 7. CLOSING. Closing shall be held at 9:00 a.m. local Tampa, Florida time, on the Closing Date at the offices of Holland & Knight LLP, 400 North Ashley, Suite 2300, Tampa, Florida 33602. Seller, Developer, and Buyer shall conduct a "pre-closing" on the day preceding the Closing Date, in order to finalize and execute (but not deliver, pending the Closing) the documents to be executed and delivered at Closing. At Closing, Seller and Developer shall deliver to Buyer the items required of such person as elsewhere set forth herein and Buyer shall deliver to Seller the Purchase Price and the other items required of Buyer as elsewhere set forth herein. Seller shall deliver possession of the Property, subject only to Permitted Title Exceptions, to Buyer at the time of Closing. The parties agree to execute and deliver into escrow the day prior to the Closing Date all documents required for 16 17 Closing with funding and release of the escrow to occur on the Closing Date. If the Transaction is not closed on or before the Closing Deadline, then either Seller or Buyer may terminate this Agreement by written notice to the other party; provided, however, that neither party shall have the right to terminate this Agreement if the Closing has not occurred by the Closing Deadline as a result of the default of the party seeking to terminate. 8. PRORATIONS, CREDITS, CLOSING COSTS, AND CLOSING DELIVERIES. 8.1 PRORATION ITEMS. In each such proration set forth below, the portion thereof allocable to periods beginning as of the Closing Proration Time shall be credited to Buyer, or charged to Buyer, as applicable, and the portion thereof allocable to periods ending as of the Closing Proration Time shall be credited to Seller, or charged to Seller, as applicable, all of which prorations shall be made at Closing or, in the case of allocations to be made after Closing, upon receipt of such payments or payment of such expenses. The following items shall be prorated between Buyer and Seller or credited to Buyer or Seller: A. REAL ESTATE TAXES AND ASSESSMENTS. All ad valorem real estate taxes, personal property taxes, and Carillon Property Owners Association assessments with respect to the Property for the current calendar year shall be prorated as of the Closing Proration Time, with due allowance for the full discount, as provided by law. Seller shall pay all installments for all certified and confirmed assessments levied upon the Property prior to Closing. In the event that tax bills for the current year's taxes are not available on the Closing Date, taxes shall be prorated based upon the tax bills for the previous year, or, if available, based upon the current assessed valuation and current millage rates, and, in such event, Seller and Buyer shall reprorate the taxes when actual tax bills for the current year are available. B. UTILITY EXPENSES AND PAYMENTS. Water, sewer, gas, waste fee, fire protection, electric and all other utility expenses and payments due or made with respect to the Property shall be prorated as of the Closing Proration Time, based upon the utility bills for the preceding period. Unless sooner transferred under the Lease, all such utility accounts shall be transferred to new accounts in Buyer's name or in the name of Buyer's designated management agent as of the Closing Date. Seller shall cooperate with Buyer's efforts to transfer such accounts and continue uninterrupted utility service to the Property. C. UTILITY DEPOSITS. Seller shall receive a credit at Closing for the amount of any utility deposits made by Seller and which deposits are transferred to Buyer at Closing and are documented to Buyer by the holder 17 18 thereof. 8.2 CLOSING STATEMENT AND SCHEDULES. On or before five (5) days prior to the Closing Date, Buyer shall prepare and deliver to Seller a draft Closing Statement for the Transaction, and Seller shall deliver to Buyer a current schedule of the items and amounts to be prorated or credited as set forth in this Section 8, including, but not limited to, ad valorem real estate taxes and assessments (together with copies of the current or most recent bills), all water, sewer, gas, waste fee, fire protection, electric and all other utility expenses and payments (together with copies of the current or most recent bills), and any utility deposits. 8.3 REPRORATION AFTER CLOSING. The provisions of this Paragraph shall survive the Closing. In the event that the actual amounts of any of the aforesaid proration items are unavailable as of the Closing Date, then such proration shall be made on the basis of an amount reasonably estimated by Buyer and Seller at Closing and Buyer and Seller shall thereupon reprorate such items at such times as the exact amounts for such proration items become available (but such prorations will be made within one year after the Closing Date or upon such earlier date as the exact amounts for such proration become available); provided however, that no reproration adjustment shall be made if the net amount due is $100 or less. 8.4 SELLER'S CLOSING COSTS. Seller shall pay all costs and expenses in connection with: any transfer, stamp or recording tax due in connection with the Transaction, all reasonable title examinations and promulgated premiums for owner's title insurance, one-half of any escrow agent fees (if any are charged in connection with this Transaction), and the fees and expenses of Seller's attorneys. Seller shall also be responsible for all brokerage fees, including fees owed to Cushman & Wakefield of Florida, Inc. and in connection therewith, Seller agrees to indemnify Buyer against any and all claims for brokerage fees that arise by and/or through Seller from any other entity. 8.5 BUYER'S CLOSING COSTS. Buyer shall pay for all recording charges due on recordation of any documents executed in connection with the Transaction, for the Surveys (other than the Survey previously delivered by Seller to Buyer), and one-half of any escrow agent fees and the fees and expenses of Buyer's attorneys. 8.6 SELLER'S DELIVERIES. At the Closing, Seller shall deliver or cause to be delivered to Buyer the following (which, as to documents to be executed by Seller or members, affiliates, or subsidiaries of Seller, shall be duly executed and delivered): A. DEED. A Special Warranty Deed in the form of EXHIBIT E, containing the following: 18 19 "For the period ending twenty (20) years following the date of the Deed: (i) The development, use and occupation of the Real Property, and any portion thereof, shall be limited to general office uses and related uses (including, without limitation, training facilities, cafeteria, testing facilities, printing and copying facilities, and software and hardware development and assembly), (ii) all improvements located on the Real Property shall not exceed in the aggregate a maximum building area of 150,000 square feet of gross buildable area (as such area may be increased by grantee's exercise of its expansion option evidenced by that certain option agreement recorded of even date); and (iii) maximum parking density located on the Real Property shall not exceed five (5) parking spaces per 1000 square feet of gross buildable area actually constructed (collectively, the "Restrictions"). The Restrictions shall be binding on Buyer, its successors, successors-in-title and assigns and its and their tenants, agents, employees, guests and invitees, and shall run with the Real Property for a period of twenty (20) years following the Date of the Deed. The Restrictions are for the benefit of, and may be modified or waived by an instrument executed solely by the owner of the Real Property or portion thereof and by the grantor under the deed or its successors or assigns, and in the event of any violation or threatened violation by any owner, tenant, occupant, or other person or entity having an interest in any portion of the Real Property of any of the foregoing terms, covenants, or Restrictions, then, in addition to all other remedies provided in the deed or available by law or in equity, the grantor or its successors or assigns shall have the right to enjoin such violation or threatened violation." B. BILL OF SALE. A Bill of Sale (with a limited warranty of title from Seller and Developer), in the form of EXHIBIT F, subject only to the Permitted Title Exceptions, to which shall be attached a current inventory of all Personal Property, if any, owned by Seller or Developer and used solely in connection with the Real Property or the operation thereof. C. ASSIGNMENT OF WARRANTIES AND OTHER INTERESTS. An Assignment and Assumption of Warranties and Other Interests from Seller and Developer, in the form of EXHIBIT "G" (the "ASSIGNMENT OF WARRANTIES AND INTERESTS") with respect to Seller's and Developer's interests in Warranties and Other Interests to be assigned at Closing or which will be binding on Buyer or the Property, reserving unto Seller or Developer, as 19 20 appropriate, the non-exclusive right to pursue claims under the Warranties and Other Interests for incomplete or defective work or materials, to the extent that a claim is made against such person under the one-year warranty in favor of Buyer or for defective or incomplete work or materials that may be described on Buyer's Punchlist. D. WARRANTY AND OTHER ESTOPPELS. Developer shall use good faith efforts to deliver to Buyer at or prior to Closing (i) estoppel certificates executed by Base Building Contractor, Tenant Improvement Contractor and their respective mechanical, electrical, plumbing subcontractors, and the roofing manufacturer, which estoppel certificates shall be substantially in the form of EXHIBIT H (a "WARRANTY ESTOPPEL"), and (ii) such other estoppel certificates requested by Buyer, in a form and substance approved by Buyer, in connection with covenants, conditions and restrictions, reciprocal easement agreements encumbering the Property and other contracts to be assumed by Buyer (a "COVENANT ESTOPPEL"). Notwithstanding anything herein to the contrary, in the event Developer is unable to obtain a Covenant Estoppel from the third party from whom such Estoppel has been requested, Developer may, at Developer's election, satisfy the requirement of this Paragraph D by delivering a Developer's Estoppel to Buyer in lieu of an estoppel signed by such third party. E. DELIVERY OF KEYS AND PROPERTY DOCUMENTS. The Property Documents and all keys to the Property or any portion thereof. F. NON-FOREIGN AFFIDAVIT. A certificate in the form of EXHIBIT I with respect to Section 1445 of the Internal Revenue Code stating whether or not Seller is a foreign person as defined in said Section 1445 and applicable regulations thereunder. Seller shall otherwise comply with all requirements under Section 1445 of the Internal Revenue Code and related provisions with respect to sales of real property. G. AFFIDAVIT OF TITLE. An Affidavit of Title with respect to liens and title matters in substantially the form of EXHIBIT J or otherwise as may be reasonably required by the Title Company. H. CLOSING STATEMENT. A Closing Statement (the "CLOSING STATEMENT") which shall, among other items, set forth the Purchase Price, all credits against the Purchase Price, the amounts of all prorations and other adjustments to the Purchase Price and all disbursements made at Closing on behalf of Buyer and Seller. I. EVIDENCE OF AUTHORITY. Evidence that Seller and Developer have the requisite power and authority to execute and deliver, and 20 21 perform under, this Agreement and all documents to be signed by such persons in connection herewith, including, but not limited to, the following: (i) if such person (or any general partner or member thereof) is a limited liability company, a certificate duly executed by the members and managers of the company with respect to the offices or titles held by the persons who at Closing execute documents on behalf of such company and a certificate (duly certified by the members and managers of such company) with respect to the resolution of the members and managers of such company authorizing the company to enter into this Transaction, which certificate shall also recite that the resolution has been duly and unanimously adopted by the company and remains in full force and effect; (ii) if such person (or any general partner or member thereof) is a corporation, an incumbency certificate duly executed by the secretary or assistant secretary of the corporation with respect to the offices held by the persons who at Closing execute documents on behalf of such corporation and a certificate (duly certified by the secretary or assistant secretary of such corporation) with respect to the resolution of the Board of Directors of such corporation authorizing the corporation to enter into this Transaction, which certificate shall also recite that the resolution has been duly and unanimously adopted by the Board of Directors and remains in full force and effect; and (iii) if such person (or any general partner or member thereof) is a partnership, such person shall deliver to Buyer a certified copy of the partnership agreement and partnership certificate, together with all amendments and modifications thereof, of any partnership which is the person or a general partner of the person, together with duly executed and delivered consents of the partners thereof with respect to the Transaction, to the extent such consents are or may be necessary under such agreements. J. REAFFIRMATION. A reaffirmation of the representations, warranties and covenants set forth in Section 9 hereof in the form of EXHIBIT K and made a part hereof, subject to the limitations on survival as provided hereinafter; and in the event a change in facts and circumstances requires a change in any such representation or warranty, the certificate shall specify any such changes in reasonable detail. K. COMPLIANCE WITH LAND USE REQUIREMENTS. The originals (or, to the extent originals are not available, copies) of all of the Land Use Compliance Documents, to the extent in Seller's or Developer's possession and not theretofore delivered to Buyer. Seller and Developer shall use commercially reasonable efforts to obtain the following items prior to Closing, all of which shall be subject to the reasonable approval of Buyer in all respects (collectively referred to as the "LAND USE COMPLIANCE DOCUMENTS"): (i) CERTIFICATE OF OCCUPANCY. Final certificate of 21 22 completion and occupancy (as applicable) from the governmental authorities administering compliance with Land Use Requirements which permits occupancy of the Improvements. To the extent only conditional certificates of completion or occupancy (as applicable) are available as of the Closing Date, Developer shall deliver to Buyer final certificates of completion or occupancy (as applicable), as and when the same are issued. (ii) LAND USE AFFIDAVIT. An affidavit from officers of Developer familiar with the Property in the form of EXHIBIT L, stating that to such persons' Knowledge all of the Property and Improvements comply with all Land Use Requirements. (iii) ZONING LETTER. Certificates of compliance, in the form of EXHIBIT M, or such other form as customarily delivered by the governmental agency having jurisdiction thereover. (iv) ARCHITECT/ENGINEER CERTIFICATE. A certificate from an architect and an engineer (if Developer has employed an engineer with respect to the Property) licensed to practice in the State in which the Property is located in the form of EXHIBIT N. (v) CONTRACTOR CERTIFICATE. A certificate from both the Base Building Contractor and the Tenant Improvement Contractor, in the form of EXHIBIT O. Land Use Compliance Documents submitted to Buyer prior to execution of this Agreement shall be updated to a date not earlier than forty five (45) days prior to Closing. L. TRANSFER OF PERMITS. If applicable, Seller and Developer shall execute all applications and instruments required in connection with the transfer of all Permits, to the extent transferable, and to the extent applicable to the Real Property, only, in order to transfer the benefits of each such Permit to the Buyer. To the extent any Permit pertains to land in addition to the Real Property, Seller or Developer, as appropriate, shall use commercially reasonable efforts to obtain a modification of such Permit, in form and substance reasonably acceptable to Buyer or as otherwise mandated by the agency issuing the permit, running solely to the Real Property. M. DEVELOPER'S WARRANTY. At Closing, Developer shall execute and deliver to Buyer a warranty in the form of EXHIBIT P attached hereto and made a part hereof, which warranty shall warrant and guarantee 22 23 the Improvements for a period of one (1) year from the date of Closing. N. OPERATIONS AND MAINTENANCE MANUALS. At closing, Seller or Developer shall deliver three (3) bound copies of the Operations and Maintenance Manuals for all major items in the Building, including systems and equipment, and the originals of all manufacturers', suppliers' and other third party warranties and guarantees for any Project item. O. LEASE TERMINATION AGREEMENT At Closing Developer shall execute, and cause Gateway Joint Venture to execute, an agreement terminating the Lease and the Lease Development Agreement. P. OTHER INSTRUMENTS Such other instruments or documents as may be reasonably requested by Buyer or the Title Company, or reasonably necessary, to effect or carry out the purposes of this Agreement (which funds, instruments or documents shall be subject to Seller's or Developer's prior approval thereof, as appropriate, which approval shall not be unreasonably withheld or delayed). Q. TITLE AND SURVEY UPDATES. Updates of the Title Commitment and survey in accordance with Section of 6.3A. R. AS BUILT DRAWINGS. All as-built drawings for the Base Building and the Tenant Improvements. S. ASSUMPTION OF LEASES. The Assumption of Leases in the form of EXHIBIT Q. T. RESTRICTION MODIFICATION OPTION AGREEMENT. An agreement granting Buyer or its successors or assigns the option to purchase the right to construct up to 100,000 square feet of additional development on the Property at the price of $12.00 per square foot, which agreement shall be in the form provided by Developer and reasonably acceptable to Buyer. U. PROPERTY MANAGEMENT AGREEMENT. A property management agreement providing for Developer's management of the Property with service commensurate with other Class "A" office buildings in the Gateway/Westshore office markets, for a term of five (5) years, noncancellable absent cause, for a fee of Ninety Thousand and No/100 Dollars ($90,000.00) for the first year, increasing three percent (3%) per year, otherwise in form and substance satisfactory to Seller, Developer, and Buyer. 8.7 BUYER'S DELIVERIES. At the Closing, Buyer shall deliver or cause to be delivered to Seller the following: 23 24 A. NET PURCHASE PRICE. The Purchase Price due at Closing under this Agreement, subject to the right to withhold monies for Punchlist Work and liquidated delay damages as provided in Section 4 of this Agreement or the Sale Development Agreement. B. CLOSING DOCUMENT COUNTERPARTS. Executed counterparts of the Closing Statement. C. LEASE TERMINATION AGREEMENT. Buyer shall execute an agreement terminating the Lease and Lease Development Agreement. D. OTHER INSTRUMENTS. Such other funds, instruments or documents as may be reasonably requested by Seller, Developer, or the Title Company, or reasonably necessary, to effect or carry out the purposes of this Agreement (which funds, instruments or documents shall be subject to Buyer's prior approval thereof, which approval shall not be unreasonably withheld or delayed). 9. REPRESENTATIONS AND WARRANTIES. 9.1 SELLER'S AND DEVELOPER'S REPRESENTATIONS AND WARRANTIES. Seller and Developer, as of the date of the execution of this Agreement by such person (or such other date as may be specified hereinafter), and as of Closing, represent and warrant to Buyer, and covenant with Buyer, subject to the matters on the Representation Exception Schedule, as follows: A. TITLE TO REAL PROPERTY. To Seller's and Developer's Knowledge, there are no other encumbrances to the title of the Real Property other than the Lease and other than as described in the Title Commitment. B. TITLE TO PERSONAL PROPERTY. Seller or Developer is the owner of the Personal Property free and clear of all encumbrances except for the Permitted Title Exceptions. C. ORGANIZATION, POWER AND AUTHORITY. Echelon International is a Florida corporation, duly organized, validly existing and in good standing under the laws of the State of Florida and has all necessary power to execute and deliver this Agreement and perform all its obligations hereunder. 200 Carillon L.L.C. is a Florida limited liability company, duly organized, validly existing and in good standing under the laws of the State of Florida. Each of Seller and Developer has the full power and authority to enter into and perform this Agreement, and the execution, delivery and performance of this Agreement by such persons (i) has been duly and validly 24 25 authorized by all necessary action on the part of such persons, (ii) does not conflict with or result in a violation of such person's articles of organization (or by-laws), or any judgment, order or decree of any court or arbiter in any proceeding to which such person is a party, and (iii) does not conflict with or constitute a material breach of, or constitute a material default under, any contract, agreement or other instrument by which such person is bound or to which it is a party. This Agreement is the valid and legally binding obligation of Seller and Developer enforceable in accordance with its terms. D. NO UNDISCLOSED CONTRACTS. As of Closing, there shall be no management, real estate, leasing or rental commission, service, maintenance, employment, union or other service contracts of any kind or description in existence relating to the Property and binding on Buyer, except for service contracts for elevators and other necessary services under terms reasonably acceptable to Buyer. E. ACCURACY AND COMPLETENESS OF OTHER PROPERTY DOCUMENTS. Developer has furnished Buyer with complete copies of the following documents: (1) soils reports, and (2) geotechnical report dated May 21, 1999, prepared by Ardaman & Associates, Inc. ("Property Documents"), and all modifications, additions and deletions to any of the foregoing; with respect to each, to Seller's or Developer's Knowledge they have not been changed, further assigned or further amended except for amendments, if any, copies of which have been provided to Buyer. F. COMPLIANCE OF REAL PROPERTY AND IMPROVEMENTS. The Property is in compliance in all material respects with all existing fire, health, building, handicapped persons, environmental, sanitation, use and occupancy or zoning laws and all other Legal Requirements applicable to the Property. Developer has obtained all Permits required for the construction of the Improvements. The Property is not dependent upon any other parcel of real property for parking or open space in compliance with any code, law, ordinance, statute, rule or regulation. The Improvements, when completed, will require no more than 660 parking spaces in order to meet all parking requirements of the governmental authority having jurisdiction over the Property. G. FLOOD, WETLANDS AND OTHER DISTRICTS. The Land (i) lies within special flood hazard areas "A" and "V" as determined by the United States Department of Housing and Urban Development and FEMA, and (ii) does not contain a wetlands area as determined by the Army Corps of Engineers, or any other area or designation by any other governmental or quasi-governmental authority as an area subject to environmental, archeological or other regulation that would materially affect the current or 25 26 proposed use of the Property. H. ENVIRONMENTAL MATTERS. Developer has delivered to Buyer a copy of that certain Environmental Report performed by Dames & Moore dated July 30, 1999 (the "ENVIRONMENTAL REPORTS"). There are no existing violations of federal, state or local laws, regulations, ordinances or orders related to environmental matters relating to the ownership, use, condition, or operation of the Real Property. No written or oral notice from any court or governmental agency, official or instrumentality, of any alleged violation of any ordinance, law, decree, order, code, or governmental rule or regulation relating to environmental matters has been filed or communicated to Seller with respect to the ownership, use, condition, or operation of the Real Property or any part thereof. No release, discharge, spillage or disposal of any Hazardous Substance has occurred or is occurring on the Real Property and no soil or water in or under any of the Real Property has been contaminated by any Hazardous Substance (except for contamination which may occur during construction but which has been fully remediated in accordance with all Legal Requirements prior to Closing). I. TAXES AND ASSESSMENTS. The Property is separately assessed for real property tax assessment purposes and is not combined with any other real property for such tax assessment purposes. Seller has received no written notice of any contemplated or actual re-assessments of the Property or any part thereof for general real estate tax purposes. To Seller's or Developer's Knowledge, no assessments for public improvements, impact fees or similar exactions have been made against the Property which remain unpaid as of Closing. J. CONDEMNATION PROCEEDINGS. There are no pending or threatened Condemnation Proceedings which would affect the Property, or any part thereof. K. LITIGATION PROCEEDINGS. There are no judgments unsatisfied against Seller or the Property or consent decrees or injunctions to which the Property is subject, and there is no litigation, claim or proceeding pending or, to Seller's or Developer's Knowledge, threatened against or relating to the Property, nor does Seller or Developer know of any basis for any such action or of any governmental investigation relative to the Property. Seller and Developer have no knowledge of the existence of criminal investigation concerning Seller or Developer which will have a material adverse affect on its ability to perform under this Agreement, the Property or the use and operation of the Property. L. BANKRUPTCY. Neither Seller nor Developer have 26 27 (A) commenced a voluntary case, or had entered against it a petition, for relief under any federal bankruptcy act or any similar petition, order or decree under any federal or state law or statute relative to bankruptcy, insolvency or other relief for debtors, (B) caused, suffered or consented to the appointment of a receiver, trustee, administrator, conservator, liquidator or similar official in any federal, state or foreign judicial or non-judicial proceeding, to hold, administer and/or liquidate all or substantially all of its assets, (C) made an assignment for the benefit of creditors. M. AVAILABILITY OF UTILITIES. As of Closing, all public utilities (sanitary sewer, storm sewer, electricity, water and telephone) required for the operation of the proposed Improvements to the Property will be installed and operating, and all installation and connection charges and all tap-on, permit or other fees required as a precondition to such utility service will be paid in full. Neither Seller nor Developer have received any notice of a claim with respect to storm water flow from any owner of adjacent property or otherwise. All such public utilities either enter the Land through adjoining public streets or, if they pass through adjoining private land, do so in accordance with valid and recorded public easements or private easements which will inure to the benefit of Buyer. N. DISCLOSURE. No statement, warranty or representation by Seller or Developer herein contains an untrue statement of material fact, or omits to state a true statement of material fact necessary in order to make such statement, warranty or representation not misleading in light of the circumstances under which such statement, warranty or representation is made. 9.2 REAFFIRMATION AT CLOSING. All of the foregoing representations, warranties and covenants of Seller and Developer shall be reaffirmed by such persons in writing at Closing subject to the Survival Period, to the extent the facts and circumstances in existence as of Closing permit such reaffirmation, and in the event a change in facts and circumstances requires a change in any such representation or warranty, the certificate shall specify any such changes in reasonable detail. 9.3 SURVIVAL. The representations, warranties and covenants set forth above shall survive Closing hereunder for a period of one (1) year (the "SURVIVAL PERIOD"), provided claims are asserted against Seller or Developer within such one (1) year period. 9.4 REMEDIES PRIOR TO CLOSING. If it is determined at any time prior to Closing that any of the foregoing representations and warranties of Seller or Developer were not accurate in any material respect either as of the date made or 27 28 as of the Closing Date, then, unless Seller or Developer cures such inaccuracy to Buyer's reasonable satisfaction (by paying money and performing any act or acts necessary to do so) on or before thirty (30) days after written notice from Buyer to Seller or Developer of such inaccuracy (but in no event later than the Closing Deadline), then Buyer shall elect either of the following remedies, which shall be Buyer's sole and exclusive remedies: (i) the Purchase Price shall be reduced by an amount equal to the cost to cure the impact of such inaccuracy, or if not curable, equal to the diminution in the Property's value resulting from such inaccuracy, as determined by: (a) mutual agreement of Buyer, Seller, and Developer, or (b) if Buyer and Seller fail to agree within ten (10) days after notice from one party to the other of such inaccuracy of any representation or warranty, by arbitration in accordance with Section 13 of the Sales Development Agreement, except that the "ADR Arbiter" shall be a Florida certified appraiser who is a member of the Appraisal Institute, with at least ten (10) years experience in appraising office properties in the Tampa Bay area; or, alternatively, and provided the inaccuracy materially reduces the usefulness of the Property to Buyer, but in no event shall such reduction of the Purchase Price under this Section 9.4(i) exceed One Hundred Fifty Thousand and No/100 Dollars ($150,000.00) in the aggregate, or (ii) Buyer shall have the right to terminate this Agreement and the Sale Development Agreement by delivery of written notice to Seller and seek reimbursement from Seller of Buyer's reasonable actual out-of-pocket expenses incurred in connection with the Transaction up to a maximum amount of One Hundred Fifty Thousand and No/100 Dollars ($150,000.00), prior to the date of such termination. Notwithstanding the foregoing, the above limitations of damages shall not be applicable to any contribution rights under state or federally mandated environmental remediation. 9.5 REMEDIES AFTER CLOSING. If it is determined at any time after Closing and prior to expiration of the Survival Period that any of the foregoing representations and warranties of Seller or Developer were not accurate in any material respect either as of the date made or as of the Closing Date (or as reaffirmed at Closing), then, provided that Buyer has delivered written notice to Seller or Developer of such inaccuracy prior to the expiration of the Survival Period, unless Seller or Developer cures such inaccuracy to Buyer's reasonable satisfaction (by paying money and, as applicable, performing any act or acts necessary to do so) on or before thirty (30) days after such written notice from Buyer of such inaccuracy (or provided Seller or Developer have commenced such cure and are diligently prosecuting the same to completion, such additional to as is reasonably necessary to complete such cure, not to exceed ninety (90) days), Seller and Developer shall be liable to Buyer with respect to such inaccuracy in such representations and warranties to the extent the same has a material adverse impact on the value, ownership, or use of the Property, and Buyer shall be entitled to seek a claim for Buyer's actual damages (including without limitation, any increased costs in financing the purchase of the Property), but otherwise excluding consequential 28 29 damages, incurred on account of such inaccuracy, not to exceed the sum of One Hundred Fifty Thousand and No/100 Dollars ($150,000.00) in the aggregate. Notwithstanding the foregoing, the above limitation of damages shall not be applicable to any contribution rights under state or federally mandated environmental remediation. 9.6 BUYER'S REPRESENTATIONS AND WARRANTIES. Buyer, as of the date of the execution of this Agreement by Buyer, represents and warrants to Seller as follows, and as a condition precedent to Seller's obligation to sell the Property to Buyer at Closing under this Agreement, the following representations of Buyer shall be true and correct in all material respects as of the Closing Date: A. ORGANIZATION, POWER AND AUTHORITY. Buyer is a corporation and is duly organized and validly existing and in good standing under the laws of Delaware, and has the power and authority to enter into and perform its obligations under this Agreement. Buyer has the full power and authority to enter into this Agreement and the execution and delivery of this Agreement by Buyer (i) has been duly and validly authorized by all necessary action on the part of Buyer, and (ii) to the knowledge of the officer of Buyer signing this Agreement, does not conflict with or result in a violation of Buyer's Articles of Incorporation or By-Laws or any judgment, order or decree of any court or arbiter in any proceeding to which Buyer is a party, and (iii) to the knowledge of the officer of Buyer signing this Agreement, does not conflict with or constitute a material breach of, or constitute a material default under, any contract, agreement or other instrument by which Buyer is bound or to which it is a party. B. NO BANKRUPTCY. Buyer has not (A) commenced a voluntary case, or had entered against it a petition, for relief under any federal bankruptcy act or any similar petition, order or decree under any federal or state law or statute relative to bankruptcy, insolvency or other relief for debtors, (B) caused, suffered or consented to the appointment of a receiver, trustee, administrator, conservator, liquidator or similar official in any federal, state or foreign judicial or non-judicial proceeding, to hold, administer and/or liquidate all or substantially all of its assets, or (C) made an assignment for the benefit of creditors. 10. SELLER'S AND DEVELOPER'S COVENANTS. Seller and Developer agree that between the date hereof and the Closing Date: 10.1 NO ALTERATION OF TITLE. Except as provided hereinafter, Seller shall not, so long as this Agreement remains in effect, permit further encumbrance of title to the Property after the date hereof without the prior written consent of Buyer, which consent shall not be unreasonably withheld. Without limiting the 29 30 foregoing, Seller shall permit the encumbrance of the Property, or any portion thereof or any interest therein, except as follows: Seller shall be permitted to make the following conveyances: (a) encumbrances in accordance with the Plans and Specifications of utility easements to utility companies, which utility easements shall serve only the Property, but provided that all such easements affecting the Property shall be submitted to Buyer for approval, which approval shall not be unreasonably withheld or delayed, prior to the execution thereof by Seller, accompanied by a survey showing the location thereof; (b) a deed of trust or mortgage and security agreement to secure the Construction Loan from Construction Lender to Developer or Seller (and any amendments, modifications, or renewals thereof), which indebtedness shall in no event exceed the Purchase Price Limit; (c) any claim of lien, notice of commencement or judgment provided Seller causes such encumbrance to be terminated or bonded off prior to Closing; or (d) any amendment to the restrictions, covenants and conditions described in Item 9, Schedule B, Section 2 of the Title Commitment appointing a successor developer or clarifying the legal description of an existing easement not encumbering the Property. 10.2 NO ALTERATION OF SITE CONDITIONS. Seller covenants that, other than as expressly contemplated under the Lease Development Agreement, the Sale Development Agreement and this Agreement, Seller will not permit any material adverse change to the condition at the Project site including, but not limited to, environmental conditions. 10.3 COMPLIANCE WITH LAWS, LEASES, CONTRACTS. Seller shall comply in all material aspects with, make all payments required to be paid under, and suffer no default under: (i) all laws, ordinances, regulations and orders relating to the Property, and (ii) all Record Exceptions. 10.4 REPRESENTATIONS AND WARRANTIES. Seller and Developer shall not take any action which could make any of the representations and warranties of Seller or Developer under this Agreement untrue or inaccurate in any material respect or fail to take any action necessary to prevent any of the representations and warranties of Seller or Developer from becoming untrue or inaccurate in any material respect. Seller or Developer, as applicable, shall notify Buyer promptly in writing if prior to the Closing Date such person has knowledge of (within the definition of "SELLER'S OR DEVELOPER'S KNOWLEDGE") any fact, transaction, event or occurrence which could make any of the representations and warranties of Seller or Developer under this Agreement not true and correct (without regard to any knowledge qualification set forth with respect thereto) in all material respects. 10.5 PERSONAL PROPERTY. Seller and Developer shall not remove any of the Property, including Personal Property, from the Real Property or the Improvements nor use any of the Personal Property prior to the Closing Date except 30 31 such use thereof as is normal and customary in the operation and maintenance of the Property. Seller and Developer covenants that items of Personal Property which consist of inventory and maintenance items shall be maintained at the customary level for Class A operations and will be available and conveyed to Buyer on the Closing Date. 10.6 PERMITS AND ZONING. Developer shall use its commercially reasonable efforts to preserve in force all existing Permits and to renew all Permits expiring prior to the Closing Date on terms reasonably acceptable to Buyer. If any such Permit shall be suspended or revoked, Developer shall promptly notify Buyer and shall diligently take all measures reasonably necessary to cause the reinstatement of such Permit without any additional limitation or condition. Developer shall not seek or allow any amendment to any Permit which would alter the existing permissible uses of the Property or any part thereof. Without the prior written consent of Buyer, which consent may be withheld in Buyer's sole discretion reasonably exercised, Seller and Developer shall not apply for, consent to, promote or acquiesce in any modification of any zoning restrictions or other restrictions or regulations of governmental or quasi-governmental authorities with respect to the Property. 11. NOTICES. All notices, consents, approvals and other communications which may be or are required to be given by either Seller, Developer or Buyer under this Agreement shall be given in the manner provided in the Sale Development Agreement. 12. CASUALTY AND CONDEMNATION. 12.1 CASUALTY. In the event that prior to the Closing Date any portion of the Improvements is damaged or destroyed by fire or other casualty, then Seller shall immediately deliver written notice to Buyer of such casualty (hereinafter referred to as "SELLER'S CASUALTY NOTICE") and the following provisions shall apply with respect to such casualty: A. MAJOR CASUALTY. If such damage or destruction results in a casualty loss in an amount exceeding One Million and No/100 Dollars ($1,000,000) (the "DAMAGE LIMIT"), then, Buyer shall have the right to terminate this Agreement and the Sale Development Agreement unless prior to Closing the damaged or destroyed improvements have been restored or replaced in a manner that meets or exceeds the original Plans and Specifications and is otherwise in full compliance with this Agreement or, at Buyer's option, Buyer and Seller shall use good faith efforts to enter into contractual arrangements for such restoration or replacement. Any such termination shall be effected by written notice to Seller received within ten (10) days after Buyer has received Seller's Casualty Notice, in which event 31 32 thereafter neither party hereto shall have any further rights, obligations or liabilities hereunder except to the extent that any right, obligation or liability set forth herein expressly survives termination of this Agreement. In the event that this Agreement and the Sale Development Agreement are not terminated pursuant to this Subparagraph A, Developer shall use due diligence and good faith to repair such damage and complete construction of the Improvements as quickly as possible. B. MINOR CASUALTY. If such damage or destruction results in a casualty loss in an amount not exceeding the Damage Limit, (i) Buyer shall have no right to terminate this Agreement or the Sale Development Agreement on account thereof, and (ii) Developer shall use due diligence and good faith to repair such damage and complete construction of the Improvements as quickly as possible. 12.2 CONDEMNATION. In the event that prior to the Closing Date there shall be commenced or instituted against the Property any Condemnation Proceeding, Seller shall immediately give written notice (hereinafter referred to as "SELLER'S CONDEMNATION NOTICE") of such Condemnation Proceeding to Buyer, and: A. MAJOR CONDEMNATION. In the event that such Condemnation Proceeding would result in the taking of any portion of any Improvement (other than taking of paving or curbing, so long as such taking of paving or curbing does not limit access to the Property), or any other taking which materially affects the Property in Buyer's reasonable opinion, or any portion of the Property worth in excess of Five Hundred Thousand and No/100 Dollars ($500,000), then Buyer shall have the right to terminate this Agreement and the Sale Development Agreement by written notice to Seller and Developer received within ten (10) days after the receipt of Seller's Condemnation Notice, in which event thereafter neither party hereto shall have any further rights, obligations or liabilities hereunder except to the extent that any right, obligation or liability set forth herein expressly survives termination of this Agreement. In the event that Buyer shall not elect to terminate this Agreement and the Sale Development Agreement pursuant to this Subparagraph A: (i) the conveyance of the Property shall be less such portion of the Property so taken (or shall be subject to, as applicable) said Condemnation Proceeding without adjustment of the Purchase Price, (ii) Seller shall assign or pay to Buyer at Closing all of such person's right, title and interest, if any, in any award payable on account of such Condemnation Proceeding or pay to Buyer all such awards previously paid, and (iii) neither Seller nor Developer shall be obligated to repair or restore the damage to the Property arising on account of said Condemnation Proceeding. 32 33 B. MINOR CONDEMNATION. In the event that such Condemnation Proceeding would not involve the taking of any portion of any Improvement described in subparagraph A above: (i) Buyer shall have no right to terminate this Agreement and the Sale Development Agreement on account thereof, (ii) the conveyance of the Property shall be less such portion of the Property so taken (or shall be subject to, as applicable) said Condemnation Proceeding without adjustment of the Purchase Price, (iii) Seller shall assign to Buyer at Closing all of Seller's right, title and interest, if any, in any award payable, and pay to Buyer all such awards previously paid, on account of such Condemnation Proceeding, and (iv) neither Seller nor Developer shall be obligated to repair or restore the damage to the Property arising on account of said Condemnation Proceeding. 13. ADVISORS. Each party represents to the other that such party has not incurred any obligation to any broker or real estate agent with respect to the purchase or sale of the Property except for the Advisor defined above and Echelon Real Estate Services, Inc. ("ERES"), which obligation has been incurred by [SELLER] pursuant to a separate agreement with the Advisor and ERES executed in connection with the sale/lease of the Property. Seller shall, upon the Closing of this Transaction and receipt by Seller of the Purchase Price, pay to Advisor and ERES the appropriate sales commission pursuant to the terms of the brokerage agreement with Advisor and ERES. Except for Advisor and such commission payable as set forth above, Seller, Developer, and Buyer each hereby (a) represent and warrant to the other that it has not employed, retained or consulted any broker, agent, or finder in carrying on a negotiation in connection with this Agreement or the Transaction, and (b) indemnify and agree to hold the other harmless from and against any and all claims, demands, causes of action, debts, liabilities, judgments and damages (including costs and reasonable attorneys' fees actually incurred in connection with the enforcement of this indemnity) which may be asserted or recovered against the indemnified party on account of any brokerage fee, commission or other compensation arising by reason of the indemnitor's breach of this representation and warranty. Advisor is being paid a real estate brokerage commission pursuant to a separate agreement between Seller and Advisor. This Paragraph shall survive the Closing or any termination of this Agreement. 14. INDEMNITY. Each of Seller and Developer shall and does protect, defend, indemnify and save Buyer harmless for, from and against all Loss imposed upon or asserted against Buyer by reason of: (a) any claim by a third party against Buyer arising out of any activity, construction, development, occupancy, use or non-use of the Property arising or occurring before the Closing (other than any activity, construction, development, occupancy, and use of the Property by Buyer or buyer's agents, employees or contractors) or in any way related to or arising out of any act, omission, contract or commitment of Seller or Developer, or its agents, 33 34 employees or contractors, at any time before or after the Closing; (b) any accident, injury to or death of person (including workmen) or loss or damage to property occurring on or about the Property arising or accruing before the Closing, unless due to the negligence or willful acts of Buyer or Buyer's agents, employees or contractors; and (c) subject to the limitations on remedies in favor of Buyer as may be specified in this Agreement, any loss or damage to Buyer resulting from any material breach or default by Seller or Developer of any obligation or covenant of Seller under this Agreement or under any document, instrument or agreement delivered pursuant to this Agreement. In the event Buyer shall be made a defendant in any action, suit or proceeding brought by reason of any such occurrence, Seller and Developer, at such parties' own expense, shall defend or cause to be defended such action, suit, or proceeding or cause the same to be resisted and defended by counsel designated by such parties or its insurer and reasonably approved by Buyer. If any such action, suit or proceedings should result in final judgment against Buyer, Seller, and Developer shall promptly satisfy and discharge such judgment or cause such judgment to be promptly satisfied and discharged. The obligations of Seller and Developer under subsection (a) of this Paragraph shall survive the Closing, and the obligations of Seller and Developer under subsections (a) and (c) shall survive the Closing for a period of one (1) year provided any claim under those subsections are asserted against Seller or Developer within such one (1) year period. A. ENVIRONMENTAL INDEMNIFICATION. In addition to other obligations hereunder, each of Seller and Developer agrees to indemnify Buyer and its lender, consultants, officers, and employees, successors and assigns from and against all demands, claims, civil or criminal actions or causes of action, liens, assessments, penalties, or fines, losses, damages, liabilities, or obligations, costs, disbursements, expenses or fees of any nature (including without limitation clean up costs, attorneys fees, paralegal fees, consultant fees or expert fees and disbursements and costs of litigation at trial and appellate levels) which may at any time be imposed upon, incurred by, asserted or awarded against Buyer directly or indirectly related to or resulting from all conditions (including those caused during construction) which existed at the Property site prior to the date on which the Buyer occupies the completed Improvements on the site. This environmental indemnification shall be in full force and effect until one (1) year after Substantial Completion of the entire Project. Seller and Developer shall provide a separately executed document evidencing its agreement to this environmental indemnification. B. MECHANIC'S LIENS. Each of Seller and Developer agrees to indemnify and to hold Buyer harmless from and against all loss, claims, resulting from, in whole or in part failure to comply with requirements of Fla. Statute ss.713.23 including but not limited to Notice of Commencement and 34 35 Bond. After closing, each of Seller and Developer shall and does protect, defend and indemnify and hold Buyer harmless for, from and against all loss, claims, liens, causes of actions, proceedings, liabilities, fees (including attorneys fees), judgment, executions, claims and demands of whatever nature from the Base Building Contractor or the Tenant Improvement Contractor or their subcontractors, sub-subcontractors or anyone claiming through, or as a result of, a contract or agreement with the Base Building Contractor or the Tenant Improvement Contractor for the performance of work or furnishing of services, materials or equipment of any kind for the project. 15. DEFAULT. 15.1 BUYER DEFAULT. In the event that Buyer defaults in the observance or performance of its covenants and obligations hereunder, and such default continues for ten (10) consecutive days after the date of receipt of written notice from Seller demanding cure of such default, or such longer period as may be reasonably required to effect a cure (but in no event to exceed a total of ninety (90) days), Seller shall be entitled, as its sole remedy, if Seller has theretofore complied with Seller's obligations under this Agreement, to terminate this Agreement and the Sale Development Agreement by written notice to Buyer of such termination. Seller's agreement to limit its remedy for Buyer's default to termination of this Agreement is a material inducement to Buyer's execution of this Agreement. Seller and Developer hereby waive, relinquish and release any and all other rights and remedies for Buyer's default under this Agreement, including, but not limited to: (1) any right to sue Buyer for damages, or (2) any other right or remedy which Seller or Developer may otherwise have against Buyer, either at law, or equity or otherwise. [ 15.2 SELLER OR DEVELOPER DEFAULT. In the event that Seller or Developer defaults in the observance or performance of a material covenant or material obligation hereunder and the liability of such party for failing to observe such covenant or obligation is not addressed or otherwise governed by the terms of the Sale Development Agreement or by the terms of Sections 6 and 9 of this Agreement, and furthermore, such default continues for six (6) consecutive calendar days after the date of receipt of written notice from Buyer demanding cure of such default, or such longer period as may be reasonably required to effect a cure (but in no event to exceed a total of ninety (90) days), Buyer shall be entitled either, at Buyer's option, (i) if Buyer has theretofore complied with Buyer's obligations under this Agreement, to sue Seller or Developer, as appropriate, for specific performance of this Agreement, or (ii) to terminate this Agreement and the Sale Development Agreement (except to the extent that any right, obligation or liability set forth herein expressly survives termination of this Agreement) by the delivery to Seller and Developer of notice of such termination, which termination shall be effective 35 36 the fifth (5th) consecutive calendar day after the date of receipt of such notice unless such default is earlier cured. In the event that Buyer has elected to terminate this Agreement and the Sale Development Agreement, Buyer shall be entitled to pursue a claim against Seller and Developer for Buyer's actual damages (including without limitation, the increase in aggregate costs incurred by Buyer under the Lease compared to Buyer's aggregate costs under this Agreement) incurred as a result of such default, but otherwise excluding consequential damages, not to exceed One Hundred Fifty Thousand and No/100 Dollars ($150,000.00). The foregoing shall be Buyer's sole remedies in the event of Seller's or Developer's default under this Agreement, except as may be provided in Section 16.1 hereof, and Seller and Developer shall not have any further liability to Buyer for liquidated or actual damages or otherwise. The parties acknowledge that the Property is unique because of its location and because the Improvements have been custom designed for Buyer. Seller's and Developer's failure to perform under this Agreement, including but not limited to the conveyance of the Property to Buyer, would cause Buyer to suffer irreparable harm, and such failure could not be remedied by the payment of monetary damages. The parties accordingly agree that Buyer shall be entitled to the remedy of specific performance for nonperformance of this Agreement by Seller or Developer. Seller and Developer waive any right they might otherwise have to object to the remedy of specific performance, and agree that they will not assert that specific performance is not an available remedy. 16. GENERAL PROVISIONS. 16.1 TERMINATION If this Agreement is terminated or the Property is otherwise not conveyed to Buyer under any circumstances, except where Seller and Developer have complied with all of their obligations under this Agreement and Buyer has defaulted under this Agreement, Seller shall pay to Buyer the sum of One Hundred Fifty Thousand and No/100 Dollars ($150,000.00) on or before the commencement date of the Lease (or on the due date of the next due rental payment if the Lease has previously commenced). Seller's agreement to pay such amount is a material inducement to Buyer's execution of this Agreement. 16.2 EXECUTION NECESSARY. This Agreement shall not be binding upon Seller and Developer until fully executed and delivered by proper officials of Seller and Developer, and no action taken by Seller's or Developer's corporate executives shall be deemed an acceptance of this Agreement until this Agreement has been so executed by Seller and Developer and delivered to Buyer. 16.3 COUNTERPARTS. This Agreement may be executed in separate counterparts. It shall be fully executed when each party whose signature is required has signed at least one counterpart even though no one counterpart contains the signatures of all of the parties to this Agreement. 36 37 16.4 SUCCESSORS AND ASSIGNS. Seller and Developer hereby agree that Buyer may freely and unilaterally assign in its sole discretion, without the need for cause to be given and without prior notice to or consent of the Seller or Developer or any surety required, Buyer's duties, rights and interests under this Agreement to any Buyer-affiliated entity or to an owner-trustee pursuant to a synthetic lease financing entered into by Buyer or its Affiliate for the Property. Neither the Seller's or Developer's obligations hereunder nor the Seller's or Developer's right to receive payments under this Agreement nor any other interest, right or duty of such party under this Agreement may be assigned without the prior written consent of Buyer, which consent may not be unreasonably withheld for any reason. Notwithstanding the foregoing, in connection with the sale, transfer, assignment, conveyance or other disposition of all or substantially all of the real property assets of Developer or any of its subsidiaries (the "RE Assets"), Developer may assign, with notice to Buyer but without Buyer's consent, its interest and obligations under this Agreement, the Sale Development Agreement, and the Lease Development Agreement, and may delegate or cause the assumption of its obligations and responsibilities thereunder to the entity (the "Assignee") that acquires (directly or indirectly through wholly-owned entities) the RE Assets, provided that: (i) Assignee, at the time of such assignment or transfer, on a consolidated basis with its wholly-owned entities, has (a) a total asset value of at least $200,000,000.00 and (b) a net worth of at least $50,000,000.00; (ii) W. Michael Doramus or Darryl A. LeClair are senior or executive management personnel of Assignee at the time of such assignment or transfer; and (iii) such Assignee assumes all of Seller's and Developer's obligations and responsibilities under this Agreement, the Sale Development Agreement, and the Lease Development Agreement. Upon such assignment or transfer, Seller and Developer will be released from their respective liabilities under this Agreement and the Sale Development Agreement. Developer may also delegate its obligations under the Sale Development Agreement and the Lease Development Agreement to a wholly-owned subsidiary of Developer or Assignee, but shall not be released from liability thereunder due solely to such delegation. Seller may assign its interest under this Agreement to Assignee or any wholly-owned subsidiary of Assignee. Transfer of any membership interest in Seller shall not violate this Section. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Seller expressly acknowledges that, at Closing, Buyer may direct Seller to transfer the Property to a synthetic lease owner-trustee, in which event Seller acknowledges that the owner-trustee shall have no liability under this Agreement. 16.5 ENTIRE AGREEMENT. This Agreement and the Sale Development Agreement and all the exhibits referenced herein and annexed hereto and thereto contain the entire agreement of the parties hereto with respect to the matters contained therein, and no prior agreement or understanding pertaining to any of the matters connected with this Transaction shall be effective for any 37 38 purpose. Except as may be otherwise provided herein, the agreements embodied herein may not be amended except by an agreement in writing signed by the parties hereto. 16.6 TIME IS OF THE ESSENCE. Time is of the essence of this Agreement. Anywhere a day certain is stated for payment or for performance of any obligation, the day certain so stated enters into and becomes a part of the consideration for this Agreement. If any date set forth in this Agreement shall fall on, or any time period set forth in this Agreement shall expire on, a day which is a Saturday, Sunday, federal or state holiday, or other non-business day, such date shall automatically be extended to, and the expiration of such time period shall automatically to be extended to, the next day which is not a Saturday, Sunday, federal or state holiday or other non-business day. The final day of any time period under this Agreement or any deadline under this Agreement shall be the specified day or date, and shall include the period of time through and including such specified day or date. 16.7 GOVERNING LAW. This Agreement shall be governed by the laws of the state in which the Land is located. 16.8 SURVIVAL. All covenants, agreements, indemnities, representations and warranties contained herein shall survive the Closing Date for one (1) year and no longer (provided claims are asserted against Seller or Developer within such one (1) year period), except for those covenants and agreements which are actually performed at Closing and except as may be otherwise specifically provided in this Agreement. 16.9 FURTHER ASSURANCES. Each party agrees to execute and deliver to the other such further documents or instruments as may be reasonable and necessary in furtherance of the performance of the terms, covenants and conditions of the within Agreement. This covenant shall survive the Closing. 16.10 EXCLUSIVE APPLICATION. Nothing in this Agreement is intended or shall be construed to confer upon or to give to any person, firm or corporation other than Buyer and Seller hereto any right, remedy or claim under or by reason of this Agreement. All terms and conditions of this Agreement shall be for the sole and exclusive benefit of the parties hereto and may not be assigned. 16.11 PARTIAL INVALIDITY. If all or any portion of any of the provisions of this Agreement shall be declared invalid by laws applicable thereto, then the performance of said offending provision shall be excused by the parties hereto; provided, however, that, if the performance of such excused provision materially affects any material aspect of this Transaction and if either party does not upon demand from the other enter into a modification or separate agreement which sets 38 39 forth in valid fashion the covenants of such offending provision, then the party hereto for whose benefit such excused provision was inserted in this Agreement shall have the right, exercisable by written notice given to the other party within ten (10) days after such provision is so declared invalid, to terminate this Agreement; thereupon this Agreement shall be null and void. 16.12 INTERPRETATION. The titles, captions and paragraph headings are inserted for convenience only and are in no way intended to interpret, define, limit or expand the scope or content of this Agreement or any provision hereof. If any party to this Agreement is made up of more than one person or entity, then all such persons and entities shall be included jointly and severally, even though the defined term for such party is used in the singular in this Agreement. If any time period under this Agreement ends on a day other than a Business Day, then the time period shall be extended until the next Business Day. This Agreement shall be construed without regard to any presumption or other rule requiring construction against the party causing this Agreement to be drafted. If any words or phrases in this Agreement shall have been stricken out or otherwise eliminated, whether or not any other words or phrases have been added, this Agreement shall be construed as if the words or phrases so stricken out or otherwise eliminated were never included in this Agreement and no implication or inference shall be drawn from the fact that said words or phrases were so stricken out or otherwise eliminated. A. DEFINED TERMS. Capitalized terms used in this Agreement shall have the meanings ascribed to them at the point where first defined, irrespective of where their use occurs, with the same effect as if the definitions of such terms were set forth in full and at length every time such terms are used. B. PRONOUNS. Wherever appropriate in this Agreement, personal pronouns shall be deemed to include the other genders and the singular to include the plural. 16.13 WAIVER RIGHTS. Buyer reserves the right to waive, in whole or in part, any provision hereof which is for the benefit of Buyer. Each of Seller and Developer reserves the right to waive, in whole or in part, any provision hereof which is for the benefit of such party. 16.14 NO IMPLIED WAIVER. Unless otherwise expressly provided herein, no waiver by Seller or Buyer of any provision hereof shall be deemed to have been made unless expressed in writing and signed by such party. No delay or omission in the exercise of any right or remedy accruing to Seller, Developer, or Buyer upon any breach under this Agreement shall impair such right or remedy or be construed as a waiver of any such breach theretofore or thereafter occurring. The waiver by Seller, Developer, or Buyer of any breach of any term, covenant or 39 40 condition herein stated shall not be deemed to be a waiver of any other breach, or of a subsequent breach of the same or any other term, covenant or condition herein contained. 16.15 RIGHTS CUMULATIVE. All rights, powers, options or remedies afforded to Seller, Developer, or Buyer either hereunder or by law shall be cumulative and not alternative, and the exercise of one right, power, option or remedy shall not bar other rights, powers, options or remedies allowed herein or by law, unless expressly provided to the contrary herein. Without limiting the generality of the foregoing, the provisions under this Agreement and under the Sale Development Agreement shall be cumulative, except in the case of irreconcilable inconsistency, in which case the provisions of the Development Agreement shall govern. So long as both this Agreement and the Lease remain in effect, the rights, powers, options or remedies afforded to Seller, Developer, or Buyer under this Agreement and under the Lease shall be cumulative, except that: (i) any damages (including liquidated damages) awarded to non-defaulting party under this Agreement shall offset and be credited against the non-defaulting party's claim for damages or liquidated damages for the same breach or default under the Lease, and (ii) any damages (including liquidated damages) awarded to non-defaulting party under the Lease shall offset and be credited against the non-defaulting party's claim for damages or liquidated damages for the same breach or default under this Agreement. 16.16 ATTORNEY'S FEES. Should either party employ an attorney or attorneys to enforce any of the provisions hereof or to protect its interest in any manner arising under this Agreement, or to recover damages for breach of this Agreement, the non-prevailing party in any action pursued in arbitration or in a court of competent jurisdiction (the finality of which is not legally contested) agrees to pay to the prevailing party all reasonable costs, damages and expenses, including reasonable attorney's fees actually incurred, expended or incurred in connection therewith. 16.17 EXHIBITS AND SCHEDULES. All exhibits and schedules referred to in, and attached to, this Agreement are hereby incorporated herein in full by this reference. 16.18 CONFIDENTIALITY. Other than the Seller's and Developer's disclosure to its lenders and bonding companies of the existence of this Agreement and the value of the work-in-process and any other disclosures made to third parties prior to the date of this Agreement, none of the parties shall, without the prior written consent of the other parties, disclose or make available to any person, or use, directly or indirectly, except for the performance and implementation of the Project work, any confidential information in connection with the Project, including this Agreement and the work thereunder. 40 41 As used herein, the term "confidential information" shall mean any information, written or oral, concerning the Project, relating to or consisting of processes, techniques, procedures, designs, drawings, plans, diagrams, specifications, computer programs, systems, know-how, trade secrets and other technical data, Project information, policies and contracts, including this Agreement. Buyer, Seller, and Developer each further agree that it shall not make any announcements or release any information or photographs concerning this Agreement, or the Project or any part thereof, to any member of the public or press or any official body, unless prior written consent is obtained from the other parties. Each party shall take all steps which may be necessary or appropriate in order that its respective officers, members, directors, agents, consultants and employees and all subcontractors and suppliers, adhere to the provisions of these conditions. Appropriate clauses to carry out the purpose and intent hereof shall be included in all subcontracts, purchase orders and contracts entered into by each party. Any material breach of this confidentiality provision shall be an event of default upon which the non-defaulting party, in its sole discretion, without notice and cure rights to Seller or Developer, may immediately terminate this Agreement. This "confidential information" provision shall survive termination of this Agreement. 16.19 FACSIMILE AS WRITING. The parties expressly acknowledge and agree that, notwithstanding any statutory or decisional law to the contrary, the printed product of a facsimile transmittal shall be deemed to be "written" and a "writing" for all purposes of this Agreement, however, facsimiles may not be used to provide any notice for this Agreement. [EXECUTION PAGE FOLLOWS] 41 42 IN WITNESS WHEREOF, Buyer, Seller, and Developer have executed this Agreement under seal as of the day and year first above written. SELLER: 200 CARILLON L.L.C., a Delaware limited liability company By: Name: Title: DEVELOPER: ECHELON INTERNATIONAL CORPORATION, a Florida corporation By: Name: Title: BUYER: CATALINA MARKETING SALES CORPORATION, a Florida corporation By: Name: Title: 42 43 SCHEDULE 1.2: STANDARD DEFINED TERMS (ATTACHED TO AND MADE A PART OF THAT CERTAIN PURCHASE AND SALE AGREEMENT BY AND BETWEEN ECHELON AT CARILLON TWO, INC., AS SELLER, ECHELON INTERNATIONAL CORPORATION, AS A DEVELOPER, AND CATALINA MARKETING CORPORATION, AS BUYER, DATED AS OF _____________, 1999) "AFFILIATE" shall mean: (a) as to Seller, (i) a corporation, partnership, limited liability company, individual or other entity owned (in whole or in part) or controlled by Seller or any of the officers, members or partners of Seller, or (ii) a corporation, partnership, limited liability company, individual or other entity owning or controlling, or under common ownership or control with, Seller, or any of the officers, members or partners of Seller, or otherwise affiliated with Seller or any of the officers, members or partners of Seller; (b) as to Echelon International, (i) a corporation, partnership, limited liability company, individual or other entity owned (in whole or in part) or controlled by Echelon International or any of the officers, members or partners of Echelon International, or (ii) a corporation, partnership, limited liability company, individual or other entity owning or controlling, or under common ownership or control with, Echelon International, or any of the officers, members or partners of Echelon International, or otherwise affiliated with Echelon International or any of the officers, members or partners of Echelon International; (c) as to Assignee, (i) a corporation, partnership, limited liability company, individual or other entity owned (in whole or in part) or controlled by Assignee or any of the officers, members or partners of Assignee, or (ii) a corporation, partnership, limited liability company, individual or other entity owning or controlling, or under common ownership or control with, Assignee, or any of the officers, members or partners of Assignee, or otherwise affiliated with Assignee or any of the officers, members or partners of Assignee; and (d) as to Buyer: (i) a corporation, partnership, limited liability company, individual or other entity owned (in whole or in part) or controlled by Buyer or any of the officers, members or partners of Buyer, or (ii) a corporation, partnership, limited liability company, individual or other entity owning or controlling, or under common ownership or control with, Buyer or any of the officers, members or partners of Buyer, or persons otherwise affiliated with Buyer or any of the officers, members or partners of Buyer. "AGREEMENT" shall mean this Purchase And Sale Agreement between Seller, Developer, and Buyer with respect to the Property. "BUSINESS DAY" shall mean Monday through Friday excluding holidays recognized by the state government of the State in which the Property is located. 43 44 "BUILDING SYSTEMS" shall mean systems and facilities with respect to the Property, including, but not limited to, elevators, security systems, HVAC, utilities, telephone service (including any cellular or digital facilities), Internet access, and common area amenities. "BUYER" shall mean the buyer referenced in the first paragraph of this Agreement. This definition shall be subject to Buyer's right of assignment of this Agreement, and right to require that title to the Improvements pass to an Affiliate of Buyer or a financing owner-trustee at Closing. "CLAIM" has the meaning contained in Section 4.3 A hereof. "CLOSING" shall mean the consummation and closing of the Transaction. "CLOSING PRORATION TIME" shall mean (a) if the Purchase Price is received by Seller for investment credit (or by the closing agent, along with authorization from Buyer to release such proceeds) prior to 2:00 P.M. local Tampa, Florida time on the Closing Date, as of 11:59 P.M. local Tampa, Florida time on the day prior to the Closing Date, in which event the day of Closing shall belong to Buyer, and (b) if the Purchase Price is received by Seller (or by the closing agent as aforesaid) at or after 2:00 P.M. local Tampa, Florida time on the Closing Date, 11:59 P.M. local Tampa, Florida time on the Closing Date, in which event the day of Closing shall belong to Seller. "CONDEMNATION PROCEEDING" shall mean any proceeding in condemnation, eminent domain or any written request for a conveyance in lieu thereof, or any notice that such proceedings have been or will be commenced against any portion of the Property. "DESIGN AND CONSTRUCTION CONTRACTS" shall mean all contracts between Seller or Developer and any third party relative to the design, engineering, construction, operation and/or maintenance of the Improvements on the Real Property or related to the Personal Property, including, but not limited to the contracts between Developer and the members of the Design and Construction Team. "DESIGN AND CONSTRUCTION CONTRACTS" shall also include the contract between the Base Building Contractor and the Base Building Architect. "DESIGN AND CONSTRUCTION TEAM" means the Base Building Architect, the Base Building Contractor, and the Tenant Improvements Contractor (but shall exclude the Tenant Improvement Architect). "DEVELOPER" shall mean the entities referenced in the first paragraph of this Agreement. All obligations of Developer under this Agreement shall be joint and several. 44 45 "ECHELON INTERNATIONAL" has the meaning contained in the first paragraph hereof. "EFFECTIVE DATE" shall mean the date on which the last to sign of Seller, Developer, and Buyer executes this Agreement. "ENVIRONMENTAL MATTER" shall mean any matter related in any manner whatsoever to (i) the disposal or release of solid, liquid or gaseous waste into the environment, (ii) the treatment, storage or other handling of any Hazardous Substance, (iii) the placement of structures or materials into waters of the United States, or (iv) the presence of any Hazardous Substance in any building, structure or workplace. "ENVIRONMENTAL LAWS" shall mean any applicable local, state or federal law with respect to the release of Hazardous Substances, the regulation of the discharge of solid, liquid or gaseous waste into the environment or the placement of structures or materials into the waters of the United States, including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended ("CERCLA"), 42 U.S.C. ss.9601 et seq.; the Resource Conservation and Recovery Act, as amended ("RCRA") 42 USC ss.6901 et seq.; the Hazardous MaterialS Transportation Act, as amended, 49 U.S.C. ss.1801, et seq.; the Federal Water Pollution Control Act, as amended, 33 U.S.C. ss.1251, et seq.; and any other applicable law or regulation. "ENVIRONMENTAL LITIGATION" shall mean any claims, actions, suits, proceedings or investigations related to Environmental Matters pending or threatened against Seller or any predecessors interest with respect to the ownership, use, condition, or operation of the Property in any court or before or by any federal, state or other governmental agency or private arbitration tribunal. "GATEWAY" has the meaning contained in the Recitals hereto. "HAZARDOUS SUBSTANCE" shall mean any hazardous or toxic substance or waste as those terms are defined by any applicable Environmental Law, together with (if not so defined by such Environmental Laws), petroleum, petroleum products, oil, PCBs and asbestos. "IMPROVEMENTS" shall mean the buildings, structures (surface and subsurface), interior tenant improvements and other improvements and fixtures now or hereafter situated on or attached to any parcel of the Land, which Improvements shall consist of a five (5) story office building with approximately 142,857 rentable square feet, constructed of a structured steel frame with an architectural pre-cast concrete exterior, with interior tenant improvements and surface and structural parking for approximately 670 automobiles (a ratio of 45 46 approximately 4.7 spaces per 1,000 rentable square feet), together with other amenities and improvements, to be constructed and completed by Developer in accordance with the terms of this Agreement and the Sale Development Agreement. "LAND" shall mean that certain tract or parcel of land, more particularly described on EXHIBIT A. "LAND USE COMPLIANCE DOCUMENTS" has the meaning contained in Paragraph [8.6K]. "LAND USE REQUIREMENTS" shall mean all deed restrictions, restrictive covenants, building codes, zoning restrictions and Environmental Laws, and any other law, ordinance, covenant, restriction or regulation affecting the Real Property or Improvements. "LEGAL REQUIREMENTS" has the meaning contained in Paragraph 4.2 A hereof. "LIEN" shall mean any mortgage, deed of trust, security deed, lien, judgment, pledge, conditional sales contract, security interest, past-due taxes, past-due assessments, contractor's lien, materialmen's lien, judgment or similar encumbrance against the Property of a monetary nature. "LIQUIDATED DAMAGE AMOUNT" shall have the meaning contained in Section 15.1 hereof. "LOSS" shall mean any and all direct or indirect demands, claims, payments, obligations, actions or causes of action, assessments, losses, liabilities, costs and expenses, including, without limitation, penalties, interest on any amount payable to a third party as a result of the foregoing, lost income and profits, and any legal or other expenses (including, without limitation, reasonable attorneys' fees and expenses) reasonably and actually incurred in connection with investigating or defending any claims or actions, whether or not resulting in any liability. "OTHER INTERESTS" shall mean any other interests of Seller or Developer in and to the Real Property and the Improvements or pertaining thereto, including, without limitation, all of the right, title and interest of the Seller or Developer in and to: (i) All Property Documents; (ii) All entitlements of the Seller or Developer in and to any award made or to be made in lieu of any of the interests to be conveyed hereunder, including any award or payment made or to be made (a) for any taking in any Condemnation Proceeding of land lying in the bed of any street, road, 46 47 highway or avenue, open or proposed, in front of or adjoining all or any part of the Land, (b) for damage to the Property or any part thereof by reason of change of grade or closing of any such street, road, highway or avenue, and (c) for any taking in a Condemnation Proceeding of any part of the Property; (iii) Any name or trade name by which the Improvements or the Real Property or any part thereof may be known, if any, including, but not limited to the Project Name and all other fictitious names used on the date hereof in connection with the ownership and operation of the Property and all registrations for such names, but expressly excluding any rights to the use of the names "Echelon" or "Carillon" or the business or corporate name of Assignee; (iv) The right to the use of any telephone number located under the Project Name and the right to list telephone numbers under the Project Name; (v) The Base Building Design Documents and the copyrights therein; and (vi) All permits. "PERMITS" shall mean all licenses, certificates (including certificates of occupancy), consents, variances, waivers, authorizations, permits and similar approvals required for the construction, ownership, operation or occupancy of the Property by Buyer and issued by governmental authorities having jurisdiction over the Property or by private parties or associations pursuant to any of the Permitted Title Exceptions or otherwise in connection with any Land Use Requirement. "PERMITTED TITLE EXCEPTIONS" shall mean the following: (a) All real estate taxes not yet due and payable as of the Closing Date. Seller shall pay any special assessments (to the extent payable in installments and due prior to Closing) in full prior to Closing; (b) Any existing utility easements serving only the Real Property and no other land; (c) The state of facts disclosed by the Survey updated August 19, 1999, prepared by Polaris Associates, Inc., Job No. 001-2365, previously delivered to Buyer by Seller or Developer and disclosed by a current Survey of the Land obtained by Buyer, provided such state of facts does not, in Buyer's reasonable judgment, materially interfere with (i) the current use, or the use contemplated by Buyer as disclosed to Seller, of any portion of the Land or the Improvements, (ii) the performance of any covenant, obligation, 47 48 representation or warranty of the owner of the Property under any Permitted Title Exceptions, (iii) the maintenance and operation of the Improvements or the continued use thereof for the same purposes as presently used, (d) the meeting of the normal requirements of a mortgage lender, or (e) Buyer's obtaining title insurance (including insurance of marketability) satisfactory to Buyer; and (d) All matters of record as reflected in the Title Commitment, and any other matters approved as Permitted Title Exceptions in writing by Buyer prior to Closing or deemed approved as Permitted Title Exceptions pursuant to this Agreement. "PERSONAL PROPERTY" shall mean all personal property owned by Seller or Developer but only if used or usable in connection with any present or future occupation or operation of all or any part of the Real Property or the Improvements or both, together with (to the extent not constituting a portion of the Real Property) all fixtures, furniture, furnishings, carpeting, draperies, fittings, equipment, machinery, apparatus, building materials, appliances and articles, whether located on or off the Real Property and used or usable in connection with any present or future occupation or operation of all or any part of the Real Property or the Improvements or both, including, without limitation, all elevators, escalators, boilers, furnaces, heating, ventilating and air-conditioning systems, office furnishings and equipment, building drawings, plans and specifications, building materials and wall partitions, sprinkler and well systems, sewerage systems, electrical equipment, fire prevention and extinguishing apparatus, engineering, maintenance and supplies and materials, fuel and other supplies of all kinds whether used, unused or in stock for future use in connection with the maintenance and operation of the Property, which are on hand on the date hereof, subject to such depletion and including such resupplying as shall occur and be made in the normal course of business. "PLANS AND SPECIFICATIONS" shall mean the final plans and specifications for construction of the Improvements, as prepared by the Base Building Architect and the Tenant Improvements Architect, and all amendments and supplements thereto, including site plans, elevation renderings and landscaping plans, including full architectural and engineering review. "PROJECT" means the Improvements or the design, construction, and completion thereof, as appropriate for the context in which such term is used. "PROPERTY" shall mean the Real Property, the Improvements, the Personal Property and the Other Interests. "PROPERTY DOCUMENTS" has the meaning contained in Paragraph [9.1G] hereof. 48 49 "REAL PROPERTY" shall mean the Land, including, without limitation, (a) any and all buildings located on the Land and all other Improvements, (b) all easements appurtenant to the Land and other easements, grants of right, licenses, privileges or other agreements for the benefit of, belonging to or appurtenant to the Land whether or not situate upon the Land, all whether or not specifically referenced on EXHIBIT A, (c) all mineral, oil and gas rights, riparian rights, water rights, sewer rights and other utility rights allocated to the Land, (d) all right, title and interest of the owner of the Land in and to any roads, streets and ways, public or private, open or proposed, in front of or adjoining all or any part of the Land and serving the Land, (e) all rights to development of the Land granted by governmental entities having jurisdiction over the Land, subject to the restrictions on development as provided on the Deed. "SELLER" shall mean the seller referenced in the first paragraph of this Agreement. "SELLER'S OR DEVELOPER'S KNOWLEDGE" shall mean (i) the actual knowledge of the following individuals: Julio Maggi and Daryl LeClair (the "KNOWLEDGEABLE PARTIES"), (ii) any written notice with respect to an item or condition delivered to a Knowledgeable Party (but not including such notices delivered to the predecessors of such Knowledgeable Parties in their respective positions with Seller or Developer or any notices delivered to the Knowledgeable Parties as a transfer of files and other data upon their assumption of responsibility with respect to the Property), or (iii) any oral communication by any third party with a Knowledgeable Party. "SURVEY" shall mean a current as-built plat of survey of the Land prepared for and certified by Polaris, Inc. or other registered land surveyor licensed as such in the state in which the Property is located. The Survey (a) shall be prepared for and certified by a registered land surveyor licensed as such in the State in which the Property is located, (b) sufficiently current so as to permit deletion of the standard survey exception on the Title Policy, (c) shall be coordinated with Buyer's title examination (and shall show the location of all easements and other encumbrances referenced therein), and (d) shall comply with the Florida Minimum Technical Standards. The Survey shall show the following items, whether covered by the foregoing minimum detail requirements or not: (i) All courses and distances referred to in the description of the Land. (ii) The location of all Improvements on the Land with the dimensions thereof. If deed restrictions, recorded plats or zoning ordinances require a building to be set back specified distances from street or property lines, the Survey must show measured distances from said building to said lines. The Survey must contain a certification from the Surveyor that the 49 50 Improvements and any other items on the Land do not encroach over any boundary line of the Land, any set-back or buffer line or any easement boundary; any exceptions to this certification must be set forth in the certification and are subject to Buyer's approval in Buyer's sole discretion. (iii) Location of all record exceptions and any other visible easements, rights-of-way, water courses, drains, sewers, encroachments, driveways or roads which serve the Land and to which the Land is subject (excluding any easements not located on the Property which are uniform to and run throughout all of plat of Carillon Park), including references to the recording data of the instruments creating such easements, rights-of-way, drains, sewers, courses, driveways or roads, if such instruments are recorded. (iv) The names and widths of the rights-of-way of streets adjacent to or serving the Land with the distance from the nearest corner to the beginning point of the Land surveyed; the extent and location of any limitation of access or development, together with a reference to the instrument limiting such access, and the extent and location of any permitted access points within any limited access area, together with a reference to the permit or other instrument permitting such access. (v) The total acreage or square foot area of the Land. (vii) The boundary lines of each portion of the Land encumbered by any recorded lease, if applicable. (viii) Interior lines and facts sufficient to insure full contiguity of each parcel if the Land is composed of more than one parcel, together with the surveyor's certification of such contiguity. (ix) The surveyor shall note the applicable flood zone classification in the surveyor's certification. (ix) The political subdivision and county in which the Land is located and such other notations as will accurately describe and depict the location of the Land surveyed. The Survey and the surveyor's certifications should be addressed to Buyer, Seller and the Title Company. The Survey must be dated as of the date the Survey was made on the ground, signed and sealed by the surveyor and certified (or re-certified) by the surveyor that the Survey was actually made on the ground and is correct. "TITLE COMMITMENT" shall mean the commitment of the Title Company to issue the Title Policy. 50 51 "TITLE POLICY" shall mean the full coverage, revised ALTA 1992 form title policy with Florida modifications issued by the Title Company in the amount of the Purchase Price, and containing, unless prohibited by applicable statutes or regulations, the following endorsements: (a) "same land as survey" (Survey legal matches title legal); and (b) such other endorsements as are reasonably required by Buyer. The Title Policy shall insure as separate insured parcels any easement rights running to the benefit of the Property, including, without limitation, easements for storm and sewer lines, storm drainage and detention, and other utilities which are required in connection with the operation of the Property. "TRANSACTION" shall mean the purchase and sale transaction contemplated by this Agreement. "UCC SEARCHES" shall mean Uniform Commercial Code and other relevant searches from the State and County in which the Land is located, and in which the Seller or Developer maintains its chief executive office or its principal business office, which shall show that there exist no UCC financing statements or other Liens against Seller or Developer or with respect to the Property, except the Permitted Title Exceptions. "WARRANTIES" shall mean each and every now existing and outstanding bond and warranty concerning the Real Property, the Improvements located thereon or the Personal Property, including, but not limited to, any and all bonds and warranties, if any, now or hereafter in effect, arising out of, made, given or issued, whether express or implied, in conjunction with any construction contracts and any other contracts between Seller or Developer (or any predecessors in title thereto) and any third party relative to the construction, operation and/or maintenance of the Improvements on the Real Property or related to the Personal Property, or otherwise arising out of, made, given or issued by any such third party under each of the construction contracts (or by a subcontractor performing any of the work which inures to the benefit of Seller or Developer), all in conjunction with the construction, operation and/or maintenance of the Improvements made pursuant to the construction contracts, or arising out of, made, given or issued, by manufacturers or suppliers, in conjunction with the Improvements or the Personal Property, together with all claims in contract or quasi-contract and any similar chose-in-action arising out of or resulting therefrom; the Warranties shall include, without limitation, any roofing, air conditioning, heating, elevator or other bond or warranty relating to construction of the Improvements, subject to any applicable express limitations contained in each such bond or warranty. "WARRANTY ESTOPPEL" has the meaning contained in Paragraph [8.6D]. 51 EX-15 6 ACKNOWLEDGEMENT LETTER 1 EXHIBIT 15 November 12, 1999 Catalina Marketing Corporation 11300 9th Street North St. Petersburg, Florida 33716 Catalina Marketing Corporation: We are aware that Catalina Marketing Corporation has incorporated by reference in its Registration Statement Nos. 33-46793, 33-77100, 33-82456, 333-07525, 333-13335 and 333-86905, its Form 10-Q for the quarter ended September 30, 1999, which includes our report dated October 13, 1999, covering the unaudited interim financial information contained therein. Pursuant to Regulation C of the Securities Act of 1933 (the Act), that report is not considered a part of the registration statement prepared or certified by our firm or a report prepared or certified by our firm within the meaning of Sections 7 and 11 of the Act. Very truly yours, /s/ Arthur Andersen LLP - ----------------------- EX-19 7 REVIEW REPORT OF INDEPENDENT CERTIFIED ACCOUNTANTS 1 EXHIBIT 19 REVIEW REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS To Catalina Marketing Corporation: We have reviewed the accompanying condensed consolidated balance sheet of Catalina Marketing Corporation (a Delaware corporation) and subsidiaries as of September 30, 1999, and the related condensed consolidated statements of income for the three-month and six-month periods ended September 30, 1999 and 1998, and the condensed consolidated statements of cash flow for the six-month periods ended September 30, 1999 and 1998. These financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the financial statements referred to above for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet of Catalina Marketing Corporation and subsidiaries as of March 31, 1999, and the related consolidated statements of income, stockholders' equity and cash flows for the year then ended (not presented herein), and, in our report dated April 29, 1999, we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of March 31, 1999, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived. Tampa, Florida October 13, 1999 /s/ Arthur Andersen LLP - ----------------------- EX-27 8 FINANCIAL DATA SCHEDULE
5 1,000 6-MOS MAR-31-1999 APR-01-1999 SEP-30-1999 10,557 0 45,468 0 0 96,364 219,744 123,988 248,633 119,795 1,780 0 0 182 118,035 248,633 159,442 159,442 65,705 125,757 210 0 0 33,475 13,458 20,375 0 0 0 20,375 1.09 1.05
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