EX-10.78 6 a2069604zex-10_78.htm EXHIBIT 10.78
QuickLinks -- Click here to rapidly navigate through this document

Exhibit 10.78

EXECUTION COPY

PARTICIPATION AGREEMENT

dated as of September 26, 2001

among

ADOBE SYSTEMS INCORPORATED
as Lessee and Construction Agent,

SELCO SERVICE CORPORATION
Doing Business in California as
OHIO SELCO SERVICE CORPORATION) as Lessor,

VICTORY RECEIVABLES CORPORATION
as Note Purchaser,

THE VARIOUS FINANCIAL INSTITUTIONS PARTIES HERETO
as Liquidity Banks,

THE BANK OF TOKYO-MITSUBISHI, LTD., NEW YORK BRANCH,
as Conduit Agent

and

KEYBANK NATIONAL ASSOCIATION
as Administrative Agent,

with

KEY GLOBAL FINANCE,
as Structuring Agent.

Lease Financing of Office Tower
Located in City of San Jose, Santa Clara County, California
for Adobe Systems Incorporated

Documentation Date: September 26, 2001

TABLE OF CONTENTS

		Page
ARTICLE I DEFINITIONS; INTERPRETATION
SECTION 1.1	Definitions; Interpretation	2
ARTICLE II DOCUMENTATION DATE
SECTION 2.1	Documentation Date	2
(a)	Participation Agreement	2
(b)	Lease	2
(c)	Construction Agency Agreement	2
(d)	Note Purchase Agreement	2
(e)	Note	2
(f)	Liquidity Documents; Available Liquidity Commitments	2
(g)	Assignment of Lease, Rent and CAA	2
(h)	Security and Assignment Agreement	2
(i)	Corporate Documents of the Lessee and the Construction Agent	2
(j)	Corporate Documents of the Lessor	3
(k)	Opinion of Counsel to the Construction Agent and the Lessee	3
(l)	Opinion of Counsel to the Lessor	4
(m)	Representations and Warranties	4
(n)	No Default	4
(o)	Governmental Approvals	4
(p)	Litigation	4
(q)	Requirements of Law	4
(r)	Note Purchase Agreement	4
ARTICLE III FUNDING OF ADVANCES
SECTION 3.1	Advances	5
(a)	Advances	5
(b)	Limitation on Advances	5
(c)	Acknowledgment of Advances	5
(d)	Cost Overruns	6
(e)	Force Majeure Costs	6
SECTION 3.2	Lessor's Commitment	6
SECTION 3.3	Note Purchaser's Commitment	6
SECTION 3.4	Procedures for Advances	6
(a)	General Procedures	6
(b)	Amount of Advance; Funding Dates	7
(c)	Use of Proceeds of Advances	7
(d)	Delivery of Funding Request to Lenders	7
SECTION 3.5	Facility Fees, Capitalized Interest and Capitalized Yield	7
SECTION 3.6	Completion Date Advances	8
SECTION 3.7	Commitment of the Liquidity Banks	8

ARTICLE IV CALCULATION OF BASIC RENT; YIELD; INTEREST; FEES; PAYMENT
SECTION 4.1	Calculation of Basic Rent	8
SECTION 4.2	Interest on Loans and Liquidity Loans	8
SECTION 4.3	Yield	9
SECTION 4.4	Computation of Basic Rent and Yield	10
SECTION 4.5	Prepayments	10
(a)	Voluntary Prepayments	10
(b)	Mandatory Prepayments	10
(c)	Notice	10
SECTION 4.6	Fees	10
(a)	Facility Fees	11
(b)	Upfront Fee	11
(c)	Note Purchaser Unused Fee	11
SECTION 4.7	Place and Manner of Payments	11
SECTION 4.8	Certain Rights of Participants	11
SECTION 4.9	Accounting Terms; Computations	12
SECTION 4.10	Payments of Rent	12
SECTION 4.11	Late Payments; Default Rate	12
SECTION 4.12	Mandatory Repayment	12
ARTICLE V CERTAIN INTENTIONS OF THE PARTIES
SECTION 5.1	Intent	13
SECTION 5.2	Amounts Due Under Lease	13
ARTICLE VI CONDITIONS TO CLOSING DATE; FUNDING DATES; COMPLETION DATE
SECTION 6.1	Closing Date	14
(a)	Funding Request	14
(b)	Ground Lease	14
(c)	Memorandum of Lease	14
(d)	Mortgages	14
(e)	Financing Statements; UCC, Tax and Judgment Lien Searches	14
(f)	Recordation of Ground Lease, Memorandum of Lease, Lessor Mortgage, UCC Financing Statements and Assignment of Lease, Rent and CAA	15
(g)	Construction Contract	15
(h)	Consent and Acknowledgments	15
(i)	Title Insurance	15
(j)	Architect's Certificate	15
(k)	Construction Budget	15
(l)	Governmental Approvals	16
(m)	Authorized Officer's Certificates	16

(n)	Opinions of Counsel	16
(o)	Appraisal	16
(p)	Evidence of Insurance	16
(q)	Environmental Audit	16
(r)	Delivery of Financial Statements	17
(s)	Survey	17
(t)	Litigation	17
(u)	Representations and Warranties	17
(v)	Limitation on Advances	17
(w)	Taxes	17
(x)	No Default	17
(y)	Fees	17
(z)	Note Purchase Agreement	17
(aa)	Liquidity Documents	17
SECTION 6.2	Funding Dates	18
(a)	Funding Request	18
(b)	Representations and Warranties	18
(c)	No Default	18
(d)	Fees	18
(e)	Limitation on Advances	18
(f)	Taxes	18
(g)	Note Purchase Agreement	18
(h)	Liquidity Documents	18
SECTION 6.3	Conditions to Completion Date	18
SECTION 6.4	Lessee's Covenants in Connection with Completion	19
(a)	Title Update	19
(b)	Permits	19
(c)	Permanent Certificate of Occupancy	19
(d)	Certain Construction Agency Agreement Covenants	19
ARTICLE VII DISTRIBUTIONS
SECTION 7.1	Basic Rent	19
SECTION 7.2	Purchase Payments by the Lessee	19
SECTION 7.3	Payment of Maximum Recourse Amount	20
SECTION 7.4	Sales Proceeds of Remarketing of Property	20
SECTION 7.5	Certain Construction Period Payments	21
SECTION 7.6	Distribution of Payments After Lease Event of Default or CAA Event of Default	22
SECTION 7.7	Casualty and Condemnation Amounts	22
SECTION 7.8	Liquidated Damages; Payments Under Performance Bonds	23
SECTION 7.9	Supplemental Rent	23
SECTION 7.10	Other Payments	23

iii

SECTION 7.11	Order of Application	23
SECTION 7.12	Payments to Account	23
SECTION 7.13	Pro Rata Treatment	23
SECTION 7.14	Sharing of Payments	24
ARTICLE VIII REPRESENTATIONS
SECTION 8.1	Representations of the Obligors	24
(a)	Due Incorporation, Qualification, etc	24
(b)	Authority	24
(c)	Enforceability	25
(d)	Non-Contravention	25
(e)	Approvals	25
(f)	No Violation or Default	25
(g)	Litigation	25
(h)	Title; Possession Under Leases	25
(i)	Financial Statements	26
(j)	Equity Securities	26
(k)	No Agreements to Sell Assets, Etc	26
(l)	Employee Benefit Plans	26
(m)	Other Regulations	27
(n)	Patent and Other Rights	27
(o)	Governmental Charges	27
(p)	Margin Stock	27
(q)	Subsidiaries, Etc	27
(r)	Solvency, Etc	27
(s)	Catastrophic Events	27
(t)	No Material Adverse Effect	28
(u)	Accuracy of Information Furnished	28
(v)	Appraisal Data	28
(w)	Construction of Property	28
(x)	No Proceedings with Respect to Property	28
(y)	Separate Parcel	28
(z)	Utilities	28
(aa)	Access, Rights-of-Way, etc	29
(bb)	Necessary Permits	29
(cc)	Title	29
(dd)	Perfection of Liens	29
(ee)	No Transfer Taxes	29
(ff)	No Casualty	29
(gg)	Insurance	29
(hh)	Flood Hazard Areas	29
(ii)	Notes, Offer of Securities, etc	30
SECTION 8.2	Representations of the Lessee and the Construction Agent with Respect to each Funding Date	30
(a)	Representations and Warranties	30
(b)	Improvements	30
(c)	Liens	30

(d)	Advance	30
SECTION 8.3	Warranties and Representations of the Lessor	30
SECTION 8.4	Representations of the Lenders	32
(a)	Source of Funds	32
(b)	Status	32
(c)	Acquisition for Investment	32
(d)	Lessor Liens	32
(e)	Offer of Securities, etc	32
(f)	No Registration	32
(g)	Institutional Investor	32
ARTICLE IX COVENANTS
SECTION 9.1	Affirmative Covenants	33
(a)	Financial Statements, Reports, etc	33
(b)	Books and Records	34
(c)	Inspections	34
(d)	Insurance	34
(e)	Governmental Charges and Other Indebtedness	35
(f)	Use of Proceeds	35
(g)	General Business Operations	35
(h)	Pari Passu Ranking	35
(i)	Separate Parcel	35
(j)	Notices In Respect of Ground Lease, etc	35
SECTION 9.2	Negative Covenants	35
(a)	Indebtedness	35
(b)	Liens	36
(c)	Asset Dispositions	38
(d)	Mergers, Acquisitions, Etc	38
(e)	Investments	39
(f)	Dividends, Redemptions, Etc	40
(g)	Change in Business	40
(h)	Employee Benefit Plans	41
(i)	Transactions With Affiliates	41
(j)	Accounting Changes	41
SECTION 9.3	Financial Covenants	41
(a)	Quick Ratio	41
(b)	Debt/EBITDA Ratio	41
(c)	Fixed Charge Coverage Ratio	41
ARTICLE X GROUND LEASE
SECTION 10.1	Ground Lease	42
ARTICLE XI LESSEE DIRECTIONS EXTENSION OF MATURITY DATE; LESSOR SECURITY
SECTION 11.1	Right of Lessee	42

SECTION 11.2	Maturity Date Extension; Basic Term Extension	42
(a)	Extension of Original Maturity Date	42
(b)	Basic Term Extension	43
(c)	New Credit Decision	43
SECTION 11.3	Replacement of Non-Consenting Participants	44
SECTION 11.4	Election to Refinance Loans	44
SECTION 11.5	Replacement of Note Purchaser	45
ARTICLE XII TRANSFERS OF PARTICIPANTS' INTERESTS
SECTION 12.1	Assignments by Participants	46
(a)	Assignments by Liquidity Banks	46
(b)	Assignments by Lessor	46
(c)	Effectiveness of Assignments	46
(d)	Assignments by the Note Purchaser	47
SECTION 12.2	Participations	47
SECTION 12.3	Pledge Under Regulation A	47
SECTION 12.4	Acknowledgment of Assignment of Lease, Rent and CAA	48
ARTICLE XIII INDEMNIFICATION
SECTION 13.1	General Indemnification	48
(a)	Construction Period	48
(b)	Basic Lease Term	48
(c)	Exclusions from General Indemnity	50
(d)	No Guaranty of Residual Value	50
SECTION 13.2	End of Term Indemnity	50
SECTION 13.3	Environmental Indemnity	51
SECTION 13.4	Proceedings in Respect of Claims	52
SECTION 13.5	General Tax Indemnity	53
(a)	Indemnification	53
(b)	Contests	53
(c)	Payments	55
(d)	Reports	56
(e)	Tax Ownership	56
(f)	Disclosure	56
(g)	Separate Agreement	57
SECTION 13.6	Indemnity Payments in Addition to Lease Obligations	57
SECTION 13.7	Illegality	57
SECTION 13.8	Inability to Determine Rates	57
SECTION 13.9	Increased Costs	58
SECTION 13.10	Funding Losses	58

SECTION 13.11	Capital Requirements	59
SECTION 13.12	Mitigation	59
SECTION 13.13	Taxes on Payments	59
(a)	Payments Free of Taxes	59
(b)	Withholding Exemption Certificates	61
(c)	Mitigation	61
(d)	Tax Returns	61
SECTION 13.14	Survival	61
ARTICLE XIV PAYMENT OF CERTAIN EXPENSES
SECTION 14.1	Payment of Costs and Expenses	62
SECTION 14.2	Brokers' Fees and Stamp Taxes	62
SECTION 14.3	Note Purchase Agreement and Related Obligations	62
ARTICLE XV THE ADMINISTRATIVE AGENT
SECTION 15.1	Appointment	62
SECTION 15.2	Delegation of Duties	63
SECTION 15.3	Exculpatory Provisions	63
SECTION 15.4	Reliance by Administrative Agent	63
SECTION 15.5	Notice of Default	63
SECTION 15.6	Non-Reliance on Administrative Agent and Other Participants	64
SECTION 15.7	Indemnification	64
SECTION 15.8	Administrative Agent in Its Individual Capacity	64
SECTION 15.9	Successor Administrative Agent	65
SECTION 15.10	Eligibility of the Administrative Agent	65
ARTICLE XVI MISCELLANEOUS
SECTION 16.1	Survival of Agreements	65
SECTION 16.2	No Broker, etc	65
SECTION 16.3	Notices	66
SECTION 16.4	Counterparts	66
SECTION 16.5	Amendments	66
SECTION 16.6	Headings, etc	67
SECTION 16.7	Parties in Interest	67
SECTION 16.8	GOVERNING LAW	67
SECTION 16.9	Severability	68

vii

SECTION 16.10	Liability Limited	68
SECTION 16.11	Further Assurances	68
SECTION 16.12	SUBMISSION TO JURISDICTION	69
SECTION 16.13	Setoff	69
SECTION 16.14	WAIVER OF JURY TRIAL	69
SECTION 16.15	Limitations on Recourse to Note Purchaser	69
SECTION 16.16	Bankruptcy	70
SECTION 16.17	Assignment of Note Purchaser's Interest in Note Purchase Agreement to Liquidity Banks	70

viii

*SCHEDULES*
SCHEDULE I		Commitments
SCHEDULE II		Notice Information, Wire Instructions, and Funding Offices
SCHEDULE III		Description of Land
SCHEDULE IV		Disclosure Schedule
*EXHIBITS*
EXHIBIT A-1		Form of Closing Date Notice
EXHIBIT A-2		Form of Advance Request
EXHIBIT B		Form of Authorized Officer's Certificate of Construction Agent and Lessee
EXHIBIT C		Form of Consent and Acknowledgment
EXHIBIT D		Form of Compliance Certificate
EXHIBIT E-1		Form of Lessor Mortgage
EXHIBIT E-2		Form of Lender Mortgage
EXHIBIT F-1		Form of Opinion of Special Counsel to Lessee and Construction Agent
EXHIBIT F-2		Form of Internal Opinion of Lessee and Construction Agent
EXHIBIT F-3		Form of Opinion of Special Counsel to Lessor
EXHIBIT F-4		Form of Opinion of Thompson Hine & Flory LLP
EXHIBIT F-5		Form of Local Counsel to Lessee and Construction Agent
*APPENDIX A*		Definitions

PARTICIPATION AGREEMENT

THIS PARTICIPATION AGREEMENT (this "Participation Agreement"), dated as of September 26, 2001, is entered into by and among ADOBE SYSTEMS INCORPORATED, a Delaware corporation ("Adobe"), as the Lessee (in such capacity, the "Lessee"); Adobe, as the Construction Agent (in such capacity, the "Construction Agent"); SELCO SERVICE CORPORATION, an Ohio corporation doing business in California as Ohio SELCO Service Corporation, as Lessor (together with its permitted successors and assigns, the "Lessor"); VICTORY RECEIVABLES CORPORATION, a Delaware Corporation, as the Note Purchaser (together with its permitted successors and assigns, the "Note Purchaser"); THE VARIOUS FINANCIAL INSTITUTIONS AS ARE OR MAY FROM TIME TO TIME BECOME PARTIES TO THE LIQUIDITY AGREEMENT referenced herein, as the Liquidity Banks (together with their respective permitted successors and assigns, the "Liquidity Banks"); THE BANK OF TOKYO-MITSUBISHI, LTD., NEW YORK BRANCH, as conduit agent for the Note Purchaser (the "Conduit Agent"); and KEYBANK NATIONAL ASSOCIATION, as administrative agent for the Participants