NOTE PURCHASE AND PRIVATE SHELF AGREEMENT

Exhibit 10.2

 

 

DIGITAL REALTY TRUST, L.P.

 

NOTE PURCHASE AND PRIVATE SHELF AGREEMENT

 

7.00% Series A Senior Notes Due July 24, 2011

($25,000,000 Aggregate Original Principal Amount)

$175,000,000 Private Shelf Facility

July 24, 2008

 

TABLE OF CONTENTS

 

 

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Information Schedule

 

 

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DIGITAL REALTY TRUST, L.P.

560 Mission Street, Suite 2900

San Francisco, CA 94105

July 24, 2008

Prudential Investment Management, Inc.

Each Prudential Affiliate (as hereinafter defined) which is

    a signatory of this Agreement or becomes bound by certain

    provisions of this Agreement as hereinafter provided)

c/o Prudential Capital Group

Four Embarcadero Center, Suite 2700

San Francisco, California 94111

Ladies and Gentlemen:

Each of the undersigned, Digital Realty Trust, L.P., a Maryland limited partnership (the “ Company ”), Digital Realty Trust, Inc., a Maryland corporation (the “ Parent Guarantor ”), and the other entities listed on the signature pages hereof as the “Guarantors” (together with any Additional Guarantors (as hereinafter defined) acceding hereto pursuant to Section 21.7, the “ Subsidiary Guarantors ” and, together with the Parent Guarantor, the “ Guarantors ”) agrees with each of the Purchasers as follows:

 

1	A UTHORIZATION OF N OTES

1A A UTHORIZATION OF S ERIES A N OTES .

The Company has authorized the issue and sale of ($25,000,000 aggregate principal amount of its 7.00% Series A Senior Notes due July 24, 2011 (as amended, restated, supplemented or otherwise modified from time to time, the “ Series A Notes ”, such term to include any such notes issued in substitution therefor pursuant to Section 14). The Series A Notes shall be substantially in the form set out in Exhibit A-1 . Certain capitalized and other terms used in this Agreement are defined in Schedule B ; and references to a “Schedule” or an “Exhibit” are, unless otherwise specified, to a Schedule or an Exhibit attached to this Agreement.

1B A UTHORIZATION OF I SSUE OF S HELF N OTES .

The Company will authorize the issue and sale from time to time of its additional senior notes (as amended, restated, supplemented or otherwise modified from time to time, the “ Shelf Notes ”) in the aggregate principal amount of up to $175,000,000 (including the equivalent in the Available Currencies), to be dated the date of issue thereof, to mature, in the case of each Shelf Note so issued, no more than 10 years after the date of original issuance thereof, to have an average life, in the case of each Shelf Note so issued, of no more than 7 years after the date of original issuance thereof, to bear interest on the unpaid balance thereof from the date thereof at the rate per annum, and to have such other particular terms, as shall be set forth, in the case of each Shelf Note so issued, in the Confirmation of Acceptance with respect to such Shelf Note delivered

pursuant to Section 2B(5), and to be substantially in the form of Exhibit A-2 . The terms “ Shelf Note ” and “ Shelf Notes ” as used herein shall include each Shelf Note delivered pursuant to any provision of this Agreement and each Shelf Note delivered in substitution or exchange for any such Shelf Note pursuant to any such provision. The terms “ Note ” and “ Notes ” as used herein shall include each Series A Note and each Shelf Note delivered pursuant to any provision of this Agreement and each Note delivered in substitution or exchange for any such Note pursuant to any such provision. Notes that have (i) the same final maturity, (ii) the same principal prepayment dates, (iii) the same principal prepayment amounts (as a percentage of the original principal amount of each Note), (iv) the same interest rate, (v) the same interest payment periods, (vi) the same currency specification, and (vii) the same date of issuance (which, in the case of a Note issued in exchange for another Note, shall be deemed for these purposes the date on which such Note’s ultimate predecessor Note was issued), are herein called a “ Series ” of Notes.

 

2	S ALE A ND P URCHASE OF N OTES

2A S ALE AND P URCHASE OF S ERIES A N OTES .

Subject to the terms and conditions of this Agreement, the Company agrees to issue and sell to each Series A Purchaser and each Series A Purchaser agrees to purchase from the Company, on the Series A Closing Day provided for in Section 3, Series A Notes in the principal amount specified opposite such Series A Purchaser’s name in the Purchaser Schedule Relating to Series A Notes set forth as Schedule A at the purchase price of 100% of the principal amount thereof.

2B S ALE AND P URCHASE OF S HELF N OTES .

2B(1) Facility . PIM is willing to consider, in its sole discretion and within limits that may be authorized for purchase by PIM and Prudential Affiliates from time to time, the purchase of Shelf Notes pursuant to this Agreement. The willingness of PIM to consider such purchase of Shelf Notes is herein called the “ Facility .” At any time, (i) the aggregate principal amount of Shelf Notes stated in Section 1B, minus (ii) the aggregate principal amount of Shelf Notes purchased and sold pursuant to this Agreement prior to such time, minus (iii) the aggregate principal amount of Accepted Notes (as hereinafter defined) which have not yet been purchased and sold hereunder prior to such time, plus (iv) the aggregate principal amount of Accepted Notes the issuance of which is cancelled in accordance herewith, is herein called the “ Available Facility Amount ” at such time. For purposes of the preceding sentence, all aggregate principal amounts of Shelf Notes and Accepted Notes shall be calculated in Dollars with the aggregate amount of any Shelf Notes denominated or Accepted Notes to be denominated in any Available Currency other than Dollars being converted to Dollars at the rate of exchange used by PIM to calculate the Dollar equivalent at the time of the applicable Acceptance under Section 2B(5). NOTWITHSTANDING THE WILLINGNESS OF PIM TO CONSIDER PURCHASES OF SHELF NOTES, THIS AGREEMENT IS ENTERED INTO ON THE EXPRESS UNDERSTANDING THAT NEITHER PIM NOR ANY PRUDENTIAL AFFILIATE SHALL BE OBLIGATED TO MAKE OR ACCEPT OFFERS TO PURCHASE SHELF NOTES, OR TO QUOTE RATES, SPREADS OR OTHER TERMS WITH RESPECT TO SPECIFIC PURCHASES OF SHELF NOTES, AND THE FACILITY SHALL IN NO WAY BE CONSTRUED AS A COMMITMENT BY PIM OR ANY PRUDENTIAL AFFILIATE.

 

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2B(2) Issuance Period. Shelf Notes may be issued and sold pursuant to this Agreement until the earlier of (i) the third anniversary of the date of this Agreement (or if such anniversary is not a New York Business Day, the New York Business Day next preceding such anniversary), and (ii) the thirtieth day after PIM shall have given to the Company, or the Company shall have given to PIM, written notice stating that it elects to terminate the issuance and sale of Shelf Notes pursuant to this Agreement (or if such thirtieth day is not a New York Business Day, the New York Business Day next preceding such thirtieth day). The period during which Shelf Notes may be issued and sold pursuant to this Agreement is herein called the “ Issuance Period .”

2B(3) Request For Purchase . The Company may from time to time during the Issuance Period make requests for purchases of Shelf Notes (each such request being herein called a “ Request for Purchase ”). Each Request for Purchase shall be made to PIM by telefacsimile or overnight delivery service, and shall (i) specify the currency (which shall be an Available Currency) of the Shelf Notes covered thereby, (ii) specify the aggregate principal amount of Shelf Notes covered thereby, which shall not be less than $5,000,000 (or its equivalent in another Available Currency) and not be greater than the Available Facility Amount (or its equivalent in another Available Currency) at the time such Request for Purchase is made, (iii) specify the principal amounts, final maturities (which shall be no more than 10 years from the date of original issuance), and principal prepayment dates and amounts (which shall result in an average life of no more than 7 years from the date of original issuance) of the Shelf Notes covered thereby, (iv) specify the use of proceeds of such Shelf Notes), (v) specify the proposed day for the closing of the purchase and sale of such Shelf Notes, which shall be a Business Day during the Issuance Period not less than 10 Business Days (or such earlier date as PIM may agree) and not more than 42 days after the making of such Request for Purchase, (vi) specify the number of the account and the name and address of the depository institution to which the purchase prices of such Shelf Notes are to be transferred on the Closing Day for such purchase and sale, (vii) certify that, except as may be described in a writing attached to such Request for Purchase, the representations and warranties contained in Section 5 are true on and as of the date of such Request for Purchase (except such representations and warranties that relate solely to an earlier date, in which case such representations and warranties shall have been true as of such earlier date) and that there exists on the date of such Request for Purchase no Event of Default or Default, and (viii) be substantially in the form of Exhibit B attached hereto. Each Request for Purchase shall be in writing and shall be deemed made when received by PIM.

2B(4) Rate Quotes . Not later than 3 Business Days after the Company shall have given PIM a Request for Purchase pursuant to Section 2B(3), PIM may, but shall be under no obligation to, provide to the Company by telephone interest rate quotes for the several currencies, principal amounts, maturities and principal prepayment schedules of Shelf Notes specified in such Request for Purchase. Each quote shall represent the interest rate per annum payable on the outstanding principal balance of such Shelf Notes at which PIM or a Prudential Affiliate would be willing to purchase such Shelf Notes at 100% of the principal amount thereof.

2B(5) Acceptance. Within 2 minutes after PIM shall have provided any interest rate quotes pursuant to Section 2B(4) or such shorter period as PIM may specify to the Company (such period herein called the “ Acceptance Window ”), the Company may, subject to Section 2B(6), elect to accept such interest rate quotes as to not less than $5,000,000 (or its equivalent in another Available Currency) aggregate principal amount of the Shelf Notes specified in the

 

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related Request for Purchase. Such election shall be made by an Authorized Officer of the Company notifying PIM by telephone or telefacsimile within the Acceptance Window (but not earlier than 9:30 a.m. or later than 1:30 p.m. (or such later time as PIM may agree), New York City local time) that the Company elects to accept such interest rate quotes, specifying the Shelf Notes (each such Shelf Note being herein called an “ Accepted Note ”) as to which such acceptance (herein called an “ Acceptance ”) relates. The day the Company notifies PIM of an Acceptance with respect to any Accepted Notes is herein called the “ Acceptance Day ” for such Accepted Notes. Any interest rate quotes as to which PIM does not receive an Acceptance within the Acceptance Window shall expire, and no purchase or sale of Shelf Notes hereunder shall be made based on such expired interest rate quotes. Subject to Section 2B(6) and the other terms and conditions hereof, the Company agrees to sell to PIM or a Prudential Affiliate, and PIM agrees to purchase, or to cause the purchase by a Prudential Affiliate of, the Accepted Notes at 100% of the principal amount of such Accepted Notes which purchase price shall be paid in the currency in which such Notes are to be denominated. As soon as practicable following the Acceptance Day, the Company, PIM and each Prudential Affiliate which is to purchase any such Accepted Notes will execute a confirmation of such Acceptance substantially in the form of Exhibit C (herein called a “ Confirmation of Acceptance ”). If the Company should fail to execute and return to PIM within 2 Business Days following receipt thereof a Confirmation of Acceptance with respect to any Accepted Notes, PIM may at its election at any time prior to its receipt thereof cancel the closing with respect to such Accepted Notes by so notifying the Company in writing.

2B(6) Market Disruption. Notwithstanding the provisions of Section 2B(5), if PIM shall have provided interest rate quotes pursuant to Section 2B(4) and thereafter, prior to the time an Acceptance with respect to such quotes shall have been notified to PIM in accordance with Section 2B(5), (i) the domestic market for U.S. Treasury securities or derivatives shall have closed during normal business hours of any Business Day or there shall have occurred a general suspension, material limitation, or significant disruption of trading in securities generally on the New York Stock Exchange or in the domestic market for U.S. Treasury securities or derivatives, or (ii) in the case of Shelf Notes to be denominated in a currency other than Dollars, the markets for the relevant government securities (which, in the case of the Euro, shall be the German Bund) or the spot and forward currency market, the financial futures market or the interest rate swap market shall have closed during normal business hours of any Business Day or there shall have occurred a general suspension, material limitation, or significant disruption of trading in securities generally in any of such markets, then the interest rate quotes with respect to such Shelf Notes shall expire, and no purchase or sale of such Shelf Notes hereunder shall be made based on such expired interest rate quotes. If the Company thereafter notifies PIM of the Acceptance of any such expired interest rate quotes, such Acceptance shall be ineffective for all purposes of this Agreement, and PIM shall promptly notify the Company that the provisions of this Section 2B(6) are applicable with respect to such Acceptance.

2B(7) Facility Closings. Not later than 1:30 p.m. (New York City local time) on the Document Delivery Date for any Accepted Notes, the Company will deliver to each Purchaser listed in the Confirmation of Acceptance relating thereto (or such Purchaser’s agent, including PIM and its agents) at the offices of the Bingham McCutchen LLP, Three Embarcadero Center, San Francisco, California 94111 (or such other address as PIM may specify in writing), the Accepted Notes to be purchased by such Purchaser in the form of one or more Notes in

 

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authorized denominations as such Purchaser may request for each Series of Accepted Notes to be purchased on such Closing Day, dated the applicable Closing Day and registered in such Purchaser’s name (or in the name of its nominee), against payment of the purchase price thereof by transfer of immediately available funds for credit to the account(s) specified in the Request for Purchase of such Notes. If the Company fails to tender to any Purchaser the Accepted Notes to be purchased by such Purchaser on the applicable Document Delivery Date, or any of the conditions specified in Section 4 shall not have been fulfilled by the time required on the applicable Document Delivery Date (and the applicable Purchaser(s) shall not have waived such conditions), the Company shall, prior to 2:00 p.m., New York City local time, on the applicable Document Delivery Date notify PIM (which notification shall be deemed received by each Purchaser) in writing whether (i) such closing is to be rescheduled (such rescheduled date to be a Business Day during the Issuance Period not less than one Business Day and not more than 10 Business Days after such originally scheduled Closing Day (the “ Rescheduled Closing Day ”)) and certify to PIM (which certification shall be for the benefit of each Purchaser) that the Company reasonably believes that it will be able to comply with the conditions set forth in Section 4 on the Document Delivery Date applicable to such Rescheduled Closing Day and that the Company will pay the Delayed Delivery Fee in accordance with Section 2B(8)(iii), or (ii) such closing is to be canceled and the Company will pay the Cancellation Fee as provided in Section 2B(8)(iv). If a Rescheduled Closing Day is established in respect of Notes denominated in a currency other than Dollars, such Notes shall have the same maturity date, principal prepayment dates and amounts and interest payment dates as originally scheduled. In the event that the Company shall fail to give such notice referred to in the second preceding sentence, PIM (on behalf of each Purchaser) may at its election, at any time after 2:00 p.m., New York City local time, on the applicable Document Delivery Date, notify the Company in writing that such closing is to be canceled and the Company is obligated to pay the Cancellation Fee as provided in Section 2B(8)(iv). Notwithstanding anything to the contrary appearing in this Agreement, the Company may elect to reschedule a closing with respect to any given Accepted Notes on not more than two occasions, unless PIM shall have otherwise consented in writing.

2B(8) Fees.

2B(8)(i) Structuring Fee. In consideration for the time, effort and expense involved in the preparation, negotiation and execution of this Agreement, the Company will pay to or as directed by PIM, on or before the date hereof, a non-refundable fee in the aggregate amount of $25,000 (herein called the “ Structuring Fee ”).

2B(8)(ii) Issuance Fee. The Company will pay to or as directed by PIM in immediately available funds a fee (herein called the “ Issuance Fee ”) on each Closing Day (including the Series A Closing Day) in an amount equal to 0.10% of the Dollar equivalent of the aggregate principal amount of Notes sold on such Closing Day. Such fee shall be payable in Dollars.

 

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2B(8)(iii) Delayed Delivery Fee. If the closing of the purchase and sale of any Accepted Note is delayed for any reason beyond the original Closing Day for such Accepted Note (other than at PIM’s or any Purchaser’s request), the Company shall pay to or as directed by PIM, on the Cancellation Date or Document Delivery Date applicable to the actual Closing Day of such purchase and sale, an amount (the “ Delayed Delivery Fee ”) equal to:

(a) in the case of an Accepted Note denominated in Dollars, the product of (1) the amount determined by PIM to be the amount by which the bond equivalent yield per annum of such Accepted Note exceeds the investment rate per annum on an alternative Dollar investment of the highest quality selected by PIM and having a maturity date or dates the same as, or closest to, the Rescheduled Closing Day from time to time fixed for the delayed delivery of such Accepted Note, (2) the principal amount of such Accepted Note, and (3) a fraction the numerator of which is equal to the number of actual days elapsed from and including the original Closing Day for such Accepted Note to but excluding the date of such payment, and the denominator of which is 360; and

(b) in the case of an Accepted Note denominated in a currency other than Dollars, the sum of (1) the product of (x) the amount by which the bond equivalent yield per annum of such Accepted Note exceeds the Overnight Interest Rate on each day from and including the original Closing Day for such Accepted Note, (y) the principal amount of such Accepted Note, and (z) a fraction the numerator of which is equal to the number of actual days elapsed from and including the original Closing Day for such Accepted Note to but excluding the date of such payment, and the denominator of which is 360, and (2) the costs and expenses (if any) incurred by such Purchaser or its Affiliates with respect to any interest rate, currency exchange or similar agreement entered into by the Purchaser or any such Affiliate in connection with the delayed closing of such Accepted Notes.

In no case shall the Delayed Delivery Fee be less than zero. The delayed Delivery Fee described in clause (b) above shall be paid in the currency in which the Accepted Notes are denominated. Nothing contained herein shall obligate any Purchaser to purchase any Accepted Note on any day other than the Closing Day for such Accepted Note, as the same may be rescheduled from time to time in compliance with Section 2B(7). Notwithstanding the foregoing, no Delayed Delivery Fee shall be payable in connection with the closing of the purchase and sale of any Accepted Shelf Note if the Company shall have timely satisfied all conditions precedent set forth in Section 4B (other than (i) the condition precedent in Section 4B(2) to the extent it pertains to the payment of the Delayed Delivery Fee provided for in this Section 2B(8)(iii), and (ii) the condition precedent in Section 4B(8)).

2B(8)(iv) Cancellation Fee. If the Company at any time notifies PIM in writing that the Company is canceling the closing of the purchase and sale of any Accepted Note, or if PIM notifies the Company in writing under the circumstances set forth in the penultimate sentence of Section 2B(7) that the closing of the purchase and sale of such Accepted Note is to be canceled, or if, due to the action or inaction of the Company, the closing of the purchase and sale of such Accepted Note is not consummated on or prior to the last day of the Issuance Period (the date of any such notification, or the last day of the Issuance Period, as the case may be, being herein called the “ Cancellation Date ”), the Company shall pay to or as directed by PIM in immediately available funds on the Cancellation Date an amount (the “ Cancellation Fee ”) equal to:

(a) in the case of an Accepted Note denominated in Dollars, the product of (1) the principal amount of such Accepted Note, and (2) the quotient (expressed in decimals) obtained by dividing (y) the excess of the ask price (as determined by PIM) of the Hedge Treasury Note(s) on the Cancellation Date over the bid price (as determined by PIM) of the Hedge Treasury Note(s) on the Acceptance Day for such Accepted Note by (z) such bid price, with the foregoing bid and ask prices as reported by such publicly available source of such market data as is then customarily used by PIM, and rounded to the second decimal place; and

 

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(b) in the case of an Accepted Note denominated in a currency other than Dollars, the aggregate of all unwinding costs incurred by such Purchaser or its Affiliates on positions executed by or on behalf of such Purchaser or such Affiliates in connection with such Accepted Note, including the proposed lending in such currency and fixing the coupon in such currency; provided , however , that any gain realized upon the unwinding of any such positions shall be offset against any such unwinding costs. Such positions include (without limitation) currency and interest rate swaps, futures and forwards, government bond (including U.S. Treasury bond) hedges and currency exchange contracts, all of which may be subject to substantial price volatility. Such costs may also include (without limitation) losses incurred by such Purchaser or its Affiliates as a result of fluctuations in exchange rates. All unwinding costs incurred by such Purchaser shall be determined by such Purchaser or its Affiliate in accordance with generally accepted financial practice.

In no case shall the Cancellation Fee be less than zero.

 

3	S ERIES A C LOSING .

The sale and purchase of the Series A Notes to be purchased by the Series A Purchasers shall occur at the offices of Bingham McCutchen LLP, Three Embarcadero Center, San Francisco, California 94111, at 9:00 a.m., Pacific time, at a closing on July 24, 2008 (the “ Series A Closing Day ”). On the Document Delivery Date, the Company will deliver to each Series A Purchaser the Series A Notes to be purchased by such Series A Purchaser in the form of a single Series A Note (or such greater number of Series A Notes in denominations of at least $1,000,000 as it may request), dated the date of the Series A Closing Day, and registered in such Series A Purchaser’s name (or in the name of its nominee), against delivery by such Series A Purchaser to the Company or its order of immediately available funds in the amount of the purchase price therefor by wire transfer of immediately available funds as set forth in the Funding Instruction Letter set forth as Exhibit D . If on the Series A Closing Day the Company shall fail to tender such Notes as provided above in this Section 3, or any of the conditions specified in Section 4 shall not have been fulfilled to the satisfaction of any Series A Purchaser (and not waived thereby), such Series A Purchaser shall, at its election, be relieved of all further obligations under this Agreement, without thereby waiving any rights it may have by reason of such failure or such nonfulfillment.

 

4	C ONDITIONS TO C LOSING .

The obligation of any Purchaser to purchase and pay for any Notes is subject to the fulfillment to its satisfaction, on or before the applicable Document Delivery Date, of the following conditions:

4A C ONDITIONS TO S ERIES A C LOSING

4A(1) Delivery of Revolving Credit Agreement and Modifications Thereto. (i) The Company and Guarantors shall have entered into amendments or other modifications of the Revolving Credit Agreement as necessary to permit the Company and the Guarantors to enter

 

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into this Agreement, (ii) such amendments or other modifications shall be in form and substance reasonably satisfactory to PIM, and (iii) PIM shall have received copies of the Revolving Credit Agreement and all such amendments or other modifications, accompanied by an Officer’s Certificate certifying such copies as being true, correct and complete copies of the Revolving Credit Agreement and such amendments or other modifications.

4A(2) Payment of Special Counsel Fees. Without limiting the provisions of Section 16.1, the Company shall have paid on or before the Series A Closing Day the reasonable fees, charges and disbursements of the special counsel of the Series A Purchasers referred to in Section 4B(1)(g), to the extent reflected in a statement of such counsel rendered to the Company at least one Business Day prior to the Series A Closing Day.

4A(3) Consents. The Series A Purchasers shall have received evidence satisfactory to it that all government, contractual and other third-party approvals and consents, if any, necessary to the consummation of the transactions contemplated by this Agreement and the other Transaction Documents as of the Series A Closing Day have been obtained.

4A(4) Structuring Fee. The Company shall have paid to or as directed by PIM in immediately available funds the Structuring Fee.

4B C ONDITIONS TO E ACH C LOSING .

4B(1) Certain Documents. Except as PIM may otherwise agree in writing, each Purchaser that is purchasing Notes on such Closing Day shall have received (or PIM shall have received on such Purchaser’s behalf) the following, each dated the applicable Closing Day and in form and substance reasonably satisfactory to PIM:

(a) The Note(s) to be purchased by such Purchaser;

(b) an Officer’s Certificate from the general partner of the Company, certifying that the conditions specified in Sections 4B(3), 4B(4) and 4B(5) have been fulfilled;

(c) certified copies of the resolutions of each Credit Party, authorizing the execution and delivery of the Transaction Documents relating to such Note purchase and to which such Credit Party is a party (and, in the case of such resolutions of the Board of Directors of the general partner of the Company, authorizing the issuance of the applicable Series of Notes by the Company), and of all documents evidencing other necessary corporate or similar action and governmental approvals, if any, with respect to the Transaction Documents and the applicable Series of Notes;

(d) a certificate of the Secretary or an Assistant Secretary of each of the Credit Parties (or, if such Person is a partnership, of its general partner), certifying the names and true signatures of the officers of such Person authorized to sign the Transaction Documents relating to such Note purchase and to which such Credit Party is a party;

(e) certified copies of the articles or certificate of incorporation (or similar charter document) and by-laws, operating agreement or partnership agreement, as applicable, of each Credit Party;

 

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(f) favorable opinions addressed to each Purchaser purchasing Notes on such Closing Day of (i) Latham & Watkins LLP, special counsel for the Credit Parties (or other counsel reasonably acceptable to PIM), satisfactory to such Purchaser in its sole discretion (in the case of the Series A Closing Day) and, in the case of any Closing Day other than the Series A Closing Day, substantially similar in form to the opinion rendered by Latham & Watkins LLP on the Series A Closing Day and satisfactory to such Purchaser in its reasonable discretion, (ii) Venable LLP, special Maryland counsel for the Credit Parties (or other counsel reasonably acceptable to PIM), satisfactory to such Purchaser in its sole discretion (in the case of the Series A Closing Day) and, in the case of any Closing Day other than the Series A Closing Day, substantially similar in form to the opinion rendered by Venable LLP on the Series A Closing Day and satisfactory to such Purchaser in its reasonable discretion, and (iii) Haynes and Boone, LLP, special Texas counsel for the Credit Parties (or other counsel reasonably acceptable to PIM), satisfactory to such Purchaser in its sole discretion (in the case of the Series A Closing Day) and, in the case of any Closing Day other than the Series A Closing Day, substantially similar in form to the opinion rendered by Haynes and Boone, LLP on the Series A Closing Day and satisfactory to such Purchaser in its reasonable discretion. The Company hereby directs each such counsel to deliver such opinions, agrees that the issuance and sale of any Notes will constitute a reconfirmation of such direction, and understands and agrees that each Purchaser receiving such an opinion will and is hereby authorized to rely on such opinion;

(g) a favorable opinion of Bingham McCutchen LLP, special counsel for PIM and the Purchasers, as to such matters incident to the matters herein contemplated related to the Series A Notes as such Purchaser reasonably requests;

(h) a good standing or similar certificate for (i) with respect to the Series A Closing Day, each Credit Party, the Company and the Parent Guarantor, and (ii) with respect to each Closing Day thereafter, the Company and the Parent Guarantor, in each case from the appropriate Governmental Authority of its jurisdiction of organization, dated as of a recent date, and such other evidence of the status of such Persons as such Purchaser may reasonably request; and

(i) additional documents or certificates with respect to legal matters or corporate or other proceedings related to the transactions contemplated hereby as may be reasonably requested by such Purchaser in a timely manner.

4B(2) Payment of Fees. The Company shall have paid to or as directed by PIM any fees due pursuant to or in connection with this Agreement, including the Issuance Fee due pursuant to Section 2B(8)(ii) and any Delayed Delivery Fee due pursuant to Section 2B(8)(iii).

4B(3) Representations and Warranties. Except as disclosed to PIM in writing and approved by PIM in writing, the representations and warranties of the Credit Parties in Section 5 hereof shall, in each case, be correct when made and on and as of such Closing Day (except where limited to an earlier date, in which case the same shall have been correct as of such earlier date).

 

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4B(4) Performance; No Default. Each of the Credit Parties shall have performed and complied with all unwaived agreements and conditions contained in this Agreement required to be performed or complied with by it prior to or at such Closing Day, and after giving effect to the issue and sale of the applicable Series of Notes (and the application of the proceeds thereof pursuant to the requirements of Section 5.14) no Default or Event of Default shall have occurred and be continuing.

4B(5) Changes in Structure. The Company shall not have changed its jurisdiction of organization or, except as otherwise permitted under this Agreement, been the subject of any merger or consolidation or succeeded to all or any substantial part of the liabilities of any other Person (except as permitted by Section 10.4), at any time following the date of the most recent financial statements referred to in Section 5.5.

4B(6) Purchase Permitted By Applicable Law, etc. Each Purchaser’s purchase of Notes on such Closing Day shall (i) be permitted by the laws and regulations of each jurisdiction to which such Purchaser is subject, without recourse to provisions (such as Section 1405(a)(8) of the New York Insurance Law) permitting limited investments by insurance companies without restriction as to the character of the particular investment, (ii) not violate any applicable law or regulation (including Regulation T, U or X of the Board of Governors of the Federal Reserve System), and (iii) not subject such Purchaser to any tax, penalty or liability under or pursuant to any applicable law or regulation, which law or regulation was not in effect on the date hereof. If requested by any Purchaser of Notes on such Closing Day, such Purchaser shall have received an Officer’s Certificate certifying as to such matters of fact as it may reasonably specify (and to which the Parent Guarantor can properly certify) to enable such Purchaser to determine whether such purchase is so permitted.

4B(7) Private Placement Number. A Private Placement number issued by Standard & Poor’s CUSIP Service Bureau (in cooperation with the Securities Valuation Office of the National Association of Insurance Commissioners) or any then-applicable equivalent shall have been obtained for each Series of Notes to be issued on the applicable Closing Day.

4B(8) Proceedings and Documents. All corporate, organizational and other proceedings in connection with the transactions contemplated by this Agreement and all documents and instruments incident to such transactions shall be satisfactory to each Purchaser purchasing Notes on the applicable Closing Day and its U.S. special counsel, and each such Purchaser and its U.S. special counsel shall have received all such counterpart originals or certified or other copies of such documents as such Purchaser or such counsel may reasonably request.

 

5	R EPRESENTATION AND W ARRANTIES OF THE C OMPANY .

Each Credit Party represents and warrants to each Purchaser that:

5.1 Organization; Power and Authority.

Each Credit Party is a corporation or other legal entity duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, and is duly qualified as a foreign corporation or other legal entity and is in good standing in each jurisdiction in which such qualification is required by law, other than those jurisdictions as to which the failure to be so qualified or in good standing would not, individually or in the aggregate, reasonably be expected

 

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to have a Material Adverse Effect. Each Credit Party has the requisite organizational power and authority to own or hold under lease the properties it purports to own or hold under lease, to transact the business it transacts and proposes to transact, to execute and deliver the Transaction Documents to which it is a party and to perform the provisions of such Transaction Documents. The Parent Guarantor is organized in conformity with the requirements for qualification as a REIT under the Code, and its method of operation enables it to meet the requirements for qualification and taxation as a REIT under the Code.

5.2 Authorization, etc.

This Agreement, the Notes and the other Transaction Documents to which any Credit Party is a party have been duly authorized by all necessary organizational action on the part of such Credit Party, and each of this Agreement and such other Transaction Documents (other than the Notes) constitutes, and upon execution and delivery thereof each Note will constitute, a legal, valid and binding obligation of each Credit Party that is party to such Transaction Document enforceable against such Credit Party in accordance with its terms, except as such enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally, and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

5.3 Disclosure.

Neither this Agreement nor any other document, certificate or written statement furnished to PIM by or on behalf of the Company or the other Credit Parties in connection herewith, contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein and therein not misleading in light of the circumstances under which they were made. There is no fact known to the Company or any other Credit Party that would reasonably be expected to have a Material Adverse Effect that has not been set forth herein or in the other documents, certificates and other writings delivered to PIM by or on behalf of the Company or the other Credit Parties specifically for use in connection with the transactions contemplated hereby or filed with the SEC at least one Business Day prior to the date this representation is made or repeated. Since the date of the most recent audited balance sheet delivered pursuant to Section 7.2, or if no such balance sheet has been delivered, the most recent audited balance sheet referred to in Section 5.5, there has been no change in the financial condition, operations, business, properties or prospects of the Company, the Parent Guarantor or any Subsidiary except changes that individually or in the aggregate would not reasonably be expected to have a Material Adverse Effect that has not been set forth herein or in the other documents, certificates and other writings delivered to PIM by or on behalf of the Company or the other Credit Parties specifically for use in connection with the transactions contemplated hereby or filed with the SEC at least one Business Day prior to the date this representation is made or repeated.

5.4 Organization; Power and Authority.

(a) Schedule 5.4 contains complete and correct lists as of the Series A Closing Day of each of the Credit Parties (including the Company and the Parent Guarantor) and its Subsidiaries, showing, as to each such Person, the correct name thereof, the jurisdiction of its organization, and the percentage of shares of each class of its capital stock or similar equity interests outstanding owned by other Credit Parties or other Persons.

 

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(b) All of the outstanding shares of capital stock or similar equity interests of each Subsidiary shown in Schedule 5.4 as being owned by the Company or the Parent Guarantor and their respective Subsidiaries have been validly issued, are fully paid and nonassessable and are owned by the Company, the Parent Guarantor or another Subsidiary free and clear of any Lien (other than Liens on Equity Interests in Property-Level Subsidiaries securing Non-Recourse Debt permitted under Section 10.2(b)(vii) hereof).

5.5 Financial Statements.

The Company has furnished PIM with the following financial statements: (i) Consolidated balance sheets of the Parent Guarantor and its Subsidiaries as of December 31, 2005, 2006 and 2007 and as of the last day in each of the fiscal years completed thereafter and prior to the date as of which this representation is made or repeated to such Purchaser (other than fiscal years completed within 90 days prior to such date for which audited financial statements have not been released), and Consolidated statements of income and cash flows of the Parent Guarantor and its Subsidiaries for each such year, all certified by independent certified public accountants of recognized international standing; and (ii) unaudited Consolidated balance sheets of the Parent Guarantor and its Subsidiaries as at the end of the quarterly period (if any) most recently completed prior to such date and after the end of the most recent fiscal year (other than quarterly periods completed within 45 days (in the case of the first three fiscal quarters) or 70 days (in the case of the fourth fiscal quarter) prior to such date for which financial statements have not been released) and the comparable quarterly period in the preceding fiscal year and unaudited Consolidated statements of income and, solely for the first three fiscal quarters, cash flows of the Parent Guarantor and its Subsidiaries for the periods from the beginning of the fiscal years in which such quarterly periods are included to the end of such quarterly periods. Such financial statements (including any related schedules and/or notes) have been prepared in accordance with generally accepted accounting principals as in effect from time to time in the United States of America (subject, as to interim statements, to changes resulting from year-end adjustments) consistently applied throughout the periods involved and show all liabilities, direct and contingent, of the Parent Guarantor and its Subsidiaries required to be shown in accordance with such principles. The balance sheets fairly present the consolidated financial condition of the Parent Guarantor and its Subsidiaries as at the dates thereof, and the statements of income and cash flows fairly present the consolidated financial results of the operations of the Parent Guarantor and its Subsidiaries and their cash flows for the periods indicated. The Parent Guarantor and its Subsidiaries do not have any Material liabilities that are not disclosed on such financial statements or otherwise disclosed in writing to PIM. No event has occurred since the end of the most recent fiscal year for which such audited financial statements have been furnished which has had or would reasonably be expected to have a Material Adverse Effect.

5.6 Compliance with Laws; Other Instruments, etc.

The execution, delivery and performance by each Credit Party of the Transaction Documents to which it is a party will not (i) contravene, result in any breach of, or constitute a default under, or result in the creation of any Lien in respect of any property of any Credit Party or any of its

 

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Subsidiaries under, any material indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease, or any corporate charter (or similar constitutive documents) or bylaws (or similar documents), or any other material agreement or instrument to which any Credit Party or any of its Subsidiaries is bound or by which any Credit Party or any of its Subsidiaries or any of their respective properties may be bound or affected, (ii) conflict with or result in a breach of any of the terms, conditions or provisions of any order, judgment, decree, or ruling of any court, arbitrator or Governmental Authority by which any Credit Party or any of its Subsidiaries is bound, or (iii) violate any provision of any statute or other rule or regulation of any Governmental Authority applicable to any Credit Party or any of its Subsidiaries.

5.7 Governmental Authorizations, etc.

No consent, approval or authorization of, or registration, filing or declaration with, any Governmental Authority is required in connection with the execution, delivery or performance by any Credit Party of this Agreement, the Notes or the other Transaction Documents to which such Person is a party except such consents, approvals or authorizations previously obtained and are in full force and effect.

5.8 Litigation; Observance of Agreements, Statutes and Orders.

(a) There are no actions, suits, investigations or proceedings pending or, to the knowledge of any Credit Party, threatened against or affecting the Parent Guarantor, the Company or any of their respective Subsidiaries or any property of the Parent Guarantor, the Company or any of their respective Subsidiaries in any court or before any arbitrator of any kind or before or by any Governmental Authority (including, without limitation, the matters disclosed in Schedule 5.8 (the “ Disclosed Litigation ”) that, if adversely determined, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.

(b) None of the Parent Guarantor, the Company or any of their respective Subsidiaries is in default under any term of any material agreement or instrument to which it is a party or by which it is bound, or any order, judgment, decree or ruling of any court, arbitrator or Governmental Authority by which it is bound, or is in violation of any applicable law, ordinance, rule or regulation (including, without limitation, Environmental Laws or the USA Patriot Act) of any Governmental Authority, which default or violation, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.

5.9 Taxes.

The Parent Guarantor, the Company and their respective Subsidiaries have filed all Material income tax returns that, to the knowledge of each Credit Party, are required to have been filed in any jurisdiction, and have paid all taxes shown to be due and payable on such returns and all other taxes and assessments received by such Credit Party or Subsidiary and levied upon them or their properties, assets, income or franchises, before they have become delinquent, except for any taxes and assessments being contested in accordance with Section 9.2. None of the Credit Parties knows of any basis for any other tax or assessment that would reasonably be expected to have a Material Adverse Effect.

 

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5.10 Title to Property; Leases.

(a) The Parent Guarantor, the Company and their respective Subsidiaries have good and sufficient title to their respective properties that individually or in the aggregate are Material, including all such properties reflected in the most recent audited balance sheet delivered pursuant to Section 7.2, or if no such balance sheet has been delivered, the most recent audited balance sheet referred to in Section 5.5 or purported to have been acquired by the Parent Guarantor, the Company or any Subsidiary after said date (except as sold or otherwise disposed of in the ordinary course of business or as otherwise permitted hereunder), in each case free and clear of Liens prohibited by this Agreement.

(b) Set forth on Schedule 5.10(b) hereto is a complete and accurate list of all material Real Property owned by any Credit Party or any of its Subsidiaries, showing as of the date hereof, and as of each other date Schedule 5.10(b) is required to be supplemented pursuant to Section 7.8, the street address, county or other relevant jurisdiction, state, record owner and book value thereof. Each Credit Party or such Subsidiary has good, marketable and insurable fee simple title to such Real Property, free and clear of all Liens, other than Liens created or permitted by the Transaction Documents.

(c) Set forth on Schedule 5.10(c) hereto is a complete and accurate list of all leases of material Real Property under which any Credit Party or any of its Subsidiaries is the lessee, showing as of the date hereof, and as of each other date Schedule 5.10(c) is required to be supplemented pursuant to Section 7.8, the street address, county or other relevant jurisdiction, state, lessor, lessee, expiration date and annual rental cost thereof. To the best of each Credit Party’s knowledge, each such lease is the legal, valid and binding obligation of the lessor thereof, enforceable in accordance with its terms.

(d) Each of the Assets listed on Schedule II satisfies all Unencumbered Asset Conditions, except to the extent as otherwise set forth in Schedule II or, with respect to Assets added after the Series A Closing Day, waived in writing by the Required Holders. The Credit Parties are the legal and beneficial owners (either in fee or leasehold, as applicable) of the Unencumbered Assets free and clear of any Lien, except for the Liens permitted under the Transaction Documents.

5.11 Licenses, Permits, etc.

(a) The Parent Guarantor, the Company and their respective Subsidiaries own or possess all licenses, permits, franchises, authorizations, patents, copyrights, proprietary software, service marks, trademarks and trade names, or rights thereto, without known conflict with the rights of others, that failure to own or possess, either individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.

(b) To the best knowledge of each Credit Party, no product of the Parent Guarantor, the Company or any of their respective Subsidiaries infringes in any material respect any license, permit, franchise, authorization, patent, copyright, proprietary software, service mark, trademark, trade name or other right owned by any other Person, where such infringement would reasonably be expected to have a Material Adverse Effect.

 

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(c) To the best knowledge of each Credit Party, there is no Material violation by any Person of any right of the Parent Guarantor, the Company or any of their respective Subsidiaries with respect to any patent, copyright, proprietary software, service mark, trademark, trade name or other right owned or used by the Parent Guarantor, the Company or any of their respective Subsidiaries that is not being contested in good faith by the Credit Parties and their Subsidiaries or would not otherwise reasonably be expected to have a Material Adverse Effect.

5.12 Compliance with ERISA.

(a) The Parent Guarantor, the Company, each Subsidiary and each ERISA Affiliate have operated and administered each Plan in compliance with all applicable laws except for such instances of noncompliance as have not resulted in and would not reasonably be expected to result in a Material Adverse Effect. None of the Parent Guarantor, the Company, any Subsidiary or any ERISA Affiliate has incurred any liability pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans (as defined in section 3 of ERISA), and no event, transaction or condition has occurred or exists that would reasonably be expected to result in the incurrence of any such liability by the Parent Guarantor, the Company, any Subsidiary or any ERISA Affiliate, or in the imposition of any Lien on any of the rights, properties or assets of the Parent Guarantor, the Company, any Subsidiary or any ERISA Affiliate, in either case pursuant to Title I or IV of ERISA or to such penalty or excise tax provisions or to section 4068 of ERISA or the Pension Funding Rules, other than such liabilities or Liens as would not be individually or in the aggregate Material.

(b) The present value of the aggregate benefit liabilities under each of the Plans (other than Multiemployer Plans), determined as of the end of such Plan’s most recently ended plan year on the basis of the actuarial assumptions specified for funding purposes in such Plan’s most recent actuarial valuation report, did not exceed the aggregate current value of the assets of such Plan allocable to such benefit liabilities. The term “benefit liabilities” has the meaning specified in section 4001 of ERISA and the terms “current value” and “present value” have the meaning specified in section 3 of ERISA. Following the effective date of the Pension Act, for any Plan which is subject to the Pension Funding Rules, the funding target attainment percentage, within the meaning of Section 303 of ERISA or Section 430 of the Code, for such Plan is not less than 100%.

(c) The Parent Guarantor, the Company, the Subsidiaries and their ERISA Affiliates have not incurred withdrawal liabilities (and are not subject to contingent withdrawal liabilities) under section 4201 or 4204 of ERISA in respect of Multiemployer Plans that individually or in the aggregate are Material.

(d) The expected postretirement benefit obligation (determined as of the last day of the Parent Guarantor’s most recently ended fiscal year in accordance with Financial Accounting Standards Board Statement No. 106, without regard to liabilities attributable to continuation coverage mandated by section 4980B of the Code) of the Parent Guarantor, the Company and their respective Subsidiaries is not Material.

 

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(e) The execution and delivery of this Agreement and the issuance and sale of the Notes hereunder will not involve any transaction that is subject to the prohibitions of section 406 of ERISA or in connection with which (x) a Material tax could be imposed pursuant to section 4975(c)(1)(A)-(D) of the Code on the Parent Guarantor, the Company, the Subsidiaries or their ERISA Affiliates or (y) any tax could be imposed pursuant to section 4975(c)(1)(A)-(D) on any Purchaser. The representation by the Credit Parties to each Purchaser in the first sentence of this Section 5.12(e) is made in reliance upon and subject to the accuracy of such Purchaser’s representation in Section 6.2 as to the sources of the funds used to pay the purchase price of the Notes to be purchased by such Purchaser.

5.13 Private Offering.

Neither the Company nor anyone acting on its behalf has offered the Notes or any similar securities for sale to, or solicited any offer to buy any of the same from, or otherwise approached or negotiated in respect thereof with, any Person other than the Purchasers and not more than 10 other Institutional Investors, each of which has been offered the Notes at a private sale for investment. Neither the Company nor anyone acting on its behalf has taken, or will take, any action that would subject the issuance or sale of the Notes to the registration requirements of Section 5 of the Securities Act or the registration requirements of any securities or blue sky laws of any applicable jurisdiction. Without limiting the foregoing, neither PIM nor any Prudential Affiliate shall be deemed to be acting on behalf of the Company for purposes of this Section 5.13.

5.14 Use of Proceeds; Margin Regulations.

None of the proceeds of the sale of the Notes hereunder will be used, directly or indirectly, for the purpose of buying or carrying any margin stock within the meaning of Regulation U of the Board of Governors of the Federal Reserve System (12 CFR 221), or for the purpose of buying or carrying or trading in any securities under such circumstances as to involve the Company in a violation of Regulation X of said Board (12 CFR 224) or to involve any broker or dealer in a violation of Regulation T of said Board (12 CFR 220). Margin stock does not constitute more than 5% of the value of the consolidated assets of the Company and its Subsidiaries and the Company does not have any present intention that margin stock will constitute more than 5% of the value of such assets. As used in this Section, the terms “margin stock” and “purpose of buying or carrying” shall have the meanings assigned to them in said Regulation U.

5.15 Existing Debt; Liens.

(a) Except as described therein, Schedule 5.15 sets forth a complete and correct list of all outstanding Debt for Borrowed Money of the Parent Guarantor, the Company and their respective Subsidiaries having a principal amount of at least $1,000,000 as of March 31, 2008 (including a description of the obligors and obligees, principal amount outstanding and collateral therefor, if any, and full-recourse guaranties thereof, if any, and the maturity date and amortization schedule therefor) which Debt will be outstanding as of the Series A Closing Day (after giving effect to the application of proceeds of the Series A Notes), and from March 31, 2008 to the Series A Closing Day there has been no Material change in the amounts, interest rates, sinking funds, installment payments or maturities of the such of the Parent Guarantor, the Company or any of their respective Subsidiaries (other than payments of principal and interest in accordance with the documents governing such Debt). None of the Parent Guarantor, the

 

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Company nor any Subsidiary is in default, and no waiver (other than a permanent waiver) of default is currently in effect, in the payment of any principal or interest on any such Debt of the Parent Guarantor, the Company or such Subsidiary and no event or condition exists with respect to any such Debt of the Parent Guarantor, the Company or any Subsidiary that would permit (or that with notice or the lapse of time, or both, would permit) one or more Persons to cause Debt in an aggregate principal amount in excess of $30,000,000 to become due and payable before its stated maturity or before its regularly scheduled dates of payment.

(b) Set forth on Schedule 5.15 hereto is a complete and accurate list as of the Series A Closing Day of all Liens on the property or assets of any Credit Party or, with respect to Debt for Borrowed Money, any of its Subsidiaries, securing, in each case, obligations in a principal amount of at least $1,000,000, showing as of the date hereof the lienholder thereof, the principal amount of the obligations secured thereby and the property or assets of such Credit Party or such Subsidiary subject thereto.

5.16 Foreign Assets Control Regulations, etc.

(a) Neither the sale of the Notes by the Company hereunder nor its use of the proceeds thereof will violate the Trading with the Enemy Act, as amended, or any of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating thereto.

(b) None of the Parent Guarantor, the Company nor any Subsidiary (i) is a Person described or designated in the Specially Designated National and Blocked Persons List of the Office of Foreign Assets Control or in Section 1 of the Anti-Terrorism Order, or (ii) engages in any dealings or transactions with any such Person. The Parent Guarantor, the Company and their respective Subsidiaries are in compliance, in all material respects, with the USA Patriot Act.

(c) No part of the proceeds from the sale of the Notes hereunder will be used, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in each case in violation of the United States Foreign Corrupt Practices Act of 1977, as amended, assuming in all cases that such act applies to the Company.

5.17 Status under Certain Statutes.

None of the Parent Guarantor or any of its Subsidiaries is required to be registered under the Investment Company Act of 1940, as amended, the Public Utility Holding Company Act of 2005, as amended, the ICC Termination Act of 1995, as amended, or the Federal Power Act, as amended.

5.18 Solvency. Immediately after giving effect to the incurrence of Debt evidenced by the Notes, the use of the proceeds thereof and the payment of all estimated legal, accounting and other fees and expenses related to the foregoing, each Credit Party will be “Solvent,” (taking into account any and all rights of contribution) meaning: (a) the fair market value of such Credit Party’s assets, on a going concern basis, will be in excess of the amount that will be required to

 

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be paid on or in respect of its existing debts and other liabilities (including contingent liabilities) as they mature; (b) such Credit Party will not have unreasonably small capital to carry on its business as conducted or as proposed to be conducted; and (c) such Credit Party does not intend to or believe that it will incur debts beyond its ability to generally pay such debts as they mature (taking into account the timing and amounts of cash to be received by it and the amounts to be payable on or in respect of its obligations).

5.19 Hostile Tender Offers. None of the proceeds of the sale of any Notes will be used to finance a Hostile Tender Offer.

5.20 Excluded Subsidiaries. Set forth on Schedule 5.20 is a complete and accurate list of all Excluded Subsidiaries and their respective Excluded Subsidiary Agreements (if any) existing on the Series A Closing Day.

5.21 Environmental Matters.

(a) None of the Parent Guarantor, the Company or any Subsidiary has knowledge of any claim or has received any notice of any claim, and no proceeding has been instituted raising any claim against the Parent Guarantor, the Company or any of their respective Subsidiaries or any of their respective real properties now or formerly owned, leased or operated by any of them or other assets, alleging any damage to the environment or violation of any Environmental Laws, except, in each case, such as would not reasonably be expected to result in a Material Adverse Effect.

(b) None of the Parent Guarantor, the Company or any Subsidiary has knowledge of any facts which would give rise to any claim, public or private, against the Parent Guarantor or its Subsidiaries of violation of Environmental Laws or damage to the environment emanating from, occurring on or in any way related to properties now or formerly owned, leased or operated by any of them, except, in each case, such as would not reasonably be expected to result in a Material Adverse Effect.

(c) None of the Parent Guarantor, the Company nor any Subsidiary has stored any Hazardous Materials on real properties now or formerly owned, leased or operated by any of them nor has disposed of any Hazardous Materials in a manner contrary to any Environmental Laws, in each case in any manner that would reasonably be expected to result in a Material Adverse Effect; and

(d) All buildings on all real properties now owned, leased or operated by the Parent Guarantor, the Company or any Subsidiary are in compliance with applicable Environmental Laws, except where failure to comply would not reasonably be expected to result in a Material Adverse Effect.

 

6	R EPRESENTATIONS OF THE P URCHASERS .

6.1 Purchase for Investment. Each Purchaser severally represents that it is purchasing the Notes for its own account or for one or more separate accounts maintained by such Purchaser or for the account of one or more pension or trust funds and not with a view to the distribution thereof, provided that the disposition of such Purchaser’s or their property shall

 

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at all times be within such Purchaser’s or their control. Each Purchaser severally represents and warrants that it is an “accredited investor” within the meaning of Rule 501(a) under the Securities Act. Each Purchaser understands that the Notes have not been registered under the Securities Act and may be resold only if registered pursuant to the provisions of the Securities Act or if an exemption from registration is available, except under circumstances where neither such registration nor such an exemption is required by law, and that neither the Company nor any other Credit Party is required to register the Notes.

6.2 Source of Funds.

Each Purchaser severally represents that at least one of the following statements is an accurate representation as to each source of funds (a “ Source ”) to be used by such Purchaser to pay the purchase price of the Notes to be purchased by such Purchaser hereunder:

(a) the Source is an “insurance company general account” (as the term is defined in the United States Department of Labor’s Prohibited Transaction Exemption (“ PTE ”) 95-60) in respect of which the reserves and liabilities (as defined by the annual statement for life insurance companies approved by the National Association of Insurance Commissioners (the “ NAIC Annual Statement ”)) for the general account contract(s) held by or on behalf of any employee benefit plan together with the amount of the reserves and liabilities for the general account contract(s) held by or on behalf of any other employee benefit plans maintained by the same employer (or affiliate thereof as defined in PTE 95-60) or by the same employee organization in the general account do not exceed 10% of the total reserves and liabilities of the general account (exclusive of separate account liabilities) plus surplus as set forth in the NAIC Annual Statement filed with such Purchaser’s state of domicile; or

(b) the Source is a separate account that is maintained solely in connection with such Purchaser’s fixed contractual obligations under which the amounts payable, or credited, to any employee benefit plan (or its related trust) that has any interest in such separate account (or to any participant or beneficiary of such plan (including any annuitant)) are not affected in any manner by the investment performance of the separate account; or

(c) the Source is either (i) an insurance company pooled separate account, within the meaning of PTE 90-1, or (ii) a bank collective investment fund, within the meaning of the PTE 91-38 and, except as disclosed by such Purchaser to the Company in writing pursuant to this clause (c), no employee benefit plan or group of plans maintained by the same employer or employee organization beneficially owns more than 10% of all assets allocated to such pooled separate account or collective investment fund; or

(d) the Source constitutes assets of an “investment fund” (within the meaning of Part V of PTE 84-14 (the “ QPAM Exemption ”)) managed by a “qualified professional asset manager” or “QPAM” (within the meaning of Part V of the QPAM Exemption), no employee benefit plan’s assets that are included in such investment fund, when combined with the assets of all other employee benefit plans established or maintained by the same employer or by an affiliate (within the meaning of Section V(c)(1) of the QPAM Exemption) of such employer or by the same employee organization and managed by such QPAM, exceed 20% of the total client assets managed by such QPAM, the conditions of Part I(c) and (g) of the QPAM Exemption are

 

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satisfied, as of the last day of its most recent calendar quarter, neither the QPAM nor a person controlling or controlled by the QPAM (applying the definition of “control” in Section V(e) of the QPAM Exemption) owns a 10% or more interest in the Company and (i) the identity of such QPAM, and (ii) the names of all employee benefit plans whose assets managed by the QPAM in the investment fund, when combined with the assets of other plans established or maintained by the same employer (or affiliate thereof described in Section V(c)(1) of the QPAM Exemption) or by the same employee organization, represent 10% or more of the assets of the investment fund have been disclosed to the Company in writing pursuant to this clause (d); or

(e) the Source constitutes assets of a “plan(s)” (within the meaning of Section IV of PTE 96-23 (the “ INHAM Exemption ”)) managed by an “in-house asset manager” or “INHAM” (within the meaning of Part IV of the INHAM exemption), the conditions of Part I(a), (g) and (h) of the INHAM Exemption are satisfied, neither the INHAM nor a person controlling or controlled by the INHAM (applying the definition of “control” in Section IV(h) of the INHAM Exemption) owns a 5% or more interest in the Company and (i) the identity of such INHAM, and (ii) the name(s) of the employee benefit plan(s) whose assets constitute the Source have been disclosed to the Company in writing pursuant to this clause (e); or

(f) the Source is a governmental plan; or

(g) the Source is one or more employee benefit plans, or a separate account or trust fund comprised of one or more employee benefit plans, or one or more plans, within the meaning of Section 4975 of the Code, each of which has been identified to the Company in writing pursuant to this clause (g); or

(h) the Source does not include “plan assets,” within the meaning of Department of Labor Regulations Section 2510.3-101, as modified by Section 3(42) of ERISA, of any employee benefit plan subject to the fiduciary responsibility provisions of Title I of ERISA or of any plan to which Section 4975 of the Code applies.

As used in this Section 6.2, the terms “employee benefit plan”, “governmental plan”, and “separate account” shall have the respective meanings assigned to such terms in Section 3 of ERISA.

 

7	I NFORMATION AS TO THE C OMPANY .

The Parent Guarantor and the Company covenant that during the Issuance Period and so long thereafter as any Notes remain outstanding or any amounts owing under the Transaction Documents remain unpaid, the Parent Guarantor and the Company will furnish to each Significant Holder:

7.1 Default Notice . As soon as possible and in any event within three days after a Responsible Officer obtains knowledge of the occurrence of each Default or any event, development or occurrence reasonably likely to have a Material Adverse Effect, in each case, if continuing on the date of such statement, a statement of the Chief Financial Officer (or other Responsible Officer) of the Parent Guarantor setting forth details of such Default or such event, development or occurrence and the action that the Parent Guarantor has taken and proposes to take with respect thereto.

 

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7.2 Annual Financials. As soon as available and in any event within 90 days after the end of each Fiscal Year, a copy of the annual audit report for such year for the Parent Guarantor and its Subsidiaries, including therein Consolidated balance sheets of the Parent Guarantor and its Subsidiaries as of the end of such Fiscal Year and Consolidated statements of income and a Consolidated statement of cash flows of the Parent Guarantor and its Subsidiaries for such Fiscal Year (it being acknowledged that a copy of the annual audit report filed by the Parent Guarantor with the Securities and Exchange Commission shall satisfy the foregoing requirements), in each case accompanied by an opinion reasonably acceptable to the Required Holders of KPMG LLP or other independent public accountants of recognized standing reasonably acceptable to the Required Holders, together with (i) a certificate of such accounting firm to the Significant Holders stating that in the course of the regular audit of the business of the Parent Guarantor and its Subsidiaries, which audit was conducted by such accounting firm in accordance with generally accepted auditing standards, such accounting firm has obtained no knowledge that a Default with respect to Section 11 has occurred and is continuing, or if, in the opinion of such accounting firm, a Default with respect to Section 11 has occurred and is continuing, a statement as to the nature thereof, (ii) to the extent available, a schedule in form reasonably satisfactory to the Required Holders of the computations used by such accountants in determining, as of the end of such Fiscal Year, compliance with the covenants contained in Section 11, provided that in the event of any change in generally accepted accounting principles used in the preparation of such financial statements, the Parent Guarantor shall also provide, if necessary for the determination of compliance with Section 11, a statement of reconciliation conforming such financial statements to GAAP, and (iii) a certificate of the Chief Financial Officer (or other Responsible Officer performing similar functions) of the Parent Guarantor stating that such financial statements have been prepared in accordance with generally accepted accounting principals as in effect from time to time in the United States of America and that no Default has occurred and is continuing or, if a Default has occurred and is continuing, a statement as to the nature thereof and the action that the Parent Guarantor has taken and proposes to take with respect thereto.

7.3 Quarterly Financials. As soon as available and in any event within 45 days after the end of each of the first three quarters of each Fiscal Year (and as soon as available and in any event within 70 days after the fourth fiscal quarter of any Fiscal Year, a supplemental schedule that contains the applicable financial information for the fourth fiscal quarter of such Fiscal Year as provided to the SEC on Form 8K), Consolidated balance sheets of the Parent Guarantor and its Subsidiaries as of the end of such quarter and Consolidated statements of income and a Consolidated statement of cash flows of the Parent Guarantor and its Subsidiaries for the period commencing at the end of the previous fiscal quarter and ending with the end of such fiscal quarter and Consolidated statements of income and a Consolidated statement of cash flows of the Parent Guarantor and its Subsidiaries for the period commencing at the end of the previous Fiscal Year and ending with the end of such quarter ( provided that such statements of cash flows shall be required to be provided only with respect to the first three fiscal quarter of each Fiscal Year), setting forth in each case in comparative form the corresponding figures for the corresponding date or period of the preceding Fiscal Year, all in reasonable detail and duly certified (subject to normal year-end audit adjustments) by the Chief Financial Officer (or other Responsible Officer performing similar functions) of the Parent Guarantor as having been prepared in accordance with generally accepted accounting principals as in effect from time to time in the United States of America (it being acknowledged that a copy of the quarterly

 

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financials filed by the Parent Guarantor with the Securities and Exchange Commission shall satisfy the foregoing requirements), together with (i) a certificate of said officer stating that no Default has occurred and is continuing or, if a Default has occurred and is continuing, a statement as to the nature thereof and the action that the Parent Guarantor has taken and proposes to take with respect thereto, and (ii) a schedule in form reasonably satisfactory to the Required Holders of the computations used by the Parent Guarantor in determining compliance with the covenants contained in Section 11, provided that in the event of any change in generally accepted accounting principles used in the preparation of such financial statements, the Parent Guarantor shall also provide, if necessary for the determination of compliance with Section 11, a statement of reconciliation conforming such financial statements to GAAP.

7.4 Unencumbered Assets Certificate. As soon as available and in any event within (i) 45 days after the end of each of the first three quarters of each Fiscal Year, and (ii) 70 days after the end of the fourth quarter of each Fiscal Year, an Unencumbered Assets Certificate, as at the end of such quarter, certified by the Chief Financial Officer (or other Responsible Officer performing similar functions) of the Parent Guarantor.

7.5 Unencumbered Assets Financials. As soon as available and in any event within (i) 45 days after the end of each of the first three quarters of each Fiscal Year, and (ii) 70 days after the end of the fourth quarter of each Fiscal Year, financial information in respect of all Unencumbered Assets, in form and detail satisfactory to the Required Holders.

7.6 Annual Budgets. As soon as available and in any event no later than 90 days after the end of each Fiscal Year, forecasts prepared by management of the Parent Guarantor, in form satisfactory to the Required Holders, of balance sheets, income statements and cash flow statements on a monthly basis for the then current Fiscal Year and on an annual basis for each Fiscal Year thereafter until the Termination Date (as defined in the Revolving Credit Agreement).

7.7 Material Litigation. Promptly after the commencement thereof, notice of all actions, suits, investigations, litigation and proceedings before any court or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, affecting any Credit Party or any of its Subsidiaries of the type described in Section 5.8, and promptly after the occurrence thereof, notice of any material adverse change in the status or the financial effect on any Credit Party or any of its Subsidiaries of the Disclosed Litigation from that described on Schedule 5.8 hereto.

7.8 Real Property. As soon as available and in any event within 90 days after the end of each Fiscal Year, a report supplementing Schedule 5.10(b) and Schedule 5.10(c) hereto, including an identification of all owned and leased real property disposed of by any Credit Party or any of its Subsidiaries during such Fiscal Year, a list and description (including the street address, county or other relevant jurisdiction, state, record owner, book value thereof and, in the case of leases of property, lessor, lessee, expiration date and annual rental cost thereof) of all Real Property acquired or leased by any Credit Party or any of its Subsidiaries during such Fiscal Year and a description of such other changes in the information included in such Schedules as may be necessary for such Schedules to be accurate and complete.

 

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7.9 Assets Report. As soon as available and in any event within 90 days after the end of each quarter of each Fiscal Year, a report listing all Assets of the Parent Guarantor and its Subsidiaries as of the end of such quarter in form and substance reasonably satisfactory to the Required Holders.

7.10 Environmental Conditions. Written notice thereof (i) promptly upon a Responsible Officer of a Credit Party obtaining knowledge of any material violation of any Environmental Law affecting any Asset or the operations thereof or the operations of any of its Subsidiaries, (ii) promptly upon obtaining knowledge of any known release, discharge or disposal of any Hazardous Materials at, from, or into any Asset which it reports in writing or is reportable by it in writing to any governmental authority and which is material in amount or nature or which could reasonably be expected to materially adversely affect the value of such Asset, (iii) promptly upon a Credit Party’s receipt of any notice of material violation of any Environmental Laws or of any material release, discharge or disposal of Hazardous Materials in violation of any Environmental Laws or any matter that may result in an Environmental Action, including a notice or claim of liability or potential responsibility from any third party (including, without limitation, any federal, state or local governmental officials) and including notice of any formal inquiry, proceeding, demand, investigation or other action with regard to (A) such Credit Party’s or any other Person’s operation of any Asset, (B) contamination on, from or into any Asset, or (C) investigation or remediation of off-site locations at which such Credit Party or any of its predecessors are alleged to have directly or indirectly disposed of Hazardous Materials, or (iv) upon a Responsible Officer of such Credit Party obtaining knowledge that any expense or loss has been incurred by such governmental authority in connection with the assessment, containment, removal or remediation of any Hazardous Materials with respect to which such Credit Party or any Joint Venture may be liable or for which a Lien may be imposed on any Asset, provided that any of the events described in clauses (i) through (iv) above would have a Material Adverse Effect or could reasonably be expected to result in an Environmental Action with respect to any Unencumbered Asset.

7.11 Unencumbered Asset Conditions. Promptly after discovery by a Responsible Officer of a Credit Party of any condition or event which causes any of the Assets listed as Unencumbered Assets on Schedule II hereto no longer to comply with the requirements set forth in the definition of Unencumbered Asset Conditions, provide written notice thereof.

7.12 Other Information. Promptly after any request therefor, such other information respecting the business, condition (financial or otherwise), operations, performance, properties or prospects of any Credit Party or any of its Subsidiaries as any Significant Holder may from time to time reasonably request.

 

8	P REPAYMENT OF THE N OTES .

The Series A Notes and any Shelf Notes shall be subject to required prepayment as and to the extent provided in Section 8.1. The Series A Notes and any Shelf Notes shall also be subject to prepayment under the circumstances set forth in Section 8.2.

 

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8.1 Required Prepayments.

(a) Series A Notes. As provided therein, the entire unpaid principal balance of the Series A Notes shall be due and payable on the stated maturity date thereof.

(b) Shelf Notes. Each Series of Shelf Notes shall be subject to required prepayments, if any, set forth in the Notes of such Series; provided that upon any partial prepayment of any Series of Shelf Notes pursuant to Section 8.2, the principal amount of each required prepayment thereof becoming due on and after the date of such partial prepayment shall be reduced in the same proportion as the aggregate principal amount of such Series of Shelf Notes is reduced as a result of such prepayment.

8.2 Optional Prepayments with Make-Whole Amount.

The Company may, at its option, upon notice as provided below, prepay at any time all, or from time to time any part of, the Notes of any Series (to the exclusion of all other Series), in an amount not less than $1,000,000 (or in the equivalent of the currency in which the Notes of such Series are denominated) of the aggregate principal amount of the Notes of such Series then outstanding in the case of a partial prepayment, or such lesser principal amount of the Notes of such Series as shall then be outstanding, at 100% of the principal amount so prepaid, plus interest thereon to the prepayment date and the Make-Whole Amount determined for the prepayment date with respect to such principal amount. The Company will give each holder of Notes of such Series written notice of each optional prepayment under this Section 8.2 not less than 5 Business Days and not more than 60 days prior to the date (which shall be a Business Day) fixed for such prepayment. Each such notice shall specify such date, the Series of Notes to be prepaid, the aggregate principal amount of such Notes to be prepaid on such date, the principal amount of each Note of such Series held by such holder to be prepaid (determined in accordance with Section 8.3), and the interest to be paid on the prepayment date with respect to such principal amount being prepaid.

8.3 Allocation of Partial Prepayments.

In the case of each partial prepayment of the Notes of each Series under Section 8.2, the principal amount prepaid shall be allocated among the Notes of such Series at the time outstanding in proportion, as nearly as practicable, to the respective unpaid principal amounts thereof.

8.4 Maturity; Surrender, etc.

In the case of each prepayment of Notes pursuant to this Section 8, the principal amount of each Note to be prepaid shall mature and become due and payable on the date fixed for such prepayment (which shall be a Business Day), together with interest on such principal amount accrued to such date and the applicable Make-Whole Amount, if any. From and after such date, unless the Company shall fail to pay such principal amount when so due and payable, together with the interest and Make-Whole Amount, if any, as aforesaid, interest on such principal amount shall cease to accrue. Any Note paid or prepaid in full shall be surrendered to the Company and cancelled and shall not be reissued, and no Note shall be issued in lieu of any prepaid principal amount of any Note.

 

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8.5 Purchase of Notes.

The Company will not and will not permit any Affiliate to purchase, redeem, prepay or otherwise acquire, directly or indirectly, any of the outstanding Notes except upon the payment or prepayment of the Notes in accordance with the terms of this Agreement and the Notes. The Company will promptly cancel all Notes acquired by it or any Affiliate pursuant to any payment or prepayment of Notes pursuant to any provision of this Agreement and no Notes may be issued in substitution or exchange for any such Notes.

8.6 Make-Whole Amount.

The term “ Make-Whole Amount ” means, with respect to any Note, an amount equal to the excess, if any, of the Discounted Value of the Remaining Scheduled Payments with respect to the Called Principal of such Note over the amount of such Called Principal; provided that the Make-Whole Amount may in no event be less than zero. For the purposes of determining the Make-Whole Amount, the following terms have the following meanings:

“ Called Principal ” means, with respect to any Note, the principal of such Note that is to be prepaid pursuant to Section 8.2 or has become or is declared to be immediately due and payable pursuant to Section 13.1, as the context requires.

“ Discounted Value ” means, with respect to the Called Principal of any Note, the amount obtained by discounting all Remaining Scheduled Payments with respect to such Called Principal from their respective scheduled due dates to the Settlement Date with respect to such Called Principal, in accordance with accepted financial practice and at a discount factor (applied on the same periodic basis as that on which interest on the Notes is payable) equal to the Reinvestment Yield with respect to such Called Principal.

“Implied British Pound Yield” means, with respect to the Called Principal of any Note, the yield to maturity implied by (i) the yields reported, as of 10:00 a.m. (New York time) on the second Business Day preceding the Settlement Date with respect to such Called Principal, on the display designated as “Page 0#GBBMK” on the Reuters Screen (or such other display as may replace “Page 0#GBBMK” on the Reuters Screen) for actively traded benchmark gilt-edged securities having a maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date, or if such yields are not reported as of such time or the yields reported shall not be ascertainable, (ii) the average of the yields for such securities as determined by Recognized British Government Bond Market Makers. Such implied yield will be determined, if necessary, by (a) converting quotations to bond-equivalent yields in accordance with accepted financial practice, and (b) interpolating linearly between (1) the actively benchmark traded gilt-edged securities with the maturity closest to and greater than the Remaining Average Life of such Called Principal, and (2) the actively traded benchmark gilt-edged securities with the maturity closest to and less than the Remaining Average Life of such Called Principal.

“ Implied Canadian Dollar Yield ” means, with respect to the Called Principal of any Note, the yield to maturity implied by (i) the yields reported, as of 10:00 a.m. (New York time) on the second Business Day preceding the Settlement Date with respect to such Called Principal, on the display designated as “Page 0#CABMK” on the Reuters Screen (or such other display as may

 

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replace “Page 0#CABMK” on the Reuters Screen) for actively traded benchmark Canadian Government bonds having a maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date, or if such yields are not reported as of such time or the yields reported shall not be ascertainable, (ii) the average of the yields for such securities as determined by Recognized Canadian Government Bond Market Makers. Such implied yield will be determined, if necessary, by (a) converting quotations to bond-equivalent yields in accordance with accepted financial practice, and (b) interpolating linearly between (1) the actively traded benchmark Canadian Government bonds with the maturity closest to and greater than the Remaining Average Life of such Called Principal, and (2) the actively traded benchmark Canadian Government bonds with the maturity closest to and less than the Remaining Average Life of such Called Principal.

“ Implied Dollar Yield ” means, with respect to the Called Principal of any Note, the yield to maturity implied by (i) the yields reported, as of 10:00 a.m. (New York City local time) on the Business Day next preceding the Settlement Date with respect to such Called Principal, for actively traded U.S. Treasury securities having a maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date on the display designated as “Page PX1” on Bloomberg Financial Markets (“ Bloomberg ”) (or, if Bloomberg shall cease to report such yields on Page PX1 or shall cease to be PIM’s customary source of information for calculating make-whole amounts on privately placed notes, then such source as is then PIM’s customary source of such information), or if such yields shall not be reported as of such time or the yields reported as of such time shall not be ascertainable, (ii) the Treasury Constant Maturity Series yields reported, for the latest day for which such yields shall have been so reported as of the second Business Day next preceding the Settlement Date with respect to such Called Principal, in Federal Reserve Statistical Release H.15 (519) (or any comparable successor publication) for actively traded U.S. Treasury securities having a constant maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date. Such implied yield shall be determined, if necessary, by (a) converting U.S. Treasury bill quotations to bond-equivalent yields in accordance with accepted financial practice, and (b) interpolating linearly between (1) the actively traded U.S. Treasury security with the maturity closest to and greater than the Remaining Average Life of such Called Principal, and (2) the actively traded U.S. Treasury security with the maturity closest to and less than the Remaining Average Life of such Called Principal.

“ Implied Euro Yield ” means, with respect to the Called Principal of any Note, the yield to maturity implied by (i) the yields reported, as of 10:00 a.m. (New York time) on the second Business Day preceding the Settlement Date with respect to such Called Principal, on the display designated as “Page 0#DEBMK” on the Reuters Screen (or such other display as may replace “Page 0#DEBMK” on the Reuters Screen) for the actively traded benchmark German Bunds having a maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date, or if such yields are not reported as of such time or the yields reported shall not be ascertainable, (ii) the average of the yields for such securities as determined by Recognized German Bund Market Makers. Such implied yield will be determined, if necessary, by (a) converting quotations to bond-equivalent yields in accordance with accepted financial practice, and (b) interpolating linearly between (1) the actively traded benchmark German Bunds with the maturity closest to and greater than the Remaining Average Life of such Called Principal, and (2) the actively traded benchmark German Bunds with the maturity closest to and less than the Remaining Average Life of such Called Principal.

 

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“ Implied Swiss Franc Yield ” means, with respect to the Called Principal of any Note, the yield to maturity implied by (i) the yields reported, as of 10:00 a.m. (New York time) on the second Business Day preceding the Settlement Date with respect to such Called Principal, on the display designated as “Page 0#CHBMK” on the Reuters Screen (or such other display as may replace “Page 0#CHBMK” on the Reuters Screen) for the actively traded benchmark Swiss Government bonds having a maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date, or if such yields are not reported as of such time or the yields reported shall not be ascertainable, (ii) the average of the yields for such securities as determined by Recognized Swiss Government Bond Market Makers. Such implied yield will be determined, if necessary, by (a) converting quotations to bond-equivalent yields in accordance with accepted financial practice, and (b) interpolating linearly between (1) the actively traded benchmark Swiss Government bonds with the maturity closest to and greater than the Remaining Average Life of such Called Principal, and (2) the actively traded benchmark Swiss Government bonds with the maturity closest to and less than the Remaining Average Life of such Called Principal.

“ Recognized British Government Bond Market Makers ” means two internationally recognized dealers of gilt edged securities reasonably selected by PIM.

“ Recognized Canadian Government Bond Market Makers ” means two internationally recognized dealers of Canadian Government bonds reasonably selected by PIM.

“ Recognized German Bund Market Makers ” means two internationally recognized dealers of German Bunds reasonably selected by PIM.

“ Recognized Swiss Government Bond Market Makers ” means two internationally recognized dealers of Swiss Government bonds reasonably selected by PIM.

“ Reinvestment Yield ” means, with respect to the Called Principal of any Note denominated in (i) Dollars, 0.50% plus the Implied Dollar Yield, (ii) British Pounds, the Implied British Pound Yield, (iii) Canadian Dollars, the Implied Canadian Dollar Yield, (iv) Euros, the Implied Euro Yield, and (v) Swiss Francs, the Implied Swiss Franc Yield. The Reinvestment Yield will be rounded to that number of decimals as appears in the coupon for the applicable Note.

“ Remaining Average Life ” means, with respect to any Called Principal, the number of years (calculated to the nearest one-twelfth year) obtained by dividing (i) such Called Principal into (ii) the sum of the products obtained by multiplying (a) the principal component of each Remaining Scheduled Payment with respect to such Called Principal by (b) the number of years (calculated to the nearest one-twelfth year) that will elapse between the Settlement Date with respect to such Called Principal and the scheduled due date of such Remaining Scheduled Payment.

 

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“ Remaining Scheduled Payments ” means, with respect to the Called Principal of any Note, all payments of such Called Principal and interest thereon that would be due after the Settlement Date with respect to such Called Principal if no payment of such Called Principal were made prior to its scheduled due date; provided that if such Settlement Date is not a date on which interest payments are due to be made under the terms of the Notes, then the amount of the next succeeding scheduled interest payment will be reduced by the amount of interest accrued to such Settlement Date and required to be paid on such Settlement Date pursuant to Section 8.2 or Section 13.1.

“ Settlement Date ” means, with respect to the Called Principal of any Note, the date on which such Called Principal is to be prepaid pursuant to Section 8.2, or has become or is declared to be immediately due and payable pursuant to Section 13.1, as the context requires.

 

9	A FFIRMATIVE C OVENANTS

During the Issuance Period and for so long thereafter as any of the Notes are outstanding or any amounts owing under the Transaction Documents remain unpaid, each Credit Party covenants that it will:

9.1 Compliance with Laws, Etc. Comply, and cause each of its Subsidiaries to comply, in all material respects, with all applicable laws, rules, regulations and orders, such compliance to include, without limitation, compliance with ERISA and the Racketeer Influenced and Corrupt Organizations Chapter of the Organized Crime Control Act of 1970; provided , however , that the failure to comply with the provisions of this Section 9.1 shall not constitute a default hereunder so long as such non-compliance is the subject of a Good Faith Contest.

9.2 Payment of Taxes, Etc. Pay and discharge, and cause each of its Subsidiaries to pay and discharge, before the same shall become delinquent, (i) all taxes, assessments and governmental charges or levies imposed upon it or upon its property, and (ii) all lawful claims that, if unpaid, might by law become a Lien upon its property; provided , however , that neither the Credit Parties nor any of their Subsidiaries shall be required to pay or discharge any such tax, assessment, charge or claim that is the subject of a Good Faith Contest, unless and until any Lien resulting therefrom attaches to its property and becomes enforceable by the holder of such Lien.

9.3 Compliance with Environmental Laws. (i) Comply, and cause each of its Subsidiaries to comply, and to take commercially reasonably steps to ensure that all lessees and other Persons operating or occupying its properties to comply, in all material respects, with all applicable Environmental Laws and Environmental Permits, except where such non-compliance could not reasonably be expected to result in a Material Adverse Effect; (ii) obtain and renew and cause each of its Subsidiaries to obtain and renew all Environmental Permits necessary for its operations and properties, except where failure to do so could not reasonably be expected to result in a Material Adverse Effect; and (iii) conduct, and cause each of its Subsidiaries to conduct, any investigation, study, sampling and testing, and undertake any cleanup, removal, remedial or other action necessary to remove and clean up all Hazardous Materials from any of its properties, in accordance with the requirements of all Environmental Laws, except where failure to do the same could not reasonably be expected to result in a Material Adverse Effect; provided , however , that neither the Credit Parties nor any of their Subsidiaries shall be required to undertake any such cleanup, removal, remedial or other action to the extent that its obligation to do so is the subject of a Good Faith Contest.

 

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9.4 Maintenance of Insurance. Maintain, and cause each of its Subsidiaries to maintain, insurance with responsible and reputable insurance companies or associations in such amounts and covering such risks as is usually carried by companies engaged in similar businesses and owning similar properties in the same general areas in which such Credit Party or such Subsidiaries operate.

9.5 Preservation of Partnership or Corporate Existence, Etc. Preserve and maintain, and cause each of its Subsidiaries to preserve and maintain, its existence (corporate or otherwise), legal structure, legal name, rights (charter and statutory), permits, licenses, approvals, privileges and franchises, except, in the case of Subsidiaries of the Company only, if in the reasonable business judgment of such Subsidiary it is in its best economic interest not to preserve and maintain such rights or franchises and such failure to preserve such rights or franchises is not reasonably likely to result in a Material Adverse Effect (it being understood that the foregoing shall not prohibit, or be violated as a result of, any transactions by or involving any Credit Party or Subsidiary thereof otherwise permitted under Section 10.4 or Section 10.5 below).

9.6 Visitation Rights. At any reasonable time and from time to time, permit any Significant Holder, or any agent or representatives thereof (in each case at such Significant Holder’s expense other than during the continuance of an Event of Default) to examine and make copies of and abstracts from the records and books of account of, and visit the properties of, any Credit Party and any of its Subsidiaries, and to discuss the affairs, finances and accounts of any Credit Party and any of its Subsidiaries with any of their general partners, managing members, officers or directors.

9.7 Keeping of Books. Keep, and cause each of its active Subsidiaries to keep, proper books of record and account, in which full and correct entries shall be made of all financial transactions and the assets and business of such Credit Party and each such Subsidiary in accordance with generally accepted accounting principals as in effect from time to time in the United States of America.

9.8 Maintenance of Properties, Etc. Maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, all of its properties that are used or useful in the conduct of its business in good working order and condition, ordinary wear and tear excepted and will from time to time make or cause to be made all appropriate repairs, renewals and replacement thereof except where failure to do so would not have a Material Adverse Effect.

9.9 Transactions with Affiliates and Excluded Subsidiaries. Conduct, and cause each of its Subsidiaries to conduct, all transactions with any of their Affiliates (other than transactions exclusively among or between the Credit Parties) or with any Excluded Subsidiary on terms that are fair and reasonable and no less favorable to such Credit Party or such Subsidiary than it would obtain at the time in a comparable arm’s-length transaction with a Person not an Affiliate.

 

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9.10 Covenant to Guarantee Obligations. Each applicable Credit Party shall, in each case at its expense:

(a) Within 15 days after any Excluded Subsidiary Agreement terminates or otherwise becomes ineffective as to the Excluded Subsidiary party to such agreement, cause such Excluded Subsidiary (other than a Foreign Subsidiary) to duly execute and deliver to the holders of Notes a Joinder to Multiparty Guaranty in substantially the form of Exhibit E , or such other guaranty supplement in form and substance satisfactory to the Required Holders, guaranteeing the obligations of the other Credit Parties under the Transaction Documents, unless such Excluded Subsidiary (or a related Excluded Subsidiary) shall incur Non-Recourse Debt permitted under Section 10.2(b)(vii) within 60 days after the termination of such Excluded Subsidiary Agreement, and in such case the agreement in respect of such Non-Recourse Debt shall be deemed to be an Excluded Subsidiary Agreement and the Company shall promptly deliver to each Significant Holder an amended Schedule 5.20 that sets forth such agreement in respect of such Non-Recourse Debt opposite the name of such Excluded Subsidiary.

(b) Within 15 days after the formation or acquisition of any new direct or indirect Subsidiary (other than a Foreign Subsidiary) by any Credit Party, cause each such Subsidiary (other than a Subsidiary (x) that is prohibited by the terms of any loan agreement or indenture or other agreement to which it or a related Excluded Subsidiary is a party (or a default under any such agreement would result therefrom) from providing guarantees of the obligations of the Credit Parties under the Transaction Documents, (y) that is being formed with the intent to incur Non-Recourse Debt permitted under Section 10.2(b)(vii) in respect of Assets that are not Unencumbered Assets, or (z) that is inactive or holds de minimis assets (any Subsidiary described in clauses (x), (y) or (z) of this parenthetical, a “ Limited Subsidiary ”)), and cause each direct and indirect parent of such Subsidiary that is not a Limited Subsidiary (if it has not already done so), to duly execute and deliver to the holders of Notes a Joinder to Multiparty Guaranty in substantially the form of Exhibit E hereto, or such other guaranty supplement in form and substance satisfactory to the Required Holders, guaranteeing the other Credit Parties’ obligations under the Transaction Documents, provided that upon the formation or acquisition of any Limited Subsidiary, each such Limited Subsidiary shall be deemed to be an Excluded Subsidiary and each such loan agreement or indenture or other material agreement (if any) that restricts such Limited Subsidiary from providing guarantees of the obligations of the Credit Parties under the Transaction Documents shall be deemed to be an Excluded Subsidiary Agreement, and the Company shall promptly deliver to each Significant Holder an amended Schedule 5.20 that sets forth such agreements or indentures in respect of such Non-Recourse Debt opposite the name of such Limited Subsidiary.

9.11 Additional Unencumbered Assets. Within 10 days after any request by the Company that any Asset (a “ Proposed Unencumbered Asset ”) be added as an Unencumbered Asset, in each case at the Company’s expense, furnish to each Significant Holder the following items:

(a) confirmation that the Credit Parties are in compliance with the covenants contained in Section 11 (both immediately before and on a pro-forma basis immediately after the addition of such Proposed Unencumbered Asset as an Unencumbered Asset), evidenced by a certificate of the Chief Financial Officer (or other Responsible Officer) of the Company delivered to each Significant Holder prior to such addition demonstrating such compliance;

 

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(b) a certificate of the Chief Financial Officer (or other Responsible Officer) of the Company confirming that (i) such Proposed Unencumbered Asset has become an Unencumbered Asset pursuant to the requirements of the Revolving Credit Agreement, and (ii) such Asset satisfies all Unencumbered Asset Conditions (or, in the event that all Unencumbered Asset Conditions are not satisfied, specifying the Unencumbered Asset Conditions that are not satisfied, in which case such Proposed Unencumbered Asset shall not become an Unencumbered Asset unless the Required Holders shall have expressly consented in writing to the addition of such Proposed Unencumbered Asset as an Unencumbered Asset); and

(c) a revised Schedule II hereto reflecting the addition of such Proposed Unencumbered Asset.

9.12 Performance of Material Contracts. Perform and observe in all material respects all the terms and provisions of each Material Contract to be performed or observed by it, maintain each such Material Contract in full force and effect, enforce in all material respects each such Material Contract in accordance with its terms, take all such action to such end as may be from time to time reasonably requested by the Required Holders and, upon request of the Required Holders, make to each other party to each such Material Contract such demands and requests for information and reports or for action as any Credit Party or any of its Subsidiaries is entitled to make under such Material Contract, and cause each of its Subsidiaries to do so.

9.13 Maintenance of REIT Status. In the case of the Parent Guarantor, at all times, conduct its affairs and the affairs of its Subsidiaries in a manner so as to continue to qualify as a REIT and not terminate or revoke its election to be treated as a REIT under all applicable laws, rules and regulations.

9.14 NYSE Listing. In the case of the Parent Guarantor, at all times cause its common shares to be duly listed on the New York Stock Exchange or other national stock exchange.

9.15 Sarbanes-Oxley. Comply at all times with all applicable provisions of Section 402(a) of Sarbanes-Oxley, except where the failure to so comply could not reasonably be expected to result in a Material Adverse Effect.

9.16 Certain Excluded Subsidiaries. After the Series A Closing Day, (i) use best efforts to obtain such consents of lenders as may be required to permit those Subsidiaries (other than a Foreign Subsidiary) presently designated as Excluded Subsidiaries solely on the basis of restrictive provisions in their charters to become Guarantors hereunder, and (ii) within 10 days after obtaining any such required consents, (x) cause the applicable Subsidiary to execute and deliver to each holder of Notes a Joinder to Multiparty Guaranty in substantially the form of Exhibit E hereto, or such other guaranty supplement in form and substance satisfactory to the Required Holders, guaranteeing the other Credit Parties’ obligations under the Transaction Documents, and (y) deliver or cause the applicable Subsidiary to deliver an amended Schedule 5.20 that no longer lists such Subsidiary as an Excluded Subsidiary.

9.17 Most Favored Lender. If at any time hereafter the Revolving Credit Agreement or any of the Revolving Credit Documents is modified (a) to add covenants or events of default that are not provided for in this Agreement or the other Transaction Documents, or (b) to make

 

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covenants or events of default that are contained in the Revolving Credit Agreement or the other Revolving Credit Documents immediately prior to such modification (and that are contained in this Agreement or the other Transaction Documents immediately prior to such modification) more restrictive than such covenants or events of default were immediately prior to such modification, then (a) such additional or more restrictive covenants or events of default shall immediately and automatically be incorporated by reference in this Agreement as if set forth fully herein, mutatis mutandis , effective as of the time when such additional or more restrictive covenants or events of default become effective under the Revolving Credit Agreement or the other Revolving Credit Documents, and no such provision may thereafter be waived, amended or modified under this Agreement except pursuant to the provisions of Section 18.1, and (b) the Company shall promptly, and in any event within 5 Business Days of entering into any such modification, so advise each Significant Holder in writing. Thereafter, upon the request of the Required Holders, the Credit Parties shall enter into an amendment to this Agreement evidencing the incorporation of such incremental or more restrictive covenant or event of default.

9.18 Information Required by Rule 144A. Upon the request of any Significant Holder, provide to such holder, and to any Qualified Institutional Buyer designated by such holder, such financial and other information as such holder may reasonably determine to be necessary in order to permit compliance with the information requirements of Rule 144A under the Securities Act in connection with the resale of Notes, except at such times as the Parent Guarantor is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act.

 

10	N EGATIVE C OVENANTS .

During the Issuance Period and for so long thereafter as any of the Notes are outstanding or any amounts owing under the Transaction Documents remain unpaid, each Credit Party covenants that it will not, at any time:

10.1 Liens, Etc. Create, incur, assume or suffer to exist, or permit any of its Subsidiaries to create, incur, assume or suffer to exist, any Lien on or with respect to any of its properties of any character (including, without limitation, accounts) whether now owned or hereafter acquired, or sign or file or suffer to exist, or permit any of its Subsidiaries to sign or file or suffer to exist, under the Uniform Commercial Code of any jurisdiction, a financing statement (other than such financing statements filed solely as a precaution in respect of true leases entered in the ordinary course of business) that names such Credit Party or any of its Subsidiaries as debtor, or sign or suffer to exist, or permit any of its Subsidiaries to sign or suffer to exist, any security agreement authorizing any secured party thereunder to file such financing statement, or assign, or permit any of its Subsidiaries to assign, any accounts or other right to receive income, except, in the case of the Credit Parties (other than the Parent Guarantor) and their respective Subsidiaries:

(a) Permitted Liens;

(b) Liens existing on the date hereof and described on Schedule 10.1 ;

 

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(c) purchase money Liens upon or in equipment acquired or held by such Credit Party or any of its Subsidiaries in the ordinary course of business to secure the purchase price of such equipment or to secure Debt incurred solely for the purpose of financing the acquisition of any such equipment to be subject to such Liens, or Liens existing on any such equipment at the time of acquisition (other than any such Liens created in contemplation of such acquisition that do not secure the purchase price), or extensions, renewals or replacements of any of the foregoing for the same or a lesser amount; provided , however, that no such Lien shall extend to or cover any property other than the equipment being acquired, and no such extension, renewal or replacement shall extend to or cover any property not theretofore subject to the Lien being extended, renewed or replaced; and provided , further , that the aggregate principal amount of the Debt secured by Liens permitted by this clause (c) shall not exceed the amount permitted under Section 10.2(b)(ii) at any time outstanding;

(d) Liens arising in connection with Capitalized Leases permitted under Section 10.2(b)(iii), provided that no such Lien shall extend to or cover any assets other than the assets subject to such Capitalized Leases;

(e) Liens on property of a Person existing at the time such Person is acquired by, merged into or consolidated with any Credit Party or any Subsidiary of any Credit Party or becomes a Subsidiary of any Credit Party, provided that such Liens were not created in contemplation of such merger, consolidation or acquisition and do not extend to any assets other than those of the Person so merged into or consolidated with such Credit Party or such Subsidiary or acquired by such Credit Party or such Subsidiary;

(f) other Liens securing Non-Recourse Debt permitted under Section 10.2(b)(vii);

(g) the replacement, extension or renewal of any Lien permitted by clause (c) or (e) above upon or in the same property theretofore subject thereto or the replacement, extension or renewal of the Debt secured thereby;

(h) Liens on property of the Company or its Subsidiaries (other than Unencumbered Assets) securing Debt under the Revolving Credit Documents so long as no Default or Event of Default arises therefrom; and

(i) other Liens incurred in the ordinary course of business with respect to obligations in an amount not to exceed $3,000,000 in the aggregate at any time.

10.2 Debt. Create, incur, assume or suffer to exist, or permit any of its Subsidiaries to create, incur, assume or suffer to exist, any Debt, except:

(a) (y) in the case of any Credit Party or any Subsidiary of a Credit Party, Debt owed to any other Credit Party or any wholly-owned Subsidiary of any Credit Party (other than an Excluded Subsidiary), provided that, in each case, such Debt (1) shall be on terms acceptable to the Administrative Agent (or, during the continuance of an Event of Default, the Required Holders), and (2) shall be evidenced by promissory notes in form and substance satisfactory to the Administrative Agent (or, during the continuance of an Event of Default, the Required Holders), which promissory notes shall (unless payable to the Company) by their terms be subordinated to the obligations of the Credit Parties evidenced by the Notes and under the other Transaction Documents, and (z) in the case of any Excluded Subsidiary, Debt owed to any other Excluded Subsidiary;

 

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(b) in the case of each Credit Party (other than the Parent Guarantor) or its Subsidiaries,

(i) Debt under the Transaction Documents,

(ii) Debt secured by Liens permitted by Section 10.1(c) not to exceed in the aggregate $7,500,000 at any time outstanding,

(iii) (1) Capitalized Leases (other than with respect to Real Property) not to exceed in the aggregate $25,000,000 at any time outstanding, and (2) in the case of Capitalized Leases (other than with respect to Real Property) to which any Subsidiary of a Credit Party is a party, Debt of such Credit Party of the type described in clause (a) of the definition of “Debt” guaranteeing the obligations of such Subsidiary under such Capitalized Leases,

(iv) [intentionally omitted],

(v) Debt in respect of Hedge Agreements designed to hedge against fluctuations in interest rates or foreign exchange rates incurred in the ordinary course of business and consistent with prudent business practice,

(vi) Unsecured Debt incurred in the ordinary cou