AMENDED AND RESTATED MILL II LEASE
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between
CREDIT SUISSE LEASING 92A, L.P.,
as Lessor
and
TENNECO PACKAGING INC.,
as Lessee
Dated: As of November 4, 1996
Location: City of Valdosta
County of Lowndes
State of Georgia
and
County of Xxxxxxxx
State of Florida
NOTE TO TAX EXAMINER IN ACCORDANCE WITH TECHNICAL ASSISTANCE ADVISEMENT #96-M-
002 ISSUED BY THE DEPARTMENT OF REVENUE, DOCUMENTARY STAMP TAXES ARE DUE AND
PAYABLE UPON RECORDATION OF THIS LEASE. THE CALCULATION OF THE DOCUMENTARY
STAMP TAXES IS BASED ON THE ASSUMPTION THAT THE VALUE OF THE COLLATERAL LOCATED
IN FLORIDA IS MORE THAN THE PRORATA AMOUNT OF THE LOAN IN ACCORDANCE WITH RULE
12B-4.053(32)(c), FLORIDA ADMINISTRATIVE CODE. THE AMOUNT OF THE NOTES MADE,
EXECUTED AND DELIVERED OUTSIDE OF THE STATE OF FLORIDA IS IN THE AGGREGATE
PRINCIPAL AMOUNT OF $860,875,000.00 AND THE VALUE OF THE COLLATERAL LOCATED IN
FLORIDA IS $260,000.00. THE VALUE OF THE COLLATERAL LOCATED OUTSIDE OF THE
STATE OF FLORIDA IS $860,615,000.00. THIS LEASE DOES NOT ENCUMBER ANY REAL
PROPERTY; THEREFORE, THE INTANGIBLE TAX UNDER SECTION 199.133, FLORIDA STATUTES,
IS NOT DUE.
THIS LEASE HAS BEEN MANUALLY EXECUTED IN COUNTERPARTS NUMBERED CONSECUTIVELY
FROM l TO __. TO THE EXTENT, IF ANY, THAT THIS LEASE CONSTITUTES CHATTEL PAPER
(AS SUCH TERM IS DEFINED IN THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN ANY
APPLICABLE JURISDICTION), NO SECURITY INTEREST IN THIS LEASE MAY BE CREATED
THROUGH THE TRANSFER OR POSSESSION OF ANY COUNTERPART OF THIS LEASE OTHER THAN
COUNTERPART NO. 1.
This is Counterpart No. ____
2
TABLE OF CONTENTS
(Not a part of the Lease)
Paragraph Page
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1. Lease of Mill II Property; Title and Condition........ 2
2. Use; Quiet Enjoyment; Ownership;
Hazardous Materials................................... 2
2A. Acquisition; Construction; Financing.................. 4
3. Term.................................................. 5
4. Rent.................................................. 5
5. Net Lease; Non-Terminability.......................... 6
6. Taxes and Assessments; Compliance with Law;
Certain Agreements.................................... 7
7. Matters of Title...................................... 8
8. [Intentionally Omitted]............................... 10
i
Paragraph Page
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9 Maintenance and Repair; Inspection.................... 10
10. Mill II Alterations; Removal.......................... 12
11. Lessee's Right to Contest Real Property Taxes......... 13
12. Condemnation and Casualty............................. 14
13. Environmental Event................................... 18
14. Offer to Purchase..................................... 23
15. Procedure Upon Purchase............................... 24
16. Insurance............................................. 26
17. Subletting; Assignability; Amendment of
Facility Agreements................................ 29
ii
Paragraph Page
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18. Permitted Contests.................................... 30
19. Default Provisions.................................... 32
20. Additional Rights; Mortgage........................... 35
21. Notices, Demands and Other Instruments................ 44
22. No Default Certificate................................ 44
23. Surrender............................................. 44
24. Severability; Binding Effect; Governing Law;
Non-Recourse........................................ 46
25. Headings and Table of Contents........................ 47
26. Lessor's Right to Cure Lessee's Default............... 47
iii
Paragraph Page
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27. Lessee's Options Upon Expiration...................... 48
28. Protective Expenditures............................... 53
29. Limitations on Amounts Payable........................ 53
30. No Merger of Title.................................... 53
31. Payments to the Agent................................. 54
32. Remaining Moneys...................................... 54
33. Replace and Supersede................................. 54
Schedule A - Description of the Mill II Parcel
Schedule B - Fixed Rent and Additional Rent Schedule
Schedule C - Environmental Disclosure
Exhibit A - Performance Tests
iv
AMENDED AND RESTATED MILL II LEASE dated as of November 4, 1996 (this "Lease")
between CREDIT SUISSE LEASING 92A, L.P., a Delaware limited partnership (the
"Lessor"), having an address at 00 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 and
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TENNECO PACKAGING INC., a Delaware corporation (the "Lessee"), having an address
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at 0000 Xxxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxx 00000. The schedules and exhibits
referred to in this Lease are hereby incorporated by reference herein.
Capitalized terms used but not defined herein shall have the respective meanings
set forth in the Participation Agreement dated as of November 4, 1996, by and
among NEW TENNECO INC., the Lessee, the Lessor, STATE STREET BANK AND TRUST
COMPANY, as Collateral Agent, and CITIBANK, N.A., as Agent, and the Persons
named therein as Note Holders (as the same may be amended, modified or
supplemented from time to time, the "Participation Agreement").
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Preliminary Statement
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The Lessor and the Lessee entered into a certain Mill II Lease dated
as of November 4, 1996, pursuant to which the Lessor agreed to sublease the Mill
II Parcel and lease Mill II, the Mill II Improvements and the Mill II
Alterations to the Lessee on the terms and subject to the provisions therein set
forth (the "Original Mill II Lease"). The Lessor and the Lessee wish to modify
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and amend certain provisions of the Original Mill II Lease and to restate, in
its entirety, the provisions of the Original Mill II Lease, all in the manner
hereinafter set forth. It is intended by the Lessor and the Lessee that (a)
this Lease replaces in its entirety and supersedes in all respects the Original
Mill II Lease and (b) that all references in the Participation Agreement and any
of the Operative Documents to the "Mill II Lease" shall mean and refer to this
Lease.
As of the Financing Closing Date, the Lessor will have acquired a
leasehold interest in the Mill II Parcel described on Schedule A hereto and fee
title to Mill II located on the Mill II Parcel. The Lessor wishes to sublease
the Mill II Parcel, and lease Mill II, the Mill II Improvements and the Mill II
Alterations to the Lessee (for convenience of reference, such sublease of the
Mill II Parcel and lease of Mill II, the Mill II Improvements, the Mill II
Alterations and the balance of the Mill II Property being collectively referred
to as the lease of the Mill II Property) and the Lessee wishes to lease the same
from the Lessor for the Term, or the Extended Term (as defined
1
below), as applicable, and on the terms and subject to the provisions
hereinafter set forth.
NOW, THEREFORE, the parties do hereby agree as follows:
1. Lease of Mill II Property; Title and Condition. (a) In
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consideration of the rents and covenants herein stipulated to be paid and
performed by the Lessee for the Term, or the Extended Term (as applicable) and
upon the terms and conditions herein specified, (i) the Lessor hereby leases to
the Lessee the Mill II Property and (ii) the Lessee hereby leases and accepts
from the Lessor the Mill II Property. The Mill II Property is leased to the
Lessee subject to (w) the terms, covenants and provisions of the Mill II Ground
Lease, (x) all applicable Legal Requirements and all of the insurance
requirements set forth in paragraphs 16(a) through (c) hereof (collectively, the
"Insurance Requirements") now or hereafter in effect; (y) all Permitted
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Encumbrances; and (z) the terms, covenants and provisions of this Lease. The
Lessee has as of the date hereof, examined the Mill II Property and title
thereto and has found the same satisfactory for all purposes of this Lease.
(b) THE LESSOR MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR
IMPLIED, WITH RESPECT TO THE MILL II PROPERTY OR ANY FIXTURE OR OTHER ITEM
CONSTITUTING A PORTION THEREOF, OR THE LOCATION, USE, DESCRIPTION, DESIGN,
MERCHANTABILITY, FITNESS FOR USE FOR ANY PARTICULAR PURPOSE, CONDITION OR
DURABILITY THEREOF OR AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN,
OR AS TO THE LESSOR'S TITLE THERETO OR OWNERSHIP THEREOF OR OTHERWISE, IT BEING
AGREED THAT ALL RISKS INCIDENT THERETO ARE TO BE BORNE BY THE LESSEE. IN THE
EVENT OF ANY DEFECT OR DEFICIENCY OF ANY NATURE IN THE MILL II PROPERTY OR ANY
FIXTURE OR OTHER ITEM CONSTITUTING A PORTION THEREOF, OR LESSOR'S TITLE TO ANY
OF THE SAME, WHETHER PATENT OR LATENT, THE LESSOR SHALL HAVE NO RESPONSIBILITY
OR LIABILITY WITH RESPECT THERETO. THE PROVISIONS OF THIS PARAGRAPH 1(b) HAVE
BEEN NEGOTIATED AND ARE INTENDED TO BE A COMPLETE EXCLUSION AND NEGATION OF ANY
AND ALL WARRANTIES AND REPRESENTATIONS, EXPRESS OR IMPLIED, BY THE LESSOR WITH
RESPECT TO THE MILL II PROPERTY OR ANY FIXTURE OR OTHER ITEM CONSTITUTING A
PORTION THEREOF, WHETHER ARISING PURSUANT TO THE UCC OR ANY OTHER LAW, NOW OR
HEREAFTER IN EFFECT.
2. Use; Quiet Enjoyment; Ownership; Hazardous Materials. (a) The
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Lessee shall use the Mill II Property solely as a pulp
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and paper mill facility, storage facilities and related business offices, in a
manner consistent with the provisions of paragraph 9. The Lessee covenants that
it will cause Mill II, the Mill II Improvements and the Mill II Alterations (to
the extent the same are or become an integral part of the Mill II Property) at
all times to be located on the Mill II Parcel.
(b) During the Term or the Extended Term, the Lessor covenants that,
unless a Default or an Event of Default or a Major Environmental Event has
occurred and is continuing, it will not, and will not permit any party claiming
by or under the Lessor (subject to the terms, covenants and provisions of the
Ground Lease) to, (i) grant, create or suffer to exist any Lien upon the Mill II
Property (or any part thereof or interest therein) other than the Permitted
Encumbrances (excluding therefrom any Lessor's Lien); or (ii) interfere with the
peaceful and quiet possession and enjoyment of the Mill II Property by the
Lessee; provided, however, that the Lessor, the Agent, the Collateral Agent, the
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Equity Investor, the Independent Engineer, the Environmental Consultant, the
Appraiser and their respective successors, assigns, representatives and agents
(the "Lessor Group") may, upon advance written notice to the Lessee (unless any
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member of the Lessor Group, each in its sole discretion, has reason to believe
that a Default, an Event of Default or a Major Environmental Event has occurred
and is continuing or other exigent or emergency conditions exist, in which case
no such notice shall be necessary), enter upon and examine the Mill II Property
or any part thereof (including all records directly related to the Mill II
Property) at reasonable times in compliance with and subject to Lessee's
standard safety and security procedures, in effect from time to time; provided,
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further, that if a Default, an Event of Default or a Major Environmental Event
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has occurred and is continuing or if the Lessee has exercised its option to
terminate this Lease pursuant to clause (ii) of paragraph 27(a), then the Lessee
shall give the Lessor Group such additional access to the Mill II Property and
to the Lessee's books and records relating to the management, operation, use,
maintenance, renovation, construction or occupancy of the Mill II Property as it
may require for any purpose, including, without limitation, for marketing,
selling, operating or otherwise disposing of the Mill II Property.
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(c) The Lessor will not, and will not permit any party claiming by,
through or under the Lessor to assign, transfer, lease or convey the Mill II
Property or this Lease, or any part thereof or interest therein other than to
the Collateral Agent. The foregoing restriction will not apply to (i) removal
of the Mill II Alterations by the Lessee to the extent permitted under this
Lease or (ii) any assignment, transfer or conveyance of the Mill II Property or
this Lease to the Collateral Agent or as otherwise permitted under the
Interparty Agreement or under the Participation Agreement; provided that any
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such assignment, transfer or conveyance (prior to the Expiration Date or when an
Event of Default does not exist) is expressly subordinate to the rights of the
Lessee under this Lease and (y) subject to the rights of the Lessee to purchase
the Mill II Property pursuant to the Operative Documents.
(d) The Lessor, at the Lessee's sole cost and expense, shall
cooperate or assist with the Lessee's efforts to obtain all services, Permits
and contracts necessary and useful for the renovation and construction of the
Mill II Improvements and the acquisition, operation and maintenance of the Mill
II Property for the intended purposes thereof, and the Lessor may, and to the
extent required in paragraph 7(c) shall, execute such documents or papers as may
be reasonably necessary for such purposes. The Lessee further covenants that it
shall at its own cost and expense on behalf of and in the name of the Lessor,
apply for, obtain and maintain all Permits required in order to permit the
lawful ownership of the Mill II Property by the Lessor during the Term or the
Extended Term, as the case may be.
(e) Any failure by the Lessor or such other Person to comply with the
foregoing provisions of this paragraph 2 or any other provisions of this Lease
shall not give the Lessee any right to cancel or terminate this Lease, or to
xxxxx, reduce or make deduction from or offset against any Fixed Rent,
Additional Rent or other sum payable under this Lease, or to fail to perform or
observe any other covenant, agreement or obligation hereunder.
(f) The Lessee shall, and it shall require and ensure that any and
all sublessees, employees, contractors, subcontractors, agents, representatives,
affiliates, consultants, occupants and any and all other Persons, subject to
paragraph 13, (i) comply with all applicable Environmental Laws, and (ii) use,
employ,
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process, emit, generate, store, handle, transport, dispose of and/or arrange for
the disposal of any and all Hazardous Materials in, on or, directly or
indirectly, related to or in connection with the Mill II Property or any part
thereof in a manner consistent with prudent industry practice and in compliance
with all applicable Environmental Laws, and in a manner which does not pose a
significant risk to human health, safety (including occupational health and
safety) or the environment. The Lessor and the Lessee hereby acknowledge and
agree that the Lessee's obligations hereunder with respect to Hazardous
Materials and Environmental Laws are intended to bind the Lessee with respect to
matters and conditions on, in, under, beneath, from, with respect to, affecting,
related to, in connection with, or involving the Mill II Property or any part
thereof.
2A. Acquisition; Construction; Financing. (a) The Lessee has entered
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into the Agency Agreement with the Lessor pursuant to which the Lessee as
Construction Agent has agreed to complete the renovation and construction of
such Mill II Improvements as the Lessee, in its sole discretion, shall determine
to construct as contemplated by the Participation Agreement. The Mill II
Improvements shall, as the construction of same is completed upon the Mill II
Parcel, become a part of Mill II, and title thereto shall remain in the Lessor.
(b) In order to finance the acquisition by the Lessor of its
leasehold interest in the Mill II Parcel and its ownership interest in the
balance of the Mill II Property and to finance the cost of renovation and
construction of the Mill II Improvements, if any, the Note Holders, as
contemplated by the Participation Agreement, will advance to the Agent on behalf
of the Lessor the Actual Project Costs up to their respective Note Commitments,
and in consideration therefor, the Lessor will issue A-Notes and B-Notes to the
Note Holders, and the Equity Investors, as contemplated by the Participation
Agreement, will make an Equity Investment in the Mill II Property in an amount
up to the Equity Investment Amount.
3. Term. The Mill II Property is leased for an initial term (the
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"Term") which shall commence on the Financing Closing Date and shall terminate
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on January 30, 2002 (the "Expiration Date"), or such earlier date as this Lease
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shall be terminated pursuant to any provision hereof; provided, however, this
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Lease may be
5
extended for an Extended Term pursuant to paragraph 27(d) hereof.
4. Rent. (a) During the Term (or the Extended Term, as
----
applicable), the Lessee shall pay to the Agent, on behalf of the Lessor, Fixed
Rent on each Payment Date in the amounts determined in accordance with Schedule
B hereto and Additional Rent (as defined below) in the amounts determined in
accordance with (and at the times required under) the Operative Documents.
(b) All amounts that the Lessee is required to pay to the Lessor
pursuant to this Lease (other than Fixed Rent), including, but not limited to,
(i) unpaid Charges and all amounts set forth in paragraph 4(e)(ii) hereof, (ii)
all sums, costs and expenses pursuant to paragraphs 23 and 26 hereof, (iii) all
costs and expenses relating to the Mill II Property or the Lessee's use or the
Lessor's ownership thereof (or leasehold interest therein), (iv) any and all
amounts payable upon transfer or purchase of (or otherwise relating to) the Mill
II Property, together with every fine, penalty, interest and cost that may be
added for non-payment or late payment thereof, and (v) all Additional Costs,
shall constitute "Additional Rent". The Lessor shall give the Lessee notice of
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any Additional Rent due hereunder promptly after it has knowledge of such
Additional Rent, and shall use reasonable efforts to notify the Lessee in
advance of the due date and amount of such Additional Rent; provided that
failure to give such prompt notice shall not relieve the Lessee of its
obligation to pay such Additional Rent, subject to, as applicable, the Lessee's
rights, if any, under paragraph 18 hereof. Additional Rent shall be payable as
provided for in Section II of Schedule B or as otherwise provided in this Lease.
(c) The Lessee shall pay to the Lessor, on demand, interest at the
Default Rate on all amounts payable by it to the Lessor hereunder from the due
date thereof until paid in full.
(d) All amounts payable by the Lessee hereunder shall be paid in
lawful money of the United States of America and in immediately available funds
by 11:00 a.m. (New York City time) on the applicable Payment Date or on the date
when due, unless any such due date is not a Business Day, in which case payment
shall be due and payable on the next succeeding Business Day, at the Agent's
address as set forth in Schedule I to the
6
Participation Agreement, or at such other address or to such other person in the
United States of America or in such other manner as the Lessor from time to time
may designate to the Lessee by written instructions.
(e) The Lessee shall perform all of its obligations under this Lease
at its sole cost and expense and shall pay, when due and without notice or
demand (except as otherwise provided in this Lease), all amounts due hereunder,
under Section 8.13 of the Participation Agreement, or under the other Operative
Documents or Securitization Documents. The Lessee agrees to pay on demand (i)
all Charges (subject to Lessee's rights pursuant to paragraphs 11 and 18) and
(ii) all indemnity obligations and all charges, reasonable fees, expenses and
out-of-pocket costs of the Lessor, Lessor's Special Counsel, the Note Holders,
the Equity Investors, the Collateral Agent and the Agent and other amounts, in
accordance with the Participation Agreement.
5. Net Lease; Non-Terminability. (a) This Lease is a net lease
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and, except as otherwise expressly provided in this Lease, any present or future
Law to the contrary notwithstanding, shall not terminate, nor shall the Lessee
be entitled to any abatement, reduction, set-off, counterclaim, defense or
deduction with respect to any Fixed Rent, Additional Rent or other sum payable
hereunder. Except as otherwise expressly provided in this Lease, the
obligations of the Lessee shall not be affected by reason of: (i) any damage to
or destruction of the Mill II Property or any part thereof by any cause
whatsoever (including, without limitation, by fire, Casualty or act of God or
enemy or any other force majeure event); (ii) any Condemnation, including,
without limitation, a temporary Condemnation of the Mill II Property or any part
thereof; (iii) any prohibition, limitation, restriction or prevention of the
Lessee's use, occupancy or enjoyment of the Mill II Property or any part thereof
by any Person; (iv) any matter affecting title to the Mill II Property or any
part thereof; (v) any eviction of the Lessee from, or loss of possession by the
Lessee of, the Mill II Property or any part thereof, by reason of title
paramount or otherwise; (vi) any default by the Lessor hereunder or under any
other Operative Document or Securitization Document; (vii) the invalidity or
unenforceability of any provision hereof or in the other Operative Documents or
the impossibility or illegality of performance by the Lessor or the Lessee or
both; (viii) any action of any Federal, state or local
7
governmental authority; or (ix) any other cause or occurrence whatsoever,
whether similar or dissimilar to the foregoing. The parties intend that the
obligations of the Lessee hereunder shall continue unaffected unless such
obligations shall have been modified or terminated pursuant to an express
provision of this Lease.
(b) The Lessee shall remain obligated under this Lease in accordance
with its terms and shall not take any action to terminate, rescind or avoid this
Lease, notwithstanding any bankruptcy, insolvency, reorganization, liquidation,
dissolution or other proceeding affecting the Lessor or any action with respect
to this Lease which may be taken by any trustee, receiver or liquidator or by
any court. Except as expressly permitted in this Lease, the Lessee waives all
rights to terminate or surrender this Lease, or to any abatement or deferment of
Fixed Rent, Additional Rent or other sums payable hereunder or under the other
Operative Documents. The Lessee shall remain obligated under this Lease in
accordance with its terms, and the Lessee hereby waives any and all rights now
or hereafter conferred by Law or otherwise to modify or to avoid strict
compliance with its obligations under this Lease. All payments made to or for
the benefit of the Lessor hereunder as required hereby shall be final, and the
Lessee shall not seek to recover any such payment or any part thereof for any
reason whatsoever, absent manifest error.
6. Taxes and Assessments; Compliance with Law; Certain Agreements.
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(a) The Lessee shall pay or cause to be paid, subject to paragraph 18, all
Property Charges before the same become delinquent. If any Property Charge may
legally be paid in installments, such Property Charge may be so paid in
installments; provided that, the Lessee shall pay all such installments on or
before the Expiration Date or earlier termination of this Lease.
(b) Subject to paragraph 13, the Lessee shall, at the Lessee's sole
expense, comply, and cause the Mill II Property to comply, in all material
respects, with all Legal Requirements; provided, however, the Lessee shall not
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be obligated to comply with any Legal Requirement whose application or validity
is being contested diligently and in good faith by appropriate proceedings (and
provided that the failure to comply with such
8
Legal Requirements during such contest is not reasonably likely to have a
Material Adverse Effect). "Legal Requirements" means (i) all Laws, foreseen or
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unforeseen, ordinary or extraordinary, or arising from any restriction of record
or otherwise, which now or at any time hereafter may be applicable to the (A)
Lessor, as holder of the leasehold estate in the Mill II Parcel and the owner of
the balance of the Mill II Property; (B) the Lessee, as lessee hereunder; or (C)
the Mill II Property or any part thereof, or any of the adjoining sidewalks, or
the ownership, construction, operation, mortgaging, occupancy, possession, use,
non-use or condition of the Mill II Property or any part thereof and any other
governmental rules, orders and determinations now or hereafter enacted, made or
issued, and applicable to the Lessor, as lessee of the Mill II Parcel or as
owner of the balance of the Mill II Property, the Lessee, as lessee hereunder,
or the Mill II Property or any part thereof or the ownership, construction,
operation, mortgaging, occupancy, possession, use, non-use or condition thereof
whether or not presently contemplated; and (ii) all agreements (including,
without limitation, all Facility Agreements), Permits, covenants, and
restrictions applicable to the Mill II Property or any part thereof or the
ownership, construction, operation, mortgaging, occupancy, possession, use, non-
use or condition thereof.
(c) The Lessee shall, and (unless a Default, an Event of Default or a
Major Environmental Event has occurred and is continuing and the Lessor has
revoked such authority) is hereby authorized by the Lessor to, fully and
promptly keep, observe, perform and satisfy, on behalf of the Lessor, any and
all obligations, conditions, covenants and restrictions of or on the Lessor
under the Ground Lease and any and all Facility Agreements so that there will be
no default thereunder and so that the other parties thereunder shall be and
remain at all times obliged to perform their obligations thereunder, and the
Lessee, to the extent within its control, shall not permit to exist any
condition, event or fact that could allow or serve as a basis or justification
for any such Person to avoid such performance.
7. Matters of Title. (a) The Lessee shall not create or permit to
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be created or exist, and shall promptly remove and discharge, any Lien upon this
Lease, the Mill II Property or any other part thereof or interest therein, or
upon any Fixed Rent,
9
Additional Rent or other sum paid hereunder, which Lien arises for any reason,
including, without limitation, any and all Liens which arise out of the
ownership, leasing, use, condition, occupancy, construction, possession, repair
or rebuilding of the Mill II Property or any part thereof (including, without
limitation, by reason of construction and start-up of the Mill II Improvements)
or by reason of labor or materials furnished or claimed to have been furnished
to the Lessee or for the Mill II Improvements or any part thereof, but excluding
Permitted Encumbrances and Liens created by the Operative Documents. Lessee's
obligation to remove any of the above-described Liens arising prior to the
termination of this Lease (or arising due to circumstances occurring prior to
the termination of this Lease) shall survive the termination of this Lease.
Nothing contained in this Lease shall be considered as constituting the consent
or request of the Lessor, express or implied, to or for the performance by any
contractor, laborer, materialman or vendor of any labor or services or for the
furnishing of any materials for any construction, alteration, addition, repair
or demolition of or to the Mill II Property or any part thereof. NOTICE IS
HEREBY GIVEN THAT THE LESSOR IS NOT AND SHALL NOT BE LIABLE FOR ANY LABOR,
SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO THE LESSEE, OR TO ANYONE
HOLDING OR POSSESSING THE MILL II PROPERTY OR ANY PART THEREOF THROUGH OR UNDER
THE LESSEE, AND THAT NO MECHANIC'S OR OTHER SIMILAR STATUTORY LIENS FOR ANY
LABOR, SERVICES OR MATERIALS SHALL ATTACH TO OR AFFECT THE LESSOR'S INTEREST OR
ESTATE IN THE MILL II PROPERTY OR ANY PART THEREOF.
(b) The Lessee hereby acknowledges that this Lease shall at all times
be subject and subordinate to the Deed of Trust and the Florida Mortgage.
However, so long as no Event of Default under this Lease shall have occurred and
be continuing, in the event of a Lessor Event of Default (as defined in the
Interparty Agreement), the Collateral Agent will not (i) take any action to
disturb the Lessee's possession and occupancy of the Mill II Property nor to
diminish or interfere with any of the Lessee's rights and priveleges under this
Lease, and/or (ii) join the Lessee as a party defendant in any action or
proceeding for the purpose of terminating the Lessee's interest and estate under
this Lease.
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(c) The Lessor agrees that the Lessee during the Term shall have the
exclusive right (so long as no Default, Event of Default or Major Environmental
Event has occurred and is continuing) to secure subdivision approvals, site plan
approvals, annexation or de-annexation approvals, zoning variances and Permits
necessary or desirable for the development, use, operation, maintenance or
condition of the Mill II Property or any part thereof; provided that the fair
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market value, marketability or use of the Mill II Property is not lessened by
any such action. The Lessor agrees to execute such documents and take all other
actions as shall be reasonably requested, and otherwise cooperate with the
Lessee, in connection with the matters described above; provided, however, that
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all costs and expenses incurred by the Lessor in connection therewith shall be
borne by the Lessee and that the Lessor shall not be required to execute any
documents which would, in the reasonable opinion of the Agent or Lessor,
adversely affect the value, marketability or use of the Mill II Property or
otherwise adversely affect the transactions contemplated by the Operative
Documents or the interests of the Lessor, the Equity Investors or the Note
Holders.
8. [Intentionally Omitted.]
9. Maintenance and Repair; Inspection. (a) Subject to paragraph
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12, the Lessee, at its own cost and expense, will manage and maintain the Mill
II Property in good mechanical condition and repair (ordinary wear and tear
excepted), in accordance with prudent industry practice and in a manner
consistent with that of other similar properties owned or operated by it or its
Affiliates similarly situated, and will take all action, and will make all
changes and repairs, structural and nonstructural, foreseen and unforeseen,
ordinary and extraordinary, which may be required to maintain the Mill II
Property in good mechanical condition and repair (ordinary wear and tear
excepted), in accordance with prudent industry practice, and in compliance with
all Legal Requirements (subject to paragraph 13) and Insurance Requirements at
any time in effect. The Lessee shall, in accordance with prudent industry
practice, repair or replace each item constituting Mill II and/or the Mill II
Improvements that shall have become worn out, damaged, inoperative or obsolete
in whole or in part; provided, however, that (i) the fair market value,
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marketability or use of the Mill II Property shall not be lessened and (ii) such
11
replacements shall be of a type currently used in the industry for the same
purpose and having a remaining useful life at least as long as that of Mill II
or the Mill II Improvements (or any part thereof), as the case may be, repaired
or replaced (prior to obsolescence, loss or damage and the like). All repairs,
replacements and rebuilding by the Lessee hereunder, to the extent permitted by
Law, shall immediately become and shall remain part of the Mill II Property of
the Lessor, subject to this Lease. The Lessor shall not be required to, and
Lessee hereby waives any right to require the Lessor to, manage, maintain,
replace, repair or rebuild Mill II, the Mill II Improvements or any part thereof
and the Lessee waives any and all rights it may now or hereafter have to make
any repairs at the cost and expense of the Lessor pursuant to any Legal
Requirement, Insurance Requirement, or otherwise, at any time in effect.
(b) Except for Permitted Encumbrances, in the event that all or any
part of Mill II or the Mill II Improvements shall encroach upon any property or
right-of-way adjoining or adjacent to the Mill II Parcel or any part thereof, or
shall violate any agreements or conditions affecting the Mill II Property or any
part thereof, or shall obstruct any easement or right-of-way to which the Mill
II Property or any part thereof may be subject, then the Lessee shall, at its
sole cost and expense, either (i) contest such matter pursuant to paragraph 18
hereof, (ii) obtain valid and effective Permits for or consents to such
encroachments and/or violations (without any liability to the Lessor, the Agent,
the Equity Investors or the Note Holders for which such parties are not
indemnified by the Lessee) or waivers or settlements of all claims, liabilities
and damages resulting therefrom, or (iii) make such changes, including
alteration or removal, to Mill II or the Mill II Improvements (as the case may
be) and take such other action as shall be reasonably necessary to rectify such
encroachments, violations, hindrances, obstructions or impairments, subject to
the Lessor's consent if and to the extent required by paragraph 10(a) hereof.
(c) Within 60 days after the end of the first three quarters of each
fiscal year and within 90 days after the end of the fourth fiscal quarter of
each fiscal year the Lessee shall give the Lessor and the Agent prompt written
notice of any mechanical
12
problems which required non-scheduled shutdown of operations of Mill II for
fifteen (15) consecutive days or an aggregate of thirty (30) days during the
fiscal quarter just ended and shall state the specific reasons for such
shutdown.
(d) The Lessor Group shall have the right (which may be delegated to
its consultants and authorized representatives) to inspect the Mill II Property
and records directly related to the operation of the Mill II Property and to
discuss such of the affairs, finances, and accounts as are relevant to the
Operative Documents with the officers of Lessee, in all cases, at reasonable
times in compliance with and subject to Lessee's reasonable security and safety
procedures, in effect from time to time. Any such inspection shall be made
after advance written notice to the Lessee is given; provided, however, that no
-------- -------
advance written notice need be given if any member of the Lessor Group, in its
sole discretion, has reason to believe that a Default, Event of Default or a
Major Environmental Event has occurred or other exigent or emergency conditions
exist; and provided further, that all such inspections upon the occurrence and
-------- -------
during the continuance of a Default, an Event of Default or a Major
Environmental Event shall be at the expense of the Lessee.
10. Mill II Alterations; Removal. (a) At any time, so long as no
----------------------------
Default, Major Environmental Event or Event of Default shall have occurred and
be continuing, the Lessee may, at its own cost and expense, make Mill II
Alterations to the Mill II Property or any part thereof; provided, however, that
-------- -------
(i) the fair market value of the Mill II Property shall not be lessened by such
Mill II Alterations; (ii) such Mill II Alterations shall not diminish the
capacity, utility, efficiency, or remaining useful life of the Mill II Property
or any part thereof; and (iii) such work shall be completed in a good and
workmanlike manner free and clear of any Liens for labor, services or materials
(other than Permitted Encumbrances) and in compliance with all applicable Legal
Requirements and Insurance Requirements. "Mill II Alterations" means any and
-------------------
all additions to, alterations of or replacements for the Mill II Property or any
part thereof made by or for the Lessee, at the cost and expense of the Lessee,
excluding Mill II Improvements and any replacements installed as part of
scheduled maintenance procedures.
(b) Title to all Mill II Alterations shall vest in the Lessor (free
and clear of all Liens, except Permitted Encumbrances)
13
subject to the right of Lessee to remove such Mill II Alterations as provided
hereunder. Upon any removal of the Mill II Alterations permitted hereunder, the
Lessor (at the expense of the Lessee) shall execute and deliver to the Lessee
such instruments and releases as are reasonably required to transfer the Mill II
Alterations to the Lessee pursuant to instruments in each case containing no
representation or warranty (expressed or implied) except that such Mill II
Alterations are free and clear of any Lien created under the Operative Documents
or any Lessor Lien or other adverse interest of any kind created or caused by
the Lessor or any person claiming by, through or under the Lessor.
(c) So long as no Default, Major Environmental Event or Event of
Default shall have occurred and be continuing, the Lessee shall be permitted at
any time during, or upon the expiration or termination of, the Term or the
Extended Term as applicable, and at its sole cost and expense, to remove or
demolish any Mill II Alterations in accordance with prudent industry practices;
provided, however, that, such removal shall not (i) impair the intended use or
-------- -------
reduce the fair market value of the Mill II Property or any part thereof below
its fair market value at the commencement of the Term; (ii) diminish the
capacity, efficiency, utility or remaining useful life of the Mill II Property
or any part thereof below the capacity, efficiency, utility or remaining useful
life as of the commencement of the Term; or (iii) cause a violation of any Legal
Requirement or Insurance Requirement or significantly increase any risk of
liability under any Environmental Law or any risk to human health or the
environment. Any damage to the Mill II Property or any part thereof caused by
such removal shall promptly be repaired by the Lessee and the Mill II Property
(and each and every part thereof) shall be restored to its condition (or the
reasonable equivalent thereof) as it existed immediately prior to the
construction of such removed Mill II Alterations, at the Lessee's sole cost and
expense. The Lessee may place upon the Mill II Parcel or any part thereof any
inventory, fixtures, machinery, equipment or other property belonging to the
Lessee or third parties and remove the same at any time during the Term or the
Extended Term, as applicable (to the extent the same are not nor become an
integral part of the Mill II Property and so
14
long as no Default, Event of Default or Major Environmental Event shall have
occurred and be continuing), and Lessee may (to the extent the same are not or
do not become an integral part of the Mill II Property and so long as no
Default, Event of Default or Major Environmental Event shall have occurred and
be continuing), and at the request of the Lessor shall, remove the same at the
expiration or termination hereof unless the Lessee shall have paid the Offer
Purchase Price and purchased the Mill II Property pursuant to the terms of this
Lease; provided that any damage to the Mill II Property or any part thereof
caused by such removal shall promptly be repaired by the Lessee, and the Mill II
Property (and each and every part thereof) restored to its condition (or the
reasonable equivalent thereof) as it existed immediately prior to the placement
of any such property upon the Mill II Parcel, all at the Lessee's sole cost and
expense.
(d) Not less than 30 days before the beginning of each calendar year,
the Lessee shall provide the Lessor and the Agent with a report of the Lessee's
capital spending plans for the ensuing calendar year for Mill II Alterations and
supporting details describing any single capital expenditure for a Mill II
Alteration in excess of $5 million. Such report shall be accompanied by a
certification from the Lessee to the effect that all such planned Mill II
Alterations will comply with the standards set forth in paragraph 10(a).
11. Lessee's Right to Contest Real Property Taxes. The Lessee, at
---------------------------------------------
its own cost and expense and in compliance with paragraph 18, shall have the
sole right, at any time, to seek, in good faith, a reduction in the assessed
valuation of the Mill II Property or any part thereof or to contest, in good
faith, any real or personal property taxes for the Mill II Property or any part
thereof. The Lessor shall not be required to join in any proceeding or contest
brought by the Lessee unless the provisions of any Legal Requirement require
that the proceeding or contest be brought by or in the name of the owner of the
Mill II Property. In that case the Lessor shall join in the proceeding or
contest or permit it to be brought in the Lessor's name as long as the Lessee
reimburses the Lessor for any and all costs and expenses incurred by the Lessor
in connection therewith. The Lessee, on a final non-appealable determination of
the proceeding or contest, shall immediately pay, discharge and satisfy any
decision or judgment rendered, together with all
15
costs, interest and penalties incidental to the decision or judgment.
12. Condemnation and Casualty. (a) General. The Lessee hereby
------------------------- -------
irrevocably assigns to the Lessor any award or compensation or insurance payment
or other proceeds to which the Lessee may become entitled by reason of its
interest in the Mill II Property or any part thereof (other than proceeds from
business interruption insurance) if (i) the Mill II Property or any part thereof
is damaged or destroyed by fire or other casualty (each, a "Casualty") or (ii)
--------
the use, occupancy or title of the Mill II Property or any part thereof is taken
or requisitioned or sold in, or on account of any actual or threatened
condemnation or eminent domain proceedings, or other action by any Person having
the power of eminent domain or condemnation (each, a "Condemnation"); provided,
------------ --------
however, that the Lessee shall be entitled to any proceeds as a result of any
-------
Condemnation or Casualty affecting the Mill II Alterations to the extent that
the Lessee would otherwise be entitled to remove such Mill II Alterations
pursuant to paragraph 10(c); and provided, further, that the Lessee shall be
-------- -------
entitled to any proceeds as a result of any Condemnation or Casualty for which
the award, compensation, insurance payment, or other proceeds to which the
Lessee may be entitled does not exceed $100,000 (the "Excluded Proceeds").
-----------------
The Lessee shall promptly notify the Lessor in writing of any such
Casualty or Condemnation and shall appear in any proceeding or action to defend,
negotiate, prosecute or adjust any claim for any award or compensation or
insurance payment on account of any Casualty or Condemnation and shall take all
appropriate action in connection with any Casualty or Condemnation, including
the employment of counsel reasonably satisfactory to the Lessor. The Lessor
shall have the right to appear and participate and to employ counsel in any such
proceeding or action, and the fees and expenses of such counsel shall be paid by
the Lessee. If the Lessee shall elect not to appear or shall fail to prosecute
diligently, the Lessor may assume the prosecution thereof and the Lessee shall
pay all of the costs and expenses of the Lessor (including, but not limited to,
fees and expenses of Lessor's Special Counsel) and the fees and expenses of
Special Counsel. No settlement of any such
16
proceeding or action shall be made by the Lessee or the Lessor without the
written consent of the other party hereto, which consent shall not unreasonably
be withheld, conditioned or delayed.
Any and all amounts in excess of the self insured retention limits
hereunder representing proceeds (other than proceeds from business interruption
insurance, proceeds with respect to Mill II Alterations permitted to be removed
pursuant to paragraph 10(c) and Excluded Proceeds) paid in connection with any
such Condemnation or Casualty, as the case may be (collectively, the
"Proceeds"), shall be paid over to the Proceeds Trustee (as defined below) to be
--------
held in trust by such Proceeds Trustee and distributed pursuant to this
paragraph 12 and paragraph 15 hereof or pursuant to the Interparty Agreement, as
appropriate (all such Proceeds, less the costs and expenses incurred by the
Lessor and the Lessee in collecting such amounts, but including any
reimbursement by the Lessee for costs and expenses in connection therewith to
which the Lessor, the Equity Investors and the Note Holders are entitled
pursuant to the Operative Documents, are the "Net Proceeds"). Any and all
------------
Proceeds received by the Lessee in connection with any such proceeding or action
shall be paid over to the Lessor, shall be segregated from other funds of the
Lessor and shall be forthwith paid over to the Proceeds Trustee. The Lessee
agrees that this Lease shall control the rights of the Lessor and the Lessee in
any such Proceeds, and any present or future Law to the contrary is hereby
waived. Any and all reasonable charges, fees and expenses of the Proceeds
Trustee shall be paid from the Net Proceeds. "Proceeds Trustee" shall mean the
----------------
Agent or such title company or other independent bank or trust company as may be
designated by the Lessor.
17
(b) Condemnation or Casualty with Termination.
-----------------------------------------
(i) Within ten (10) days after the amount of the Proceeds to be
paid to the Lessee or the Proceeds Trustee is determined, the Lessee shall
decide whether the Lessee shall rebuild, replace and repair the damage to the
Mill II Property; provided, however, that the Lessee shall not be obligated to
-------- -------
rebuild any Mill II Alterations to the extent that the Lessee would otherwise
have been entitled to remove such Mill II Alterations pursuant to paragraph
10(c). If the Lessee decides not to rebuild, replace and repair the damage to
the Mill II Property, the Lessee shall, within such ten (10) day period, deliver
to the Lessor an Offer to Purchase in accordance with paragraphs 14 and 15
hereof. Prior to the Closing Date, the Lessee shall continue to pay all Fixed
Rent, Additional Rent and all other amounts due hereunder.
(ii) If a Casualty or Condemnation occurs during the Term (or the
Extended Term, as applicable) and the Lessor has received an opinion, which
shall be at the Lessee's sole cost and expense, of the Independent Engineer to
the effect that the restoration of the Mill II Property could not be expected to
restore and rebuild the Mill II Property to its previous capacity, efficiency
and remaining useful life or such restoration and rebuilding could not be
expected to be completed in full prior to the Expiration Date or that the cost
of such restoration or rebuilding would exceed 25% of the fair market value of
the Mill II Property immediately prior to such Casualty or Condemnation, then
the Lessor may, in its sole discretion, deliver a notice ("Lessor Termination
------------------
Notice") declaring Lessor's intention to terminate this Lease and the Lessee
------
shall be deemed to have delivered to the Lessor as of the date of the Lessor
Termination Notice an Offer to Purchase in accordance with paragraphs 14 and 15
hereof.
(c) Condemnation or Casualty Without Termination. If, after a
--------------------------------------------
Casualty or Condemnation, the Lessee has not given an Offer to Purchase and
Lessor has not given a Lessor Termination Notice in accordance with paragraph
12(b), then this Lease shall continue in full force and effect, and the Lessee
shall, at its sole cost and expense, promptly commence and diligently pursue to
completion the rebuilding, replacement or repair of any damage to the Mill II
Parcel, Mill II and the Mill II Improvements caused by such event in conformity
with the requirements of paragraph 9 or 10, as applicable, in order to restore
the Mill II Parcel, Mill II and the Mill II Improvements (in the case of a
Condemnation, as nearly as practicable) to the value and operating condition
thereof immediately prior to such event. In connection with such restoration
the Lessee shall, before beginning such restoration, submit plans and
specifications for such restoration, together with an estimate of the cost
thereof, and all necessary construction contracts therefor for the Lessor's and
the Independent Engineer's approval, which will not be unreasonably withheld,
conditioned or delayed; provided that (i) the capacity, efficiency and utility
--------
of the Mill II Parcel, Mill II and the Mill II
18
Improvements shall not, after such restoration, be less than the capacity,
efficiency and utility prior to such Casualty or Condemnation; (ii) the fair
market value of the Mill II Parcel, Mill II and the Mill II Improvements shall
not, after such restoration, be less than its fair market value prior to such
Casualty or Condemnation; and (iii) if the estimated cost to complete such
restoration exceeds the amount of Net Proceeds, the Lessor is, in its sole
judgment, satisfied that the Lessee shall have sufficient funds (the "Excess
------
Funds") available to pay such excess, which Excess Funds shall be deposited by
-----
the Lessee with the Proceeds Trustee and distributed to the Lessee as
hereinafter provided. If the conditions set forth in the foregoing proviso are
not satisfied, the Lessee shall be deemed to have made an Offer to Purchase.
Such work shall be completed in a good and workmanlike manner free and clear of
all Liens for labor, services or materials (except Permitted Encumbrances) and
in compliance with all applicable Legal Requirements and Insurance Requirements.
Upon completion of such work, the Lessee shall cause the Independent Engineer to
deliver a certificate to the effect that final completion of the work has
occurred and that the operating condition of the Mill II Property, after taking
into consideration the restoration, is equivalent to, or better than, the
operating condition that existed immediately prior to the Casualty or
Condemnation assuming compliance with paragraph 9 hereof. All fees and expenses
of the Independent Engineer in connection with any rebuilding and restoration
shall be at the Lessee's sole cost and expense.
The Lessee shall be entitled to receive payment from the Net Proceeds
or the Excess Funds, as the case may be, from time to time as such work of
rebuilding, replacement or repair progresses, but only after presentation of
certificates of the Independent Engineer, delivered by the Lessee to the
Proceeds Trustee (with a copy to the Lessor) from time to time as such work of
rebuilding, replacement or repair progresses. Each such certificate of the
Independent Engineer shall describe the work for which the Lessee is requesting
permission to pay or requesting payment and the cost incurred by the Lessee in
connection therewith and shall state that such work has been properly completed
and that the Lessee has not theretofore received payment for such work, and
shall be accompanied by (i) an Officer's Certificate of the Lessee certifying
that no
19
Default, Event of Default or Major Environmental Event has occurred and is
continuing and that the Net Proceeds and Excess Funds held by the Proceeds
Trustee are adequate to complete such rebuilding, replacement or repair in
accordance with this paragraph 12(c), and (ii) duly executed Lien waivers
executed by each materialman or mechanic furnishing materials or labor for which
the Lessee is requesting permission to pay or requesting payment. The Proceeds
Trustee shall deliver, or cause to be delivered, payment within five (5)
Business Days after its receipt of the certificates required above. In
connection with such payments, the Proceeds Trustee shall first apply the Excess
Funds to the cost of such restoration prior to the disbursement of any Net
Proceeds by the Proceeds Trustee for such purpose. Upon receipt by the Proceeds
Trustee (with a copy to the Lessor) of an Officer's Certificate from the Lessee,
to the effect that final payment has been made for any such work and stating
that the rebuilding, replacement or repair has been completed in compliance with
the terms and conditions of this Lease, the remaining amount of such Net
Proceeds shall be paid to the Lessee. The Lessee shall be responsible for the
cost of any such repair, rebuilding or restoration in excess of such Net
Proceeds and Excess Funds, for which cost the Lessee shall make adequate
provision acceptable to the Lessor.
(d) Temporary Condemnation or Lease Termination. Notwithstanding any
-------------------------------------------
provision to the contrary contained in this paragraph 12, in the event of any
temporary Condemnation this Lease shall remain in full force and effect, and
provided no Default, Event of Default or Major Environmental Event has occurred
and is continuing, the Lessee shall be entitled to receive the Net Proceeds
allocable to such temporary Condemnation, except that if this Lease shall expire
or terminate during such temporary Condemnation, then the Lessee shall be
entitled to the Net Proceeds allocable to the period after the termination or
expiration of this Lease only if it has paid the Offer Purchase Price for the
Mill II Property.
13. Environmental Event. (a) The Lessee shall promptly, but in any
-------------------
case within five (5) Business Days after discovery thereof, notify the Lessor,
the Agent, the Collateral Agent, the Equity Investors and the Note Holders of
the occurrence of a Reportable Environmental Event. For
20
purposes hereof, an "Environmental Event" shall mean (i) any environmental
-------------------
event, occurrence, or condition in, on, beneath, from or involving the Mill II
Property or any part thereof (including, but not limited to, the presence,
emission or release of Hazardous Materials in violation of any Environmental Law
or the violation of any applicable Environmental Law) that could reasonably be
expected to result in any ordered remediation or corrective action required by
Environmental Laws, or other liability under Environmental Laws, or that poses a
significant risk to human health or the environment or (ii) the receipt by the
Lessee of notification that the Lessee, the Lessor, the Mill II Property or any
part thereof is the subject of an Environmental Action in connection with the
Mill II Property that could reasonably be expected to result in any ordered
remediation or corrective action required by Environmental Laws or other
liability under Environmental Laws; provided, however, that as of the date
hereof none of the matters described on Schedule C hereto shall be deemed an
Environmental Event. For purposes hereof, a "Reportable Environmental Event"
------------------------------
shall mean an Environmental Event with respect to which the Remediation Costs
could reasonably be expected to exceed $1 million, or, when added to the
remaining Remediation Costs for all other then existing Environmental Events,
could reasonably be expected to exceed $5 million. For purposes hereof,
"Remediation Costs" include, but are not limited to, losses, fines, damages,
-----------------
civil or criminal penalties, judgments, costs and expenses (including reasonable
fees and expenses of legal counsel and consultants) incurred within a ten year
period commencing with the discovery of the Environmental Event, and arising
from activities to clean-up, remove, treat or in any other way respond to an
Environmental Event as required by Environmental Laws or as may be necessary to
avoid creating a significant risk to human health or the environment and any
other damages related thereto.
(b) If following the receipt of a notice of a Reportable Environmental
Event pursuant to paragraph 13(a), the Lessor, the Agent, or the Holders of the
Majority Interests, each in its or their sole discretion, determines that the
Remediation Costs for each Reportable Environmental Event, alone or when
combined with the remaining Remediation Costs for all other then existing
Environmental Events, could
21
reasonably be expected to exceed $25 million, the Lessor, the Agent, the
Collateral Agent or the Holders of the Majority Interests may, at the expense of
the Lessee, cause the Environmental Consultant to conduct an environmental audit
of the affected portions of the Mill II Property and report the results of such
audit to the Lessor, the Agent, the Equity Investors, the Note Holders and the
Lessee. If the Environmental Consultant determines that the remaining
Remediation Costs for all then existing Environmental Events could reasonably be
expected to exceed $25 million (an "Environmental Trigger") but could not
---------------------
reasonably be expected to exceed $50 million, the Lessee shall proceed
diligently to prosecute the remediation or cure of such Environmental Event that
gave rise to the Environmental Trigger prior to the expiration of a period of
120 days following the discovery of such Environmental Event (the "Initial Cure
------------
Period"). If, however, such Environmental Event is not capable of being fully
------
remediated or cured within the Initial Cure Period, despite diligent efforts by
the Lessee, the Initial Cure Period shall be extended at the written request of
the Lessee as to such Environmental Event (i) for so long as the Lessee is
proceeding diligently to remediate in full or cure such Environmental Event and,
in the opinion of the Environmental Consultant the remaining Remediation Costs
for all then existing Environmental Events could not reasonably be expected to
exceed $50 million and (ii) for so long as the Guarantor's senior unsecured
long-term debt is rated at least Baa3 by Xxxxx'x or BBB- by S&P or, if not rated
by Xxxxx'x or S&P, has an implied rating of at least BBB- by S&P.
(c) If, in the opinion of the Environmental Consultant, the remaining
Remediation Costs for the Environmental Events contributing to the Environmental
Trigger could reasonably be expected to exceed $50 million (a "Major
-----
Environmental Event") but could not reasonably be expected to exceed $100
-------------------
million, and the Environmental Event that gave rise to such Major Environmental
Event is not capable of being fully remediated or cured within the Initial Cure
Period, the Initial Cure Period shall be extended at the written request of the
Lessee as to such Environmental Event for so long as
22
the Lessee is proceeding diligently to remediate in full or cure such
Environmental Event and all of the following conditions are satisfied:
(i) As promptly as reasonably practicable and in any event not
less than thirty (30) days prior to the end of the Initial Cure Period, the
Lessee shall have submitted to the Agent (a) a copy of its plan of remediation,
containing time and cost budgets and other supporting information, and (b) a
copy of its written request for an extension specifying the date to which such
extension is requested.
(ii) The Lessor shall have received a report from the
Environmental Consultant to the effect that the Environmental Consultant has
reviewed the Lessee's plan of remediation and has found such plan to be in
accordance with applicable Environmental Laws, consistent with prudent practices
of the industry, and otherwise acceptable. The Lessor shall direct the
Environmental Consultant to complete and submit such report before the end of
the Initial Cure Period. If such report has not been completed as of the end of
the Initial Cure Period, the cure period shall be deemed extended pending
completion of such report, except to the extent that failure to submit such
report on a timely basis is due in part or in whole to the failure or
unreasonable delay of Lessee to provide cooperation and/or information
reasonably required to complete such report.
(iii) The Lessee shall have delivered to the Lessor an
irrevocable and unconditional direct pay letter of credit, having a term
coterminous with the Term (or Extended Term, as applicable), issued by a
commercial bank organized under the laws of the United States or any political
subdivision thereof having a combined capital and surplus of at least $500
million and having long-term unsecured debt securities then rated "A" or better
by S&P and "A2" or better by Xxxxx'x and in an amount equal to 125% of the
amount by which the remaining Remediation Costs for such Environmental Event as
estimated by the Environmental Consultant are reasonably expected to exceed $50
million. Such letter of credit shall be increased or decreased from time to
time, but not less frequently than annually, by an amount equal to 125% of any
increases or decreases in the remaining Remediation Costs as estimated by the
Environmental Consultant. Such letter of credit shall provide that drawings may
be made thereon by the Lessor upon certification by the Lessor to the issuer
that an Event of Default has occurred and is continuing or the Term (or Extended
Term as applicable) has expired and the Lessee has failed to purchase the Mill
II Property in accordance with the terms of this Lease.
(iv) The senior unsecured long-term debt of the Guarantor shall
at all times be rated at least Baa3 by Xxxxx'x or BBB- or better by S&P or, if
not rated by Xxxxx'x or S&P, has an implied rating of at least BBB- by S&P.
(v) (a) The Lessor shall have received a legal opinion
acceptable to Lessor (from counsel selected by the Lessor and the Agent and
acceptable to the Lessee) to the effect that the Lessee has obtained all permits
necessary to remediate the Environmental Event, or, to the extent such permits
are not then required, such counsel has no reason to believe that such required
permits cannot be obtained at such time as required, as well as other legal
matters reasonably requested by the Lessor. (b) The Lessor and the Agent shall
also have received a legal opinion acceptable to Lessor and the Agent (from
counsel selected by the Lessor and the Agent and acceptable to the Lessee)
addressing any change in Law after the Financing Closing Date regarding the
scope of protection from liability for Remediation Costs afforded to the Lessor
and the Agent under Environmental Laws. Without prejudice to the rights of the
Agent or the
23
Holders of the Majority Interests under paragraph 13(d) of this Lease, to the
extent such opinion is not satisfactory to the Lessor (because of a change of
law or a change in interpretation thereof) the Lessee shall have the right to
find a replacement Lessor within 30 days after the Lessor notifies the Lessee
that such opinion is unsatisfactory to the Lessor. Upon replacement of the
Lessor hereunder, the Lessor (for the benefit of the Equity Investors) shall
receive in immediately available funds from its assignee an amount equal to the
stated amount of the Equity Investment then outstanding, accrued yield thereon
to the date of payment and all other amounts due and payable to the Lessor and
each Equity Investor under the Operative Documents. (c) Such legal counsel shall
be directed by the Lessor to complete and submit such opinions before the end of
the Initial Cure Period. If such opinions are not completed before the end of
the Initial Cure Period, the cure period shall be deemed extended pending
completion of such opinions except to the extent that failure to submit such
opinions on a timely basis is due in part or in whole to the failure of Lessee
to timely provide available information reasonably required to complete such
opinions.
(vi) The Lessee shall deliver to the Lessor and the Agent
monthly progress reports during the Initial Cure Period, and quarterly progress
reports every three months thereafter, with respect to such curative actions or
remediation, including a status report on the Remediation Costs incurred and the
estimated remaining Remediation Costs, in form and substance satisfactory to the
Lessor and the Agent.
(vii) The Lessor and the Agent shall receive a report every three
months after the end of the Initial Cure Period from the Environmental
Consultant to the effect that the Lessee is complying with the remediation plan
in all material respects and with all Environmental Laws applicable to the
Environmental Event.
(viii) Upon completion of the remediation plan, the Lessor, the
Agent and the Collateral Agent shall receive a report from the Environmental
Consultant to the effect that the Lessee has fully implemented the plan and is
in compliance with all Environmental Laws applicable to the Environmental Event.
(d) If an Environmental Event has occurred that results in an
Environmental Trigger or a Major Environmental Event and the Environmental Event
cannot be cured through a Permitted Remediation or if the Lessee fails to
satisfy any of the requirements in the last sentence of paragraph 13(b) or any
of the applicable conditions in paragraph 13(c) (an "Environmental Default"),
---------------------
the Lessor, the Agent, or the Holders of the Majority Interests shall have the
option, each in its or their sole discretion, to require the Lessee to purchase
the Mill II Property for the Offer Purchase Price by giving written notice to
the Lessor, and the Lessee shall then be deemed to have delivered to the Lessor,
as of the date of receipt of such notice, an Offer to Purchase in accordance
with paragraphs 14 and 15. A "Permitted Remediation" means any remediation of an
---------------------
Environmental Event undertaken by the Lessee in compliance with the requirements
of this paragraph
24
13, the remaining Remediation Costs of which, when combined with the remaining
Remediation Costs of all other Environmental Events then existing, are not
reasonably expected to exceed $100 million, which is permitted and effected, at
the cost of the Lessee, in compliance with all applicable Environmental Laws.
(e) Irrespective of whether a Major Environmental Event or an
Environmental Trigger has occurred, the Lessee shall immediately initiate, and
diligently pursue at its sole cost and expense, such actions as may be necessary
to comply in all respects with all applicable Environmental Laws and to
alleviate any significant risk to human health or the environment if the same
arises from a condition on or in respect of the Mill II Property or any part
thereof, whether existing prior to, on or after the date of this Lease. Once
the Lessee commences such actions, the Lessee shall thereafter diligently and
expeditiously proceed to comply in a timely manner with all Environmental Laws
and to eliminate any significant risk to human health or the environment and
shall, at the reasonable request of the Lessor or the Agent, give periodic
progress reports on its compliance efforts and actions.
(f) In connection with the formulation and implementation of any
remediation plan, or the evaluation or review thereof, the Lessor, the Agent,
the Note Holders, the Equity Investors, the Environmental Consultant, and their
respective agents and legal counsel shall not communicate with regulatory
authorities without the prior written consent of the Lessee unless an
Environmental Trigger shall have occurred and be continuing. If any
Environmental Trigger shall have occurred and be continuing, the Lessor, the
Agent, the Note Holders, the Equity Investor, the Environmental Consultant and
their respective agents and legal counsel shall first provide an opportunity to
the Lessee to participate in such communications, except to the extent that such
communications are required by Law.
(g) A Major Environmental Event shall not be deemed to be continuing
after the date upon which the remaining Remediation Costs from the Environmental
Event that
25
gave rise to such Major Environmental Event, when combined with the remaining
Remediation Costs for all other Environmental Events contributing to such Major
Environmental Event, could no longer reasonably be expected to exceed $50
million. An Environmental Trigger shall not be deemed to be continuing after the
date upon which the remaining Remediation Costs for the Environmental Event that
gave rise to such Environmental Trigger, when combined with the remaining
Remediation Costs for all other Environmental Events contributing to such
Environmental Trigger, could no longer reasonably be expected to exceed $25
million.
14. Offer to Purchase. (a) At any time during the Term (or the Extended Term,
-----------------
as applicable), Lessee may (unless otherwise required to do so, in which case it
shall) deliver to the Lessor and the Agent an irrevocable written offer to
purchase the Mill II Property in its entirety (an "Offer to Purchase") at least
-----------------
20 days in advance of the Closing Date upon and subject to the applicable terms
of this Lease.
(b) Any Offer to Purchase delivered or deemed to be delivered by the Lessee
hereunder shall, notwithstanding anything to the contrary set forth therein, be
irrevocable and unconditional and shall set forth the Closing Date and
Termination Value to be paid by Lessee.
(c) The Lessor shall be deemed to have accepted such Offer to Purchase the Mill
II Property on the date the Lessor receives the same. The procedure for the
purchase of the Mill II Property and the purchase price therefor shall be
governed by paragraph 15 hereof.
15. Procedure Upon Purchase. (a) The date of the closing of the Lessee's (or
-----------------------
its designee's) purchase of the Mill II Property (the "Closing Date") shall be
------------
(i) on the Expiration Date pursuant to paragraph 27 hereof, or (ii) if the
Lessee shall deliver (or shall be deemed to have delivered) an Offer to Purchase
pursuant to paragraph 14(a) hereof, on the next scheduled Payment Date following
the date of Lessor's acceptance or deemed acceptance of such Offer to Purchase,
or (iii) if the Lessee shall deliver (or be deemed to have delivered) an Offer
to Purchase pursuant to paragraphs 12(b), 12(c) or 13(d), on the fifteenth day
following the date of Lessor's acceptance or deemed acceptance of such Offer to
Purchase, or (iv) if the Lessee shall pay the Offer Purchase
26
Price pursuant to paragraph 19(h), on the date of the Lessor's receipt of the
Offer Purchase Price. On the Closing Date, upon receipt by the Agent of the
Offer Purchase Price, the Lessor shall convey, or cause to be conveyed, the Mill
II Property (or, in the case of Casualty or Condemnation, the remaining portion
thereof) to the Lessee or its designee by an appropriate recordable assignment
of the leasehold interest in the Mill II Parcel, limited warranty deed and xxxx
of sale to Mill II, the Mill II Improvements and the Mill II Alterations and
assignment of the Facility Agreements (other than the rights of the Lessor to
any indemnities thereunder), in each case containing no representation or
warranty (expressed or implied) except that the Mill II Property is free and
clear of Lessor Liens.
(b) On the Closing Date, the Lessee shall pay, or cause to be paid, to the Agent
(on behalf of the Lessor) the Termination Value for the Mill II Property, as
specified in the Offer to Purchase related thereto, and all Fixed Rent,
Additional Rent and other sums then due and payable hereunder and under the
other Operative Documents relating to the Mill II Property up to and including
such Closing Date (such amounts, plus all Closing Costs, are herein referred to
as the "Offer Purchase Price"), and the Lessor shall simultaneously (i) deliver
--------------------
to the Lessee or its designee the instruments referred to in paragraph 15(a)
above with respect to the Mill II Property and any other instruments reasonably
necessary to assign and convey to the Lessee or its designee the Mill II
Property and assign all Facility Agreements related to the Mill II Property
(other than any rights of the Lessor to any indemnities thereunder) and any
other related property then required to be assigned pursuant hereto, and (ii)
convey, or cause to be conveyed, to the Lessee or its designee any Net Proceeds
related to the Mill II Property and/or the right to receive the same.
Additionally, on the Closing Date, upon receipt of the Termination Value, Lessor
and the Collateral Agent shall execute the releases and take the other actions
described in Section 8.23(b) of the Participation Agreement.
(c) Upon the completion of any purchase of the Mill II Property pursuant to this
paragraph 15, but not prior thereto, this Lease shall terminate except with
respect to obligations and liabilities of the Lessee, actual or contingent,
which have arisen with respect to the Mill II Property or under the Operative
Documents on or prior to such date of purchase, and except as elsewhere
expressly provided herein or in the other Operative Documents.
(d) Notwithstanding any provisions of this Lease or the Participation Agreement
to the contrary, the Lessee shall not be required to acquire title to the Mill
II Property until such time that all necessary filings and notifications under
the HSR Act or any similar Law shall have been made (including any filing or
provision of required additional information or documents) and the waiting
period referred to in the HSR Act applicable to such purchase shall have expired
or been terminated (without any objection or prohibition of such purchase). The
Lessee hereby covenants to use its best efforts to secure the prompt termination
of such waiting period
27
without objection or prohibition. Notwithstanding the foregoing, if the Lessee
is precluded from acquiring the Mill II Property or any part thereof pursuant to
the HSR Act or any similar Law, the Lessee shall pay the Termination Value
attributable to the Mill II Property within the time and in the manner described
in this paragraph 15 as a consequence of the Lessee's exercise or deemed
exercise of its purchase option hereunder. However, if the Lessee pays the
Termination Value in compliance with the preceding sentence, then Lessee shall
be entitled to continue to lease the Mill II Property for an additional rental
payment of $1 per annum under the terms and provisions of this Lease for an
extended term expiring on the earlier to occur of (i) three (3) years from the
date the Lessee delivers (or is deemed to have delivered) the Offer to Purchase
or (ii) that date that the Lessee is no longer precluded from purchasing the
Mill II Property pursuant to the HSR Act or any similar Law. If Lessee does not
purchase the Mill II Property prior to the expiration of such extended term,
then Lessor shall thereafter sell the Mill II Property and distribute the
proceeds from such sale in accordance with the Interparty Agreement. If, prior
to the voluntary exercise by the Lessee of the purchase options hereunder, the
Lessee is unable to obtain a ruling that a filing under the HSR Act or any
similar Law is not required in order to consummate such purchase, then the
Lessor shall execute such conditional sales contracts and other documents
necessary to permit the Lessee to complete such filing before irrevocably
exercising its purchase option. As a condition to executing such conditional
sales contracts and other documents, the Lessee shall deliver to the Lessor an
agreement obligating the Lessee to fully indemnify the Lessor from all
liabilities, damages, costs and expenses arising from the execution of such
documents and the completion of such filing.
16. Insurance. (a) The Lessee (or the Guarantor in lieu of the Lessee) will
---------
purchase and maintain, or cause to be purchased and maintained, insurance with
respect to the Mill II Property of the following types and in the following
amounts (or in such greater amounts as may become necessary from time to time to
prevent the Lessor, the Lessee, the Collateral Agent, the Equity Investors, CXC,
CXC'S Credit Enhancer, the Agent and the Note Holders from becoming co-insurers
of any loss), and in no event in amounts less than those maintained by the
Lessee or its Affiliates for other similar facilities owned and/or operated by
them:
(i) Property Insurance: Insurance against physical damage to the
------------------
Mill II Property (with sublimits and deductibles as are acceptable to Lessor and
with a maximum self-insured retention allowable of $5 million) caused by perils
now or hereafter embraced by or defined in an "all risks" insurance policy,
including flood, earth movement, earthquake, subsidence and collapse, business
interruption/extra expense and boiler and machinery coverage (which boiler and
machinery coverage is currently self-insured for up to $5 million);
(ii) General Liability Insurance: Comprehensive general liability
---------------------------
(including contractual, completed operations and product liability) insurance
against claims for bodily injury (including death), personal injury and property
damage occurring on, in or in respect of the Mill II Property or resulting from
activities on or related to the Mill II Property and other properties of the
28
Guarantor and its subsidiaries, in the minimum combined single limit amount of
$100 million, for each occurrence for bodily injury (or death) and/or property
damage with a maximum self-insured retention allowable of $10 million;
(iii) Workers' Compensation Insurance: Workers' compensation
-------------------------------
insurance at statutory levels and employers' liability insurance or self-
insurance as permitted by Law;
(iv) Builder's Risk Insurance: During the construction of any
------------------------
Mill II Improvements or Mill II Alterations, builder's "all risks" and "general
risks" insurance or equivalent coverage (with sublimits and deductibles as are
acceptable to Lessor and with a maximum self-insured retention allowable of $5
million), including flood, earth movement, earthquake, subsidence and collapse,
business interruption/extra expense and testing and commissioning coverage with
respect to the Mill II Property and any on-site and off-site work and materials
related thereto protecting the Lessee, the Lessor and all contractors and
subcontractors in an amount not less than the full replacement cost of such on-
site and off-site work;
(v) Flood Insurance: To the extent that the ALTA/ASCM surveys
---------------
of the Parcels delivered pursuant to Section 2.01(g) of the Participation
Agreement indicate that any portion of Mill II, the Mill II Facility, the Mill
II Improvements or the Mill II Alterations may lie in a flood zone, flood
insurance in amounts acceptable to the Lessor; and
(vi) Other Insurance: Such other insurance, including
---------------
automobile liability, in such amounts and against such risks, as is either (x)
customarily carried by companies owning, operating or leasing property or
conducting businesses similar and/or similarly situated to the Mill II Property
and/or the Lessee, or (y) reasonably requested from time to time by Lessor to
the extent available on commercially reasonable terms.
Such insurance shall be written by companies (other than Lloyd's of
London) that are nationally recognized (or other recognized international
insurers with an ISI rating of not less than BBB); primary insurance shall be
written by companies rated at least AXI in the most recent edition of Best's Key
Rating Guide, or as otherwise agreed to by the Agent, the Lessor, the Collateral
Agent, the Majority Interests, selected by the Lessee and, other than the
insurance specified in paragraphs 16(a)(i), (iii) and (iv), shall name the
Collateral Agent as loss payee and the Lessor, CXC, the Equity Investors, CXC'S
Credit Enhancer, T.P.I., the Collateral Agent and the Agent, on its own behalf
and on behalf of the Note Holders, as additional insureds, as their interests
may appear. Notwithstanding the foregoing, in no event will the Lessee be
required to maintain coverage in amounts in excess of those maintained for
businesses similar in size and nature to the Lessee.
(b) The insurance referred to in paragraphs 16(a)(i) and (iv) for the
Mill II Property (as appropriate) may be a blanket policy and shall (i) at all
times be in an amount at least equal to the greater of (x) one hundred percent
(100%) of
29
the full replacement cost value of the Mill II Property (as appropriate) and the
Lessee's leasehold improvements and (y) $350,000,000; (ii) name the Collateral
Agent as loss payee and the Lessor, CXC, the Equity Investors, CXC's Credit
Enhancer, T.P.I., the Collateral Agent and the Agent, on its own behalf and on
behalf of the Note Holders, as additional insureds, as their interests may
appear; (iii) provide that the interests of the Lessor, the Agent, the
Collateral Agent, the Equity Investors and the Note Holders shall be insured
regardless of any intentional or willful breach or violation by the Lessee of
any warranties, declarations or conditions contained in such insurance; (iv)
provide that such insurance shall not be invalidated by any act, omission or
negligence of the Lessee, the Lessor, the Agent, the Collateral Agent, the
Equity Investors or the Note Holders, nor by any foreclosure or other
proceedings or notices thereof relating to the Mill II Property (as appropriate)
or any part thereof, nor by legal title to, or ownership of the Mill II Property
or any part thereof becoming vested in or by Lessor or its agents, nor by
occupancy or use of the Mill II Property or any part thereof for purposes more
hazardous than permitted by such policy; and (v) provide that all partial loss
insurance claims pertaining to the Mill II Property (as appropriate) or any part
thereof shall be adjusted by the insurers thereunder with the Lessee.
All policies of insurance required to be maintained pursuant to
paragraph 16(a)(ii) which cover liability for bodily injury or property damage
shall provide that all provisions of such insurance, except the limits of
liability (which shall be applicable to all insureds as a group) and liability
premiums (which shall be solely a liability of the Lessee), and shall operate in
the same manner as if there were a separate policy covering each such insured
and/or additional insured, without right of contribution from any other
insurance which may be carried by an insured and/or additional insured.
Every policy required under paragraph 16(a) shall (i) expressly
provide that it will not be canceled or terminated except upon thirty (30) days'
written notice to the Lessor, the Lessee and the Collateral Agent; (ii) except
for liability coverage, include a waiver of all rights of subrogation against
the Lessor, the Agent, the Collateral Agent, the Equity
30
Investors, and the Note Holders and any recourse against the Lessor, the Agent,
the Collateral Agent, the Equity Investors or the Note Holders for payment of
any premiums or assessments under any policy; and (iii) not contain a provision
relieving the insurer thereunder of liability for any loss by reason of the
existence of other policies of insurance covering the Mill II Property or any
part thereof against the peril involved, whether collectible or not. The Lessee
shall advise the Lessor promptly of any policy cancellation or any change
adversely affecting the coverage provided thereby.
(c) The Lessee shall deliver to the Lessor the certificates of
insurance and any other documentation required by the Lessor evidencing the
existence of all insurance which is required to be maintained by the Lessee
hereunder including descriptions of the previously mentioned Insurance
Requirements, such delivery to be made (i) as provided in Section 2.01(k) of the
Participation Agreement, (ii) within thirty (30) days after the issuance of any
additional policies or amendments or supplements to any of such insurance, and
(iii) at least thirty (30) days prior to the expiration date of any such
insurance. The Lessee shall notify the Lessor, the Agent and the Collateral
Agent of any nonrenewal of any policy required hereunder and shall cause each
insurer under each policy required hereunder to give the Lessor notice of any
lapse under any such policy. The Lessee shall not obtain or carry separate
insurance concurrent in form, or contributing in the event of loss, with that
required by this paragraph 16 unless the Collateral Agent is named as loss payee
and the Lessor, CXC, the Equity Investors, CXC's Credit Enhancer, T.P.I., the
Collateral Agent and the Agent, on its own behalf and on behalf of the Note
Holders are named as additional insureds therein. The Lessee shall immediately
notify the Lessor, the Agent, the Collateral Agent, the Equity Investors, and
the Note Holders whenever any such separate insurance is obtained and shall
deliver to the Lessor the certificates of insurance and any other documentation
(other than blanket policies) required by Lessor evidencing the same as is
required hereunder.
(d) The requirements of this paragraph 16 shall not be construed to
negate or modify the Lessee's obligations under Section 8.14 of the
Participation Agreement.
17. Subletting; Assignability; Amendment of Facility Agreements. (a)
-----------------------------------------------------------
The Lessee shall not sublet the Mill II
31
Property, or any part thereof, unless (i) at the time of any such sublease, no
Default, Event of Default or Major Environmental Event shall have occurred and
be continuing; (ii) prior to such sublet, the Guarantor shall have confirmed
that its obligations under the Guaranty shall not be affected thereby; (iii) any
such sublease shall by its terms be expressly made subject and subordinate to
the terms of this Lease (and the Ground Lease, the Florida Mortgage and the Deed
of Trust) and shall expire on or before the last day of the Term (or the
Extended Term, as the case may be) of this Lease; (iv) the Lessee shall provide
the Lessor with notice of such sublease sixty (60) days prior to the effective
date of such sublease; (v) except with respect to Affiliates, the Lessee shall
provide the Lessor ten (10) Business Days prior to the effective date of such
sublease with a conformed copy of the instrument creating such sublease; (vi)
except with respect to Affiliates, the Lessor has consented to such sublease;
and (vii) except with respect to Affiliates, such sublease shall be made on
commercially reasonable terms.
(b) No sublease pursuant to this paragraph 17 shall modify or limit
any right or power of the Lessor hereunder or affect or reduce any obligation of
the Lessee hereunder, and all such obligations of the Lessee shall continue in
full force and effect as obligations of a principal and not of a guarantor or
surety, as though no subletting had been made or occupancy permitted.
(c) If the Lessee shall request, in connection with any sublease, that
the Lessor execute an attornment and non-disturbance agreement with respect to
such sublease, the Lessor shall consider each such sublease on a case-by-case
basis and may consent to its execution and delivery of an attornment and non-
disturbance agreement.
(d) Except as permitted in paragraph 17(a), the Lessee shall not
mortgage, pledge, assign or otherwise encumber its interest in and to this Lease
or in and to any sublease or the rentals payable thereunder without the prior
written consent of the Lessor except that the Lessee may assign its right to
purchase Mill II Property without the consent of the Lessor so long as the
Lessee remains liable for the performance and payment of the purchase
obligation. Any sublease made, and any
32
mortgage, pledge or assignment of the Lessee's interest hereunder or under any
such sublease granted, otherwise than as expressly permitted by this paragraph
17, shall be null and void and of no force or effect.
(e) The Lessee shall have the exclusive right to amend or supplement
the Facility Agreements, on the conditions that (i) the fair market value or use
of the Mill II Property is not lessened thereby, and (ii) the amendment or
supplement is not consummated without Lessor's consent (unless Lessee has
delivered an Offer to Purchase the Mill II Property) or unless such amendment or
supplement could not reasonably be expected to result in a Material Adverse
Effect. Except pursuant to any sublease or assignment of this Lease permitted
hereunder, the Lessee may not assign its rights in the Facility Agreements
without the prior written consent of Lessor.
18. Permitted Contests. (a) So long as (w) no Lessor Termination
------------------
Notice has been delivered, (x) no Default, Event of Default or Major
Environmental Event has occurred and is continuing, (y) the Lessee shall not
have notified the Lessor pursuant to paragraph 27(a)(ii) that it is terminating
this Lease and abandoning the Mill II Property or (z) the Lessee shall not have
otherwise surrendered or be required to surrender the Mill II Property to the
Lessor for any reason (including, without limitation, pursuant to paragraph
23(a)), the Lessee shall not be required, nor shall the Lessor have the right,
to pay, discharge or remove any Charges or to comply or cause the Mill II
Property or any part thereof to comply with any applicable Legal Requirement or
to pay any materialman's, laborer's or undischarged or unremoved Lien, as long
as the Lessee shall at its sole cost and expense contest, or cause to be
contested, diligently and in good faith, the existence, amount or validity
thereof by appropriate proceedings, which shall (i) in the case of an unpaid
Property Charge or undischarged or unremoved Lien, prevent the collection
thereof from the Lessor or against the Mill II Property or any part thereof,
(ii) prevent the sale, forfeiture or loss of the Mill II Property or any part
thereof, and (iii) in the case of a Legal Requirement, not subject the Lessor,
the Agent, the Collateral Agent, the Equity Investors, or the Note Holders to
the risk of any criminal liability or civil penalties or fines for failure to
comply therewith. The Lessee shall give such assurances as may be reasonably
demanded by the Lessor to insure
33
ultimate payment of such Charges or the discharge or removal of any such
materialman's, laborer's or mechanic's Lien or to insure compliance with such
Legal Requirement and to prevent any sale or forfeiture of the Mill II Property,
or any part thereof, or any interference with or deductions from any Fixed Rent,
Additional Rent or any other sum required to be paid by the Lessee hereunder by
reason of such non-payment, non-discharge, non-removal or non-compliance.
(b) The Lessor shall cooperate with the Lessee in any contest and
shall allow the Lessee to conduct such contest (in the name of the Lessor, if
necessary) at the Lessee's sole cost and expense; provided that the Lessor shall
-------- ----
not be required to execute any documents which would materially adversely affect
the fair market value, use or operation of the Mill II Property (or any part
thereof) or subject the Lessor, the Agent, the Collateral Agent, any Equity
Investor or any Note Holder to any liability or result in the admission of
liability, guilt or culpability on the part of such Persons. The Lessee shall
notify the Lessor of each such proceeding at least ten days prior to the
commencement thereof, which notice shall describe such proceeding in reasonable
detail.
(c) The Lessee shall, promptly after the final determination
(including appeals) of any contest brought by it pursuant to this paragraph 18,
pay and discharge all amounts which shall be determined to be payable therein
and shall be entitled to receive and retain for its own account all amounts
refunded and/or rebated as a result of any such contest and if the Lessor
receives any amount as a result of such contest to which it is not otherwise
entitled pursuant to this Lease, it shall promptly return such amount to the
Lessee.
(d) Except as otherwise specifically provided in this Lease, this
paragraph 18 shall not apply in the case of Charges upon, or in respect of, any
Person other than the Lessor (or the lessor under the Ground Lease) or in
respect of the property or income of any such Person.
19. Default Provisions. (a) An Event of Default as defined in the
------------------
Participation Agreement shall constitute an "Event of Default" under this Lease.
----------------
(b) The Lessor may take all steps to protect and enforce the rights of
the Lessor or obligations of the Lessee
34
hereunder, whether by action, suit or proceeding at law or in equity (for the
specific performance of any covenant, condition or agreement contained in this
Lease, or in aid of the execution of any power herein granted or for any
foreclosure, or for the enforcement of any other appropriate legal or equitable
remedy) or otherwise as the Lessor shall deem necessary or advisable.
(c) (i) If an Event of Default shall have occurred and be continuing,
including an Event of Default arising from the breach of a covenant, condition
or other provision hereof, then upon five (5) Business Days' prior written
notice by the Lessor to the Lessee, in addition to all other rights, remedies or
recourses available, the Lessor may either (A) terminate this Lease or (B)
terminate the Lessee's right to possession of the Mill II Property or any part
thereof. If the Lessor should elect to terminate this Lease as provided in
clause (A) above, then this Lease and the estate hereby granted shall expire and
terminate at midnight on the fifth (5th) Business Day (or such later date as may
be specified therein) after the date of such notice, as fully and completely and
with the same effect as if such date was the date herein fixed for the
expiration of the Term and all rights of the Lessee shall terminate, but the
Lessee shall remain liable as hereinafter provided.
(ii) Should the Lessor elect not to terminate this Lease, this
Lease shall continue in effect and the Lessor may enforce all the Lessor's
rights and remedies under this Lease including the right to recover the Fixed
and Additional Rent as each becomes due under this Lease. For the purposes
hereof, the following do not constitute a termination of this Lease:
(A) Acts of maintenance or preservation of the Mill II Property
or any part thereof or efforts to relet the Mill II Property or any part
thereof, including, without limitation, termination of any sublease of the Mill
II Property to a third party and removal of such subtenant from the Mill II
Property;
(B) The appointment of a receiver upon initiative of the Lessor
to protect the Lessor's interest under this Lease; and/or
(C) The exercise of any rights under the Florida Mortgage or the
Deed of Trust.
(d) If an Event of Default shall have occurred and be
continuing, and the Lessor has elected to terminate this Lease or terminate the
Lessee's right to possession of the Mill II Property or part thereof, upon five
(5) Business Days' notice, the Lessor shall have (i) the right, whether or not
this Lease
35
shall have been terminated pursuant to paragraph 19(c) hereof, to re-enter and
repossess the Mill II Property or any part thereof, as the Lessor may elect, by
summary proceedings, ejectment, any other legal action or in any other lawful
manner the Lessor determines to be necessary or desirable and (ii) the right to
remove all Persons and property therefrom. The Lessor shall be under no
liability by reason of any such re-entry, repossession or removal. No such re-
entry or repossession of the Mill II Property or any part thereof shall be
construed as an election by the Lessor to terminate this Lease unless a notice
of such termination is given to the Lessee pursuant to paragraph 19(c) hereof,
or unless such termination is decreed by a court or other governmental tribunal
of competent jurisdiction. Should the Lessor elect to re-enter the Mill II
Property as herein provided or should the Lessor take possession pursuant to
legal proceedings or pursuant to any notice provided for by Law or upon
termination of this Lease of the Lessee's right to possession of the Mill II
Property or any part thereof pursuant to paragraph 19(c) hereof or otherwise as
permitted by Law, the Lessee shall peaceably quit and surrender the Mill II
Property or any part thereof to the Lessor. In any such event, neither the
Lessee nor any Person claiming through or under the Lessee, by virtue of any
Law, shall be entitled to possession or to remain in possession of the Mill II
Property or any such part thereof, but shall forthwith quit and surrender the
Mill II Property to the Lessor.
(e) At any time or from time to time after the re-entry or
repossession of the Mill II Property or any part thereof pursuant to paragraph
19(d) hereof, whether or not this Lease shall have been terminated pursuant to
paragraph 19(c) hereof, the Lessor may (but shall be under no obligation to)
relet the Mill II Property or any part thereof, for the account of the Lessee,
without notice to the Lessee, for such term or terms and on such conditions and
for such uses as the Lessor, in its sole and absolute discretion, may determine.
The Lessor may collect and receive any rents or other proceeds payable by reason
of such reletting. The Lessor shall not be liable for any failure to relet the
Mill II Property or any part thereof or for any failure to collect any rent due
upon any such reletting.
36
(f) No termination of this Lease or of the Lessee's right to
possession of the Mill II Property or any part thereof pursuant to paragraph
19(c) hereof, or by operation of Law, and no re-entry or repossession of the
Mill II Property or any part thereof, pursuant to paragraph 19(d) hereof, and no
reletting of the Mill II Property or any part thereof pursuant to paragraph
19(e) hereof, shall relieve the Lessee of its liabilities and obligations
hereunder, all of which shall survive such termination, re-entry, repossession
or reletting.
(g) In the event of any termination of this Lease or of the Lessee's
right to possession of the Mill II Property or any part thereof by reason of the
occurrence of any Event of Default, the Lessee shall pay to the Lessor all Fixed
Rent, Additional Rent and other sums required to be paid to and including the
date of such termination of this Lease or of the Lessee's right to possession;
and thereafter, until the end of the Term or the Extended Term, as applicable,
whether or not the Mill II Property or any part thereof shall have been relet,
the Lessee to the extent permitted by applicable Law shall be liable to the
Lessor for, and shall pay to the Agent (on behalf of the Lessor), on the days on
which such amounts would be payable under this Lease in the absence of such
termination, re-entry or repossession, as agreed current damages and not as a
penalty: all Fixed Rent, Additional Rent and other sums which would be payable
under this Lease by the Lessee, in the absence of such termination, re-entry or
repossession, and all costs (including attorneys' fees and expenses) incurred by
the Lessor hereunder (payable on demand) and all costs of any environmental
remediation pursuant to paragraph 13. To the extent permitted by Law, at such
time after the termination or expiration of this Lease as the Lessee shall have
paid all amounts required to be paid by it under this Lease and the other
Operative Documents and the Lessee shall have discharged any and all obligations
to the Lessor, the Equity Investors and the Note Holders, then the Lessor shall
pay and assign to the Lessee, when received, the net proceeds, if any, of any
reletting effected for the account of the Lessee pursuant to paragraph 19(e),
and any residual interest in the Mill II Property after deducting from such
proceeds all of the Lessor's expenses in connection with such reletting
(including, but not limited to, all repossession costs, brokerage commissions,
attorneys' fees and expenses, employees' expenses, alteration costs and expenses
of
37
preparation for such reletting and all costs of any environmental remediation
pursuant to paragraph 13).
(h) Notwithstanding the foregoing, if an Event of Default shall have
occurred, the Lessee may within 5 Business Days after the earliest of the
Lessor's or Agent's notice of such occurrence thereafter pay to the Agent, on
behalf of the Lessor, an amount equal to the Offer Purchase Price in which event
the Lessor shall be obligated to convey the Mill II Property to the Lessee in
compliance with paragraph 15.
(i) At any time after such termination of the Term (or the Extended
Term) of this Lease or re-entry or repossession of the Mill II Property by
reason of the occurrence of an Event of Default, the Lessor shall be entitled to
recover from the Lessee, and the Lessee will pay to the Agent (on behalf of the
Lessor) on demand, in lieu of all liquidated damages in respect of Fixed Rent
beyond the date of such demand (but in addition to any claim for current damages
in respect of Fixed Rent or Additional Rent prior to the date of such demand),
an amount equal to the Termination Value, in which event the Lessor shall be
obligated to convey the Mill II Property to the Lessee in compliance with
paragraph 15.
20. Additional Rights; Mortgage. (a) No right or remedy hereunder
---------------------------
shall be exclusive of any other right or remedy, but shall be cumulative and in
addition to any other right or remedy hereunder or under the other Operative
Documents or now or hereafter existing at Law or in equity and the exercise by
the Lessor or the Collateral Agent of any one or more of such rights, powers or
remedies shall not preclude the simultaneous exercise of any or all of such
other rights, powers or remedies. Failure to insist upon the strict performance
of any provision hereof or to exercise any option, right, power or remedy
contained herein shall not constitute a waiver or relinquishment thereof for the
future. Receipt by the Lessor (or by the Agent on behalf of the Lessor) of any
Fixed Rent, Additional Rent, Residual Guaranty, Termination Value or other sum
payable hereunder or under any other Operative Document with knowledge of the
breach by the Lessee of any provision hereof shall not constitute a waiver of
such breach, and no waiver by the Lessor of any provision hereof shall be deemed
to have been made unless made in writing. The Lessor shall be entitled to
38
injunctive relief in case of the violation or attempted or threatened violation
of any of the provisions hereof, a decree compelling performance of any of the
provisions hereof or any other remedy allowed to the Lessor at law or in equity.
(b) Except as otherwise provided in Section 19(h), the Lessee hereby
waives and surrenders for itself and all those claiming under it, including
creditors of all kinds, (i) any right and privilege which they may have under
any applicable law or otherwise to redeem the Mill II Property or any part
thereof or to have a continuance of this Lease after termination of the Lessee's
right of occupancy by Law or by any legal process or writ, or under the terms of
this Lease, or after the termination of the Term (or Extended Term, as the case
may be) of this Lease as herein provided and (ii) the benefits of any Law which
exempts property from liability for debt or for distress for rent.
(c) If an Event of Default exists hereunder, the Lessee shall pay to
the Agent (on behalf of the Lessor) on demand all fees and out-of-pocket
expenses incurred by the Lessor in enforcing its rights under this Lease,
including attorneys' fees and expenses.
(d) The Lessor and the Lessee intend that the Lessee shall treat this
Lease, for accounting purposes, as an operating lease. Notwithstanding the
intent of the parties, if a court of competent jurisdiction determines that the
transaction represented by this Lease and the other Operative Documents will be
treated as a financing transaction, then the parties hereto intend that (i) this
Lease be treated as the repayment and security provisions of a loan by Lessor to
Lessee in a principal amount equal to the sum of (x) the Acquisition Costs of
the Mill II Property plus (y) the aggregate of all Advances made with respect to
the Mill II Property plus any other amounts owing to the Lessor or the
Collateral Agent, Note Holders or Equity Investors (collectively, the "Secured
-------
Party") under the Operative Documents, including, without limitation, Fixed
-----
Rent, Additional Rent, the Offer Purchase Price and the Termination Value
(collectively, the "Mill II Loan Amount"), but not to exceed the principal
-------------------
amount of Eight Hundred Eighty Seven Million Five Hundred Thousand Dollars
($887,500,000), (ii) all payments of Fixed Rent, Additional Rent, the Offer
Purchase Price and the Termination Value be treated as payments of principal,
interest and other amounts owing with respect to such
39
Mill II Loan Amount, respectively, (iii) the Lessee should be treated as
entitled to all benefits of ownership of the Mill II Property or any part
thereof, (iv) this Lease be treated (A) with respect to the portion of the Mill
II Property situate in the State of Georgia (a) as a deed to secure debt and
security agreement from Lessee, as Grantor, to the Lessor, as Grantee, passing
title to that portion of the Mill II Property (situate in the State of Georgia)
constituting real property, and is made under those provisions of the existing
laws of the State of Georgia relating to deeds to secure debt, and not as a
mortgage and that the Lessee, as Grantor, hereby grants, bargains, sells,
conveys, assigns, transfers and sets over unto the Lessor, as Grantee, for the
use and benefit of the Secured Party, Lessee's right, title and interest in and
to any real property of any kind or character comprising the Mill II Property,
whether now owned or hereafter acquired, and all proceeds therefrom, to have and
to hold said real property and all parts, rights, members and appurtenances
thereof to the use, benefit and behoof of the Lessor, for the use and benefit of
the Secured Party; and (b) as a security agreement from the Lessee, as debtor,
to the Lessor, as secured party, encumbering all personal property (situate in
the State of Georgia) comprising the Mill II Property whether now owned or
hereafter acquired, and all proceeds therefrom (this Lease, in its capacity as
such deed to secure debt and security agreement, the "Mill II Georgia Tenneco
-----------------------
Mortgage"), and that the Lessee, hereby grants to the Lessor for the use and
--------
benefit of the Secured Party, a Lien on and security interest in the equipment,
fixtures, and any and all other personal property of any kind or character
comprising the Mill II Property (situate in the State of Georgia) whether now
owned or hereafter acquired, and all proceeds therefrom, in each case being
effective as of the date of this Lease, and (B) with respect to the portion of
the Mill II Property situate in the State of Florida, (a) as a mortgage from
Lessee, as mortgagor, to the Lessor, as mortgagee, encumbering that portion of
the Mill II Property (situate in the State of Florida) constituting real
property, and is made under those provisions of the existing laws of the State
of Florida relating to mortgages and that the Lessee, as mortgagor hereby does,
effective as of the date of this Lease, mortgage, give, grant,
40
bargain, sell, alien, enfeoff, convey, confirm and assign unto Lessor, as
mortgagee, for the benefit of the Secured Party, Lessee's right, title and
interest in and to any real property of any kind or character comprising the
Mill II Property, whether now owned or hereafter acquired, and all proceeds
therefrom, to have and to hold said real property and all parts, rights, members
and appurtenances thereof to the use, benefit and behoof of the Lessor, for the
use and benefit of the Secured Party, and (b) as a security agreement from the
Lessee, as debtor, to the Lessor, as secured party, encumbering all personal
property (situate in the State of Florida) comprising the Mill II Property
whether now owned or hereafter acquired, and all proceeds therefrom (this Lease,
in its capacity as such mortgage and security agreement, the "Mill II Florida
---------------
Tenneco Mortgage"), and that the Lessee, as debtor, hereby grants to the Lessor,
----------------
for the use and benefit of the Secured Party a Lien on and security interest in
the equipment, fixtures and all other personal property of any kind or character
comprising the Mill II Property (situate in the State of Florida) whether now
owned or hereafter acquired, and all proceeds therefrom, in each case being
effective as of the date of this Lease. In such event, the Lessor shall have all
of the rights, powers and remedies of (I) (with respect to the portion of the
Mill II Property situate in the State of Georgia) a grantee and a secured party
available under applicable law, including, without limitation, judicial or
nonjudicial foreclosure or power of sale, as and to the extent available under
applicable law, and (II) (with respect to the portion of the Mill II Property
situate in the State of Florida) a mortgagee and a secured party available under
applicable law, including, without limitation, judicial foreclosure as and to
the extent available under applicable law, and the amounts secured by the liens
and security interests described above shall be the Mill II Loan Amount, plus
any other amounts owing to the Lessor or the Secured Party under the Operative
Documents. The filing of this Lease (or a memorandum hereof) shall be deemed to
constitute the filing (x) with respect to the portion of the Mill II Property
situate in the State of Georgia, of a deed to secure debt and the filing of any
financing statement in connection with this Lease shall be deemed to constitute
the filing of a financing statement to perfect the deed to secure debt security
title and security interests in the Mill II Property as aforesaid to secure the
payment of all
41
amounts due from time to time from the Lessee to the Lessor under this Lease and
the other Operative Documents, and (y) with respect to the portion of the Mill
II Property situate in the State of Florida, a mortgage and the filing of any
financing statement in connection with this Lease shall be deemed to constitute
the filing of a financing statement to perfect the security interest in the Mill
II Property aforesaid to secure the payment of all amounts due from time to time
from the Lessee to the Lessor under this Lease and the other Operative
Documents. (the "Mill II Georgia Tenneco Mortgage" and the "Mill II Florida
-------------------------------- ---------------
Tenneco Mortgage" shall, collectively, be referred to as the "Mill II Tenneco
--------------- ---------------
Mortgage").
--------
(e) In addition, if a court of competent jurisdication determines
that the transaction represented by this Lease and the other Operative Documents
will be treated as a financing transaction, then as additional security for the
payment of the Mill II Loan Amount and the observance and performance by Lessee
of this Lease and the Mill II Tenneco Mortgage, Lessee does hereby, effective as
of the date of this Lease, sell, assign, transfer and set over unto Lessor all
of Lessee's right, title and interest in and to the Mill II Ground Lease, all
other leases, the Mill II Property, the possession thereof, and all the rents
now due and which may hereafter become due under or by virtue of any other
leases, whether written or verbal, or any letting of, or any agreement for the
use or occupancy of any part of the Mill II Property, it being the intention to
hereby establish a present and absolute transfer and assignment of all such
leases and agreements and all the avails thereunder unto Lessor. This
assignment shall run with the land and be good and valid as against Lessee and
those claiming by, under or through Lessee from the date of the execution of
this Lease. This assignment shall not be exercised unless and until an Event of
Default shall occur and be continuing and shall continue and remain in full
force and effect during any foreclosure proceedings relating to this Mill II
Tenneco Mortgage and the period of redemption, if any, and until the Mill II
Loan Amount shall have been paid in full.
(f) The Mill II Tenneco Mortgage secures and shall be security for the
entire Mill II Loan Amount if a court of competent jurisdiction determines that
the transaction
42
represented by this Lease and the other Operative Documents will be treated as a
financing transaction. Nothing contained herein shall be deemed an obligation on
the part of the Secured Party to make any further advances, except in accordance
with the Participation Agreement and the other Operative Documents. In order to
preserve the Lien, security interest and security title (as appropriate with
respect to the portion of the Mill II Property situate in the State of Florida
or Georgia) provided for herein, each of the Lessor and the Lessee agrees to
abide by the following provisions with regard to the Mill II Property (for
purposes of this paragraph, hereinafter referred to as "Mill II Collateral"):
------------------
(1) Change in Location of Mill II Collateral or the Lessee's Name,
--------------------------------------------------------------
Structure or Location. The Lessee (i) will notify the Secured Party on or
---------------------
before the date of any change in (A) the location of the Mill II Collateral (B)
the location of Lessee's chief executive office or address, (C) the name of the
Lessee and (D) the corporate structure of the Lessee, and (ii) will, on or
before the date of any such change, prepare and file new or amended financing
statements as necessary so that the Secured Party shall continue to have a
perfected Lien (subject only to Permitted Encumbrances) in the Collateral after
any such change.
(2) Documents; Mill II Collateral in Possession of Third Parties. If
------------------------------------------------------------
certificates of title or other documents evidencing ownership or possession of
the Mill II Collateral are issued or outstanding, the Lessee will cause the
interest of the Secured Party to be properly noted thereon and will, forthwith
upon receipt, deliver same to the Secured Party. If any Mill II Collateral is
at any time in the possession or control of any warehouseman, bailee, agent or
independent contractor, the Lessee shall notify such Person of the Secured
Party's security interest in such Mill II Collateral. Upon the Secured Party's
request, the Lessee shall instruct any such Person to hold all such Mill II
Collateral for the Secured Party's account subject to the Lessee's instructions,
or, if an Event of Default shall have occurred and be continuing, subject to the
Secured Party's instructions.
(3) Sale, Disposition or Encumbrance of Mill II Collateral. Except
------------------------------------------------------
for Permitted Encumbrances and contests permitted under paragraph 18, as
permitted by this Lease or any of the other Operative Documents or with the
Secured Party's
43
prior written consent, the Lessee will not in any way encumber any of the Mill
II Collateral (or permit or suffer any of the Mill II Collateral to be
encumbered) or sell, assign, lend, rent, lease or otherwise dispose of or
transfer any of the Mill II Collateral to or in favor of any Person other than
the Secured Party.
(4) Proceeds of Mill II Collateral. Except as permitted by this Lease
------------------------------
or any of the other Operative Documents, the Lessee will deliver to the Secured
Party promptly upon receipt all proceeds delivered to the Lessee from the sale
or disposition of any Mill II Collateral. This paragraph shall not be construed
to permit sales or dispositions of the Mill II Collateral except as may be
elsewhere expressly permitted by this Lease or the other Operative Documents.
(5) Further Assurances. Upon the request of the Secured Party, the
------------------
Lessee shall (at the Lessee's expense) execute and deliver all such mortgages,
deeds of trust, deeds to secure debt, assignments, certificates, financing
statements or other documents and give further assurances and do all other acts
and things as the Secured Party may reasonably request to perfect the Secured
Party's interest in the Mill II Collateral or to protect, enforce or otherwise
effect the Secured Party's rights and remedies hereunder, all in form and
substance satisfactory to the Secured Party.
(6) Mill II Collateral Attached to other Property. In the event that
---------------------------------------------
the Mill II Collateral is to be attached or affixed to any real property, the
Lessee hereby agrees that a financing statement which is a fixture filing may be
filed for record in any appropriate real estate records. If the Lessee is not
the record owner of such real property, it will provide the Secured Party with
any additional security documents or financing statements necessary for the
perfection of the Secured Party's Lien in the Mill II Collateral, as requested
by the Secured Party.
(7) Mill II Loan Amount. Should the Mill II Loan Amount be paid
-------------------
according to the tenor and effect thereof when the same becomes due and payable
hereunder, and should Lessee perform all covenants contained in the Operative
Documents in a timely manner, then the Mill II Tenneco Mortgage shall be
cancelled and surrendered.
44
(8) Mortgage Remedies. (a) With respect to the Mill II Georgia
-----------------
Tenneco Mortgage, if an Event of Default shall have occurred and be continuing,
the Lessor, at the direction of Agent and in accordance with the Interparty
Agreement, may sell the portion of the Mill II Property situated in the State of
Georgia or any part thereof, at one or more public sale or sales before the door
of the courthouse of the county in which the Mill II Property is situated, to
the highest bidder for cash, in order to satisfy the Mill II Loan Amount and all
expenses of sale and of all proceedings in connection therewith, including
reasonable attorneys' fees, after advertising the same, place and terms of sale
once a week for four (4) weeks immediately preceding such sale (but without
regard to the number of days) in a newspaper in which Sheriffs' Sales are
advertised in said county. At any such public sale, the Lessor, as Grantee, may
execute and deliver to the purchaser a conveyance of Lessee' interests in the
Mill II Property situate in the State of Georgia and to this end, Lessee, as
Grantor, hereby constitutes and appoints Lessor the agent and attorney-in-fact
of Lessee to make such sale and conveyance, and thereby to divest Lessee of all
right, title and equity that Lessee may have in and to the portion of the Mill
II Property situate in the State of Georgia and to vest the same in the
purchaser or purchasers at such sale or sales and all the acts and doings of
said agent and attorney-in-fact are hereby ratified and confirmed and any
recitals in said conveyance or conveyances as to facts essential to a valid sale
shall be binding upon Lessee. The aforesaid power of sale and agency hereby
granted are coupled with an interest and are irrevocable by death or otherwise,
are granted as cumulative of the other remedies provided hereby or by law for
collection of the Mill II Loan Amount and shall not be exhausted by one exercise
thereof but may be exercised until full payment or the Mill II Loan Amount and
performance of all the obligations under the Operative Documents. In the event
of any sale under this subparagraph 8(a) by virtue of the exercise of the powers
herein granted, pursuant to any order and any judicial proceeding or otherwise,
the portion of the Mill II Property situate in the State of Georgia may be sold
as an entirety or in separate parcels and in such manner or order as Lessor,
upon direction by Agent, in its sole discretion may elect, and if Lessor so
elects, until the entire portion of the Mill II Property situate in the State of
Georgia is sold or the Mill II Loan Amount is
45
paid and the obligations under the Operative Documents performed in full. If the
Mill II Loan Amount is now or hereafter further secured by any chattel
mortgages, pledges, guarantees, assignments of lease or security instruments,
Lessor, as Grantee, may at its option exhaust the remedies granted under any of
said security instruments either concurrently or independently, and in such
order as Lessor, as Grantee, may determine. Upon any foreclosure sale pursuant
to the power herein granted or otherwise, Lessor, as Grantee, may bid for and
purchase the portion of the Mill II Property situate in the State of Georgia and
shall be entitled to apply all or any part of the Mill II Loan Amount secured
hereby as a credit to the purchase price.
(b) With respect to the Mill II Florida Tenneco Mortgage, if an
Event of Default shall have occurred and be continuing, the Lessor, at the
direction of the Agent and in accordance with the Interparty Agreement, shall
have the right
(i) to exercise any and all remedies available to a mortgagee under
Florida law (and without prejudice to the rights of the Secured Party to
exercise any remedies described in the Participation Agreement, the Interparty
Agreement or the other Operative Documents).
(ii) to declare the Mill II Loan Amount and all other obligations of
Lessee secured by the Mill II Florida Tenneco Mortgage immediately due and
payable without further notice.
(iii) to the extent permitted by law, to take immediate possession of
the Mill II Property situate in the State of Florida or any part thereof (which
Lessee agrees to surrender to Lessor) and manage, control or lease same to such
person or persons and exercise all other rights granted to a mortgagee under
applicable Florida law. The taking of possession under this paragraph shall not
prevent concurrent or later proceedings for the foreclosure sale of the portion
of the Mill II Property situated in the State of Florida as provided elsewhere
herein.
(iv) to apply, on ex parte motion to any court of competent
jurisdiction, for the appointment of a receiver and shall be entitled to the
appointment of such receiver as a matter of right, without regard to the value
of the Mill II
46
Property (situate in the State of Florida) as security for the Mill II Loan
Amount, or the solvency or insolvency of any person then liable for the payment
of the Mill II Loan Amount. In addition to the rights of protection afforded to
Lessor by Section 697.07, Florida Statutes (1995), as amended (and not as an
election of remedies), Lessor shall be entitled, as a matter of strict right and
without regard to the value or occupancy of any security for the obligations
secured by the Mill II Florida Tenneco Mortgage, to have a receiver appointed by
a court, without notice to Lessee, to enter upon and take possession of the
portion of the Mill II Collateral situated in the State of Florida, collect the
rents therefrom and thereof and apply the same as the court may direct, such
receiver to have all the rights and powers permitted under the laws of Florida.
The expenses, including receiver's fees, reasonable attorneys' fees (including
any incurred in appeals), costs and agent's compensation, incurred pursuant to
the powers herein contained shall be secured by the Mill II Florida Tenneco
Mortgage. The right to enter and take possession of the Mill II Property
(situate in the State of Florida), to manage and operate the same, to collect
the rents therefrom and thereof, whether by a receiver or otherwise, shall be
cumulative to any other right or remedy hereunder or afforded by law, and may be
exercised concurrently therewith or independently thereof. Lessor shall be
liable to account only for such rents actually received by Lessor, whether
received pursuant to this paragraph or otherwise. The Lessee hereby specifically
waives the right to object to the appointment of a receiver as aforesaid and
hereby consents that such appointment shall be made as an admitted equity and as
a matter of absolute right to the Lessor and that the same may be done without
notice to the Lessee or any other defendant to such suit.
(v) to foreclose on the Mill II Florida Tenneco Mortgage and in case
of sale in an action or proceeding to foreclose the Lessor shall have the right
to sell the Mill II Property situate in the State of Florida in parts or as an
entirety. It is intended hereby to give to Lessor the widest possible
discretion permitted by law with respect to all aspects of any such sale or
sales.
(vi) to exercise all other remedies available, whether at law or
equity, in such order as Lessor may elect.
47
It shall also not be necessary that Lessor pay any Impositions, premiums or
other Charges regarding which Lessee is in default before Lessor may invoke its
rights hereunder. All such other rights and remedies available to Lessor with
respect to the Mill II Florida Tenneco Mortgage shall be cumulative and may be
pursued concurrently or successively. The failure or omission on the part of
Lessor to exercise the option for acceleration of maturity and/or foreclosure or
to timely exercise any other option, right, or remedy conferred upon the Lessor
herein, or the acceptance by Lessor of partial payments hereunder, shall not
constitute a waiver of any default or the right to exercise any such option, but
such option shall remain continuously in force. Acceleration of maturity, once
claimed hereunder by Lessor, at the option of Lessor, may be rescinded by
written acknowledgment to that effect by Lessor, but the tender and acceptance
of partial payments alone shall not, in any way, effect or rescind such
acceleration of maturity. The obtaining of a judgment or decree on the Mill II
Loan Amount, whether in the State of Florida or elsewhere, shall not in anyway
affect the lien of the Mill II Florida Tenneco Mortgage upon the Mill II
Property situate in the State of Florida covered hereby, and any judgment or
decree so obtained shall be secured hereby to the same extent as said Mill II
Loan Amount is now secured.
21. Notices, Demands and Other Instruments. All notices, demands,
--------------------------------------
offers, consents and other instruments given pursuant to this Lease shall be
sent to the parties hereto at the addresses set forth on Schedule I to the
Participation Agreement and shall be given in the manner and shall be effective
at the times and under the terms set forth in Section 8.02 of the Participation
Agreement. The Lessee shall send to the Agent copies of all notices, demands,
offers, consents, advices and other instruments hereunder sent to the Lessor.
22. No Default Certificate. Each party hereto shall, at the
----------------------
reasonable request of the other party hereto, deliver to such other party a
certificate stating whether such first party has knowledge that, or has received
notice from any person that, any Casualty, Condemnation, Default, Major
Environmental Event,
48
Environmental Default, Environmental Trigger or Event of Default has occurred
and is continuing.
23. Surrender. (a) If upon the expiration or termination of the
---------
Term (or the Extended Term, as the case may be) or the termination of Lessee's
possession of the Mill II Property, Lessee or its designee has not purchased the
Mill II Property as provided hereunder, the Lessee shall surrender (i) the Mill
II Parcel to the Lessor in the condition in which the Mill II Parcel was upon
the commencement of the Term hereof (together with all easements, rights of way
or other rights as Lessor may require to assure unrestricted access to the Mill
II Parcel), (ii) Mill II in the operating condition, efficiency, utility and
with the remaining useful life, it had upon the commencement of the Term, except
as repaired, rebuilt, renovated, altered, added to or built as permitted or
required hereby and except for ordinary wear and tear, and (iii) the Mill II
Improvements and the Mill II Alterations in good operating condition, in
substantially the condition the same were in when constructed or installed on
the Mill II Parcel, except for ordinary wear and tear. To the extent that the
Mill II Property is not in compliance with the above upon such expiration or
termination (except as a consequence of a Casualty or Condemnation, as to which
paragraph 12 applies), the Lessee shall pay to the Agent (on behalf of the
Lessor) such additional amounts as are required to place it in compliance
therewith.
(b) The Lessee shall also surrender the Mill II Property to the Lessor
free and clear of all Liens, easements, consents and restrictive covenants and
agreements affecting the Mill II Property (other than (i) rights reserved to or
vested in any municipality or public authority, by the terms of any franchise,
grant, license, Permit or provision of Law, to purchase, condemn, appropriate or
recapture, or designate a purchaser of the Mill II Property, (ii) rights
reserved to or vested in any municipality or public authority to control or
regulate the use of the Mill II Property or to use the Mill II Property in any
manner, (iii) easements, rights-of-way, servitudes, restrictions, encroachments
and other minor defects, encumbrances and irregularities in title to the Mill II
Property which do not, individually or in the aggregate, materially and
adversely affect the value, condition, marketability or operation of the Mill II
Property or the Lessor's ownership thereof, (iv) the Ground Leases and the
Mortgages, (v) Liens
49
existing on the Financing Closing Date and set forth in the Title Policy, and
(vi) Lessor Liens.
(c) The Lessee shall also surrender the Mill II Property in a
condition such that it is in compliance with all applicable Environmental Laws
then enacted or then proposed by any governmental agency (irrespective of
whether the deadline for such compliance would otherwise expire after the end of
the Term or the Extended Term, as applicable). Nothing contained in this
paragraph 23 shall relieve or discharge or in any way affect the obligation of
the Lessee to cure promptly pursuant to this Lease any violations of Legal
Requirements referred to in this Lease, or to pay and discharge any Liens and
Impositions against the Mill II Property, subject, however, to the right of the
Lessee to contest the same pursuant to the provisions of paragraphs 11 and 18.
Lessee shall cooperate, to the fullest extent permitted by Law, with the Lessor,
its subsequent lessees, operators or purchasers to effect the transfer of all of
Lessee's Applicable Permits for the Mill II Property to such Persons.
(d) The Lessee, at its sole cost and expense, shall remove from the
Mill II Property on or prior to such expiration or termination, all property
situated thereon which is not owned by the Lessor and shall repair any damage
caused by such removal and shall restore the Mill II Property to the condition
and working order (or reasonable equivalent thereof) in which it existed
immediately prior to the installation of such property, except for ordinary wear
and tear. Lessee shall indemnify and hold harmless the Lessor, its successors
and assigns against any loss, liability, cost, expense, penalty or claim arising
out of the Lessee's removal of such property from the Mill II Property
including, without limitation, any environmental liability arising therefrom.
Any such property of the Lessee not so removed shall become the property of the
Lessor, and the Lessor may cause such property to be removed from the Mill II
Property and disposed of, and the cost of any such removal and disposition of
the Lessee's property and of repairing any damage caused by such removal and of
the restoration of the Mill II Property to the condition and working order (or
reasonable equivalent thereof) in which it existed immediately prior to the
50
installation of such property, ordinary wear and tear excepted, shall be borne
by the Lessee.
(e) The Lessee shall comply with the conditions set forth in paragraph
27(b) of this Lease in addition to those set forth in this paragraph 23.
(f) The obligations of the Lessee under this paragraph 23 shall
survive the expiration or any termination of the Term (or the Extended Term, as
the case may be) of this Lease (whether by operation of Law or otherwise) for
all matters described in this paragraph 23 which occur or arise prior to such
expiration or termination or arise out of or result from facts, events, claims,
liabilities, actions or conditions occurring, arising or existing on or before
such expiration or termination.
24. Severability; Binding Effect; Governing Law; Non-Recourse. (a)
---------------------------------------------------------
Except as expressly provided otherwise in this Lease, each provision hereof
shall be separate and independent and the breach of any such provision by the
Lessee, or a breach of any obligation hereunder by the Lessor, shall not
discharge or relieve the Lessee from its obligations to perform each and every
covenant to be performed by the Lessee hereunder. If any provision hereof or
the application thereof to any Person or circumstance shall be invalid or
unenforceable, the remaining provisions hereof, or the application of such
provision to Persons or circumstances other than those as to which it is invalid
or unenforceable, shall not be affected thereby, and each provision hereof shall
be valid and shall be enforceable to the extent permitted by Law.
(b) All provisions contained in this Lease shall be binding upon,
inure to the benefit of and be enforceable by, the respective permitted
successors and assigns of the Lessor and the Lessee to the same extent as if
each successor and assignee were named as a party hereto. Except for subleases
and assignments permitted or created in accordance with paragraph l7 hereof, the
Lessee may not assign its rights hereunder or any interest herein without the
prior written consent of the Lessor. Subject to the provisions of Section 2(c)
of this Lease and the other Operative Documents, the Lessor may assign all or
any part of the Mill II Property and/or its rights under this Lease. All
amendments, waivers, consents or approvals arising pursuant to this Lease shall
be consummated in accordance with the Participation Agreement. Any amendment,
waiver, consent or
51
approval made otherwise than as expressly permitted by this paragraph 24 shall
be null and void.
(c) THIS LEASE SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH
THE LAWS OF THE STATES OF GEORGIA AND FLORIDA, AS APPLICABLE, WITHOUT REGARD TO
CONFLICTS OF LAWS PROVISIONS.
(d) The parties may sign this Lease in any number of counterparts and
on separate counterparts, each of which shall be an original but all of which
when taken together shall constitute one and the same instrument, except that,
if this Lease constitutes "chattel paper" within the meaning of the UCC only one
counterpart stamped or marked "COUNTERPART NUMBER ONE" or "COUNTERPART NUMBER l"
shall constitute, to the extent applicable, "chattel paper" or other
"collateral" within the meaning of the Uniform Commercial Code in effect in any
jurisdiction.
(e) No recourse shall be had against the Lessor, the Agent, the
Collateral Agent, the Equity Investor or any Note Holder or their respective
successors, assigns, directors, officers, partners, employees, agents or
shareholders, for any claim based on any failure by the Lessor in the
performance or observance of any of the agreements, covenants or provisions
contained in this Lease and in the event of any such failure, recourse shall be
had solely against the Mill II Property; provided, however, that nothing
-------- -------
contained in this Lease shall be taken to prevent enforcement of any claim
against the Lessor or any other Person arising out of or in connection with this
Lease based on fraud, gross negligence or willful misconduct of the Lessor or
such other Person and nothing shall prevent enforcement against any other Person
to which any part thereof shall have been transferred, or obligations undertaken
or assumed in writing by such Person.
25. Headings and Table of Contents. The table of contents and the
------------------------------
headings of the various paragraphs and schedules of this Lease are for
convenience only and shall not affect the meaning of the terms and conditions of
this Lease.
26. Lessor's Right to Cure Lessee's Default. If the Lessee shall
---------------------------------------
fail to make any payment or perform any act required to be made or performed
under this Lease, the Lessor, without waiving any default or releasing Lessee
from any
52
obligation, may (but shall be under no obligation to) make such payment
or perform such act for the account and at the cost and expense of the Lessee,
and may enter upon the Mill II Property for such purpose and take all such
action thereon as, at the Lessor's sole discretion, may be necessary or
appropriate therefor. No such entry shall be deemed an eviction of the Lessee
or a breach of the Lessor's covenant for quiet possession pursuant to paragraph
2(b). All sums so paid by the Lessor and all costs and expenses (including,
without limitation, reasonable attorneys' fees and expenses so incurred,
together with interest thereon at the Default Rate to the extent permitted by
Law) shall be paid by the Lessee to the Lessor on demand as Additional Rent.
27. Lessee's Options Upon Expiration. (a) In addition to its rights
--------------------------------
under paragraphs l2 and 14 hereof, Lessee shall elect either to (i) by written
notice given at least three (3) months prior to the Expiration Date (or later if
permitted or required under paragraph 27(d)) deliver an Offer to Purchase the
Mill II Property in its entirety and purchase the Mill II Property on the
Expiration Date upon payment of an amount equal to the Offer Purchase Price, in
which case the transfer of the Mill II Property shall be governed by the terms
of paragraphs 14 and 15 (and in which case, this Lease (with the exception of
any provision hereof or under the other Operative Documents under which the
Lessee indemnifies the Lessor or others from liability in connection with this
Lease, or otherwise specifies that such provision survives termination hereof or
under the other Operative Documents) shall terminate on the Closing Date); (ii)
so long as no Default, Event of Default or Major Environmental Event has
occurred and is continuing by written notice given at least twelve (12) months
prior to the Expiration Date, and subject to the satisfaction of the conditions
set forth in paragraphs 27(b) and 27(c) hereof, terminate this Lease, abandon
the Mill II Property as of the Expiration Date and pay to the Agent, on behalf
of the Lessor on the Expiration Date, in addition to any Fixed Rent, Additional
Rent and any other amounts then due and payable to the Lessor hereunder, an
amount equal to the Series A Portion of the Adjusted Capitalized Cost of the
Mill II Property (the "Residual Guaranty"); or (iii) by written notice given at
-----------------
least three (3) months prior to the Expiration Date, and subject to the
conditions set forth in paragraph 27(d), extend this Lease for the Extended
Term.
53
(b) Upon the election of the Lessee to terminate this Lease pursuant
to paragraph 27(a)(ii) hereof, the Lessee shall provide, or cause to be provided
or accomplished, at the sole cost and expense of the Lessee, to or for the
benefit of the Lessor and the holders of the Instruments, at least thirty (30)
days but not more than sixty (60) days prior to the Expiration Date or date of
such other termination of this Lease each of the following (other than the
documentation contemplated under clause (b)(ii)(F) which must be delivered five
days prior to the Expiration Date) (collectively, the "Return Conditions"):
-----------------
(i) an environmental audit of the Mill II Property, performed by
environmental consultants selected by the Lessor, satisfactory in scope and
content to the Agent, the Lessor, the Collateral Agent, each Equity Investor and
each Note Holder, each in its sole discretion.
(ii) a report of the Appraiser and/or the Independent Engineer,
satisfactory in scope and content to the Lessor, the Collateral Agent, the
Agent, the Equity Investors and the Note Holders, each in their sole discretion,
to the effect that (A) the Mill II Improvements, if any, have been completed;
(B) the Mill II Property has been constructed or maintained in accordance with
the terms and conditions of the Lease and the other Operative Documents and the
requirements of all Legal Requirements, Applicable Permits and prudent industry
standards for pulp and paper xxxxx in Wisconsin; (C) the Lessee shall not be
rebuilding or restoring or required to rebuild or restore the Mill II Property
or any part thereof pursuant to paragraph 12(c) of this Lease; (D) the Mill II
Property meets or exceeds the performance tests specified on Exhibit A hereto
(the "Performance Tests") taking into account any modifications to the
-----------------
Performance Tests necessitated by the Mill II Improvements (as determined by the
Independent Engineer) which will insure that, at a minimum, the Mill II Property
(including the Mill II Improvements, if any,) can operate at the required
capacity, efficiency, utility and reliability required to meet the terms of any
existing contracts involving the Mill II Property (including the Mill II
Improvements) on the Expiration Date (or date of such other termination of the
Lease); (E) all mechanical, electrical, security, plumbing, fire safety,
telecommunications, structural and other building systems in the Mill II
Property are operating properly in accordance with standards and specifications
for such systems not less than those in effect on the date hereof, subject to
the provisions of paragraph 23 hereof (and such other standards and
specifications as may be required by applicable Legal Requirements); and (F) no
Condemnation or Casualty has occurred which has not been remedied in accordance
with the terms of the Operative Documents;
(iii) delivery of a services agreement to the Lessor (in form and
substance satisfactory to the Agent, the Lessor, the Equity Investors and the
Note Holders each in their sole and absolute discretion), containing among other
things, evidence that the Lessee has made arrangements satisfactory to the Agent
in its sole and absolute discretion for the provision of all services necessary
to maintain, own, operate or sell the Mill II Property (including obtaining all
necessary intellectual property, surveys, permits, rights of way, manuals and
contracts specifically associated with the Mill II Property and required for the
operation of the Mill II Property as then being operated);
54
(iv) an endorsement to the previously delivered ALTA extended
coverage owner's title insurance policy issued by the Title Company, marked
"premium paid" and increasing the coverage of such policy to an aggregate amount
equal to the lesser of (i) the maximum insurable amount or (ii) the Adjusted
Capitalized Cost of the Mill II Property, subject only to Permitted Encumbrances
and otherwise in form and substance satisfactory to the Note Holders, the Equity
Investors, the Lessor and Special Counsel, to be delivered to the Note Holders,
the Equity Investors, the Lessor and Special Counsel, together with copies of
all documents relating to the Permitted Encumbrances referred to therein,
showing record title of the Lessor in the (leasehold estate in and to the) Mill
II Property, and in and to Mill II, the Mill II Improvements and the Mill II
Alterations;
(v) all Fixed Rent and Additional Rent shall have been paid in
full through such expiration or termination of the Term (or the Extended Term,
as applicable);
(vi) the Lessee shall remove, or cause the removal of, at the
Lessee's sole expense, any inventory, fixtures, machinery, equipment or other
property belonging to the Lessee or third parties in compliance with paragraph
10(b) and 23(d) of this Lease; and
(vii) if directed to do so by the Lessor, the Lessee (at its
expense) shall execute and deliver any and all further instruments, agreements
and documents as may, in the reasonable opinion of the Lessor, be necessary to
confirm the termination and expiration of this Lease and to acknowledge that the
Lessee, from the date of termination and expiration, ceases to have any interest
in the Mill II Property under this Lease and to confirm the Lessor's ownership
of the Mill II Property.
(c) Upon the Lessee's election to terminate this Lease pursuant to and
in compliance with paragraph 27(a)(ii) the Lessee shall use reasonable efforts
during the twelve-month period prior to the Expiration Date ("Remarketing
-----------
Period") to obtain bids from unrelated third parties for the Mill II Property.
------
All bids received by the Lessee shall immediately be copied to the Lessor and
the Agent in writing, setting forth the amount of such bid and the name and
address of the person submitting such bid. The Lessor, the Agent, the Equity
Investors and each Note Holder shall have the right, but not the obligation, to
seek bids for the Mill II Property during the Remarketing Period or at any time
thereafter. On the Expiration Date or at any time thereafter, provided that all
conditions of this paragraph 27 have been met, the Collateral Agent may (but is
not obligated to) sell the Mill II Property for cash to the bidder, if any, who
shall have submitted the highest bid during the Remarketing Period or any time
thereafter on an as-is basis and without recourse or warranty, subject to the
provisions of Section 3.01 of the Interparty Agreement. The Lessor shall be
entitled to keep the proceeds of such sale after payment of Closing Costs (the
"Net Sale Proceeds"), and Lessee shall have no further claim thereto except to
------------------
the extent such Net Sale
55
Proceeds exceed the outstanding obligations of the Lessee under the Operative
Documents.
(d) So long as no Default, Event of Default or Major Environmental
Event exists, the Lessee may request (in its sole discretion), by written notice
given to the Agent at least 3 months prior to the Expiration Date an extension
of this Lease for one additional period of up to five years (the "Extended
--------
Term"). The Lessor and the Lessee shall determine the Applicable Rate for the
----
Extended Term, consistent with the terms outlined below in this paragraph 27(d),
and the Lessee shall undertake to enter into all amendments and supplements to
the Operative Documents and such other agreements as the Lessor in its sole
discretion determines to be necessary and appropriate in connection therewith
including, without limitation, delivery to Agent of an appraisal of the Mill II
Property (satisfactory in form and substance to the Agent in its sole
discretion). If the Lease is extended for the Extended Term, the Lessee shall
pay the Agent a remarketing fee, the amount of which shall be determined one
month prior to the commencement of the Extended Term. Fixed Rent during the
Extended Term shall be paid monthly in arrears, and include an annual amount
(payable annually in arrears) to be applied (i) to the outstanding principal
amount of the Notes, and (ii) to the outstanding stated amount of the Equity
Investment, such annual amount to be based on an amortization schedule
(determined by reference to the appraisal described in this paragraph 27(d) and
agreed to by the Note Holders and the Equity Investors in their sole
discretion).
(e) The Applicable Rate, the principal amount of the commitments to be
agreed upon by each Note Holder and each Equity Investor and Commitment Fees
payable during the Extended Term shall be determined as follows:
(i) Within ten (10) days after receipt of Lessee's request to
extend this Lease pursuant to this paragraph 27(d), the Agent shall, in
accordance with provisions of the letter agreement of even date herewith (the
"Extension Letter") among the Lessee and each APA Purchaser, the manager under
----------------
the Management Agreement, CNAI, the Equity Investor, the Lessor and the
Collateral Agent, consult with each party to the Extension Letter to determine
(A) the amount of the Applicable Rate, the Fixed Rent and the Commitment Fees,
if any, for the Extended Term at which the Note Holders, the Equity Investors
and other applicable Persons are willing to continue their respective interests
for the Extended Term (the "Proposed Extension Rates"), or (B) whether any such
------------------------
Person is unwilling to continue its interest during the Extended Term; and the
Agent shall promptly thereafter notify the Lessee thereof.
56
(ii) If the Agent notifies the Lessee of the Proposed Extension
Rates, the Lessee shall, within five Business Days after such notice, notify the
Agent whether the Lessee is willing to accept the Proposed Extension Rates for
the Extended Term and, if not, at what Applicable Rate, Fixed Rent and
Commitment Fees the Lessee is willing to accept for the Extended Term (the
"Lessee's Extension Rates"); provided, however, that in the event that the
------------------------ -------- -------
Equity Investor and the Lessor are the same person, the Lessee agrees that any
extension of this Lease agreed to by the Lessee with either the Equity Investor
or the Lessor shall also include such other Person.
(iii) If any party to the Extension Letter notifies the Agent that it
is unwilling to extend this Lease in accordance with clause (i)(B) above or if
the Lessee notifies the Agent that it is unwilling to accept the Proposed
Extension Rates and advises the Agent of the Lessee's Extension Rates as set
forth above, the Agent shall use reasonable efforts to locate replacement
lenders, investors and other Persons as necessary to extend this Lease for the
Extended Term on Lessee's Extension Rates.
(iv) If the Lessee fails to give the Agent the notice described in
clause (ii) of this paragraph 27(e), or, if within one month after Lessee's
request to extend this Lease pursuant to paragraph 27(d), the Agent has been
unable to locate replacement lenders, investors or other Persons as necessary to
extend this Lease for the Extended Term on Lessee's Extension Rates, the Agent
shall notify the Lessee and the Lessee, within five Business Days after such
notice shall give the Agent notice of either (x) the Lessee's agreement to
extend this Lease for the Extended Term at the Proposed Extension Rates, if any,
or (y) in all other cases, the Lessee's election pursuant to paragraph 27(a)(i)
hereof; provided, that if the Lessee fails to give the Agent such notice, the
Lessee shall be deemed to have given notice of its election pursuant to
paragraph 27(a)(i) hereof.
(e) If Lessee is unable to satisfy one or more of the conditions set
forth in paragraphs 27(b) and 27(c) hereof, or fails to elect either (i) or (ii)
under paragraph 27(a) hereof, the Lessee shall be deemed to have elected to
proceed under paragraph 27(a)(i) hereof, in which case Lessee shall purchase the
Mill II Property pursuant to and in accordance with said paragraph 27(a)(i).
28. Protective Expenditures. At any time after the expiration or
-----------------------
other termination of this Lease, if the Lessee has not purchased the Mill II
Property pursuant to the terms of this Lease, any Note Holder, any Equity
Investor or the Lessor shall have the right to pay, or to fund the Collateral
Agent's payment of, (i) real estate Taxes due and owing with respect to the Mill
II Property or (ii) insurance premiums required to maintain the coverage
required during the Term of this Lease pursuant to Section 5.01(o) of the
Participation Agreement (each a "Protective Expenditure"). Reimbursement of
----------------------
Protective Expenditures made by any Note Holder, any Equity Investor or the
Lessor in accordance with this paragraph 28 shall be made upon a sale of the
Mill II Property pursuant to the provisions set forth in the Interparty
Agreement.
57
29. Limitations on Amounts Payable. Notwithstanding anything to the
------------------------------
contrary contained in this Lease or any of the other Operative Documents, the
amounts which the Lessee is obliged to pay, as Fixed Rent pursuant to this Lease
and the other Operative Documents, and the amounts which Lessor, Agent, the
Equity Investors and the Note Holders are entitled to receive as Fixed Rent
pursuant to this Lease and other Operative Documents, are subject to limitations
pursuant to Section 8.17 of the Participation Agreement.
30. No Merger of Title. There shall be no merger of this Lease nor
------------------
of the leasehold estate created by this Lease with the ownership of the Mill II
Parcel, Mill II, the Mill II Improvements or the Mill II Alterations by reason
of the fact that the same Person may acquire, own or hold, directly or
indirectly, this Lease or the leasehold estate created by this Lease or any
interest in this Lease or interest in the fee or leasehold ownership of the Mill
II Parcel, Mill II, the Mill II Improvements or the Mill II Alterations and no
such merger shall occur unless and until all Persons having any interest in (x)
the leasehold estate created by this Lease and (y) the ownership of the Mill II
Parcel, Mill II, the Mill II Improvements or the Mill II Alterations, or any
part thereof shall join in a written instrument effecting such merger and shall
duly record the same.
31. Payments to the Agent. The Lessee hereby acknowledges, and the
---------------------
Lessor hereby directs, that all payments of Fixed Rent, Additional Rent and
other sums due to the Lessor hereunder shall be made to the Agent, on behalf of
the Lessor, to the account specified for the Agent in Schedule I to the
Participation Agreement.
32. Remaining Moneys. Except as otherwise provided for herein or in
----------------
the Interparty Agreement, any and all moneys remaining, and all residual
interests in the Mill II Property after all payments of interest on and
principal of the Notes, and all payments of current yield on and the stated
amount of the Equity Investment and all payments of other sums due to the
parties entitled thereto under the Operative Documents, have been made in
accordance with the Operative Documents, shall be paid and assigned to the
Lessee.
33. Replace and Supersede. This Lease replaces and supersedes in all
---------------------
respects the Original Mill II Lease, which
58
Original Mill II Lease shall, from and after the date hereof, be of no further
force or effect.
59
IN WITNESS WHEREOF, the parties hereto have caused this Lease to be
duly executed by their respective Officers thereunto duly authorized as of the
date hereof.
LESSOR:
CREDIT SUISSE LEASING 92A, L.P.
By: CREDIT SUISSE FIRST BOSTON,
its general partner
/s/ Xxx X. Xxxx By: /s/ Xxxxxxx X. O'Day
--------------------------- ---------------------------
Print Name Xxx X. Xxxx Name: Xxxxxxx X. O'Day
Title: Associate
/s/ Xxxxxxxx Sequin
---------------------------
Print Name Xxxxxxxx Sequin
/s/ Xxx X. Xxxx By: /s/ Xxxx X. Xxxxxxxx
--------------------------- ---------------------------
Print Name Xxx X. Xxxx Name: Xxxx X. Xxxxxxxx
Title: Associate
/s/ Xxxxxxxx Sequin
---------------------------
Print Name Xxxxxxxx Sequin
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
The foregoing instrument was acknowledged before me this 31st day of
January, 1997, by Xxxxxxx X. O'Day, as Associate of CREDIT SUISSE FIRST BOSTON,
the general partner of CREDIT SUISSE LEASING 92A, L.P., a Delaware limited
partnership, in his capacity as Associate of such general partner and on behalf
of said limited partnership. He is personally known to me or has produced
_____________________ as identification.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal at my office in New York, New York the day and year last above
written.
(SEAL)
/s/ Xxxxx X. Xxxxx
-----------------------------------
Printed Name: Xxxxx X. Xxxxx
Notary Public in and for said State
Commissioned in New York County
[Notary Public]
My Commission Expires:
November 4, 0000
XXXXX XX XXX XXXX )
: ss.:
COUNTY OF NEW YORK )
The foregoing instrument was acknowledged before me this 31st day of
January, 1997, by Xxxx X. Xxxxxxxx, as Associate of CREDIT SUISSE FIRST BOSTON,
the general partner of CREDIT SUISSE LEASING 92A, L.P., a Delaware limited
partnership, in her capacity as Associate of such general partner and on behalf
of said limited partnership. She is personally known to me or has produced
_____________________ as identification.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal my office in New York, New York the day and year last above
written.
(SEAL)
/s/ Xxxxx X. Xxxxx
-----------------------------------
Printed Name: Xxxxx X. Xxxxx
Notary Public in and for said State
Commissioned in New York County
[Notary Public]
My Commission Expire:
November 4, 1997
LESSEE:
Witness/Attest: TENNECO PACKAGING INC.
Attest: /s/ Xxxxx X. Xxxxxxx By:/s/ Xxxxx X. Xxxx
----------------------------- -----------------------------------
Print Name Xxxxx X. Xxxxxxx Name: Xxxxx X. Xxxx
Assistant Secretary Vice President
/s/ Xxxx Novas
-----------------------------
Print Name Xxxx Novas [CORPORATE SEAL]
Witness: /s/ Xxxx Xxxxxxx
----------------------------
Name: Xxxx Xxxxxxx
Title: Assistant Treasurer
Tenneco Inc.
Agreed to and Accepted:
Witness/Attest: CITIBANK, N.A., as Agent
/s/ Xxxxxxxxx Audiffied By: /s/ Xxxxxxx X. Xxxxxx
----------------------------- ----------------------------------
Print Name Xxxxxxxxx Audiffied Name: Xxxxxxx X. Xxxxxx
Title: Vice President
/s/ Xxxxxxx Xxxxxxx
-----------------------------
Print Name Xxxxxxx Xxxxxxx
STATE OF NEW YORK )
: ss.:
COUNTY OF WESTCHESTER)
On this 31st day of January, 1997, before me personally appeared
Xxxxx X. Xxxx, to me personally known, who being by me duly sworn, did say that
she is the Vice President of TENNECO PACKAGING, INC., a Delaware corporation,
and that the seal affixed to the foregoing instrument is the corporate seal of
said corporation and that said instrument was signed and sealed on behalf of
said corporation by authority of its Board of Directors, and said Vice President
acknowledged said instrument to be the free act and deed of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal at my office in Westchester County the day and year last
above written.
(SEAL)
/s/ Xxxxx Xxxxxxx
-----------------------------------
Printed Name: Xxxxx Xxxxxxx
Notary Public in and for said State
Commissioned in Westchester County
My Commission Expire:
May 31, 1997
[Notary Public]
STATE OF NEW YORK )
: ss.:
COUNTY OF QUEENS )
On this 31st day of January, 1997, before me personally appeared
Xxxxxxx X. Xxxxxx, to me personally known, who being by me duly sworn, did say
that she is the Vice President of Citibank, N.A., and that said instrument was
signed on behalf of said corporation by authority of its Board of Directors, and
said Vice President acknowledged said instrument to be the free act and deed of
said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal at my office in Long Island City, N.Y. the day and year last
above written.
(SEAL)
/s/ Xxxxxxx X. Xxxxxxx
-----------------------------------
Printed Name: Xxxxxxx X. Xxxxxxx
Notary Public in and for said State
Commissioned in Kings County
[Notary Public]
My Commission Expire:
Oct. 11, 1998
SCHEDULE A
----------
Description of the Mill II Parcel
---------------------------------
LAND IN THE CITY OF ________, ________ COUNTY, ________, legally described as
follows:
-55-
SCHEDULE B
----------
Fixed Rent and Additional Rent Schedule
---------------------------------------
Capitalized terms used herein and not defined herein shall have the meanings
----------------------------------------------------------------------------
assigned to them in the Lease (including terms defined by reference in the Lease
--------------------------------------------------------------------------------
to the other Operative Documents).
----------------------------------
I. Fixed Rent
----------
A. The "Adjusted Capitalized Cost" of the Mill II Property as a
-------------------------
whole at any time during the Term (or the Extended Term, as
applicable) is (i) the sum of each of the aggregate unpaid principal
amounts of the A-Notes and the B-Notes (without taking into account
any prepayment pursuant to the last sentence of Section 2.04 of the
Loan Agreement) at such time and the unpaid stated amount of the
Equity Investment at such time times (ii) the Mill II Percentage.
B. "Fixed Securitization Costs" shall mean, without duplication of
--------------------------
any of the following fixed securitization costs and without
duplication of any other fixed costs related to the Operative
Documents or the Securitization Documents payable by the Lessee, the
fee of the Managing Agent pursuant to the Management Agreement or any
related fee letter, the fee of the Servicing Agent pursuant to the
Servicing Agreement or any related fee letter, and the monthly
commitment fee payable to CXC's Credit Enhancer pursuant to the
Securitization Fee Letter.
C. The "Mill II Percentage" means initially the updated appraised
------------------
fair market value of the Mill II Property divided by the Acquisition
Costs and thereafter the percentage calculated by dividing (i) the
Actual Project Costs actually expended on the Mill II Property (on and
as of the date of such calculation) by (ii) the sum of the Actual
Project Costs actually expended on the Mill II Property (on and as of
the date of such calculation) plus the
B-1
Actual Project Costs actually expended on the Mill II Property (on and
as of the date of such calculation).
D. Fixed Rent during the Term (or the Extended Term, as applicable)
shall be due and payable in arrears on each Payment Date (subject, in
the case of Fixed Securitization Costs, to the rights of Lessee under,
and the limitations on such payments contained in, the Operative
Documents). "Fixed Rent" for each Payment Date during the Term shall
----------
be equal to the product of (i) the portion of Adjusted Capitalized
Cost represented by each Instrument multiplied by (ii) the Applicable
-------------
Rate for each Instrument in effect prior to such Payment Date; plus
----
Fixed Securitization Costs.
B-2
II. Additional Rent
---------------
A. In addition to such Additional Rent as may otherwise be payable
under the Lease, Lessee shall pay, without duplication, within five
(5) days after a demand therefor (but subject in all cases to the
rights of Lessee under, and the limitations on such payments contained
in, the Operative Documents) as Additional Rent, without duplication,
all Additional Costs. Promptly after the Lessor receives notice from
any Note Holder, Equity Investor or such other Persons requesting
payment of any Additional Costs to be payable as Additional Rent the
Lessor shall notify Lessee of the same. The failure to provide such
notice as to any Additional Costs shall not affect the right of any
Equity Investor, Note Holder or such other Person to recover
Additional Rent for the same.
B. "Additional Costs" shall mean all Break Costs, Funding Costs,
----------------
Reserve Costs, Increased Costs, Charges, Other Taxes, Variable
Securitization Fees, Illegality Costs and other amounts required to be
paid (or indemnified against) by the Lessee pursuant to Article V of
the Participation Agreement.
C. Upon requesting that Lessee pay Additional Rent pursuant to
paragraph II. A. above, the Lessor shall deliver to Lessee a
certificate in reasonable detail executed by the Equity Investors,
Note Holders or such other Persons requesting payment of Additional
Costs, as the case may be, charging such Additional Rent and (i)
setting forth the basis for and the Amount of such Additional Rent,
and (ii) in the case of Increased Costs, stating that such Increased
Costs are generally being charged by such Equity Investor or Note
Holder to other similarly situated Persons under similar arrangements.
Such certificate shall be conclusive and binding for all purposes,
absent manifest error, unless such certificate fails to set forth the
information required above.
B-3
Exhibit A
---------
Performance Tests
-----------------
A-1
-1-
