EXHIBIT 10.10
THE CITY OF SYRACUSE INDUSTRIAL DEVELOPMENT AGENCY
AND
PROJECT ORANGE ASSOCIATES, L.P.
-------------------------------------------
LEASE AND SUBLEASE AGREEMENT
-------------------------------------------
Dated as of April 5, 1991
The City of Syracuse Industrial Development Agency (the "Issuer") has
Granted a Security Interest in Certain Rights of the Issuer Under This
Lease and Sublease Agreement and Certain Monies Due, and to Become
Due, to the Issuer Hereunder, Have Been Assigned to Algemene Bank,
Nederland, N.V., Cayman Islands Branch (the "Agent"), as Agent for the
benefit of the Banks ("Banks") pursuant to certain Mortgages (the
"Mortgages") each dated as of April 5, 1991, from the Issuer to the
Agent.
City of Syracuse Industrial Development Agency
1991 Taxable Industrial Development Revenue Bond
(Project Orange Associates, L.P. Project)
TABLE OF CONTENTS
Page
----
ARTICLE I............................................................ 5
Definitions..................................................... 5
1.1 Definitions...................................... 5
1.2 Interpretation................................... 5
ARTICLE II........................................................... 7
Representations And Covenants................................... 7
2.1 Representations and Warranties of the Issuer..... 7
2.2 Representations and Warranties of the
Guarantor........................................ 9
2.3 Covenants of the Issuer.......................... 14
2.4 Covenants of the Guarantor....................... 15
ARTICLE III.......................................................... 17
3.1 Use of Project................................... 17
ARTICLE IV........................................................... 17
Construction and Operation of the Project; Loans from
Banks; Use of Loan Proceeds.................................... 17
4.1 Development, Acquisition, Construction and
Operation of the Project......................... 17
4.2 Guarantor to Obtain Loans........................ 18
i
Page
----
4.3 Completion by Guarantor......................... 18
4.4 Remedies Against Contractors, Subcontractors,
Materialmen, and their Sureties................. 19
ARTICLE V............................................................ 20
Sublease of the Leased Premises and Outside Easements,
Lease of the City Easements and Construction of the
Project.................................................... 20
5.1 Lease and Sublease.............................. 20
5.2 Use and Operation of Project.................... 20
5.3 Incorporation of Ground Lease................... 21
ARTICLE VI........................................................... 21
Term of Lease; Conveyance of Project 21
6.1 Term............................................ 21
6.2 Earlier Conveyance of Project................... 21
6.3 Ultimate Conveyance of Project.................. 23
ARTICLE VII.......................................................... 25
Rental Obligations and Issuer's Fee 25
7.1 Rent............................................ 25
7.2 Issuer's Fee.................................... 26
7.3 Obligations of Guarantor Unconditional.......... 26
ii
Page
----
ARTICLE VIII......................................................... 28
Maintenance, Modifications, Taxes, and Insurance..................... 28
8.1 Maintenance and Operation of Project................. 28
8.2 Taxes, Assessments, and Utility Charges.............. 28
8.3 Insurance Required................................... 29
8.4 Application of Insurance Proceeds.................... 29
ARTICLE IX........................................................... 30
Damage, Destruction, and Condemnation................................ 30
9.1 Damage or Destruction................................ 30
9.2 Condemnation......................................... 31
9.3 Additions to Project................................. 31
9.4 Repairs and Restoration.............................. 32
ARTICLE X............................................................ 32
Special Covenants.................................................... 32
10.1 Covenant of Quiet Enjoyment.......................... 32
10.2 No Warranty of Condition or Suitability by
the Issuer; Acceptance "As Is."...................... 32
10.3 Indemnification...................................... 33
10.4 Right of Access to Project........................... 38
10.5 Maintenance of Existence............................. 38
10.6 Agreement to Provide Information..................... 38
iii
Page
----
10.7 Compliance With Orders, Ordinances, Etc............. 39
10.8 Liens and Encumbrances.............................. 40
10.9 Performance by Issuer of Guarantor's
Obligations......................................... 41
10.10 Compliance with Clean-Up Laws....................... 42
ARTICLE XI............................................................. 43
Assignments; Merger of Issuer..................................... 43
11.1 Assignment of Lease and Guarantor's
Interest in the Project............................. 43
11.2 Pledge and Assignment of Issuer's Interests
to the Agent........................................ 44
11.3 Merger of Issuer.................................... 44
11.4 Lease of Project; Sale of Equipment................. 45
ARTICLE XII............................................................ 46
Events of Default and Remedies.................................... 46
12.1 Events of Default Defined........................... 46
12.2 Remedies............................................ 46
12.3 No Additional Waiver Implied by One Waiver.......... 47
ARTICLE XIII........................................................... 47
Miscellaneous..................................................... 47
13.1 Notices............................................. 47
iv
Page
----
13.2 Binding Effect........................................ 48
13.3 Severability.......................................... 48
13.4 Amendments, Changes, and Modifications................ 49
13.5 Execution of Counterparts............................. 49
13.6 Applicable Law........................................ 49
13.7 Recording and Filing.................................. 49
13.8 Survival of Obligations............................... 50
13.9 Table of Contents and Section Headings Not
Controlling........................................... 50
13.10 No Recourse; Special Obligation....................... 51
13.11 Subordination To Ground Lease
and Mortgages......................................... 53
EXHIBIT A.............................................................. A-1
Description of the Leased Premises
v
LEASE AND SUBLEASE AGREEMENT
LEASE AND SUBLEASE AGREEMENT, dated as of April 5, 1991 (this "Lease"), by
and between the CITY OF SYRACUSE INDUSTRIAL DEVELOPMENT AGENCY, a body corporate
and politic and a public instrumentality of the State of New York having its
principal office at 000 Xxxx Xxxx, Xxxxxxxx, Xxx Xxxx (the "Issuer"), and
PROJECT ORANGE ASSOCIATES, L.P., a Delaware limited partnership having an office
at 0000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxx Xxxxxxxx, Xxx Xxxx 00000 (the
`Guarantor").
W I T N E S S E T H:
-------------------
WHEREAS, the New York State Industrial Development Agency Act, constituting
Title I of Article 18-A of the General Municipal Law of the State of New York
(the "Enabling Act") was duly enacted into law as Chapter 1030 of the Laws of
1969 of New York State; and
WHEREAS, the Enabling Act authorizes and provides for the creation of
industrial development agencies for the benefit of the several counties, cities,
villages, and towns in the State of New York and empowers such agencies, among
other things, to acquire, construct, reconstruct, lease, improve, maintain,
equip, furnish and dispose of land and any buildings or other improvements, and
all real and personal properties, including, but not limited to, machinery and
equipment deemed necessary in connection therewith, whether or not now in
existence or under construction, which shall be suitable for manufacturing,
warehousing, research, commercial, industrial or civic purposes in order to
advance the job opportunities, health, general prosperity, and economic welfare
of the people of the State of New York and to improve their standard of living;
and
1
WHEREAS, the Enabling Act further authorizes each such agency to lease or
sell any or all of its properties, to mortgage and pledge any or all of its
properties, whether then owned or thereafter acquired, and to pledge the
revenues and receipts from the lease or sale thereof; and
WHEREAS, the Issuer was created pursuant to and in accordance with the
provisions of the Enabling Act by Chapter 641 of the Laws of 1979 the State of
New York (collectively with the Enabling Act, the "Act") and is empowered under
the Act to undertake the Project; and
WHEREAS, the Issuer, by resolution adopted on November 15, 1990, (the
"Resolution"), resolved to undertake the Project; and
WHEREAS, the Guarantor has entered into a Lease Agreement, dated February
27, 1990, between Syracuse University (the "University"), as lessor, and the
Guarantor, as lessee (such Lease, as heretofore amended, the "Ground Lease"), a
memorandum of which is to be recorded immediately prior to the recording of this
Lease or a memorandum of this Lease, pursuant to which the University leased to
the Guarantor certain real property located in the City of Syracuse, New York,
as more particularly described in Exhibit A, attached hereto (the "Leased
---------
Premises"), upon which property the Guarantor plans to construct the Facility;
and
WHEREAS, the Issuer proposes to assist the Guarantor's construction and
equipping of the Project by (i) issuing its 1991 Taxable Industrial Development
Revenue Bonds (Project Orange Associates, L.P.) (the "Bonds") in the aggregate
amount of $204,300,000 pursuant to the Act to finance certain costs incurred by
the Guarantor (A) in the acquisition of the Easements and related improvements,
including the Pipeline to be located on the Easements, (B) in the
2
construction and development on the Leased Premises and the Easements of the
Facility and the Pipeline, (C) in the acquisition and installation of the
Equipment therein, (D) to obtain a prepaid supply of natural gas for the
Project, (E) to pay the expenses anticipated to be incurred in connection with
the issuance of the Bonds, and (F) to fund a reserve for the payment of debt
service on the Bonds; (ii) appointing the Guarantor as its agent to develop and
construct the Project and purchase and install the Equipment; (iii) accepting an
assignment of the Ground Lease; (iv) accepting a conveyance of the Easements
located within the City of Syracuse, New York (the "City Easements") from the
Guarantor; (v) leasing the Easements located outside of the City of Syracuse,
New York (the "Outside Easements") from the Guarantor; (vi) entering into the
Financing Agreement, dated as of April 5, 1991, between the Guarantor, the
Issuer, the Agent and the Banks (the "Financing Agreement"); (vii) granting a
first mortgage lien, a second mortgage lien and a third mortgage lien on and a
security interest in the Issuer's interest in the Project (including, without
limitation, the Issuer's interest in the Ground Lease, the Easements, the
Pipeline, the Facility and the Equipment) and this Lease to the Algemene Bank,
Nederland, N.V., Cayman Islands Branch (the "Agent"), as agent for the benefit
of the Banks, to secure the Bonds pursuant to the Financing Agreement; and
(viii) executing and delivering such other Financing Documents as are required
under the Financing Agreement; and
WHEREAS, the Guarantor has assigned all of its right, title and interest
under the Ground Lease and the City Easements to the Issuer, and the Guarantor
has leased the Outside Easements to the Issuer pursuant to the Assignment of
Lease, the Assignment of Easements and the Lease Agreement, respectively, each
dated as of April 5, 1991 and each between the Guarantor and the Issuer;
3
WHEREAS, the Issuer proposes to sublet the Leased Premises and the Outside
Easements to the Guarantor and to lease the Facility and City Easements to the
Guarantor, and the Guarantor proposes to lease the Facility and the City
Easements, and sublease the Leased Premises and the Outside Easements from the
Issuer, pursuant to the terms and conditions herein set forth; and
WHEREAS, all things necessary to constitute this Lease as a valid and
binding agreement by and between the parties hereto in accordance with the terms
hereof have been done and performed, and the creation, execution, and delivery
of this Lease have, in all respects, been duly authorized;
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants hereinafter contained, the parties hereto hereby formally covenant,
agree, and bind themselves as follows, to wit:
ARTICLE I
DEFINITIONS
1.1 Definitions.
Unless otherwise defined herein all capitalized terms used herein have the
meanings assigned to them in the Financing Agreement.
1.2 Interpretation.
In this Lease, unless the context otherwise requires:
4
(a) The terms "hereby," "hereof," "herein," "hereunder," and any similar
terms as used in this Lease refer to this Lease; the term "heretofore" shall
mean before and the term "hereafter" shall mean after the date of this Lease;
(b) Words of masculine gender shall mean and include correlative words of
feminine and neuter genders, and words importing the singular number shall mean
and include the plural number and vice versa; and
(c) Any certificates, letters, or opinions required to be given pursuant to
this Lease shall mean a signed document attesting to or acknowledging the
circumstances, representations, opinions of law, or other matters therein stated
or set forth or setting forth matters to be determined pursuant to this Lease
unless otherwise agreed to in writing by the parties to this Lease.
(d) "Hazardous Substance" or "Hazardous Substances" means "hazardous
materials," "oil," and "petroleum products" as those terms are defined in the
Federal Resource Conservation and Recovery Act, the Federal Comprehensive
Environmental Response Compensation and Liability Act, the Federal Hazardous
Materials Transportation Act, the Federal Clean Water Act, and corresponding
state and local laws and ordinances, as such acts, laws or ordinances are
currently in effect, or from time to time amended, or as defined in any Federal,
state or local regulation currently in effect, or from time to time amended, as
adopted under such acts, laws or ordinances.
(e) "Unassigned Rights" means the rights of the Issuer and the members,
officers, agents and employees of the Issuer to indemnification from the
Guarantor under this Lease and
5
under any other Operative Document and their rights, if any, under this Lease
and any other Operative Document, to insurance proceeds which represent
compensation for any loss any of them may personally suffer or any personal
liability any of them may incur on account of or in connection with the
ownership or operation of the Project or the Issuer's obligations under this
Lease or any other Operative Document. The Unassigned Rights include, without
limitation, the Issuer's rights under Sections 2.4(a) and 10.3 of this Lease.
(f) "Auxiliary System" and "Existing Plant" have the meanings assigned to
those terms in the Operating Agreement.
ARTICLE II
REPRESENTATIONS AND COVENANTS
The Issuer hereby represents and warrants to the Guarantor as follows:
(a) The Issuer is a corporate governmental agency constituting a body
corporate and politic and a public benefit corporation duly organized, existing,
and established under the laws of the State of New York (including the Act), and
is authorized and empowered to enter into this Lease and the transactions
contemplated herein and to carry out its obligations hereunder. Based upon the
representations of the Guarantor as to the utilization of the Project, the
Project will constitute a "project," as such quoted term is defined in the Act.
By proper official action of its members, the Issuer has duly authorized the
execution and delivery of this Lease and the Issuer's participation in the
transactions contemplated hereby.
6
(b) Neither the execution and delivery of this Lease, the consummation of
the transactions contemplated hereby, nor the fulfillment of or compliance with
the provisions of the other Financing Documents to which the Issuer is a party
will conflict with or result in a breach by the Issuer of any of the terms,
conditions, or provisions of the Act, the By-Laws of the Issuer, or any order,
judgment, restriction, agreement, or instrument to which the Issuer is a party
or by which it is bound or will constitute a default by the Issuer under any of
the foregoing.
(c) The Issuer will cause the Project to be constructed and installed and
the Easements acquired and will sublease the Leased Premises and the Outside
Easements (including the Pipeline located on such Easements) to the Guarantor
and lease the Facility and the City Easements (including the Pipeline located on
such Easements) to the Guarantor pursuant to this Lease, all for the purpose of
advancing the job opportunities, health, general prosperity, and economic
welfare of the people of the State of New York and improving their standard of
living.
(d) By Resolution adopted on November 15, 1990, the Issuer determined that
based upon the review of the materials submitted, representations made by the
Guarantor relating to the Project and the findings statement (the "Findings
Statement") of the City of Syracuse, acting as lead agency pursuant to the New
York State Environmental Conservation Law (the "Lead Agency"), construction of
the Project would not have a "significant impact" on the environment within the
meaning of such quoted term under the New York State Environmental Quality
Review Act.
7
(e) The Issuer is issuing the Bonds in order to finance the development,
acquisition and construction of the Project. The Bonds mature, bear interest,
are redeemable and have the other terms and provisions set forth in the
Financing Agreement.
(f) The Financing Documents constitute, or upon their execution and
delivery in accordance with the terms thereof will constitute, valid and legally
binding obligations of the Issuer, enforceable in accordance with their
respective terms.
(g) No suit, action or arbitration, or legal, administrative or other
proceeding is pending or has been threatened against the Issuer that would
materially and adversely affect the validity or enforceability of this Lease or
the ability of the Issuer to fulfill its commitments hereunder, or that could
result in any material adverse change in the business or financial condition of
the Issuer.
The Guarantor hereby represents and warrants to the Issuer as follows:
(a) The Guarantor is a limited partnership organized and existing under the
laws of the State of Delaware, is duly authorized to do business in the State of
New York, has the power and authority to enter into this Lease and the other
Financing Documents to which it is a party and to carry out its obligations
hereunder and thereunder, and has duly authorized the execution, delivery, and
performance of this Lease and the other Financing Documents.
8
(b) The Financing Documents constitute, or upon their execution and
delivery in accordance with the terms thereof will constitute, valid and legally
binding obligations of the Guarantor, enforceable in accordance with their
respective terms.
(c) The Guarantor has caused the Ground Lease and the City Easements to be
assigned to the Issuer and has caused the Outside Easements to be leased to the
Issuer and will cause the Project to be constructed and improved all for the
purposes of promoting the prosperity and general welfare of all citizens of the
State of New York.
(d) Neither the execution and delivery of the Financing Documents to which
the Guarantor is a party, the consummation of the transactions contemplated
thereby, nor the fulfillment of or compliance with the provisions thereof will:
(1) Result in a breach of, or conflict with any term or provision in,
the Partnership Agreement or this Lease;
(2) Require any consent under (except for consents which have been
received) or result in a breach of or default under any credit agreement,
indenture, purchase agreement, mortgage, deed of trust, commitment,
guaranty, or other agreement or instrument to which the Guarantor is a
party or by which it or any interest of the Guarantor in any kind of
property or asset, whether real, personal or mixed, or tangible or
intangible (the "Property") may be bound or affected; or
(3) Conflict with or violate any existing law, rule, regulation,
judgment, order, writ, injunction, or decree of any Governmental Authority
having jurisdiction over the Guarantor or any of the Property of the
Guarantor.
9
(e) No suit, action or arbitration, or legal, administrative or other
proceeding is pending or has been threatened against the Guarantor that would
materially and adversely affect the validity or enforceability of this Lease or
the ability of the Guarantor to fulfill its commitments hereunder, or that could
result in any material adverse change in the business or financial condition of
the Guarantor.
(f) The Issuer's execution and delivery of this Lease and its participation
in the transactions contemplated hereby, including its assistance in financing a
portion of the cost of the Project:
(1) Has been an important consideration in the Guarantor's decision to
construct and equip the Project in the City of Syracuse; and
(2) Will not result in the removal of an industrial or manufacturing
plant or commercial activity of any Project occupant, other than the
Guarantor, from one area of the State of New York to another area of the
State of New York or in the abandonment of one or more plants or facilities
of any user, occupant, or proposed user or occupant of the Project, other
than the Guarantor, located within the State of New York.
(g) So long as the Issuer owns the Facility and is the lessee under the
Ground Lease and has an interest in the Project, the Project is and will
continue to be a "project" (as such quoted term is defined in the Act), and the
Guarantor will not take any action (or omit to take any action required by the
Financing Documents or which the Issuer or the Agent, together with Issuer's
counsel, advise the Guarantor in writing should be taken), or allow any action
to be
10
taken, which action (or omission) would in any way cause the Project not to
constitute a "project" (as such quoted term is defined in the Act).
(h) The City of Syracuse, acting as lead agency pursuant to the State of
New York's Environmental Conservation Law has issued a findings statement as
required by 6 NYCRR Part 617.9(c) stating that it has considered the draft
environmental impact statement, the supplemental environmental impact statement
and the final environmental impact statement prepared in connection with the
acquisition, construction and installation of the Project and has certified that
(i) the requirements of Article 8, New York State Environmental Conservation Law
and 6 NYCRR Part 617 have been met, (ii) consistent with social, economic and
other essential considerations from among the reasonable alternatives thereto,
the action approved is one which minimizes or avoids adverse environmental
effects to the maximum extent practicable, including the effects disclosed in
the environmental impact statement, and (iii) consistent with social, economic
and other essential considerations, to the maximum extent practicable, adverse
environmental effects revealed in the environmental impact statement process
will be minimized or avoided by incorporating as conditions to the Lead Agency's
decision forming the basis for the Findings Statement the mitigative measures
which were identified as practicable.
(i) The Project and the operation thereof will comply in all material
respects with all applicable building, zoning, environmental, planning, and
subdivision laws, ordinances, rules, and regulations of Governmental Authorities
having jurisdiction over the Project (the applicability of such being determined
both as if the Issuer were the owner of the Project and as if the Guarantor, and
not the Issuer, were the owner of the Project).
11
(j) Except for the Outside Easements and that part of the Pipeline
constructed on the Outside Easements, after completion of the Project no part of
the Project will be located outside of the City of Syracuse, New York.
(k) Except as disclosed in Exhibit W to the Financing Agreement or in the
Hazardous Substance Reports, as of the date hereof the Guarantor has no
knowledge of hazardous, nuclear or toxic waste or substance contamination
affecting the Leased Premises which would require remedial action under any
Clean-Up Laws (as defined in Section l0.3(a)(7)). The Guarantor has exercised
due diligence to review the report dated December 1989 entitled "Environmental
Liability Assessment, Syracuse University Steam Station" prepared by O'Brien &
Xxxx Engineers, Inc. to ascertain whether the Leased Premises are or have been
affected by the presence of any Hazardous Substances that could necessitate
taking remedial or protective action or that could cause harm to persons,
property, the environment, or the Leased Premises.
(l) The Construction Contract obligates the Contractor to: (i) hire and
employ at the Leased Premises skilled workers from the local labor force, that
being residents of the City of Syracuse and Central New York, and to exhaust
that resource of workers before those from another geographic residence are
hired to perform work at the Leased Premises; (ii) report quarterly to the
Issuer until substantial completion of the Facility, the residence of workers
employed by the Contractor at the Leased Premises, such report to identify
workers only by the zip code of their residence; (iii) cause the local labor
force hired by the Contractor who work at the Leased Premises to comprise women
and minorities whenever and wherever it is deemed practicable; (iv) pay wages to
the local labor force hired by the Contractor for work at the Leased Premises at
the hourly rate established as "prevailing wages" for their work in the Syracuse
area;
12
and (v) provide the local labor force hired by the Contractor for work at the
Leased Premises with health and welfare and pension benefits equivalent to those
established by the prevailing wage standard for their work in the Syracuse area.
The Guarantor shall use its best efforts to cause Xx. Xxxx Xxxxxx, or his
designee, to remain available as a liaison between the Issuer and the Contractor
to promote and create an amicable and harmonious relationship between the two to
insure that the Facility will be built within the prescribed time frame and
without disruption.
The Issuer, to the extent of its interest therein, shall not sell, assign,
transfer, encumber, or pledge as security the Project or any part thereof except
as contemplated or allowed by the terms of the Financing Documents.
(a) The Guarantor shall perform, or cause to be performed, for and on
behalf of the Issuer, each and every obligation of the Issuer, which is within
the control of the Guarantor, under and pursuant to the Operative Documents, and
shall defend, indemnify, and hold harmless the Issuer and its members, officers,
agents (other than the Guarantor) and employees from and against every expense,
liability, or claim arising out of the failure of the Guarantor to fulfill its
obligations under the provisions of this subsection 2.4(a).
(b) The Guarantor shall cause all notices as required by law to be given
and shall comply or cause compliance with all laws, ordinances, municipal rules,
and regulations and requirements of all Governmental Authorities applying to or
affecting the conduct of work on or the operation of the Project (the
applicability of such laws, ordinances, rules, and regulations to
13
be determined both as if the Issuer were the owner of the Project and as if the
Guarantor, and not the Issuer, were the owner of the Project) and the Guarantor
will defend and save the Issuer and its officers, members, agents (other than
the Guarantor), and employees harmless from all fines and penalties due to
failure to comply therewith.
(c) In the event of the termination of this Lease pursuant to Section 6.2,
10.10 or 12.2 hereof, the Guarantor agrees to purchase the Project in accordance
with the provisions of Section 6.3 hereof.
(d) The Guarantor shall not allow the manufacture (except to the extent, if
any, that such substances are a byproduct of the operation of the Project and
then only to the extent such manufacture is in compliance in all material
respects with applicable laws) or disposal of any Hazardous Substances on the
Leased Premises or otherwise at the Facility, and shall only allow the storage
or presence of Hazardous Substances on the Leased Premises or otherwise at the
Facility to the extent necessary in connection with the operation of the Project
and if such storage or presence is in compliance with applicable laws.
(e) The Issuer shall have the right at any time after the occurrence and
during the continuance of an Event of Default which results from a breach of
Section 2.4(d), but in no event more than once in any year, to conduct an
environmental audit of the Facility by an environmental consultant reasonably
acceptable to both the Issuer and the Guarantor (the "Environmental Consultant")
and the Guarantor shall cooperate in the conduct of the same. The cost of such
audits shall be borne by the Guarantor.
14
(f) The Guarantor will not lease or sublease the whole or any portion of
the Project for an unlawful purpose.
(g) The Guarantor shall take all actions necessary to cause the Tenneco
Letter of Credit and any replacements thereof to be issued as required in the
Financing Agreement.
ARTICLE III
USE OF PROJECT
During the term of this Lease, the Guarantor shall be entitled to all of
the benefits from the use of the Project (including, but not limited to, the
Leased Premises, the Easements, the Facility and the Pipeline) in any manner not
otherwise prohibited by the Financing Documents, so long as such use does not
cause the Project to fail to qualify as a "project" under the Act.
15
ARTICLE IV
CONSTRUCTION AND OPERATION OF THE PROJECT; LOANS FROM BANKS; USE OF LOAN
PROCEEDS
(a) Title to all materials, equipment, machinery, and any other property
acquired by the Guarantor and intended to be incorporated or installed in and to
become part of the Project shall vest in the Issuer immediately upon payment
thereof or incorporation or installation in the Project, whichever shall first
occur; provided, however, that all alterations, improvements and additions made
to the Existing Plant, other than the Auxiliary System, and whether or not
affixed or moveable, shall upon installation become the property of the
University to the extent required under the Operating Agreement. The Guarantor
shall execute, deliver, and record or file all instruments necessary or
appropriate to vest title to any such property (other than the property
described in the proviso to the preceding sentence) in the Issuer and shall take
all action necessary or appropriate to protect such title against claims of any
third Persons. The Issuer agrees that the Auxiliary System shall become the
property of the University upon the expiration or earlier termination of the
Operating Agreement in accordance with its terms.
(b) The Guarantor has given, or will give or cause to be given, all notices
and has complied, or will comply or cause compliance with, all existing laws,
ordinances, rules, regulations, and requirements of all Governmental Authorities
applying to or affecting the conduct of work on, or the operation of, the
Project (the applicability of such laws, ordinances, rules, and regulations to
be determined both as if the Issuer were the owner of the Project and as
16
if the Guarantor, and not the Issuer, were the owner of the Project) and the
Guarantor will defend, indemnify, and save the Issuer and its officers, members,
agents (other than the Guarantor), servants, and employees harmless from all
fines and penalties due to failure to comply therewith.
Simultaneously with the delivery of this Lease, the Issuer will deliver the
Bonds in the aggregate principal amount of $204,300,000 under and pursuant to a
resolution adopted by the Issuer authorizing the issuance of the Bonds. The
proceeds of sale of the Bonds received by the Issuer shall be deposited in the
Construction Account and made available to the Guarantor in accordance with the
provisions of this Lease and the Financing Agreement. Pending application,
amounts so deposited may be invested as provided in the Financing Agreement.
In the event that the proceeds of the Bonds are not sufficient to pay in
full all costs of the development, acquisition, construction and equipping of
the Project, the Guarantor shall, to the extent required by the Financing
Agreement, complete such development, acquisition, construction and equipping
and pay all such sums as may be in excess of the proceeds of the Bonds. All
portions of the Project developed, acquired, constructed or equipped at the
Guarantor's cost shall immediately, upon such development, acquisition,
construction or equipping, be subject to the Liens of the Mortgages.
17
In the event of a default by any contractor, subcontractor, or materialman
under any contract made by them in connection with construction, equipping,
operation or maintenance of the Project or in the event of a breach of warranty
or other liability with respect to any materials, workmanship, or performance
guaranty, the Guarantor may, in its discretion, proceed, either separately or in
conjunction with others, to enforce the remedies of the Guarantor and/or the
Issuer against the contractor, subcontractor, or materialman so in default and
against each surety for the performance of such contract. The Guarantor may
prosecute or defend any action or proceeding or take any other action involving
any such contractor, subcontractor, materialman, or surety which the Guarantor
deems reasonably necessary. The Guarantor shall advise the Issuer of any actions
or proceedings taken hereunder. No such suit shall relieve the Guarantor of any
of its obligations under this Lease.
ARTICLE V
SUBLEASE OF THE LEASED PREMISES AND OUTSIDE EASEMENTS, LEASE OF THE CITY
EASEMENTS, FACILITY AND PERSONAL PROPERTY, AND CONSTRUCTION OF THE PROJECT.
The Issuer hereby sublets to Guarantor the Leased Premises and the Outside
Easements (including the portion of the Pipeline located on such Easements) and
leases to Guarantor the Facility, the City Easements (including the portion of
the Pipeline located on such Easements) and all personal property acquired by
the Issuer for use in connection with the Project (the "Personalty"), and
Guarantor hereby leases or subleases, as the case may be, from the Issuer the
18
Leased Premises, the Facility, the Pipeline, the Outside Easements, the City
Easements and the Personalty for and during the term provided herein and upon
and subject to the terms and conditions herein set forth.
The Guarantor shall construct the Project on the Leased Premises, the City
Easements and the Outside Easements pursuant to the Ground Lease and the
Financing Agreement, and shall use the Leased Premises to construct, operate and
maintain the Facility and for no other purpose or purposes. The Guarantor shall
not occupy, use or operate the Project or any part thereof to be occupied, used
or operated for any unlawful purpose or in violation of any certificate of
occupancy affecting the Project.
All of the terms, provisions, covenants and conditions contained in the
Ground Lease are in addition to the terms and conditions of this Lease and,
except as otherwise expressly provided herein and as may be provided by that
certain Consent and Agreement dated as of April 5, 1991 among the University,
the Agent, the Guarantor and the Issuer, such rights and obligations as are
granted to and imposed upon the lessee therein are, during the term of this
Lease, granted to or imposed upon the Guarantor.
19
ARTICLE VI
TERM OF LEASE; CONVEYANCE OF PROJECT
The term of this Lease shall commence on the date that the term of the
Ground Lease commences and shall continue in full force and effect (unless
earlier terminated pursuant hereto) until the earlier of (i) the termination of
the Ground Lease, as the same may from time to time be extended, or (ii) the
termination or expiration of the term of the PILOT Agreement.
(a) Notwithstanding anything herein to the contrary, after the occurrence
and during the continuance of an "Event of Default" under the PILOT Agreement,
the Issuer may, with at least 15 days' prior written notice to the Agent and to
the Guarantor and provided that the Issuer is entitled to reconvey the Project
or its interest in any portion thereof to the Guarantor pursuant to Section 6.03
of the PILOT Agreement, terminate this Lease and reconvey and assign to the
Guarantor the Issuer's entire right, title and interest in the Project
(including but not limited to its interest under the Operative Documents (other
than the Unassigned Rights), the Ground Lease and its interest in the Facility,
the Pipeline, the Easements and the Personalty) in accordance with Section 6.03
of the PILOT Agreement. In the event that the Issuer exercises its right under
Section 6.03 of the PILOT Agreement to reconvey its interest in the Project to
the Guarantor, the Issuer shall also terminate this Lease and assign to the
Guarantor the Issuer's entire interest in all Operative Documents (except for
the Unassigned Rights), the Ground Lease, the Facility, the
20
Pipeline, the Easements and the Personalty, in compliance with Section 6.3
hereof, except that the Liens of the Mortgages may remain outstanding.
(b) Notwithstanding anything herein to the contrary, the Guarantor shall
have the option, in its sole discretion and at any time, to terminate this Lease
upon giving the Issuer and the Agent written notice signed by an authorized
representative of the Guarantor stating the Guarantor's intention to do so
pursuant to this Section 6.2(b) and upon compliance with the requirements set
forth in Section 6.2(c) hereof.
(c) In the event the Guarantor exercises its option to terminate this Lease
in accordance with Section 6.2(b) hereof or the Issuer exercises its right to
terminate this Lease in accordance with Section 6.2(a), 10.10, or 12.2 hereof,
the following payments shall be made by the Guarantor:
(i) to the Agent, all amounts payable by the Issuer and/or the
Guarantor, if any, under the Financing Documents; provided, however,
that in lieu of making such payments the Guarantor may deliver to the
Issuer a release, in form reasonably satisfactory to the Issuer,
pursuant to which the Issuer is released by the Agent and the Banks
from its obligations under the Financing Documents;
(ii) to the Issuer, an amount certified by the Issuer sufficient
to pay all unpaid fees and expenses of the Issuer and of its members,
officers, employees and agents (other than the Guarantor) incurred
under this Lease and the Mortgages; and
(iii) to the Issuer or the City of Syracuse, as appropriate, all
amounts which are then due and unpaid under the PILOT Agreement.
21
Upon the termination of this Lease pursuant to Section 6.2(a), 6.2(b),
10.10 or 12.2 or otherwise, or upon the expiration of the term of this Lease,
the Guarantor shall purchase from the Issuer and the Issuer shall convey to the
Guarantor, in consideration of one dollar ($1.00), the Issuer's entire right,
title and interest in the Project, including, without limitation, the Issuer's
rights and interest in, to and under the Ground Lease, the Facility, the
Pipeline, the Easements, the Personalty and the Operative Documents (other than
the Unassigned Rights). If the Guarantor is required to purchase the Project
pursuant to the preceding sentence, the Guarantor shall give written notice to
the Issuer and the Agent (i) declaring the Guarantor's election to purchase, and
(ii) fixing the date of the closing of such purchase, which shall not be later
than 30 days after any notice sent to the Guarantor pursuant to Section 6.2(a)
of the date on which this Lease is to be terminated (subject to any other
provision of this Lease or the PILOT Agreement which may require an earlier
closing). At the closing of the purchase of the Project pursuant to this Section
6.3, the Issuer shall deliver and request the Agent to deliver to the Guarantor
all necessary documents (a) to convey to the Guarantor all of the Issuer's
right, title and interest in and to the Project, as it exists, subject only to
(i) any Liens to which title to such Project was subject when conveyed to the
Issuer, (ii) any Liens created at the request of the Guarantor or to which the
Guarantor consented or in the creation of which the Guarantor acquiesced, (iii)
Permitted Liens, and (iv) any Liens resulting from the failure of the Guarantor
to perform or observe any of the agreements on its part contained in this Lease
or arising out of an Event of Default, (b) to release and convey to the
Guarantor all of the Issuer's right, title and interest in and to any rights of
action or any net proceeds of insurance or condemnation awards with respect to
the Project, and (c) to discharge and release any other Liens or encumbrances
held by the Issuer and not set forth
22
above. Upon the due conveyance and assignment of all of the Issuer's right,
title and interest in the Project to the Guarantor, the Guarantor shall deliver
a release and agreement that the exculpation provisions and the obligations of
the Guarantor in Sections 2.4(a) and 10.3 hereof shall survive such conveyance
or purchase of the Project. Unless all amounts due to the Banks under the
Financing Documents shall have been paid in full, any conveyance of the Issuer's
interest in the Project to the Guarantor pursuant to this Section 6.3 shall be
subject to the Bank's security interests in and mortgages on the Project and the
various rights and interests comprising the Project.
ARTICLE VII
RENTAL OBLIGATIONS AND ISSUER'S FEE
(a) Until the obligations of the Issuer under the Bonds and the Financing
Agreement have been paid in full, the Guarantor shall pay rent under this Lease
in an amount which equals the principal of, interest on, any premium on, and all
other sums due on the Bonds, and all other sums the Issuer is required to pay
under the Financing Agreement, such rent hereunder to be due when the
corresponding amounts are due from the Issuer under the Bonds and the Financing
Documents and subject to the same grace periods, if any. Thereafter, the rent
under this Lease shall equal one dollar per annum and shall be due in arrears on
each December 31. Until the Issuer's obligations under the Bonds and the
Financing Agreement have been paid in full, all rental payments required under
this Section 7.1 shall be paid by the Guarantor directly to the
23
Agent, and all such payments by the Guarantor to the Agent or made to the Agent
from any of the Accounts shall be credited against the Guarantor's obligations
to the Issuer hereunder.
(b) The Guarantor agrees to make the above-mentioned rental payments,
without any further notice, in lawful money of the United States of America as,
at the time of payment, shall be legal tender for the payment of public and
private debts.
In consideration of the Issuer entering into this Lease, the Financing
Agreement and certain Financing Documents, in addition to any other amounts
payable under this Lease the Guarantor shall pay to the Issuer a fee of
$500,000, which shall be paid on the Initial Funding Date under the Financing
Agreement.
(a) The obligations of the Guarantor to make the rental payments due under
this Lease and to perform and observe any and all of the other covenants and
agreements on its part contained herein are general obligations of the Guarantor
and are absolute and unconditional irrespective of any defense or any rights of
set-off, recoupment, or counterclaim it may otherwise have against the Issuer.
The Guarantor agrees that it will not suspend, discontinue, xxxxx or be entitled
to any diminution of any rental required by, or fail to observe any of its other
covenants or agreements contained in this Lease, or terminate this Lease for any
cause whatsoever, including, without limiting the generality of the foregoing,
failure to complete the construction and equipping of the Project, any defect in
the title, design, operation, merchantability, fitness, or condition of the
Project, or any part thereof, or in the suitability of the Project, or any part
24
thereof, for the Guarantor's purposes or needs, or failure of consideration for,
destruction of or damage to, or condemnation of title to, or the use of all or
any part of the Project, any change in the tax or other laws of the United
States of America or of the State of New York, or any political subdivision
thereof, or any failure of the Issuer to perform and observe any agreement,
whether express or implied, or any duty, liability or obligation arising out of
or in connection with this Lease.
(b) Nothing contained in this Section shall be construed to release the
Issuer from the performance of any of the agreements on its part contained in
this Lease, and in the event the Issuer should fail to perform any such
agreement, the Guarantor may institute such action against the Issuer as the
Guarantor may deem necessary to compel performance (subject to the provisions of
Section 13.10).
ARTICLE VIII
MAINTENANCE, MODIFICATIONS, TAXES, AND INSURANCE
During the term of this Lease, the Guarantor shall operate, maintain,
repair and restore the Project in the manner and to the extent required under
the Financing Agreement and the Operative Documents.
25
(a) The Guarantor shall pay, or cause to be paid, the following, as the
same respectively become due unless the Guarantor is actively and in good faith
contesting any such taxes, assessments or other changes as permitted by Section
8.2(b):
(1) All taxes and governmental charges of any kind whatsoever which
may at any time be lawfully assessed or levied against or with respect to
the Project or any part thereof;
(2) All utility and other charges, including "service charges,"
incurred or imposed for the operation, maintenance, use, occupancy, upkeep,
and improvement of the Project, the non-payment of which would create, or
entitle the obligee to impose, a Lien on the Project;
(3) All assessments and charges of any kind whatsoever lawfully made
by any Governmental Authority against the Project for public improvements;
and
(4) All payments in lieu of taxes, required to be made to the Issuer
or the City of Syracuse under the terms of the PILOT Agreement.
(b) Notwithstanding anything in Section 8.2(a) to the contrary, the
Guarantor may in good faith actively contest any taxes, assessments and other
charges described in Section 8.2(a) (except that with respect to the PILOT
Agreement, the Guarantor shall not contest the validity of such agreement but
may only dispute, in good faith, the calculation of the amounts due thereunder),
provided that such action does not constitute an Event of Default under the
Financing Agreement.
26
The Guarantor shall at all times maintain insurance with respect to the
Project against such risks and for such amounts as are customarily insured
against by businesses of like size and type, paying (as the same become due and
payable) all premiums with respect thereto; provided, however, that, if the
premiums are not timely paid, the Issuer may pay such premiums and the Guarantor
shall pay immediately upon demand all sums so expended by the Issuer. The
maintenance of such insurance as is required under Section 5.20 of the Financing
Agreement or as is otherwise acceptable to the Agent shall satisfy the
Guarantor's obligations under this Section 8.3.
All proceeds of insurance maintained pursuant to the Financing Agreement or
Section 8.3 of this Lease shall be applied in accordance with the terms of the
Financing Agreement until the obligations of the Issuer under the Bonds and the
Financing Agreement have been satisfied in full. Thereafter, all such proceeds
shall be payable to the Guarantor. Notwithstanding the foregoing, the proceeds
of any insurance required to be maintained by the Guarantor pursuant to the
Operating Agreement shall be applied as required under the terms of the
Operating Agreement.
ARTICLE IX
DAMAGE, DESTRUCTION, AND CONDEMNATION
(a) If the Project shall be damaged or destroyed, in whole or in part:
27
(1) The Issuer shall have no obligation to replace, repair, rebuild,
or restore the Project, but the Issuer shall make all insurance proceeds
payable to it in connection with any such damage or destruction available
to the Guarantor to be applied in accordance with the terms of the
Financing Agreement;
(2) There shall be no abatement or reduction in the rent payable by
the Guarantor under this Lease (whether or not the Project is replaced,
repaired, rebuilt, or restored); and
(3) The Guarantor shall promptly give notice thereof to the Issuer.
(b) Subject to the provisions of the Financing Agreement, the Guarantor may
adjust all claims under any policies of insurance required by Section 5.20 of
the Financing Agreement.
(a) If title to, or the use of, less than substantially all of the Project
shall be taken by condemnation:
(1) The Issuer shall have no obligation to restore the Project, but
the Issuer shall make all proceeds of such condemnation payable to it
available to the Guarantor to be applied in accordance with the terms of
the Financing Agreement;
(2) There shall be no abatement or reduction in the rent payable by
the Guarantor under this Lease (whether or not the Project is restored);
and
(3) The Guarantor shall promptly give notice thereof to the Issuer and
the Agent.
28
(b) Subject to the provisions of the Financing Agreement, the Guarantor
shall have sole control of any condemnation proceeding with respect to the
Project, or any part thereof, and may negotiate the settlement of any such
proceeding.
All replacements, repairs, rebuilding or restorations made to the Project,
whether or not requiring the expenditure of the Guarantor's own moneys, shall
automatically become part of the Project as if the same were specifically
described herein and title to such replacements, repairs, rebuilding or
restoration shall immediately vest in the Issuer; provided, however, that title
to any replacements, repairs, rebuilding or restoration of the Existing Plant
shall, to the extent required under the Operating Agreement, become vested in
the University.
Subject to the requirements of the Financing Agreement, the Guarantor shall
not have any obligation hereunder to repair, replace, restore or reconstruct the
Project in the event of any damage, destruction or condemnation of all or any
portion of the Project.
ARTICLE X
SPECIAL COVENANTS
The Issuer covenants and agrees that it has full right and lawful authority
to enter into this Lease for the full term hereof, and that, subject to the
terms and provisions of the Financing Documents, unless and until this Lease is
terminated by the Issuer or the Guarantor, the
29
Guarantor shall have, hold and enjoy, during the term hereof, peaceful, quiet
and undisputed possession of the Project.
THE ISSUER IS NOT MAKING ANY WARRANTY, EITHER EXPRESS OR IMPLIED, AS TO THE
CONDITION, TITLE, DESIGN, OPERATION, MERCHANTABILITY, OR FITNESS OF THE PROJECT,
OR ANY PART THEREOF, OR AS TO THE SUITABILITY OF THE PROJECT OR ANY PART THEREOF
FOR THE GUARANTOR'S PURPOSES OR NEEDS. NO WARRANTY OF FITNESS FOR A PARTICULAR
PURPOSE OR MERCHANTABILITY IS MADE. IN THE EVENT OF ANY DEFECT OR DEFICIENCY OF
ANY NATURE, EITHER PATENT OR LATENT, THE ISSUER SHALL NOT HAVE ANY
RESPONSIBILITY OR LIABILITY WITH RESPECT THERETO.
(a) The Guarantor hereby releases the Issuer and its members, officers,
agents (other than the Guarantor) and employees from, agrees that the Issuer and
its members, officers, agents (other than the Guarantor) and employees shall not
be liable for, and agrees to indemnify, defend, and hold the Issuer and its
members, officers, agents (other than the Guarantor) and employees harmless from
and against, any and all claims arising as a result of the Issuer's undertaking
the Project, including, but not limited to:
(1) Liability for loss or damage to property or bodily injury to or
death of any and all Persons that may be occasioned by any cause whatsoever
(including latent and
30
patent defects) pertaining to the Project, or arising by reason of or in
connection with the occupation or the use thereof, or the presence on, in,
or about the Project;
(2) Liability arising from or expense incurred by the Issuer's owning,
selling, constructing or equipping of the Project, including, without
limiting the generality of the foregoing, all liabilities or claims arising
as a result of or in connection with the Issuer's obligations under the
Operative Documents;
(3) All claims arising from the exercise by the Guarantor of the
authority conferred upon it by the Agency Agreement of even date herewith
between the Issuer and the Guarantor;
(4) All costs incurred in connection with the maintenance, repair,
restoration, rebuilding and operation of the Project, or any portion
thereof, to the extent required under the Financing Agreement;
(5) All taxes of any kind (and by whomsoever imposed) assessed against
the Project or any portion thereof;
(6) All causes of action and attorneys' fees and other expenses
incurred in connection with any suits or actions which may arise as a
result of any of the foregoing or as a result of establishing a breach by
the Guarantor of the terms of any of the Operative Documents; and
(7) Any liability, loss, cost, damage or expense (including, without
limitation, reasonable attorneys' fees) arising from (i) the imposition or
recording of a lien by any
31
Federal, state or local government or governmental agency or authority
pursuant to any Federal, state or local statute or regulation relating to
Hazardous Substances or the removal thereof ("Clean-Up Laws"); (ii) claims
of any private parties regarding violations of Clean-Up Laws; and (iii)
costs and expenses (including, without limitation, reasonable attorneys'
fees and fees incidental to the securing of repayment of such costs and
expenses) incurred by the Issuer in connection with its compliance with any
order issued pursuant to any Clean- Up Laws by any Federal, state or local
governmental agency or authority. The obligations of the Guarantor under
this paragraph (7) of this Section 10.3(a) shall not be limited by Section
13.10(c).
Subject to paragraph (c) of this Section 10.3, all of the foregoing indemnities
shall apply notwithstanding the fault or negligence (other than gross negligence
or willful misconduct) on the part of the Issuer or any of its officers,
members, agents or employees and irrespective of any breach of statutory
obligation or any rule of comparative or apportional liability.
(b) In the event of any claim against the Issuer or its members, officers,
agents (other than the Guarantor) or employees by any employee of the Guarantor,
or any contractor of the Guarantor, or anyone directly or indirectly employed by
any of them, or any one for whose acts any of them may be liable, the
obligations of the Guarantor hereunder shall not be limited in any way by any
limitation on the amount or type of damages, compensation, or benefits payable
by or for the Guarantor or such contractor under workers' compensation laws,
disability benefit laws, or other employee benefit laws.
(c) Notwithstanding any other provisions of this Lease, (i) the obligations
of the Guarantor pursuant to this Section 10.3 shall remain in full force and
effect after the termination
32
of this Lease until the expiration of the period stated in the applicable
statute of limitations during which a claim, cause of action, or prosecution
relating to the matters herein described may be brought, and the payment in full
or the satisfaction of such claim, cause of action or prosecution, and the
payment of all expenses and charges incurred by the Issuer or its officers,
members, agents (other than the Guarantor) or employees, relating thereto, and
(ii) the Guarantor shall not have any obligation to indemnify the Issuer or its
members, officers, agents (other than the Guarantor) or employees for any loss,
liability, damage, expense or claims whatsoever arising from the gross
negligence or willful misconduct of any of such Persons (other than the
Guarantor).
(d) In order for the Issuer or any other Person who may be entitled to
indemnification from the Guarantor under this Section 10.3 or any other
provision of this Lease (each of the foregoing, an "Indemnitee") to be entitled
to indemnification with respect to any liability or claims against such
Indemnitee, such Indemnitee must notify the Guarantor in writing of any claim or
demand made against such Indemnitee within 10 business days after receipt by
such Indemnitee of written notice of such claim; provided, however, that the
failure of an Indemnitee to provide notice to the Guarantor of a claim or demand
within such 10 business day period shall not affect its right to indemnification
hereunder if such delay does not in any material way prejudice or impair the
Guarantor's ability to contest or defend against such claim or demand or to
assert an offset or counter-claim. Each Indemnitee shall also deliver to the
Guarantor copies of all notices and documents received by such Indemnitee
relating to any such claim or demand for which such Indemnitee is seeking
indemnification from the Guarantor. The Guarantor shall be entitled to
participate, at its expense, in the defense of any claim made against any
Indemnitee
33
and, if it so chooses, to assume the defense thereof at its cost with counsel
selected by it who shall be reasonably acceptable to such Indemnitee. An
Indemnitee may, in any such case, retain its own counsel at its own expense to
participate in the defense of such claims. Each Indemnitee shall cooperate fully
in the defense and prosecution of any such claim. The Guarantor shall not be
obligated to indemnify any Indemnitee for the amount of any settlement paid by
such Indemnitee in connection with any claim unless the Guarantor has approved
the settlement in writing, the Guarantor agreeing that it will not unreasonably
withhold its consent to a proposed settlement which is approved by the affected
Indemnitee. An Indemnitee shall, at the Guarantor's request, agree to the terms
of any settlement of any claim for which the Indemnitee is entitled to
indemnification hereunder which is negotiated by the Guarantor so long as such
settlement involves only the payment of money which shall be paid by the
Guarantor at the time of settlement; settlement on any other terms shall require
the Indemnitee's written consent (which consent shall be conclusively presumed
by its execution of a settlement agreement or stipulation of settlement).
(e) Within 30 days after the Guarantor's receipt of demand therefor from
the Issuer, the Guarantor shall reimburse the Issuer for any expenses reasonably
incurred by the Issuer by reason of the Issuer's ownership, financing or leasing
of the Project or in connection with the performance of the Issuer's duties and
obligations under this Lease and the Operative Documents.
The Guarantor agrees that during the term of this Lease the Issuer and its
duly authorized agents shall have the right to enter upon and to examine and
inspect the Project during normal
34
business hours and upon reasonable prior written notice to the Guarantor, and
provided that all such persons comply with applicable safety regulations and
insurance requirements.
During the term of this Lease, the Guarantor will maintain its existence,
will not dissolve or otherwise dispose of all or substantially all of its
assets, and will not consolidate with or merge into another legal entity or
permit one or more other legal entities to consolidate with or merge into it.
During the term of this Lease, the Guarantor shall, whenever requested by
the Issuer in writing, provide and certify, or cause to be certified, such
information concerning the Guarantor or its finances as the Issuer from time to
time reasonably considers necessary or appropriate, including, but not limited
to, such information as is necessary to enable the Issuer to make any reports
required by law or governmental regulation. The Issuer agrees that any
information provided to it by the Guarantor hereunder is confidential and
proprietary and the Issuer shall not permit the duplication, use or disclosure
of any such information to any Person (other than its attorneys, consultants,
employees or agents) unless authorized in writing by the Guarantor. Any
information provided by the Guarantor shall not be deemed confidential and
proprietary, and shall not be subject to the restrictions set forth in the
preceding sentence, if and to the extent that (i) at the time of disclosure,
such information is generally known by the public and any competitors of the
Guarantor, (ii) such information was in the Issuer's possession or available to
it on a non-confidential basis from a third party prior to its receipt of such
information from the Guarantor, (iii) such information is hereafter obtained by
the Issuer from a third party without
35
obligation of confidentiality, or (iv) such information is legally required to
be disclosed, in the opinion of the Issuer's counsel; provided, however, that
before any determination is made by the Issuer that any information is not
confidential and proprietary for any of the foregoing reasons and before any
such information is disclosed by the Issuer, the Issuer shall give the Guarantor
reasonable notice and a reasonable opportunity to prevent or contest such
disclosure.
(a) The Guarantor agrees that it will, during any period in which the Bonds
remain unpaid, promptly comply in all material respects with all statutes,
codes, laws, acts, ordinances, orders, judgments, decrees, injunctions, rules,
regulations, permits, licenses, authorizations, directions, and requirements of
all Governmental Authorities, foreseen or unforeseen, ordinary or extraordinary,
which now or at any time hereafter affect the Guarantor's obligations hereunder
or are applicable to the Project, or any part thereof, or to any use, manner of
use, or condition of the Project, or any part thereof, the applicability of the
same to be determined both as if the Issuer were the owner of the Project, and
as if the Guarantor and not the Issuer were the owner of the Project.
(b) Notwithstanding the provisions of subsection 10.7(a), the Guarantor
may, in good faith, actively contest the validity or the applicability of any
requirement of the nature referred to in said subsection 10.7(a), provided that
the Guarantor shall have first notified the Issuer of such contest. In such
event, the Guarantor may fail to comply with the requirement or requirements so
contested during the period of such contest and any appeal therefrom unless:
36
(1) The Issuer shall notify the Guarantor that by failure to comply
with such requirement or requirements the Liens of the Mortgages as to the
Project may be endangered or the Project, or any part thereof, may be
subject to loss or forfeiture, in which case the Guarantor shall promptly
take such action with respect thereto as shall be reasonably satisfactory
to the Issuer; or
(2) The Issuer shall so notify the Guarantor that based on an opinion
of counsel to the Issuer, a copy of which must accompany such notice, the
Issuer or its members, officers, agents (other than the Guarantor), or
employees may be liable for prosecution for failure to comply therewith, in
which event the Guarantor shall promptly take such action with respect
thereto as shall be satisfactory to the Issuer.
(a) The Guarantor hereby represents and warrants that, except for Permitted
Liens, there are no Liens on the Project senior to the Mortgages.
(b) The Guarantor hereby represents and agrees not to create, or suffer to
be created, any Lien, except for Permitted Liens, on the Project, or any part
thereof.
(c) Notwithstanding the provisions of subsection 10.8(b), the Guarantor
may, in good faith, actively contest any such Lien, provided that the Guarantor
shall have first notified the Issuer of such contest. No action taken pursuant
to this Section 10.8 shall relieve the Guarantor from its obligation to make all
rental payments required by Section 7.1 hereof or any other payments required to
be made by the Guarantor, including, without limitation, payments due under the
PILOT Agreement.
37
Should the Guarantor fail to make any payment or to do any act as herein
provided within 30 days after notice from the Issuer, then the Issuer may, but
need not, without releasing the Guarantor from any obligation herein, make or do
the same, including, without limitation, appearing in and defending any action
purporting to affect the rights or powers of the Guarantor or the Issuer and
paying all expenses, including, without limitation, reasonable attorneys' fees;
and the Guarantor shall pay immediately upon demand all sums so expended by the
Issuer under the authority hereof, together with the interest thereon at a rate
of ten (10%) percent per annum or the highest rate permitted by law, whichever
is lower.
The Issuer makes no representation or warranty, either express or implied,
as to any prior or current use of, or contamination by, Hazardous Substances at
or affecting the Project. In the event that, within 30 days (or such longer
period as the Issuer and the Agent, after consultation with the Environmental
Consultant, deem reasonable) after its receipt from the Issuer or the
Environmental Consultant of an environmental audit prepared by the Environmental
Consultant which reports a violation of any Clean-Up Laws due to a condition
existing with respect to the Project, the Guarantor fails to commence and
continue with reasonable diligence at least one of the alternative remediation
actions recommended by the Environmental Consultant or an alternative
remediation action otherwise agreed to by the Issuer and the Guarantor to cure
such violation and the Issuer obtains an opinion of counsel that the Issuer may
be liable for any fees, penalties or assessments or may have civil or criminal
liability as a result of such violation, then the Issuer shall have the option
to terminate this Lease and convey the Project to the Guarantor
38
after the expiration of such 30-day period and after notice to the Guarantor and
the Agent, and the Guarantor shall have the obligation to accept such
conveyance, notwithstanding any other provision of this Lease. In the event of
such conveyance from the Issuer to the Guarantor, the Guarantor shall comply
with any other term or provision of this Lease, the Financing Agreement, the
Mortgages, or any of the Financing Documents which may become operative due to
such early conveyance of the Facility. Any such conveyance shall be subject to
the provisions of Section 6.3 and shall not terminate or limit the Agent's
rights in the Collateral or pursuant to the Financing Documents.
ARTICLE XI
ASSIGNMENTS; MERGER OF ISSUER
Notwithstanding anything in this Lease to the contrary, the Guarantor may
assign its rights and interests under this Lease and the other Operative
Documents and its rights and interests in the Project to any Person provided
that: (a) either (i) all amounts owed to the Banks under the Financing Documents
shall have been paid in full or (ii) such sale or assignment shall not
constitute a breach of the Financing Agreement or any Financing Documents which
has not been waived or consented to by the Agent; and (b) either (x) at the time
of such sale or assignment the Guarantor shall not be in default in the payment
of any amounts due to the Issuer under this Lease or the PILOT Agreement, or (y)
the Issuer shall have consented to such sale or assignment. Nothing in this
Lease shall prohibit the sale, assignment or encumbrance of all or
39
any portion of the Project or the Guarantor's interest therein pursuant to the
Financing Documents or the granting or creation of a Permitted Lien.
The Issuer has pledged and assigned, pursuant to the terms of the
Mortgages, certain of its rights and interests in the Project and under and
pursuant to this Lease to the Agent on behalf of the Banks as security for the
payment of the principal of and interest on the Bonds. Such pledge and
assignment shall in no way impair or diminish any obligations of the Issuer
under this Lease. The Guarantor hereby acknowledges receipt of notice of, and
consents to, such pledge and assignment by the Issuer to the Agent on behalf of
the Banks and specifically agrees to perform for the benefit of the Agent on
behalf of the Banks all of its duties and undertakings hereunder.
(a) Nothing contained in this Lease shall prevent the consolidation of the
Issuer with, or merger of the Issuer into, or assignment by the Issuer of its
rights and interests hereunder to any other body corporate and politic and
public instrumentality of the State of New York, or political subdivision
thereof, which has the legal authority to perform the obligations of the Issuer
hereunder, provided that upon any such consolidation, merger, or assignment, the
due and punctual performance and observance of all the agreements and conditions
of this Lease and the Mortgages to be kept and performed by the Issuer shall be
expressly assumed in writing by the public instrumentality or political
subdivision resulting from such consolidation or surviving such merger or to
which the Issuer's rights and interests hereunder shall be assigned.
40
(b) As of the date of any such consolidation, merger, or assignment, the
Issuer shall give notice thereof in reasonable detail to the Guarantor and the
Agent. The Issuer shall promptly furnish to the Agent and the Guarantor such
additional information with respect to any such consolidation, merger, or
assignment as the Agent and the Guarantor may reasonably request.
(a) During the term of this Lease, the Guarantor may not sublease the
Project, or any part thereof, without the prior written consent of the Issuer.
Notwithstanding the foregoing, the Guarantor may, without the Issuer's consent,
sublease portions of the Project in the ordinary course of its business,
provided that (i) no such lease shall relieve the Guarantor of its obligations
hereunder and (ii) the Guarantor shall, within 10 days after any such lease,
furnish the Issuer with a copy of the instruments effecting the same.
(b) Notwithstanding anything to the contrary in this Lease, if in any
instance the Guarantor determines that any item of Equipment has become
inadequate, obsolete, worn out, unsuitable, undesirable, or unnecessary, the
Guarantor may remove such item of Equipment and may sell, trade in, exchange, or
otherwise dispose of the same, in whole or in part, without the prior written
consent of the Issuer, provided that such removal will not constitute an Event
of Default under the Financing Agreement. At the request of the Guarantor, the
Issuer shall execute and deliver to the Guarantor all instruments necessary or
appropriate to enable the Guarantor to sell or otherwise dispose of any such
item of Equipment, free from the Lien of the Financing Documents. The Guarantor
shall pay all costs, including reasonable attorneys' fees, incurred in
transferring title to, and releasing from the Lien of the Financing Documents,
any item of Equipment removed pursuant to this Section 11.4.
41
(c) Nothing in this Section 11.4 shall restrict the right of the Guarantor
to sell or assign all or any portion of its interest in the Project or its
interest in this Lease to the extent such sale or assignment is permitted under
Section 11.1.
ARTICLE XII
EVENTS OF DEFAULT AND REMEDIES
For purposes of this Lease, the term "Event of Default" shall mean an Event
of Default under the Financing Agreement which is not waived by the Agent (or
the Banks or the Required Banks, as the case may be, if their consent is
required for such waiver under the terms of the Financing Agreement), and the
term "Default" shall mean an Inchoate Default.
The Issuer may terminate this Lease in accordance with the provisions of
Section 6.3 hereof in the event that either (i) an Event of Default occurs and
is not cured within 60 days after written notice thereof from the Agent or the
Issuer to the Guarantor, or (ii) the Guarantor fails to pay any amount due to
the Issuer under this Lease within 60 days after written notice from the Issuer
that such amount is past due.
12.3 No Additional Waiver Implied by One Waiver.
In the event any agreement contained herein should be breached by the other
party and thereafter such breach be waived by the other party, such waiver shall
be limited to the particular breach so waived and shall not be deemed to waive
any other breach hereunder.
42
ARTICLE XIII
MISCELLANEOUS
All notices, certificates, and other communications hereunder shall be in
writing, shall be sufficiently given, and shall be deemed given when (a) sent to
the applicable address stated below by registered or certified mail, return
receipt requested, or by such other means as shall provide the sender with
documentary evidence of such delivery, or (b) delivery is refused by the
addressee as evidenced by the affidavit of the Person who attempted to effect
such delivery. The addresses to which notices, certificates, and other
communications hereunder shall be delivered are as follows:
(a) If to the Issuer, to:
The City of Syracuse Industrial Development Agency
000 Xxxx Xxxx
Xxxxxxxx, Xxx Xxxx
Attention: Chairman
(b) If to the Guarantor, to:
Project Orange Associates, L.P.
c/o NCP Syracuse, Inc.
0000 Xxxx & Xxxxxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Attention: President
With a copy to:
Project Orange Associates, L.P.
0000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxx Xxxxxxxx, Xxx Xxxx 00000
Attention: Managing General Partner
43
A duplicate copy of each notice, certificate, and other communication given
hereunder by the Issuer or the Guarantor shall be given to the Agent at its
address and in the manner specified in the Financing Agreement. The Issuer and
the Guarantor may, by notice given hereunder, designate any further or different
addresses to which subsequent notices, certificates, and other communications
shall be sent.
This Lease shall inure to the benefit of and shall be binding upon the
Issuer, the Guarantor and, as permitted by this Lease, by their respective
successors and assigns.
------------
Any provision of this Lease which is invalid or unenforceable shall be
ineffective to the extent of such invalidity or unenforceability without
affecting or invalidating the remaining provisions of this Lease.
This Lease may not be amended, changed, modified, altered, or terminated
except by an instrument in writing signed by the parties hereto.
This Lease may be executed in several counterparts, each of which shall be
an original and all of which shall constitute but one and the same instrument.
This Lease shall be governed by the laws of the State of New York.
44
(a) The Mortgages, the financing statements perfecting the security
interests created and/or assigned by the Issuer Security Agreement, and this
Lease shall be filed by the Issuer, at the Guarantor's expense, in the Office of
the Clerk of the County of Onondaga, New York, or in such other office as may at
the time provided by the law as the proper place for the recordation or filing
thereof.
(b) The Issuer and the Guarantor shall execute and deliver all instruments
and shall furnish all information which the Agent may deem necessary or
appropriate to protect any Liens created or contemplated by the Mortgages or the
Security Agreements.
(a) The obligations of the Guarantor to provide the indemnity required by
Section 10.3 hereof shall survive the termination of this Lease, the full
payment of the Bonds and any conveyance of the Issuer's interest in the Project
to the Guarantor and payments on account of such indemnification obligations
after such termination shall be made upon demand of the party to whom such
payment is due.
(b) The obligations of the Guarantor with respect to the Unassigned Rights
shall survive the termination of this Lease until the expiration of the period
stated in the applicable statute of limitations during which a claim, cause of
action, or prosecution relating to the Unassigned Rights may be brought, and the
payment in full or the satisfaction of such claim, cause of action, or
prosecution, and the payment of all expenses and charges incurred by the Issuer
or its officers, members, agents (other than the Guarantor), or employees
relating thereto.
45
The Table of Contents and the Section headings in this Lease have been
prepared for convenience of reference only and shall not control, affect the
meaning of, or be taken as an interpretation of any provision of this Lease.
(a) The obligations and agreements of the Issuer contained herein and in
the other Financing Documents and in any other instrument or document executed
in connection herewith or therewith, and any instrument or document supplemental
hereto or thereto, shall be deemed the obligations and agreements of the Issuer
and not of any member, officer, agent (other than the Guarantor), or employee of
the Issuer in his individual capacity; and the members, officers, agents (other
than the Guarantor), and employees of the Issuer shall not be liable personally
hereon or thereon or be subject to any personal liability or accountability
based upon or in respect hereof or thereof or of any transaction contemplated
hereby or thereby. The obligations and agreements of the Issuer contained herein
or therein shall not constitute or give rise to an obligation of the State of
New York or the County of Onondaga, and neither the State of New York nor the
County of Onondaga shall be liable hereon or thereon. Further, such obligations
and agreements shall not constitute or give rise to a general obligation of the
Issuer, but rather shall constitute limited obligations of the Issuer, payable
solely from the revenues of the Issuer derived, and to be derived from, the
lease, sale, or other disposition of the Project, except for revenues derived by
the Issuer with respect to the Unassigned Rights. No order or decree of specific
performance with respect to any of the obligations of the Issuer hereunder or
thereunder shall be sought or enforced against the Issuer unless:
46
(i) The party seeking such order or decree shall first have requested the
Issuer in writing to take the action sought in such order or decree of specific
performance, and ten days shall have elapsed from the date of receipt of such
request, and the Issuer shall have refused to comply with such request (or if
compliance therewith would reasonably be expected to take longer than ten days,
shall have failed to institute and diligently pursue action to cause compliance
with such request) or failed to respond within such notice period; and
(ii) If the Issuer refuses to comply with such request and the Issuer's
refusal to comply is based on its reasonable expectation that it will incur fees
and expenses, the party seeking such order or decree shall have placed in an
account with the Issuer an amount or undertaking sufficient to cover such
reasonable fees and expenses; and
(iii) If the Issuer refuses to comply with such request and the
Issuer's refusal to comply is based on its reasonable expectation that it or any
of its members, officers, agents (other than the Guarantor), or employees shall
be subject to potential liability, the party seeking such order or decree shall
(1) agree to indemnify and hold harmless the Issuer and its members, officers,
agents (other than the Guarantor), and employees against any liability incurred
as a result of its compliance with such demand; and (2) if requested by the
Issuer, furnish to the Issuer satisfactory security to protect the Issuer and
its members, officers, agents (other than the Guarantor), and employees against
all liability expected to be incurred as a result of compliance with such
request.
(b) Any failure to provide notice, indemnity, or security to the Issuer
pursuant to this Section 13.10 shall not alter the full force and effect of any
Event of Default under this Lease.
47
(c) Except to the extent otherwise expressly provided in Section
10.3(a)(7), the obligations and agreements of Guarantor contained herein and any
instrument or document supplemental hereto, shall be deemed the obligations and
agreement of the Guarantor (with recourse for such obligations and agreement
limited solely to the assets of the Guarantor) and not of any partner, member,
beneficial owner, officer, agent, or employee of Guarantor in his or its
individual capacity, and the partners, members, beneficial owners, officers,
agents and employees of the Guarantor shall not be liable personally hereon or
be subject to any personal liability or accountability based upon or in respect
hereof or of any transaction contemplated hereby.
This Lease (except for the Unassigned Rights) and all rights of the
Guarantor hereunder are, and shall be, subject and subordinate to the Ground
Lease, the Liens of the Mortgages, and to any mortgage or mortgages, whether fee
or leasehold mortgages, which may now or hereafter affect the Project or the
land under the Project, and to all renewals, modifications, consolidations,
replacements, and extensions thereof, and advances thereunder. The subordination
of this Lease to the Ground Lease and Mortgages shall be automatic, without
execution of any further subordination agreement by the Guarantor. Nonetheless,
if the Agent or the Issuer requires a further written subordination agreement,
the Guarantor agrees to execute, acknowledge, and deliver the same.
48
The Guarantor's execution and delivery pursuant to the Financing Agreement
of the Project Orange Associates, L.P. Guaranty, has been relied upon by the
Issuer in its execution and delivery of this Lease and its participation in the
transactions contemplated hereby.
IN WITNESS WHEREOF, the Issuer and the Guarantor have caused this Lease to
be executed in their respective names by their duly authorized representatives,
as of the date first set forth above.
THE CITY OF SYRACUSE INDUSTRIAL
DEVELOPMENT AGENCY
By: /s/ Xxxxxxx X. XxXxxxxx
____________________________________
Xxxxxxx X. XxXxxxxx, Chairman
PROJECT ORANGE ASSOCIATES, L.P.
By NCP Syracuse, Inc.,
Managing General Partner
By: /s/ Xxxxxxx X. Xxxx
____________________________________
Title: VP
00
Xxxxx xx Xxx Xxxx )
) SS.:
County of Onondaga )
On this 5th day of April l991 before me personally came Xxxxxxx X.
XxXxxxxx, to me known, who being by me duly sworn, did depose and say that he
resides in Syracuse, New York, that he is the Chairman of the City of Syracuse
Industrial Development Agency, a public benefit corporation of the State of New
York described in and which executed the foregoing Lease; and that he signed his
name thereto by order of the members of said corporation.
/s/ Xxxxxxxx X. Xxxxxxxx, Xx.
_____________________________________
Notary Public
State of New York )
) SS.:
County of New York )
On this 11th day of April, 1991 before me personally came Xxxxxxx X. Xxxx,
to me known, who being by me duly sworn, did depose and say that he resides at
_________________________________________; that he is the VP of NCP Syracuse,
Inc., a Delaware corporation which is the managing general partner of Project
Orange Associates, L.P., the Delaware limited partnership described in and which
executed the foregoing Lease (the "Partnership"); and that he signed his name
thereto by order of the board of directors of said corporation and as the
authorized and binding act and deed of the Partnership.
/s/ Xxxxxx X. Midwinter
_____________________________________
Notary Public
50
EXHIBIT A
Description of the Leased Premises
51
