Exhibit 10.(x)
---------------------------------
AMENDED AND RESTATED
LEASE AGREEMENT
Dated as of October 1, 1998
-----------------------------------
Between
THE INDUSTRIAL DEVELOPMENT BOARD
OF THE CITY OF HUNTSVILLE
AND
CENTRAL CPVC CORPORATION
Relating to the Issuance of
$7,500,000
The Industrial Development Board of the City of Huntsville
Tax-Exempt Variable Rate Demand/Fixed Rate Refunding Revenue Bonds
(Central CPVC Corporation Project)
Series of 1998
This Instrument was Prepared by:
Xxxxxx X. Xxxxxxx, Xx.
Lange, Simpson, Xxxxxxxx & Somerville LLP
000 Xxxxx 00xx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, Xxxxxxx 00000
TABLE OF CONTENTS
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(This Table of Contents is not a part of the Lease Agreement and is
provided solely for convenience of reference.)
Page
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PARTIES .............................................................................................5
PREAMBLES .............................................................................................5
ARTICLE I
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DEFINITIONS
-----------
Section 1.1 Definitions....................................................................................7
Section 1.2 Use of Words and Phrases......................................................................11
ARTICLE II
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REPRESENTATIONS AND WARRANTIES
------------------------------
Section 2.1 Representations and Warranties by the Lessor..................................................12
Section 2.2 Representations and Warranties by Lessee......................................................12
ARTICLE III
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DEMISING CLAUSES AND WARRANTY OF TITLE
--------------------------------------
Section 3.1 Demise of the Project.........................................................................13
Section 3.2 Warranty of Title.............................................................................13
Section 3.3 Quiet Enjoyment and Possession................................................................13
ARTICLE IV
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COMMENCEMENT AND COMPLETION OF THE PROJECT,
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Section 4.1 Agreement to Acquire, Construct and Equip the Project.........................................13
Section 4.2 Agreement to Issue Bonds; Application of Bond Proceeds........................................14
ARTICLE V
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EFFECTIVE DATE AND DURATION OF THIS LEASE AGREEMENT,
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Section 5.1 Effective Date and Duration of this Lease Agreement...........................................15
Section 5.2 Delivery and Acceptance of Possession.........................................................15
Section 5.3 Rents and Other Amounts Payable...............................................................15
Section 5.4 Prepayment of Rents...........................................................................17
Section 5.5 Indemnity Against Claims......................................................................17
Section 5.6 Obligation of Lessee Unconditional............................................................18
Section 5.7 Public Services Payment.......................................................................18
Section 5.8 Lessee Entitled to Certain Rent Abatements if Bonds Paid Prior to Maturity....................19
Section 5.9 Indemnification with Respect to Certain Tax Changes...........................................19
2
Page
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ARTICLE VI
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MAINTENANCE, TAXES AND INSURANCE
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Section 6.1 Maintenance and Modification of Project by Lessee.............................................19
Section 6.2 Taxes, Other Governmental Charges and Utility Charges.........................................20
Section 6.3 Insurance Required to be Carried..............................................................21
Section 6.6 Advances by Lessor or Trustee.................................................................22
Section 6.7 Removal of Leased Equipment...................................................................22
ARTICLE VII
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DAMAGE, DESTRUCTION AND CONDEMNATION
------------------------------------
Section 7.1 Damage and Destruction........................................................................23
Section 7.2 Condemnation or Failure of Title..............................................................23
Section 7.3 Condemnation of Lessee Owned Property.........................................................24
ARTICLE VIII
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SPECIAL COVENANTS
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Section 8.1 No Warranty of Condition or Suitability by the Lessor.........................................24
Section 8.2 Inspection of the Project.....................................................................24
Section 8.3 Release of Certain Land.......................................................................24
Section 8.4 Purchase of Additional Machinery, Equipment, Furniture or Fixtures by the Lessor..............25
Section 8.5 Further Assurance and Corrective Instruments..................................................25
Section 8.7 Authorized Lessor Representative..............................................................25
Section 8.8 Authorized Lessee Representative..............................................................25
ARTICLE IX
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ASSIGNMENT, SUBLEASING, MORTGAGING AND
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Section 9.1 Assignment and Subleasing.....................................................................28
Section 9.3 Restrictions on Mortgage or Sale of Project by Lessor.........................................28
Section 9.4 Redemption of Bonds...........................................................................29
Section 9.5 Reference to Bonds Ineffective After Bonds Paid...............................................29
ARTICLE X
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EVENTS OF DEFAULT AND REMEDIES
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Section 10.1 Events of Default Defined....................................................................29
Section 10.2 Remedies on Default..........................................................................31
Section 10.3 No Remedy Exclusive..........................................................................31
Section 10.4 Agreement to Pay Attorneys' Fees and Expenses................................................32
Section 10.5 No Additional Waiver Implied by One Waiver...................................................32
Section 10.6 Remedial Rights Assigned to Trustee..........................................................32
3
Page
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ARTICLE XI
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OPTIONS IN FAVOR OF LESSEE
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Section 11.1 Options to Terminate.........................................................................32
Section 11.2 Option to Purchase Project Prior to Payment of the Bonds.....................................33
Section 11.3 Option to Purchase Project After Payment of the Bonds........................................34
Section 11.4 Option to Purchase Unimproved Land...........................................................34
Section 11.5 Conveyance on Exercise of Option to Purchase.................................................35
Section 11.6 Effect of Exercise on Options................................................................36
Section 11.7 Relative Position of Options and Indenture...................................................36
ARTICLE XII
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MISCELLANEOUS
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Section 12.1 Surrender of Project.........................................................................36
Section 12.2 Notices......................................................................................36
Section 12.3 Binding Effect...............................................................................37
Section 12.4 Severability.................................................................................37
Section 12.5 Amendments, Changes and Modifications........................................................37
Section 12.6 Execution in Counterparts....................................................................37
Section 12.7 Recording and Filing.........................................................................37
Section 12.8 Net Lease....................................................................................38
Section 12.9 Certain Tax Matters..........................................................................38
Section 12.10 Date of this Lease Agreement................................................................38
Section 12.11 Applicable Law..............................................................................38
Section 12.12 No Charge Against Lessor's Credit...........................................................38
Section 12.13 Captions....................................................................................38
TESTIMONIUM ...............................................................................................39
SIGNATURES AND SEALS...................................................................................... 39
ACKNOWLEDGEMENTS.......................................................................................... 41
EXHIBIT "A" ...............................................................................................42
EXHIBIT "B" ...............................................................................................43
4
AMENDED AND RESTATED LEASE AGREEMENT, dated as of October 1, 1998,
between The Industrial Development Board of the City of Huntsville (the
"Lessor"), a public corporation duly organized and existing under the
constitution and laws of the State of Alabama, and Central CPVC Corporation (the
"Lessee"), a corporation, organized and existing under the laws of the State of
Alabama.
W I T N E S S E T H:
--------------------
WHEREAS, the Lessor was organized pursuant to the provisions of Act No.
648 adopted at the 1949 Regular Session of the Legislature of the State of
Alabama, approved September 19, 1949, as amended (said Act being codified as
Section 11-54-80, et seq., Code of Alabama, 1975 and hereinafter sometimes
referred to as the "Act"); and,
WHEREAS, the Lessor has made the necessary arrangements with the Lessee
for acquiring real property and equipping thereon a manufacturing facility)(the
said real property, equipment and improvements being hereinafter referred to as
the "Project"), which will be of the character and accomplish the purposes
provided by the Act; and
WHEREAS, the Lessor has duly authorized the issuance of its $7,500,000
The Industrial Development Board of the City of Huntsville Tax-Exempt Variable
Rate Demand/Fixed Rate Refunding Revenue Bonds (Central CPVC Corporation
Project) Series of 1998 (the "Bonds") pursuant to a Trust Indenture made and
entered into as of the 1st day of October, 1998 by and between the Lessor and
First Union National Bank (the "Trustee"); and
WHEREAS, proceeds of the Bonds are being issued to refund the
outstanding principal amount of the Lessor's Industrial Development Revenue
Bonds (Central CPVC Corporation Project) Series 1997 Bonds dated December 1,
1997 (the "Series 1997 Bonds"). The Series 1997 Bonds were issued in the
principal amount of $7,500,000 and are now outstanding in the same amount. The
Series 1997 Bonds were issued to finance the costs of acquiring, constructing
and equipping a certain manufacturing facility (the "Project") that was leased
to the Lessee by the Lessor pursuant to a Lease Agreement dated as of December
1, 1997 (the "1997 Lease"); and
WHEREAS, when the Bonds are issued, the 1997 Bonds will be immediately
paid and retired and the 1997 Lease will be amended and restated. The Lessor
continues to own the Project and will continue to lease the Project to the
Lessee pursuant to this Amended and Restated Lease Agreement; and
WHEREAS, pursuant to this Amended and Restated Lease Agreement the
Lessee will agree to make lease payments to the Lessee at times and in amounts
sufficient to pay debt service on the Bonds and to pay the purchase price of
Bonds tendered for purchase pursuant to the optional or mandatory tender
provisions of the Indenture. Pursuant to the Indenture the Lessor will assign
and pledge to the Trustee all the Lessor's rights under this Amended and
Restated Lease Agreement except for certain rights relating to indemnification,
reimbursement of expenses and receipt of notices and other communications; and
5
WHEREAS, the Lessee will cause Congress Financial Corporation (together
with its successors and/or assigns, the "Bank") to arrange for First Union
National Bank (together with its successors and/or assigns, the "Letter of
Credit Bank") to issue an irrevocable letter of credit in favor of the Trustee
to provide for payment of debt service on the Bonds and to pay the purchase
price of Bonds tendered for purchase pursuant to the optional or mandatory
tender provisions of the Indenture. The initial letter of credit to be delivered
to the Trustee and any substitute letter of credit delivered pursuant to the
Indenture are referred to as the "Letter of Credit"; and
WHEREAS, the Bank has agreed to guarantee to the Letter of Credit Bank
the performance by the Company of its obligations to the Letter of Credit Bank;
and
WHEREAS, the Bank will arrange for the initial Letter of Credit
pursuant to the Loan and Security Agreement by and among Congress Financial
Corporation, as Lender, and Central Sprinkler Company, Central Castings
Corporation, Central CPVC Corporation, as Borrowers, and Central Sprinkler
Corporation and Central Sprinkler Export Corporation, as Guarantors, dated
September 18, 1998 (together with all amendments, modifications and restatements
thereof, the "Credit Agreement") between the Bank and the Lessee whereby the
Lessee has agreed, among other things, to reimburse the Bank for payments to the
Letter of Credit Bank to reimburse the Letter of Credit Bank for all amounts
drawn pursuant to the initial Letter of Credit; and
WHEREAS, as security for the Lessee's obligations under the Credit
Agreement, the Lessor and Lessee have executed a Fee and Leasehold Mortgage with
Security Agreement and Assignment of Leases and Rents dated September 18, 1998
(together with all amendments, modifications and restatements thereof, the "Bank
Mortgage") in favor of the Bank, whereby the Bank has a mortgage on and security
interest in the Project, the leasehold interest of the Lessee, and certain other
collateral; and
WHEREAS, the Bonds will be further secured by the unconditional
guaranty of payment of principal of and interest on the Bonds by Central CPVC
Corporation, an Alabama corporation; and
WHEREAS, the Bonds are the limited obligations of the Lessor payable
solely out of (a) payments made pursuant to the Lease Agreement and the Bond
Guaranty, and (b) money received from a draw on the Letter of Credit. The
Trustee will not have a mortgage on or security interest in the Project. The
Bank Mortgage is for the sole benefit of the Bank; and
WHEREAS, the Bonds never shall constitute the debt or indebtedness of
the City of Huntsville (the "City") or the State of Alabama (the "State"),
within the meaning of any provision or limitation of the constitution or
statutes of Alabama, and shall not constitute or give rise to a pecuniary
liability of the Lessor, its members or the City or the State or a charge
against its or their general credit or the taxing powers of the City or the
State; and,
6
WHEREAS, all things have been done which are necessary to make the
Bonds the valid obligations of the Lessor and to constitute this Indenture a
valid trust indenture for the security of the Bonds;
NOW, THEREFORE, in consideration of the premises and of the covenants
hereinafter set forth, the parties hereto do hereby covenant, agree and bind
themselves as follows, to-wit:
ARTICLE I
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DEFINITIONS
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Section 1.1 Definitions. In addition to the words and terms elsewhere
defined in the Indenture or in this Lease Agreement, the following words and
terms, as used in this Lease Agreement, shall have the following meanings unless
the context or use indicates another or different meaning or intent:
"Act" means Act No. 648 enacted at the 1949 Regular Session of the
Legislature of Alabama, as heretofore amended, said Act being codified as
Chapter 54, Article 4 (Section 11-54-80, et seq.), Code of Alabama, 1975.
"Agreement," "Lease Agreement" or "Lease" means this Amended and
Restated Lease Agreement entered into by and between the Lessor and Lessee as of
October 1, 1998, and including any amendments or supplements thereto.
"Authorized Lessee Representative" means the person at the time
designated to act on behalf of the Lessee by written certificate furnished to
the Lessor and the Trustee signed on behalf of the Lessee. Such certificate may
designate an alternate or alternates.
"Authorized Lessor Representative" means the person or persons at the
time designated to act on behalf of the Lessor by written certificate furnished
to the Lessee and the Trustee and signed on behalf of the Lessor by its
Chairman, Vice Chairman, or Secretary.
"Bonds" shall have the same meaning as described in the form of Bonds
set forth in the Indenture.
"Building" means that certain building and all other facilities forming
a part of the Project, and not constituting part of the Leased Equipment, which
are located on the Leased Land, as they may at any time exist.
7
"City" means the City of Huntsville, a municipal corporation organized
and existing under the laws of the State.
"Code" means the Internal Revenue Code of 1986, as amended and at the
time in force and effect.
"Completion Date" means May 1, 1998, the date of completion of the
acquisition, construction, equipping and improvement of the Project.
"Construction Period" means the period between the beginning of
construction and the Completion Date.
"County" means Madison County, Alabama.
"Determination of Taxability" means a determination that interest on
the Bonds is subject to federal income taxation for any reason other than the
circumstances described in Section 147(a) of the Code. Such a determination
shall be deemed to have been made upon the occurrence of either of the
following:
(a) the date on which the Lessee or the Trustee shall be
advised by private ruling, technical advice or other written
communication from an authorized official of the Internal Revenue
Service that interest on the Bonds is subject to federal income
taxation;
(b) the date on which the Lessee or the Trustee shall receive
notice in writing from a Registered Owner of the Bonds that the
Registered Owner has been advised by an authorized official of the
Internal Revenue Service that the interest on the Bonds is subject to
federal income taxation; or
(c) the date on which the Trustee receives an opinion of a
nationally recognized bond counsel that interest on the Bonds is
subject to Federal income taxation.
"Event of Taxability" means the occurrence of any event or the
existence of any circumstances (including, without limitation, the fact that any
representation or warranty of the Lessee set forth in this Agreement is untrue
or the breach by the Lessee of any covenants of the Lessee herein set forth)
which has the effect of causing the interest payable on the Bonds to become
includable in the gross income of the holders thereof for federal income
taxation purposes (other than a holder who is a Substantial User of the Project
or a Related Person). The date of an Event of Taxability shall be the effective
date as of which such interest became subject to taxation.
8
"Guarantor" means Central CPVC Corporation, an Alabama corporation.
"Guaranty" means that certain guaranty agreement dated as of October 1,
1998, by Central CPVC Corporation, an Alabama corporation.
"Trust Indenture" means the Trust Indenture dated as of October 1,
1998, between the Lessor and the Trustee, pursuant to which the Bonds are
authorized to be issued, the interest of the Lessor in this Agreement, and the
revenues and receipts of the Lessor in respect of the Project, as in this
Agreement provided, are to be pledged and assigned as security for the payment
of principal of and interest on the Bonds, and including any indenture
supplemental thereto.
"Independent Counsel" means an attorney or firm of attorneys duly
admitted to practice law in any state of the United States and not in the full
time employment of either the Lessor or the Lessee.
"Independent Engineer" means an engineer or architect or engineering or
architectural firm registered and qualified to practice the profession of
engineering or architecture under the laws of Alabama and not in the full time
employment of either the Lessor or the Lessee.
"Lease Term" means the duration of the leasehold estate created in this
Agreement as specified in Section 5.1 hereof.
"Leased Equipment" means (i) those items of machinery, equipment and
other tangible personal property financed with proceeds from the sale of the
Bonds, (ii) any item of machinery, equipment or tangible personal property
acquired in substitution for, or as a renewal or replacement of, or a
modification or improvement of any Leased Equipment, pursuant to the provisions
of Sections 6.1, 6.7(a), 7.1 and 7.2 hereof, (iii) any machinery, equipment or
other tangible personal property acquired by the Lessor pursuant to the
provisions of Section 8.4 hereof. "Leased Equipment" shall not include such
machinery, equipment and tangible personal property as may be purchased by the
Lessee from its own funds, or released from this Agreement pursuant to the
provisions of Section 6.7 hereof, or taken by the exercise of the power of
eminent domain as provided in Section 7.2 hereof.
"Leased Land" means the real estate, interests in real estate and other
rights described in Exhibit A hereto and such other real estate, interests in
real estate and other rights hereafter conveyed or granted to the Lessor at the
request of the Lessee, together with all additions thereto and substitutions,
therefor, less any real estate, interests in real estate and other rights as may
be released from this Agreement pursuant to Sections 8.3, 8.6 and 11.4 hereof or
taken by the exercise of the power of eminent domain as provided in Section 7.2
hereof.
"Lessee" means Central CPVC Corporation, and its successors and assigns
as herein permitted.
9
"Lessor" means (i) The Industrial Development Board of the City of
Huntsville and its successors and assigns, and, (ii) any corporation resulting
from or surviving any consolidation or merger to which it or its successors may
be a party.
"Local Facilities" means facilities of which the Lessee or a Related
Person thereto is or will be the Principal User and which are located within
twenty-five miles from the corporate limits of the City.
"Net Proceeds", when used with respect to any insurance or condemnation
award, means the gross proceeds from the insurance or condemnation award with
respect to which that term is used, remaining after payment of all expenses
(including attorney's fees and any extraordinary fee of the Trustee) incurred in
the collection of such gross proceeds.
"Permitted Encumbrances" means, as of any particular time, (i)
mechanics' and other liens and liens for ad valorem taxes permitted to exist as
provided in Sections 6.1 and 6.2 hereof, or not then delinquent, (ii) this
Agreement, the Indenture and the Bank Mortgage, (iii) utility, access and other
easements and rights of way, restrictions and exceptions that an Independent
Engineer certifies will not interfere with or impair the operations being
conducted in the Building (or, if no operations are being conducted therein, the
operations for which the Building was designed or last modified) or elsewhere on
the Leased Land, (iv) any mechanics', laborers', materialmen's, suppliers' or
vendors' lien or right or purchase money security interest in respect thereof if
payment is not yet due and payable under the contract in question, (v) those
exceptions under Schedule B Section 2 of the interim title insurance binder
issued with respect to the Leased Land in connection with this transaction by a
title insurance company acceptable to the Trustee, and (vi) such minor defects,
irregularities, encumbrances, easements, rights of way, and clouds on title as
normally exist with respect to properties similar in character to the Project
and as do not materially impair the Project for the purpose for which it was
acquired or is held by the Lessor.
"Principal User" means a "principal user" as that term is used in
Section 144(a)(2)(B) of the Code and the applicable regulations promulgated
thereunder.
"Project" means the Leased Land, the Building and the Leased Equipment,
as they may at any time exist.
"Related Person" means a "related person" as that term is defined in
Section 144(a)(3) of the Code.
"State" means the State of Alabama.
"Substantial User" means a "substantial user" as that term is used in
Section 147(a) of the Code and the applicable regulations promulgated
thereunder.
10
"Unimproved" when used with reference to the Leased Land means any part
or parts of the Leased Land upon the surface of which no part of a building or
other structure rests.
Section 1.2 Use of Words and Phrases. "Herein", "hereby", "hereunder",
"hereof", "hereinbefore", "hereinafter" and other equivalent words refer to this
Indenture as a whole and not solely to the particular portion thereof in which
any such word is used. The definitions set forth in Section 1.1 hereof include
both singular and plural. Whenever used herein, any pronoun shall be deemed to
include both singular and plural and to cover all genders. Terms which refer
generally to the payment or the obligation to pay "principal and interest on the
Bonds" shall be deemed to include the payment or the obligation to pay any
applicable redemption premium on any Bonds which are called for redemption prior
to maturity.
Section 1.3. Content of Certificates and Opinions. The Trustee may, but
shall not be obligated to, require that every certificate or opinion provided
for in this Agreement with respect to compliance with any provision hereof shall
include: (1) a statement to the effect that the Person making or giving such
certificate or opinion has read such provision and the definitions herein
relating thereto; (2) a brief statement as to the nature and scope of the
examination or investigation upon which the certificate or opinion is based; (3)
a statement to the effect that in the opinion of such Person, he has made or
caused to be made such examination or investigation as is necessary to enable
him to express an informed opinion with respect to the subject matter referred
to in the instrument to which his signature is affixed; (4) a statement of the
assumptions upon which such certificate or opinion is based, and that such
assumptions are reasonable; and (5) a statement as to whether, in the opinion of
such Person, such provision has been complied with.
Any such certificate or opinion made or given by an officer of the
Lessor or the Lessee may be based, insofar as it relates to legal or accounting
matters, upon a certificate or opinion of or representation by counsel or an
accountant, unless such officer knows, or in the exercise of reasonable care
should have known, that the certificate, opinion or representation with respect
to the matters upon which such certificate or statement may be based, as
aforesaid, is erroneous. Any such certificate or opinion made or given by
counsel or an accountant may be based, insofar as it relates to factual matters
(with respect to which information is in the possession of the Lessor or the
Lessee, as the case may be) upon a certificate or opinion of or representation
by an officer of the Lessor or the Lessee, unless such counsel or accountant
knows, or in the exercise of reasonable care should have known, that the
certificate or opinion or representation with respect to the matters upon which
such certificate or opinion or representation may be based, as aforesaid, is
erroneous. The same officer of the Lessor or the Lessee, or the same counsel or
accountant, as the case may be, need not certify to all of the matters required
to be certified under any provision of this Agreement, but different officers,
counsel or accountants may certify to different matters, respectively.
11
ARTICLE II
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REPRESENTATIONS AND WARRANTIES
------------------------------
Section 2.1 Representations and Warranties by the Lessor. The Lessor
represents and warrants that:
(a) By proper corporate action, the Lessor has duly authorized the
execution and delivery of this Agreement, the Indenture, the Bonds and all other
instruments and documents previously or contemporaneously executed and delivered
by the Lessor in connection with the Bonds. Subject to Section 9.3 hereof, the
Lessor agrees that it will do or cause to be done all things necessary to
preserve and keep in full force and effect its existence.
(b) Notwithstanding anything herein to the contrary, any obligation
that the Lessor may incur pursuant to the terms of this Agreement for the
payment of money shall not be a general debt on its part but shall be payable
solely from proceeds derived from this Agreement, draws on the Letter of Credit,
the sale of the Bonds and the insurance and condemnation awards as herein
provided.
Section 2.2 Representations and Warranties by Lessee. The Lessee
represents and warrants that:
(a) The Lessee is a corporation duly organized, validly existing and
in good standing under the laws of the State of Alabama. Lessee has all
requisite power and authority, corporate and otherwise, to conduct its business
and to own its properties and is duly qualified as a foreign corporation in good
standing in all jurisdictions in which its failure so to qualify could have a
Material Adverse Effect on its financial condition or business.
(b) The Lessee has, by all necessary action, duly authorized the
execution, delivery and performance of this Agreement, and when duly executed
and delivered by the Lessor, this Agreement will constitute a legal, valid and
binding obligation of the Lessee.
(c) The Lessee will comply fully at all times with the Lessee's
Arbitrage and Tax Certificate, and the Lessee will not take any action, or omit
to take any action, which, if taken or omitted, respectively, would violate the
Lessee's Arbitrage and Tax Certificate.
Section 2.3 Continuing Disclosure The Bonds are exempt from the
continuing disclosure requirements of Section (b)(5) of Rule 15c2-12 (the
"Rule") adopted by the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended and supplemented, so long as they bear interest
at the Floating Rate (as defined in the Indenture). If the Bonds are converted
12
to the Fixed Rate (as defined in the Indenture), the Bonds may become subject to
the continuing disclosure requirements of the Rule. In such event, the Lessee
agrees to enter into a continuing disclosure agreement with the Trustee, in form
satisfactory to Bond Counsel. The Lessee hereby covenants and agrees with the
Bondholders that it will comply with and carry out all of the provisions of such
continuing disclosure agreement, as amended from time to time, applicable to it.
Notwithstanding any other provision of this Agreement, failure of the Lessee to
comply with such continuing disclosure agreement shall not be considered a
default or an event of default under this Agreement and the rights and remedies
provided by this Agreement upon the occurrence of a Default shall not apply to
any such failure, but the continuing disclosure agreement may be enforced only
as provided therein.
ARTICLE III
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DEMISING CLAUSES AND WARRANTY OF TITLE
--------------------------------------
Section 3.1 Demise of the Project. The Lessor demises and leases to the
Lessee, and the Lessee leases from the Lessor, the Leased Land, as more
particularly described in Exhibit A hereto, together with the Building and the
Leased Equipment as more particularly described in Exhibit B hereto, as they may
at any time exist, and all other property which, under the terms hereof, are or
subsequently become a part of the Project, subject only to Permitted
Encumbrances, in accordance with the provisions of this Lease Agreement,
including the payment of rentals and of other amounts as set forth in Section
5.3 hereof.
Section 3.2 Warranty of Title. The Lessor warrants that it has good and
marketable title to the Project, free from all encumbrances other than Permitted
Encumbrances and other than the encumbrances set forth in the granting clauses
of the Indenture, and the Lessor has or will promptly obtain title insurance in
form and amount acceptable to the Trustee with respect to the Leased Land. The
Net Proceeds from such insurance shall be paid to the Trustee and applied in
accordance with Section 7.2 hereof. To the extent such insurance is available to
redeem Bonds pursuant hereto, no claim shall be made and no suit brought
hereunder against the Lessee by the title insurance company or anyone else
claiming on behalf of or by, through or under it.
Section 3.3 Quiet Enjoyment and Possession. The Lessor covenants and
agrees that as long as the Lessee shall not be in default under this Lease
Agreement, the Lessee may peaceably and quietly have, hold and enjoy the
Project, and that the Lessor will, to the extent funds are made available to it
for such purposes, defend the Lessee's enjoyment and possession thereof against
all parties.
13
ARTICLE IV
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THE PROJECT, ISSUANCE OF THE BONDS
----------------------------------
Section 4.1 Acquisition, Construction and Equipping of the Project. The
Lessor, acting by and through the Lessee as its agent, has caused the Project to
be acquired, installed, equipped and improved as herein provided, substantially
in accordance with the plans and specifications provided by the Lessee.
Section 4.2 Agreement to Issue Bonds; Application of Bond Proceeds.
(a) The Lessor agrees that it will sell, issue and deliver $7,500,000
aggregate principal amount of Bonds to the initial purchasers thereof and use
the proceeds therefrom, along with an equity contribution from the Lessee, to
payoff the Series 1997 Bonds, the proceeds of which were used to acquire,
construct and equip the Project.
Section 4.3. Substitute Letter of Credit. The Lessee may provide for
the delivery to the Trustee of a Substitute Letter of Credit upon thirty (30)
days prior written notice to the Trustee, the Tender Agent, the Remarketing
Agent and the Lessor. Any Substitute Letter of Credit shall be delivered to the
Trustee on an Interest Payment Date and not later than the thirtieth (30th)
Business Day prior to the expiration of the Letter of Credit it is being issued
to replace. On or before the date of the delivery of any Substitute Letter of
Credit to the Trustee, as a condition to the acceptance of any Substitute Letter
of Credit by the Trustee, the Lessee shall furnish to the Lessor, the Trustee
and the Remarketing Agent: (i) written evidence that the issuer of such
Substitute Letter of Credit is a commercial bank or other financial institution
organized and doing business in the United States or a branch or agency of a
foreign commercial bank located and doing business in the United States and
subject to regulation by state or federal banking regulatory authorities and
that it has been assigned the same or better rating as the Letter of Credit in
effect immediately prior to the substitution of the Substitute Letter of Credit;
(ii) an opinion of nationally recognized bond counsel to the effect that the
delivery of such Substitute Letter of Credit is authorized under this Agreement
and the Indenture and the Act and complies with the terms hereof, and, that the
delivery of such Substitute Letter of Credit does not adversely affect the
exclusion from gross income of the interest on the Bonds for federal income tax
purposes; and (iii) an opinion of Counsel satisfactory to the Trustee, the
Lessor, the Lessee and the Remarketing Agent to the effect that the Substitute
Letter of Credit is a legal, valid and binding obligation of the issuer (or, in
the case of a branch or agency of a foreign commercial bank, the branch or
agency) issuing the same, enforceable in accordance with its terms, that
payments of principal of, and to the extent the Letter of Credit covers same,
any premium on the Bonds, or Purchase Price of or interest on the Bonds from the
proceeds of a drawing on the Substitute Letter of Credit will not constitute
14
voidable preferences under the Bankruptcy Code or other applicable laws and
regulations and that it is not necessary to register the Substitute Letter of
Credit under the Securities Act of 1933, as amended, or to qualify an indenture
with respect thereto under the Trust Indenture Act of 1939, as amended. On or
before the delivery of any Substitute Letter of Credit to the Trustee, as an
additional condition to the acceptance of any Substitute Letter of Credit by the
Trustee, the Lessee shall furnish to the Lessor, the Trustee and the Remarketing
Agent written evidence from each Rating Agency that the rating on the Bonds will
not be reduced or withdrawn as a result of the acceptance of the Substitute
Letter of Credit and that the short term unsecured debt of the Bank or
Substitute Bank, as applicable, shall then have been assigned a rating by
Xxxxx'x of "P-1" or the equivalent rating assigned by S&P. In the case of a
Substitute Letter of Credit issued by a branch or agency of a foreign commercial
bank there shall also be delivered an opinion of Counsel, satisfactory to the
Trustee, the Lessor, the Lessee and the Remarketing Agent and licensed to
practice law in the jurisdiction in which the head office of such bank is
located, to the effect that the Substitute Letter of Credit is the legal, valid
and binding obligation of such bank enforceable in accordance with its terms.
The Trustee shall accept any such Substitute Letter of Credit only in accordance
with the terms, and upon the satisfaction of the conditions, contained in this
Section 4.3 and any other provisions applicable to acceptance of a Substitute
Letter of Credit under this Agreement and the Indenture.
ARTICLE V
---------
EFFECTIVE DATE AND DURATION OF THIS AGREEMENT, RENTAL PROVISIONS
----------------------------------------------------------------
Effective Date and Duration of this Agreement. This Agreement shall
become effective upon its delivery and subject to the provisions of this Lease
Agreement (including particularly Articles X and XI hereof), shall, unless
terminated by the Lessee pursuant to Section 11.1 hereof, continue until ll:59
o'clock, P.M., on the last day of December, 2013.
Section 5.2 Delivery and Acceptance of Possession. The Lessor shall
deliver to the Lessee sole and exclusive possession of the Project (subject to
the right of the Lessor to enter thereon for inspection purposes and to the
other provisions of Section 8.2 hereof) on the date the Lease Agreement is
executed.
Section 5.3 Rents and Other Amounts Payable.
(a) The Lessee shall pay to the Trustee, on behalf of the
Lessor, the following sums as lease payments hereunder at the following times,
in immediately available funds:
(i) on each Interest Payment Date during the term of this
Agreement, an amount which is sufficient to pay the interest then due
on the Bond.
15
(ii) on the maturity date of the Bond, the
principal amount thereof then maturing;
(iii) on the redemption dates established for the Bond to be
redeemed pursuant to Section 4.01 (c) of the Indenture (if any), an
amount equal to the redemption price due on such date.
(b) In any event, the sum of the lease payments payable under this
Section 5.3 shall be insufficient to pay the total amount due with respect to
such principal and redemption price of and interest (including but not limited
to interest and late charges payable pursuant to the Bond on any overdue amount)
on the Bond, as and when due, and the Lessee shall forthwith pay any deficiency
to the Trustee. If at any time the Bond has been fully paid and discharged
within the meaning of the terms hereof, the Lessee shall not be obligated to
make any further payments under this Section.
(c) Payment of Lessor's Fees and Expenses. The Lessee shall pay to, or
upon the order of, the Lessor, upon request of the Lessor, such amounts required
to pay the Lessor's customary administrative fees and to pay or reimburse its
reasonable administrative expenses incurred from time to time in connection with
services or actions of the Board in connection with this Agreement.
(d) No Abatement or Setoff. The Lessee shall pay all lease payments and
all additional sums required hereunder without suspension or abatement of any
nature, notwithstanding that all or any part of the facilities shall have been
wholly or partially destroyed, damaged or injured and shall not have been
repaired, replaced or rebuilt. So long as the Bond remains Outstanding, the
obligation of the Lessee to pay all sums due from the Lessee hereunder shall be
absolute and unconditional for which the Lessee pledges its full faith and
credit and shall not be suspended, abated, reduced, abrogated, waived,
diminished or otherwise modified in any manner or to any extent whatsoever,
regardless of any rights of setoff, recoupment or counterclaim that the Lessee
might otherwise have against the Lessor or any other party or parties and
regardless of any contingency, act of god, event or cause whatsoever and
notwithstanding any circumstances or occurrence that may arise or take place
after the date hereof, including but without limiting the generality of the
foregoing:
(i) any damage to or destruction of any part or all of the
Project Facilities;
(ii) the taking or damaging of any part or all of the Project
facilities, by any public authority or agency in the exercise of the
power of or in the nature of eminent domain or by way of a conveyance
in lieu of such exercise or otherwise;
(iii) any assignment, novation, merger, consolidation, or
transfer of assets, whether with or without the approval of the Lessor;
(iv) any failure of the Lessor to perform or observe any
agreement or covenant, whether express or implied, or any duty,
liability or obligation arising out of or in connection with this
Agreement and the Bond;
16
(v) any act or circumstances that may constitute an eviction
or constructive eviction;
(vi) failure of consideration, failure of title or commercial
frustration;
(vii) any change in the tax laws or other laws of the United
States or of any state or other governmental authority; or
(viii) any determination that the Bond or the interest payable
thereon are subject to Federal taxation.
Section 5.4 Prepayment of Rents.
(a) Optional Prepayment. There is expressly reserved to the Lessee the
right, and the Lessee is authorized and permitted, at any time the Lessee may
choose, to prepay all or any part of the rents payable under Section 5.3 hereof,
but only to the extent that the Bonds may be prepaid in accordance with the
provisions of Article IV of the Indenture, and the Lessor agrees that the
Trustee may accept such prepayment of rents when the same are tendered by the
Lessee. All rents so prepaid shall be credited on the rental payments specified
in Section 5.3 hereof in the inverse order of their maturities, unless prior to
the date on which said credit is to be taken, the Lessee requests the Lessor to
use such monies to redeem the Bonds in accordance with the provisions of the
Indenture.
(b) Extraordinary and Mandatory Prepayment. In the event of an
extraordinary or mandatory redemption as provided by Article IV of the
Indenture, the Lessee shall prepay the Basic Rent sufficient to redeem the Bonds
in accordance with the provisions of the Indenture and to pay all expenses of
such redemption and all other obligations as set forth in the Indenture.
Section 5.5 Indemnity Against Claims. The Lessee covenants and agrees
to pay and to indemnify and save the Lessor harmless of, from and against any
and all claims, damages, demands, expenses, liabilities and losses of every
conceivable kind, character and nature whatsoever (including, but not limited
to, claims for loss or damage to any property, or injury to or death of any
person) asserted against the Lessor by or on behalf of any person, firm,
corporation or governmental authority arising out of, resulting from, or in any
way connected with the Project, including but not limited to the condition, use,
possession, conduct or management of, or any work done in or about, the Project,
or from the planning, design, acquisition or improvement of the Project or any
part thereof, or from the lease or sale of any part thereof. The Lessee will
also pay and discharge and will indemnify and hold harmless the Lessor from: (a)
any lien or charge upon payments by the Lessee to the Lessor hereunder, and (b)
any taxes, assessments, impositions and other charges, in respect to the
Project. The Lessee also covenants and agrees to pay and to indemnify and save
17
the Lessor harmless of, from and against, all of the Lessor's costs, expenses
(including reasonable counsel fees) and liabilities incurred in any action or
proceeding brought by reason of any such claim or demand. If any such claim is
asserted, or any such lien or charge upon payments, or any taxes, assessments,
impositions or other charges are sought to be imposed, and either the Lessor and
the Trustee has notice or knowledge thereof the Lessor or the Trustee, as the
case may be, will give prompt notice to the Lessee, and the Lessee shall have
the sole right and duty to assume, and will assume the defense thereof on the
Lessee's behalf and on behalf of the Lessor, with full power to litigate,
compromise or settle the same in the Lessee's sole discretion; provided,
however, if the Lessor deems it necessary, the Lessor may obtain its own Counsel
in such action and the Lessee agrees to pay the reasonable fees and expenses of
such counsel.
Notwithstanding the foregoing, nothing set forth in this Section 5.5
shall be construed to indemnify the Lessor for or release the Lessor from any
liability which it would otherwise have had arising from the willful, wrongful
or negligent actions or failures to act on the part of the Lessor, its
employees, agents or representatives acting in their capacities other than as
contemplated by this Lease Agreement.
Section 5.6 Obligation of Lessee Unconditional. The obligation of the
Lessee to make the payments pursuant to this Lease Agreement and to perform and
observe the other agreements on the Lessee's part set forth herein shall be
absolute and unconditional, shall not be subject to any defense or any right of
set-off, counterclaim, recoupment, abatement or otherwise, arising out of any
breach by the Lessor of any obligation to the Lessee, whether hereunder or
otherwise, or out of any indebtedness or liability at any time owing to the
Lessee by the Lessor. The Lessee hereby agrees to pay to the Trustee all of said
payments payable by the Lessee pursuant to Section 5.3 of this Lease Agreement.
Until such time as the principal of and interest on the Bonds shall have been
fully paid or provisions for the payment thereof shall have been made in
accordance with the Indenture, the Lessee: (i) will not suspend or discontinue
any payments pursuant to this Lease Agreement, (ii) will perform and observe all
the Lessee's other agreements set forth in this Lease Agreement, and (iii)
except as provided in Article XI hereof, will not terminate this Lease Agreement
for any cause including, without limiting the generality of the foregoing,
failure of the Lessor to complete the Project, failure of the Lessor's title to
the Project or any part thereof, loss of title to (or the temporary use of) the
Project by virtue of the exercise by others of the power of eminent domain, any
acts or circumstances, that may constitute failure of consideration, destruction
of or damage to the Project, commercial frustration of purpose, any change in
the tax or other laws of the United States of America or of the State of
Alabama, or any political subdivision of either thereof, or any failure of the
Lessor to perform and observe any agreement, whether express or implied, or any
duty, liability or obligation arising out of or connected with this Lease
Agreement.
Nothing set forth in this Section 5.6 shall be construed to release the
Lessor from the performance of any of the agreements on its part herein set
forth. In the event the Lessor shall fail to perform any such agreement on its
part, the Lessee may institute such action against the Lessor as the Lessee may
18
deem necessary to compel performance or may pursue such other remedies for
non-performance as may be available to the Lessee so long as such action shall
not violate the agreements on the part of the Lessee set forth in the preceding
paragraph. In no event, however, shall the Lessee be entitled to any diminution
of the amounts payable under Section 5.3 hereof. The Lessee may, however, at the
Lessee's own cost and expense and in the Lessee's own name or in the name of the
Lessor, prosecute or defend any action or proceeding or take any other action
involving third persons which the Lessee deems reasonably necessary in order to
insure the acquisition, construction, installation and equipping of the Project
or to secure or protect the Lessee's right of possession, occupancy and use
hereunder, and in such event, the Lessor hereby agrees to cooperate fully with
the Lessee and to take all action necessary to effect the substitution of the
Lessee for the Lessor in any such action or proceeding if the Lessee shall so
request.
Section 5.7 Ad Valorem Taxes. The Lessee and the Lessor acknowledge
that under present law the Project is not exempt, by reason of this Lease, from
ad valorem taxes. The Project, however, is subject to an abatement of certain
non-educational taxes.
Section 5.8 Lessee Entitled to Certain Rent Abatements if Bonds Paid
Prior to Maturity. If at any time the aggregate monies available in a bond
escrow agreement approved by the Trustee shall be sufficient to retire all of
the Bonds outstanding in accordance with the provisions of the Indenture, and to
pay all fees and charges of the Trustee and paying agents due or to become due
through the date on which the last of the Bonds is retired under circumstances
not resulting in termination of the Lease Term, and if the Lessee is not at the
time otherwise in default hereunder, the Lessee shall be entitled to use and
occupy the Project from the date on which such aggregate monies are in the hands
of the Trustee to and including the last day of December, 2013 without the
payment of the rent specified in Section 5.3 during that interval (but otherwise
on the terms and conditions thereof).
Section 5.9 [Reserved]
19
ARTICLE VI
----------
MAINTENANCE, TAXES AND INSURANCE
--------------------------------
Section 6.1 Maintenance and Modification of Project by Lessee. The
Lessee will, at the Lessee's sole expense, during the Lease Term, keep the
Project in as reasonably safe condition as its operations shall permit and in
good repair and in good operating condition, making from time to time all
necessary repairs thereto (including external and structural repairs). The
Lessee may, also at the Lessee's expense, make from time to time any additions,
modifications or improvements to the Project that the Lessee may deem desirable
for the Lessee's business purposes and that do not adversely affect the
structural integrity of the Project or substantially reduce its value. All such
renewals, replacements, additions, modifications and improvements so made by the
Lessee shall become part of the Project. The Lessee may, also at the Lessee's
own expense, locate on the Leased Land any tangible personal property not
purchased by the Lessor with the proceeds from the sale of the Bonds which, in
the Lessee's judgment, is essential to the operation of the Project.
The Lessee will not permit any mechanics', materialmen's or other liens
(except Permitted Encumbrances) to be established or remain against the Project
for labor or materials furnished in connection with the Project or any
additions, modifications, improvements, repairs, renewals or replacements so
made by the Lessee; provided, that if the Lessee shall first notify the Trustee
of the Lessee's intention to do so, the Lessee may in good faith contest any
mechanics', materialmen's or other lien filed or established against the
Project, and in such event, may permit the items so contested to remain
undischarged and unsatisfied during the period of such contest and any appeal
therefrom unless (i) the Lessor or the Trustee and (ii) the Bank shall notify
the Lessee that, in the opinion of Independent Counsel, by non-payment of any
such items, the security afforded pursuant to the terms of the Indenture will be
materially endangered or the Project or any part thereof will be subject to loss
or forfeiture, and in either of such events, the Lessee shall promptly pay and
cause to be satisfied and discharged all such unpaid items or secure such
payment by posting a bond, in form satisfactory to the Lessor and the Trustee,
with the Trustee. The Lessor will cooperate fully with the Lessee in any such
contest.
Section 6.2 Taxes, Other Governmental Charges and Utility Charges. The
parties to this Lease Agreement understand and acknowledge that: (i) under
present law the income and receipts, if any, of the Lessor from the Project are
not subject to either Federal or State income taxation, and (ii) this factor
among others, has induced Lessee to enter into this Lease Agreement.
Nevertheless, the Lessee will pay during the Lease Term, as the same
respectively become due, all taxes and governmental charges of any kind
whatsoever that may at any time be lawfully assessed or levied against or with
respect to the Project or any equipment or other personal property installed or
brought by the Lessee therein or thereon (including, without limiting the
generality of the foregoing, any taxes levied upon or with respect to the income
or profits of the Lessor from the Project which, if not paid, will become a
charge on the Project prior to or on a parity with the lien of the Indenture or
20
a charge on the revenues and receipts from the Project prior to or on a parity
with the charge thereon and the pledge or assignment thereof to be created and
made in the Indenture, and including any ad valorem taxes lawfully assessed
thereupon), all utility and other charges incurred in the operation,
maintenance, use, occupancy and upkeep of the Project and all assessments and
charges lawfully made by any governmental body for public improvements that may
be secured by lien on the Project; provided, that with respect to special
assessments or other governmental charges that may lawfully be paid in
installments over a period of years, the Lessee shall be obligated to pay only
such installments as are required to be paid during the Lease Term. The
foregoing provisions of this Section 6.2 shall be effective only so long as any
Bonds remain outstanding or any part of the principal of or the interest on the
Bonds remains unpaid.
The Lessee may, at its expense and in its own name and behalf, or in
the name and behalf of the Lessor, in good faith, contest any such taxes,
assessments and other charges and, in the event of any such contest, may permit
the taxes, assessments or other charges so contested to remain unpaid during the
period of such contest and any appeal therefrom unless (i) the Lessor or the
Trustee and (ii) the Bank shall notify the Lessee that, in the opinion of
Independent Counsel, by non-payment of any such items, the security afforded
pursuant to the terms of the Indenture will be materially endangered or the
Project or any part thereof will be subject to loss or forfeiture, and in either
of such events such taxes, assessments or charges shall be paid forthwith by the
Lessee. The Lessor will cooperate fully with the Lessee in any such contest.
In the event that the Lessee shall fail to pay any of the foregoing
items required by this Section 6.2 to be paid by the Lessee, the Lessor, the
Trustee or the Bank may, but shall be under no obligation to pay the same and
any amounts so advanced therefor by the Lessor or the Trustee shall become an
additional obligation of the Lessee to the one making the advancement, which
amounts, together with interest thereon at a per annum rate equal to one
percentage point in excess of the Base Rate from the date thereof, the Lessee
agrees to pay.
Section 6.3 Insurance Required to be Carried. The Lessee shall carry
such insurance as may be required in the Credit Agreement or, if none is
required therein, then the Lessee shall carry the following insurance:
(a) Insurance to the extent of the full insurable value of the Project
against loss thereto from, or damage by vandalism, fire, and lightning,
with uniform standard form of extended coverage endorsement at the time
in use in the State; and
(b) Insurance against liability for injuries to, or death of any
person, or damage to or loss of property arising out of or in any way
relating to the condition or operation of the Project or any portion
thereof, in the minimum amounts of $1,000,000 for death of or personal
injury to any one person, and $200,000 for property damage in any one
accident.
21
Section 6.4 Destruction, Damage and Eminent Domain. If the Project
Facilities shall be wholly or partially destroyed or damaged by fire or other
casualty covered by insurance, or shall be wholly or partially condemned, taken
or injured by any Person, including any Person possessing the right to exercise
the power of or a power in the nature of eminent domain or shall be transferred
to such a Person by way of a conveyance in lieu of the exercise of such a power
by such a Person, the Lessee covenants that it will take all actions and will do
all things which may be necessary to enable recovery to be made upon such
policies of insurance or on account of such taking, condemnation, conveyance,
damage or injury. The Lessee is authorized, in its own name, as trustee of an
express trust, to demand, collect, xxx, settle claims, receipt and release
monies which may be due and payable under policies of insurance covering such
damage or destruction or on account of such condemnations, damage or injury. Any
moneys recovered: (i) on policies of insurance required to be maintained
hereunder; or (ii) as a result of any taking, condemnation, conveyance, damage
or injury shall be deposited with the Trustee under the Indenture and shall be
applied in accordance with the provisions of Section 7.1 hereof; provided,
however, that as long as the Letter of Credit Bank is not in default under the
terms of the Letter of Credit, the applicable provisions of the Credit Agreement
shall control the disposition of casualty insurance and condemnation award
proceeds.
Any appraisement or adjustment of loss or damage and any settlement or
payment therefor, shall be agreed upon by the Lessee, the Bank (as long as the
Letter of Credit Bank is not in default under the Letter of Credit) and the
appropriate insurer or condemnor or Person, and shall be evidenced to the Bank
by the certificate and approvals set forth in the Indenture. The Bank may rely
conclusively upon such certificates.
Section 6.5. Notice of Property Loss. After the occurrence of loss or
damage to, or after receipt of notice of condemnation of, the Project
Facilities, the Lessee shall within five (5) Business Days thereof notify the
Trustee and the Bank, in writing, of such damage.
Section 6.6 Advances by Lessor or Trustee. In the event the Lessee
shall fail to maintain the full insurance coverage required by this Agreement or
shall fail to keep the Project in as reasonably safe condition as its operating
conditions will permit, or shall fail to keep the Building in good repair and
good operating condition, the Lessor or the Bank, after first notifying the
Lessee of any such failure on the Lessee's part and after giving the Lessee a
reasonable opportunity to cure such default, may, but shall be under no
obligation to, take out the required policies of insurance and pay the premiums
on the same, or make the required repairs; and all amounts so advanced therefor
by the Lessor or the Bank shall become an additional obligation of the Lessee to
the one making the advancement.
Section 6.7 Removal of Leased Equipment. The Lessor shall not be under
any obligation to renew, repair, or replace any inadequate, obsolete, worn out,
unsuitable, undesirable or unnecessary Leased Equipment. In any instance where
the Lessee, in the Lessee's sole discretion, determines that any items of Leased
22
Equipment have become inadequate, obsolete, worn out, unsuitable, undesirable or
unnecessary, the Lessee may, subject to the consent of the Bank, remove such
items of Leased Equipment from the Building and the Leased Land and, on behalf
of the Lessor, sell, trade-in, exchange or otherwise dispose of them, as a whole
or in part, without any responsibility or accountability to the Lessor therefor.
The removal from the Project of any portion of the Leased Equipment
pursuant to the provisions of this Section shall not entitle the Lessee to any
abatement or diminution of the amounts payable under Section 5.3 hereof. The
Lessee will not remove, or permit the removal of any of the Leased Equipment
from the Leased Land except in accordance with the provisions of this Section
6.7.
ARTICLE VII
-----------
DAMAGE, DESTRUCTION AND CONDEMNATION
------------------------------------
Section 7.1 Disposition of Casualty Insurance and Condemnation Award
Proceeds. Subject to the provisions of Section 6.4 hereof, and, if applicable in
accordance with Section 6.4 hereof, the Credit Agreement, and as long as the
Lessee is not in default under the terms of this Agreement, the Lessee may
elect, in its discretion, whether to apply the proceeds of any casualty
insurance coverage and/or condemnation awards to: (i) the repair, reconstruction
or replacement of damaged, destroyed or injured property comprising the Project
Facilities; or (ii) the redemption of Bonds pursuant to the applicable
provisions of the Indenture. Absent timely direction from the Lessee as to the
application of any casualty insurance coverage and/or condemnation awards or if
the Lessee shall be in default under the terms of this Agreement, the proceeds
thereof shall be applied to the extraordinary redemption of the Bonds at par
plus accrued interest through the date of redemption. For purposes of the
preceding sentence, "timely direction" shall mean 30 days after the Lessee has
agreed, in connection with any damage to or condemnation of the Project
Facilities, upon the settlement or payment with respect to any appraisement or
adjustment of loss or damage, as appropriate.
Section 7.2 Condemnation or Failure of Title. Unless the Lessee shall
exercise its option to purchase pursuant to the provisions of Section 11.2
hereof, in the event that title to, or the temporary use of the Project or any
part thereof or the leasehold estate of the Lessee in the Project created by
this Lease Agreement or any part thereof shall be taken under the exercise of
power of eminent domain by any governmental body or by any person, firm or
corporation acting under governmental authority, or in the event of a failure of
title, the Lessee shall be obligated to continue to pay the amounts specified in
Section 5.3 hereof. Subject to any contrary provisions contained in Section 6.4
hereof, and, if applicable in accordance with Section 6.4 hereof, the Credit
Agreement, the Lessor and the Lessee will cause the Net Proceeds received by
them or any of them, from any award made in such eminent domain proceedings, or
from the title insurance policy purchased pursuant to Section 3.2 hereof to be
deposited with the Trustee and to be applied by the Trustee in one or more of
the following ways as shall be directed in writing by the Lessee:
23
(a) The restoration of the Building and improvements comprising part of
the Project to substantially the same condition as they exist immediately prior
to the exercise of the said power of eminent domain or failure of title.
(b) Redemption of the Bonds and payment of accrued interest thereon to
the date of redemption.
If the Bonds have been fully paid (or provision for payment thereof has
been made in accordance with the provisions of the Indenture) all such Net
Proceeds shall be paid to the Lessee.
The Lessor shall cooperate fully with the Lessee in the handling and
conduct of any prospective or pending condemnation, or failure of title
proceeding with respect to the Project or any part thereof and will, to the
extent it may lawfully do so, permit the Lessee to litigate in any such
proceeding in the name and behalf of the Lessor. In no event will the Lessor
voluntarily settle, or consent to the settlement of, any prospective or pending
condemnation or title proceeding with respect to the Project or any part thereof
without the prior written consent of the Lessee.
Section 7.3 Condemnation of Lessee Owned Property. The Lessee shall
also be entitled to the Net Proceeds of any condemnation award or portion
thereof made for damages to, or takings of its own property not included in the
Project, provided that any Net Proceeds resulting from damages to, or a taking
of all or any part of the leasehold estate of the Lessee in the Project created
by this Lease Agreement shall be paid and applied in the manner provided in
Section 7.2 hereof.
ARTICLE VIII
------------
SPECIAL COVENANTS
-----------------
Section 8.1 No Warranty of Condition or Suitability by the Lessor. THE
LESSOR MAKES NO WARRANTY, EITHER EXPRESS OR IMPLIED, WITH RESPECT TO THE
CONDITION OR WORKMANSHIP OF ANY PART OF THE PROJECT, OR THAT THE PROJECT WILL BE
SUITABLE FOR THE LESSEE'S PURPOSES OR NEEDS.
Section 8.2 Inspection of the Project. The Lessor, the Bank, the
Trustee, and their or any of their duly authorized agents shall have the right
at all reasonable times to enter at their own risk upon the site of the Project
and examine and inspect the Project. The Lessor and its duly authorized agents
shall also have such rights of access to the Project as may be reasonably
necessary for the proper maintenance of the Project in the event of failure by
the Lessee to perform the Lessee's obligations under Section 6.1 hereof. Any
inspection of the Project by the Lessor, the Bank, the Trustee, and their or any
of their duly authorized agents, shall be for the benefit of the Lessor, the
Bank and the Trustee, respectively, and no third party shall have the right to
rely on any such inspection.
24
Section 8.3 Release of Certain Land. Notwithstanding any other
provision of this Agreement, the parties hereto reserve the right at any time,
and from time to time, but only with the prior written consent of the Bank, to
amend this Agreement for the purpose of effecting the release of and removal
from this Agreement and the leasehold estate created hereby of any part of the
Leased Land with respect to which the Lessor proposes to grant an easement or
convey fee title to a railroad, public utility or public body in order that
railroad, utility services or roads may be provided for the Project, provided
that, if at the time any such amendment is made, any of the Bonds are
outstanding and unpaid there shall be deposited with the Trustee the following:
(a) An executed copy of the said amendment;
(b) A resolution of the Board of Directors of the Lessor (i) stating
that the Lessor is not in default under any of the provisions of the Indenture
or of this Lease Agreement, and the Lessee is not, to the knowledge of the
Lessor, in default under any of the provisions of this Lease Agreement, (ii)
stating an adequate legal description of that portion of the Leased Land to be
released, and (iii) requesting the consent of the Bank to said amendment and the
release of such property from the lien of the Indenture;
(c) A certificate of the Lessee approving such amendment and stating
that the Lessee is not in default under any of the provisions of this Agreement;
(d) A copy of the instrument granting the easement or conveying the
title to a railroad, public utility or public body.
Section 8.4 Purchase of Additional Machinery, Equipment, Furniture or
Fixtures by the Lessor. The Lessor shall purchase additional machinery,
equipment, furniture or fixtures to be used in connection with the Project upon
the request of the Lessee and receipt from the Lessee of money sufficient to pay
for such machinery, equipment, furniture or fixtures, whether such machinery,
equipment, furniture or fixtures is to be purchased under the provisions of
Section 6.1 or 6.7 hereof or otherwise. Such machinery, equipment, furniture or
fixtures shall constitute a part of the Leased Equipment.
Section 8.5 Further Assurance and Corrective Instruments. The Lessor
and the Lessee shall, from time to time, execute, acknowledge and deliver, or
cause to be executed, acknowledged and delivered, such supplements hereto and
such further instruments as may reasonably be required for correcting any
inadequate or incorrect description of the Project hereby leased or intended so
to be, or for carrying out the intention of, or facilitating the performance of
this Lease Agreement.
25
Section 8.6 [Reserved]
Section 8.7 Authorized Lessor Representative. Whenever under the
provisions of this Lease Agreement the approval of the Lessor is required or the
Lessor is required to take some action, such approval shall be made or such
action shall be taken by the Authorized Lessor Representative, and the Lessee
and the Trustee shall be authorized to act on any such approval or action;
provided, however, that in any case in which the Bank's consent or approval is
required, the Trustee shall also obtain the Bank's consent or approval before so
acting.
Section 8.8 Authorized Lessee Representative. Whenever under the
provisions of this Lease, the approval of the Lessee is required or the Lessee
is required to take some action, such approval shall be made or such action
taken by the Authorized Lessee Representative, and the Lessor and the Trustee
shall be authorized to act on any such approval or action.
Section 8.9 Additional Covenants. The Lessee shall comply with each of
the covenants on its part set forth in the Credit Agreement, and any other
similar agreement entered into in connection with the issuance of any Substitute
Letter of Credit and any and all modifications, alterations, amendments and
supplements thereto.
Section 8.10 Additional Tax Covenants and Representations. (a) The
Lessee covenants that it will not take any action, or fail to take any action,
if any such action or failure to take action would adversely affect the
exclusion from gross income of the interest on any Bond under Section 103 of the
Code. The Lessee will not directly or indirectly use or permit the use
(including the making of any investment) of any Bond Proceeds or any other funds
of the Lessor or the Lessee, or take or omit to take any action, that would
cause the Bonds to be "arbitrage bonds" within the meaning of Section 148(a) of
the Code.
(b) The Lessee hereby covenants that in connection with complying with
the requirement for payment of the Rebatable Arbitrage to the United States with
respect to the Bonds, all of the gross Bond Proceeds (within the meaning of
Section 148(f) of the Code), other than gross Bond Proceeds on deposit in a bona
fide debt service fund (within the meaning of Section 148(f)(4) of the Code),
were expended on or prior to the Initial Rebate Computation Date.
(c) The Lessee acknowledges that the Lessor shall have the right at any
time and in the sole and absolute discretion of the Lessor to obtain from the
Lessee and the Trustee the information necessary to determine the amount
required to be paid to the United States pursuant to Section 148(f) of the Code.
Additionally, the Lessor may, with reasonable cause, (A) review or cause to be
reviewed any determination of the amount to be paid to the United States made by
or on behalf of the Lessee and (B) make or retain a Rebate Expert to make the
determination of the amount to be paid to the United States. The Lessee hereby
agrees to be bound by any such review or determination, absent manifest error,
to pay the costs of such review, including without limitation the reasonable
fees and expenses of counsel or a Rebate Expert retained by the Lessor, and to
pay any Rebate that might be required as the result of any such review or
determination.
26
(d) Notwithstanding any provision of this subsection to the contrary,
the Lessee shall be liable, and shall indemnify and hold the Lessor and the
Trustee harmless against any liability, for payments due to the United States
pursuant to Section 148(f) of the Code. Further, the Lessee specifically agrees
that neither the Lessor nor the Trustee shall be held liable, or in any way
responsible, and the Lessee shall indemnify and hold harmless the Trustee and
Lessor against any liability, for any mistake or error in the filing of the
payment or the determination of the amount due to the United States or for any
consequences resulting from any such mistake or error. The provisions of this
paragraph (vi) shall survive termination of this Agreement.
(e) The Lessee will aid and assist the Lessor in connection with
preparing and submitting to the Internal Revenue Service a Form 8038 (or other
applicable information reporting statement) at the time and in the form required
by the Code.
(f) The Lessee will comply fully at all times with the Lessee's
Arbitrage and Tax Certificate, and the Lessee will not take any action, or omit
to take any action, which, if taken or omitted, respectively, would violate the
Lessee's Arbitrage and Tax Certificate.
(g) The Project was not acquired or placed in service by the Lessee
(determined in accordance with the provisions of Section 103 of the Code and
applicable regulations thereunder) more than one (1) year prior to the date of
issuance of the Bonds.
(h) Subsequent to fifteen (15) days prior to the date the Bonds are
sold, the Lessee or any Related Person (or group of related persons which
includes the Lessee) has not, or will not, as the case may be, guarantied,
arranged, participated in, assisted with, borrowed the proceeds of, or leased
facilities financed by obligations issued pursuant to Section 103 of the Code by
any state or local governmental unit or any constituted authority empowered to
issue obligations by or on behalf of any state or local governmental unit other
than the Lessor. During the period commencing on the date of the sale of the
Bonds and ending fifteen (15) days thereafter, there will be no obligations
issued pursuant to Section 103 which are guarantied by the Lessee or any Related
Person (or group of related persons which includes the Lessee) or which are
issued with the assistance or participation of, or by arrangement with, the
Lessee or any Related Person (or group of related persons which includes the
Lessee) without the written opinion of Bond Counsel to the effect that the
issuance of such obligation will not adversely affect their opinion as to the
exclusion of interest on the Bonds from the gross income of the Purchaser under
Section 103 of the Code. Other than the Lessee or any Related Person (or group
of related persons including the Lessee), no person has (i) guarantied,
arranged, participated in, assisted with the issuance of, or paid any portion of
the cost of the issuance of the Bonds, or (ii) provided any property or any
franchise, trademark or trade name (within the meaning of Code Section 1253)
which is to be used in connection with the Project.
27
(i) The information contained in the Lessee's Arbitrage and Tax
Certificate, setting forth the respective cost, economic life, ADR midpoint
life, if any, under Rev. Proc. 87-56, 1987-2 C.B. 674, as supplemented and
amended from time to time, and guideline life, if any, under Rev. Proc. 62-21,
1962-2 C.B. 118, as supplemented and amended from time to time, of each asset
constituting the Project financed with the Bond Proceeds is true, accurate and
complete.
(j) The Project does not share "substantial common facilities", within
the meaning of Section 144(a)(9) of the Code, with any other facility financed
by an outstanding tax-exempt bond.
(k) The Lessee has not taken and will not take any action and knows of
no action that any other person has taken or intends to take, which would cause
interest income on the Bonds to be includable in the gross income of the
recipients thereof under Section 103 of the Code. The Lessee will take and will
cause its officers, employees and agents to take all affirmative actions legally
within its power necessary to ensure that the interest on the Bonds does not
become includable in gross income of the recipient for federal income tax
purposes under the Code (including, without limitation, the calculation of
rebate required to preserve such exclusion).
(l) The Bonds will not be federally guaranteed within the meaning of
Section 149(b) of the Code. For purposes of this representation, no Principal
User of the Project has entered into any leases of the Project to, or any sales
or service contracts with, any federal government agency with the result that
the Bonds are so federally guaranteed within the meaning of Section 149(b) of
the Code.
ARTICLE IX
----------
ASSIGNMENT, SUBLEASING, MORTGAGING AND SELLING; REDEMPTION OF BONDS
-------------------------------------------------------------------
Section 9.1 Assignment and Subleasing. Subject to the consent of the
Bank so long as the Letter of Credit Bank is not in default of its obligations
under the Letter of Credit, this Lease may be assigned or subleased as a whole
or in part, by the Lessee without the necessity of obtaining the consent of
either the Lessor or the Trustee, provided that, however, no such assignment or
further sublease shall cause the Project to no longer constitute a "project"
under the Act, have any effect on the tax exempt status of the interest on the
Bonds or shall relieve the Lessee from primary liability for any of the Lessee's
obligations hereunder, and in the event of any such assignment or sublease, the
Lessee shall continue to remain primarily liable for payment of the amounts
specified in Section 5.3 hereof and for performance and observance of the other
agreements on the Lessee's part herein provided to be performed and observed by
the Lessee to the same extent as though no assignment or sublease had been made.
28
Section 9.2 [Reserved]
Section 9.3 Restrictions on Mortgage or Sale of Project by Lessor. The
Lessor agrees that, except for the Bank Mortgage and the assignment of this
Lease Agreement and the rentals hereunder to the Trustee pursuant to the
Indenture, it will not mortgage, sell, assign, transfer or convey its interest
in the Project during the term of this Agreement, except as herein provided. If
the laws of the State of Alabama at the time shall permit such action to be
taken, nothing in this Section 9.3 shall prevent the consolidation of the Lessor
with, or merger of the Lessor into, or transfer of its remaining interest in the
Project or in this Lease Agreement as an entirety to, any public corporation
whose income is not subject to taxation and which has corporate authority to
exercise the Lessor's rights granted hereunder; provided: (i) that no such
action shall be taken without the prior written consent of the Lessee, unless
such action shall be required by law, (ii) that any such action shall be
approved by the governing body of the City of Huntsville, Alabama, and (iii)
that upon any such consolidation, merger or transfer, the due and punctual
payment of the principal of, premium, if any, and interest on the Bonds
according to their tenor, and the due and actual performance and observance of
all the agreements and conditions of this Lease Agreement to be kept and
performed by the Lessor shall be expressly assumed in writing by the corporation
resulting from such consolidation or surviving such merger or to which the
Project shall be transferred in its entirety.
Section 9.4 Redemption of Bonds. If at any time the Lessee shall
deposit with the Trustee monies which, under any terms of the Indenture, are
sufficient to redeem all or part of the principal amount of the Bonds and to pay
any applicable redemption premium plus the fees and expenses of the Trustee in
connection with such redemption, the Lessor, at the request of Lessee, shall
forthwith take all steps necessary under the applicable redemption provisions of
the Indenture to effect redemption of the Bonds requested by the Lessee on a
redemption date selected by the Lessee.
Section 9.5 Reference to Bonds Ineffective After Bonds Paid. Upon
payment in full of the Bonds (or provisions for payment thereof having been made
in accordance with the provisions of the Indenture) and payment of all fees and
charges of the Trustee, and reimbursement to the Letter of Credit Bank of all
sums drawn under the Letter of Credit, together with interest thereon and all
other sums due and payable to the Bank under the Credit Agreement, and the
termination of the Letter of Credit, all references in this Lease Agreement to
the Bonds and the Trustee and the Bank shall be ineffective and neither the
Trustee, the Bank nor the holders of any of the Bonds shall thereafter have any
rights hereunder, saving and excepting those that shall have theretofore vested.
29
ARTICLE X
---------
EVENTS OF DEFAULT AND REMEDIES
------------------------------
Section 10.1 Events of Default Defined. The following shall be "Events
of Default" under this Lease Agreement and the terms "Event of Default" or
"Default" shall mean, whenever they are used in this Lease Agreement, any one or
more of the following events:
(a) Failure by the Lessee to pay when due the amounts required to be
paid pursuant to Section 5.3 of this Lease Agreement;
(b) Failure by the Lessee to observe and perform any covenant,
condition or agreement on the Lessee's part to be observed or performed, other
than as referred to in paragraph (a) of this Section 10.1, for a period of
thirty (30) days after written notice, specifying such failure and requesting
that it be remedied, is given to the Lessee by the Lessor or the Trustee, unless
the Trustee shall agree in writing to an extension of such time prior to its
expiration; provided, however, if the failure stated in the notice cannot be
corrected within the applicable period, the Trustee will not unreasonably
withhold its consent to an extension of such time if corrective action is
instituted by the Lessee within the applicable period and diligently pursued
until the failure is corrected;
(c) Any material warranty, representation or other statement by or on
behalf of the Lessee in this Lease Agreement or in any certificate or other
document executed by the Lessee furnished in connection with the issuance and
sale of the Bonds, shall prove to be false or misleading in any material
respect;
(d) The occurrence of an "Event of Default" under the Guaranty;
(e) The Lessee shall:
(i) apply for or consent to the appointment of a receiver,
Trustee or liquidator of the Lessee, or of its properties or
assets;
(ii) admit in writing its inability to pay its debts as they
mature;
(iii) make a general assignment for the benefit of creditors;
(iv) be adjudicated a bankrupt or insolvent or;
30
(v) file a voluntary petition in bankruptcy or take advantage
of any bankruptcy, reorganization, insolvency, readjustment of
debt, dissolution or liquidation law or statute or file an
answer admitting the material allegations of a petition filed
against the Lessee in any proceeding under any such law;
(f) An order, judgment or decree shall be entered, without application,
approval or consent of the Lessee, by any court of competent jurisdiction,
approving a petition seeking or appointing a receiver, Trustee, or liquidator of
the Lessee and such order, judgment or decree shall continue unstayed and in
effect for any period of sixty (60) days;
(g) A default in respect to any other indebtedness of the Lessee to the
Trustee;
(h) The occurrence of any "Event of Default" as set forth in the Bond
Purchase Agreement, and
(i) The Lessor's receipt of written notice from the Bank that the Bank
has declared an Event of Default under the provisions of the Credit Agreement.
A default under this Lease Agreement shall also be a default under any
other indebtedness of the Lessee to the Trustee, and a default under any other
indebtedness of the Lessee to the Trustee shall be a default under this Lease
Agreement. Any acceleration under this Lease Agreement shall also require an
acceleration under any other indebtedness of the Lessee to the Trustee, and any
acceleration under any other indebtedness of the Lessee to the Trustee shall
require an acceleration under this Ageement.
Section 10.2 Remedies on Default. Subject to Section 10.6 hereof,
whenever any event of default referred to in Section 10.1 hereof shall have
happened and be continuing, the Lessor may take any one or more of the following
remedial steps:
(a) By written notice to the Lessee, the Lessor may declare all
installments of rent payable under Section 5.3 hereof for the remainder of the
Lease Term to be immediately due and payable, whereupon the same shall become
immediately due and payable.
(b) The Lessor or the Trustee on its own behalf or on behalf of the
Lessor, may re-enter and take possession of the Project without terminating this
Lease Agreement, and sublease the Project for the account of the Lessee, holding
the Lessee liable for the difference in the rent and other amounts payable by
such sublessee in such subleasing and the rents and other amounts payable by the
Lessee hereunder.
(c) The Lessor or the Trustee on its own behalf or on behalf of the
Lessor may terminate the Lease Term, exclude the Lessee from possession of the
Project and use its best efforts to lease the Project to another party for the
account of the Lessee, holding the Lessee liable for all rent and other payments
due up to the effective date of such leasing and for the difference in the
amounts payable by such new lessee and the amounts payable by the Lessee under
this Lease Agreement.
31
(d) In the event any of the Bonds shall at the time be outstanding and
unpaid, the Lessor may have access to, and inspect and examine and make copies
of the Lessee's books and records and all of its accounts.
(e) The Lessor may take whatever action at law or in equity may appear
necessary or desirable to collect the rent, then due and thereafter to become
due, or to enforce performance and observance of any obligation, agreement or
covenant of the Lessee under this Lease Agreement.
The Lessee acknowledges and understands that any lease or sublease
agreement entered into by the Lessor or the Trustee pursuant to either of
Subsections (b) or (c) of this Section 10.2 shall, if the Lessor and the Trustee
deem it advisable, grant an option to purchase the Project to the new lessee or
the sublessee on the terms and conditions acceptable to the Lessor and the
Trustee.
Any amounts collected pursuant to action taken under this Section 10.2
shall be paid to the Trustee and applied in accordance with the provisions of
the Indenture.
It is further understood and agreed that the Lessor will follow the
instructions of the Bank or the Trustee in the election or pursuit of any
remedies herein vested in it.
Section 10.3 No Remedy Exclusive. Subject to Section 10.6 hereof, no
remedy herein conferred upon or reserved to the Lessor is intended to be
exclusive of any other available remedy or remedies, but each and every such
remedy shall be cumulative and shall be in addition to every other remedy given
under this Lease Agreement, or now or hereafter existing at law or in equity or
statute. No delay or omission to exercise any right or power shall be construed
to be a waiver thereof, but any such right and power may be exercised from time
to time and as often as may be deemed expedient. In order to entitle the Lessor
to exercise any remedy reserved to it in this Article X, it shall not be
necessary to give any notice, other than such notice as may be herein expressly
required. Such rights and remedies of the Lessor hereunder shall also extend to
the Trustee, and the Trustee and the holders of the Bonds, subject to the
provisions of the Indenture, shall be entitled to the benefit of all covenants
and agreements hereof.
Section 10.4 Agreement to Pay Attorneys' Fees and Expenses. In the
event the Lessee should default under any of the provisions of this Lease
Agreement, and the Lessor or the Trustee should employ attorneys or incur other
expenses for the collection of amounts payable hereunder or the enforcement,
performance or observance of any obligation or agreement on the part of the
Lessee herein set forth, the Lessee agrees, on demand therefor, to pay to the
Lessor or the Trustee the reasonable fee of such attorney or attorneys and such
other expenses so incurred by the Lessor or the Trustee.
32
Section 10.5 No Additional Waiver Implied by One Waiver. In the event
any obligation in this Lease Agreement is breached by either party and
thereafter waived by the other party, such waiver shall be limited to the
particular breach so waived and shall not be deemed to waive any other breach
hereunder.
Section 10.6 Remedial Rights Assigned to Trustee. All rights and
remedies conferred upon or reserved to the Lessor in this Article X shall, upon
the execution and delivery of the Indenture, be deemed to have been assigned to
the Trustee and the Trustee shall have the exclusive right to exercise such
rights and remedies in the same manner and under the limitations and conditions
that the Trustee is entitled to exercise rights and remedies upon the occurrence
of an Event of Default pursuant to Article 10 of the Indenture.
ARTICLE XI
----------
OPTIONS IN FAVOR OF LESSEE
--------------------------
Section 11.1 Options to Terminate. The Lessee shall have the following
options to cancel or terminate the term of this Lease Agreement:
(a) At any time prior to full payment of the Bonds (or provisions for
payment thereof having been made in accordance with the provisions of the
Indenture), the Lessee may terminate the term of this Lease Agreement and
exercise the option to purchase granted in Section 11.2 hereof by paying to the
Trustee for the account of the Lessor an amount of cash which will be sufficient
to pay, retire and redeem all the outstanding Bonds in accordance with the
provisions of the Indenture (including, without limiting the generality of the
foregoing, principal, interest to maturity, or earliest applicable redemption
date, as the case may be, premium, if any, expenses of redemption and Trustee's
fees and expenses), and, in case of redemption, making arrangements satisfactory
to the Trustee for the giving of the required notice of redemption;
(b) At any time after full payment of the Bonds (or provision for
payment thereof having been made in accordance with the provisions of the
Indenture), the Lessee may terminate the term of this Lease Agreement by giving
the Lessor notice in writing of such termination and such termination shall
forthwith become effective.
Section 11.2 Option to Purchase Project Prior to Payment of the Bonds.
The Lessee shall have, and is hereby granted the option to purchase the Project
prior to the full payment of the Bonds (or provision for payment thereof having
been made in accordance with the provisions of the Indenture), if any of the
following shall have occurred:
33
(a) The Project, or any part thereof, shall have been damaged or
destroyed to such extent that, in the opinion of the Lessee expressed in
writing, (i) it cannot be reasonably restored, within a period of four months,
to the condition thereof immediately preceding such damage or destruction, or
(ii) the Lessee is thereby prevented from carrying on its normal operations at
the Project for a period of four months or (iii) the cost of restoration thereof
would exceed by more than $100,000 the Net Proceeds of insurance carried thereon
pursuant to the requirements of Section 6.4 hereof, plus the amounts for which
the Lessee is self-insured with respect to deductible amounts permitted under
Section 6.5 hereof;
(b) Title to, or the temporary use of the Project, or any part thereof,
or the leasehold estate of the Lessee in the Project created by this Lease
Agreement, or any part thereof, shall have been taken under the exercise of the
power of eminent domain by any governmental authority or person, firm or
corporation acting under governmental authority which results, or is likely to
result in the Lessee thereby being prevented from carrying on its normal
operations therein for a period of four months or more;
(c) As a result of any changes in the Constitution of the State or the
Constitution of the United States of America or of legislative or administrative
action (whether state or federal) or by final decree, judgment or order of any
court or administrative body, whether state or federal, entered after the
contest thereof by the Lessee in good faith, this Lease shall have become void
or unenforceable or impossible of performance in accordance with the intent and
purposes of the parties as expressed in this Lease Agreement, or unreasonable
burdens or excessive liabilities shall have been imposed on the Lessor or the
Lessee including without limitation federal, state or income or other taxes not
being imposed on the date of this agreement;
(d) The Project or a material portion thereof is adjudged by a court of
competent jurisdiction to be a public nuisance and operation of the Project or a
material portion thereof is permanently enjoined, and such decision has become
final or, if appealed, affirmed upon such appeal and the decision upon such
appeal has become final.
To exercise such option, the Lessee shall, within thirty (30) days
following the event authorizing the exercise of such option, give written notice
to the Lessor and to the Trustee and shall specify therein the date of closing
such purchase, which date shall not be less than forty-five (45) nor more than
ninety (90) days from the date such notice is mailed, and in case of a
redemption of the Bonds in accordance with the provisions of the Indenture,
shall make arrangements satisfactory to the Trustee for the giving of the
required notice of redemption for the redemption of the Bonds on the earliest
practicable date either on or following the closing of such purchase. The
purchase price payable by the Lessee in the event of its exercise of the option
granted in this Section shall be the sum of the following:
(i) an amount of money which will be sufficient to pay to the
Trustee the principal of the then outstanding Bonds plus accrued
interest thereon to the redemption date; plus
34
(ii) an amount of money equal to all the costs and expenses
incurred by the Trustee in connection with such purchase; plus
(iii) an amount payable to the Lessor equal to the sum of
one-tenth of one percent (.1%) of the original principal amount of the
Bonds (i.e., $7,500,000) for each year (or portion of a year) that the
Lease Agreement remains in effect, plus all costs and expenses incurred
by the Lessor relative to the exercise of the option.
In the event of the exercise of the option granted in this section, any
Net Proceeds of insurance or condemnation after the payment of the required
redemption price shall be paid to the Lessee.
Section 11.3 Option to Purchase Project After Payment of the Bonds. The
Lessee shall have, and is hereby granted the option to purchase the Project at
any time during the Lease Term or within forty-five (45) days thereafter,
following full payment of the Bonds (or provision for payment thereof having
been made in accordance with the provisions of the Indenture) or at any time at
which the Lessee shall have the option to terminate this Lease Agreement
pursuant to Section 11.1(a) hereof, by paying to the Lessor a purchase price in
an amount equal to the sum of one-tenth of one percent (.1%) of the original
principal amount of the Bonds (i.e., $7,500,000) for each year (or portion of a
year) that the Lease Agreement remains in effect, plus all costs and expenses
incurred by the Lessor relative to the exercise of the option. To exercise this
option granted in this Section 11.3, the Lessee shall notify the Lessor of the
Lessee's intention so to exercise such option no less than forty-five (45), nor
more than ninety (90) days prior to the proposed date of purchase and shall, on
the date of purchase, pay such purchase price to the Lessor.
Section 11.4 Option to Purchase Unimproved Land. Prior to payment in
full of the Bonds, the Lessee shall have, and is hereby granted, the option to
purchase any Unimproved part of the Leased Land at any time, and from time to
time, at and for a purchase price equal to the fair market value thereof
provided that it furnishes the Lessor with the following:
(a) A notice in writing setting forth (i) an adequate legal
description of that portion of the Leased Land with respect to which
such option is to be exercised, and (ii) a statement that the Lessee
intends to exercise its option to purchase such portion of the Leased
Land on a date stated, which shall not be less than forty-five (45),
nor more than ninety (90) days from the date of such notice, and (iii)
a statement that the use to which such portion of the Leased Land will
be devoted will be in furtherance of the purpose for which the Lessor
was organized;
(b) A certificate of an Independent Engineer acceptable to the
Trustee, dated no more than ninety (90) days prior to the date of the
purchase, stating that, in the opinion of the person signing such
certificate, (i) the portion of the Leased Land with respect to which
the option is exercised is not needed for the operation of the Project
for the purposes hereinabove stated, and (ii) the purchase will not
impair the usefulness of the Building and will not destroy the means of
ingress thereto and egress therefrom;
35
(c) The written consent of the Trustee and the Bank; and
(d) An amount of money equal to the fair market value of the
real property to be purchased or as agreed.
Upon receipt of the notice, certificate and money required in this
section to be furnished to it by the Lessee, the Lessor will promptly deliver
the same to the Trustee, will cause the Trustee to apply said money as a partial
redemption of the Bonds in accordance with the terms of the Indenture and will
secure from the Trustee a release from the security interest afforded by the
terms of the Indenture of such portion of the Leased Land with respect to which
the Lessee shall have exercised the option granted in this section. In the event
the Lessee shall exercise such option, the Lessee shall not be entitled to any
abatement or diminution of the amounts payable under Section 5.3 hereof.
The Lessee may, at the Lessee's own expense, connect utility and other
similar facilities serving the Project to utility and other similar facilities
serving real property adjacent to or near the Leased Land, or partly on such
adjacent real property and partly on the Leased Land, but only if the Lessee
furnishes the Lessor and the Trustee a certificate by an Independent Engineer
who is acceptable to the Trustee, certifying that such connection of utility or
other similar facilities will not unreasonably interfere with the use of the
Project.
Section 11.5 Conveyance on Exercise of Option to Purchase. At the
closing of the purchase pursuant to the exercise of any option to purchase
granted herein, the Lessor will, upon receipt of the purchase price, deliver to
the Lessee documents conveying to the Lessee good and marketable title to the
property with respect to which such option was exercised, as such property then
exists, subject to the following: (i) those liens and encumbrances, if any, to
which title to said property was subject when conveyed to the Lessor; (ii) those
liens and encumbrances created by the Lessee, or to the creation or suffering of
which the Lessee consented; (iii) those liens and encumbrances resulting from
the failure of the Lessee to perform or observe any of its obligations in this
Lease Agreement; and (iv) Permitted Encumbrances other than the Indenture and
this Lease Agreement.
Section 11.6 Effect of Exercise on Options. Upon the exercise of any
option provided in this Article XI, the matured or accrued obligations of the
Lessee to the Lessor hereunder not theretofore performed, shall survive.
36
Section 11.7 Relative Position of Options and Indenture. The Options
granted to the Lessee in this Article XI, shall be and remain prior and superior
to the Indenture and may be exercised whether or not the Lessee is in default
hereunder, provided that such default will not result in the non-fulfillment of
any condition to the exercise of such option.
ARTICLE XII
-----------
MISCELLANEOUS
-------------
Section 12.1 Surrender of Project. Except as otherwise expressly
provided in this Lease Agreement, at the expiration or sooner termination of the
term of this Lease Agreement, the Lessee will surrender possession of the
Project peaceably and promptly to the Lessor in as good condition as at the
commencement of the Lease Term, excepting only loss by fire or other casualty
covered by insurance, and ordinary wear, tear and obsolescence.
Section 12.2 Notices. All notices, certificates or other communications
hereunder shall be sufficiently given and shall be deemed given when delivered
or mailed by registered or certified mail, postage prepaid, addressed as
follows:
If to the Lessor: The Industrial Development Board
of the City of Huntsville
X.X. Xxx 000
Xxxxxxxxxx, XX 00000
If to Lessee: Central CVPC Corporation
Attn: Xx. Xxxxxx X. Xxxxx
000 X. Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
If to Trustee: First Union National Bank
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Corporation Trust Administration
If to the Bank: Congress Financial Corporation
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxx
37
A duplicate copy of each notice, certificate, or other communication given
hereunder by either the Lessor or the Lessee to the other shall also be given to
the Trustee. The Lessor, the Lessee and the Trustee may, by notice given
hereunder, designate any further or different addresses to which subsequent
notices, certificates or other communications shall be sent.
Section 12.3 Binding Effect. This Lease Agreement shall inure to the
benefit of and shall be binding upon the Lessor, the Lessee, and their
respective successors and assigns, subject, however, to the limitations of
Section 9.1, 9.2 and 9.5 hereof. To the extent provided herein and in the
Indenture, the Trustee and the Bank shall be deemed to be third party
beneficiaries hereof, but nothing herein contained shall be deemed to create any
right in, or for the benefit of, any other person who is not a party hereto.
Section 12.4 Severability. In the event any provision of this Lease
Agreement shall be held invalid or unenforceable by any court of competent
jurisdiction, such holding shall not invalidate or render unenforceable any
other provisions hereof.
Section 12.5 Amendments, Changes and Modifications. Subsequent to the
issuance of the Bonds and prior to their payment in full (or provision for the
payment thereof having been made in accordance with the provisions of the
Indenture), this Lease Agreement may not be effectively amended, changed,
modified, altered or terminated except in accordance with the Indenture.
Section 12.6 Execution in Counterparts. This Lease Agreement may be
executed in several counterparts, each of which shall be an original and all of
which shall constitute but one and the same instrument.
Section 12.7 Recording and Filing. The Lessee will take all actions
that at the time and from time to time may be necessary (or, in the opinion of
the Trustee, may be necessary) to perfect, preserve, protect and secure the
interests of the Lessor and the Trustee, or either, in and to the Project, this
Agreement and the revenues and receipts derived by the leasing or sale of the
Project, including, without limitation, the filing of all financing and
continuation statements that may be required under the Alabama Uniform
Commercial Code.
Section 12.8 Net Lease. This Agreement shall be deemed and constructed
to be a "net lease", and the Lessee shall pay absolutely net during the term
hereof the rent and all other payments required hereunder free of any
deductions, without abatement, deduction or set-off other than those herein
expressly provided.
Section 12.9 Certain Tax Matters. The Lessor and the Lessee acknowledge
and agree that it is their mutual intention that the Lessee, for federal and
state income tax purposes, will be entitled to all deductions and credits with
respect to the Project (including, but not limited to, capital cost recovery and
investment credits) and that for such purposes this Lease Agreement shall be
deemed to be a financing of the Project. The Lessor does hereby make the
election available under Section 144(a)(4) of the Code.
38
Section 12.10 Date of this Agreement. The date of this Agreement is
intended as and for a date for the convenient identification of this Agreement
and is not intended to indicate that this Agreement was executed or delivered on
such date.
Section 12.11 Applicable Law. This Lease Agreement shall be governed by
and construed in accordance with the laws of the State.
Section 12.12 No Charge Against Lessor's Credit. No provisions hereof
shall be construed to impose a charge against the general credit of the Lessor
or any personal or pecuniary liability upon the Lessor, its officers, directors,
or of the City of Huntsville. Nothing set forth in this Section 12.12, however,
shall relieve the Lessor from the observance and performance of the several
covenants and agreements on its part herein set forth.
Section 12.13 Captions. The captions or headings in this Lease
Agreement are for convenience only and in no way define, limit or describe the
scope or intent of any provisions or sections of this Agreement.
Section 12.14 Relationship of Documents. So long as the Letter of
Credit remains in effect and the Letter of Credit Bank is not in default of its
obligations thereunder, (i) this Agreement shall be subject and subordinate to
the Bank Mortgage, (ii) to the extent that any provision of the Credit Agreement
or the Bank Mortgage is inconsistent with any provision of this Agreement, such
provision of the Credit Agreement and the Bank Mortgage shall govern and
control, (iii) the Lessor hereby agrees to give notice in writing to the Bank of
any Event of Default by the Lessee under the Lease that is known to the Lessor,
and, upon receipt of any such notice, the Bank shall have the right, but not the
obligation, to cure any such Event of Default for the account of the Lessee
within ninety (90) days after receipt of such notice, during which time the
Lessor or the Trustee shall not take any steps to enforce or seek to enforce,
directly or indirectly, any rights pursuant to this Agreement; (iv) the Lessor
and the Trustee shall allow the Bank to enter the Leased Land and the Building
for the purpose of repossessing, removing, selling or otherwise dealing with any
of its personal property collateral and such license shall continue without
change from the date the Bank enters the Leased Land or the Building for so long
as the Bank deems necessary for such purposes; (v) notwithstanding any provision
to the contrary contained in this Agreement, the Bank (or its designee or a
purchaser at a trustee's sale, as the case may be), at its option pursuant to
the Bank Mortgage or in lieu of foreclosure thereunder, shall be allowed to
acquire absolute ownership of the interest of the Lessee or the Lessor in this
Agreement, and if the Bank elects to acquire (or have its designee acquire or
any party at a trustee's sale acquire) such leasehold or other estate, the Bank
(or such designee or other party) will thereupon be recognized as the Lessee
hereunder and be entitled to all of the Lessee's rights hereunder, including,
without limitation, the right of the Lessee to exercise the option to purchase
the Project or the Lessor's rights hereunder, as the case may be, in accordance
with the terms of this Agreement; and (vi) if the Bank (or its designee) becomes
the Lessee under this Agreement, the Bank shall be allowed to sublease or assign
its rights hereunder to a third party who shall be authorized to use the Project
for any lawful purpose and such assignment or sublease shall release and
relieved the Bank (or its designee) of all obligations hereunder, without
releasing the Lessee from any and all liability and responsibility hereunder or
under the Credit Agreement or Bank Mortgage.
39
Section 12.15 Restatement of Lease. This agreement is intended to amend
and restate in its entirely the 1997 Lease and serve as a substitute therefor.
IN WITNESS WHEREOF, the Lessee has caused this Agreement to be executed
by one of its duly authorized officers, the 29th day of October, 1998, and the
Lessor has caused this Agreement to be executed in its corporate name and its
corporate seal to be hereunder affixed and attested by its duly authorized
officers, the 28th day of October, 1998, all as of the date and year first
above written.
40
THE INDUSTRIAL DEVELOPMENT
BOARD OF THE CITY OF HUNTSVILLE
By: /s/ X.X. Xxxxxxx, Xx.
-------------------------------------------
Its Vice Chairman
ATTEST:
------------------------------
Secretary
ACKNOWLEDGMENT OF BOARD
-----------------------
STATE OF ALABAMA )
MADISON COUNTY )
I, the undersigned, a Notary Public in and for said County in said
State, hereby certify that X.X. Xxxxxxx, Xx., whose name as Vice Chairman of The
Industrial Devlopment Board of the City of Huntsville, a public corporation, is
signed to the foregoing Lease Agreement, and who is known to me, acknowledged
before me on this day that, being informed of the contents of this Lease
Agreement, he, as such officer and with full authority, executed the same
voluntarily for and as the act of said corporation.
Given under my hand and official seal this the 28th day of October,
1998.
/s/ Xxxxxxx Xxxxxxxxx
--------------------------------
Notary Public
My Commission Expires: 11/14/01
41
CENTRAL CPVC CORPORATION, an
Alabama corporation
By: /s/ Xxxxxx X. Xxxxx
----------------------------------
Its Executive Vice President
ATTEST:
----------------------------
Secretary
ACKNOWLEDGMENT OF LESSEE
------------------------
STATE OF PENNSYLVANIA )
COUNTY OF PHILADELPHIA )
I, the undersigned, a Notary Public in and for said County in said
State, hereby certify that Xxxxxx X. Xxxxx, whose name as Executive Vice
President of Central CPVC Corporation, an Alabama corporation, is signed to the
foregoing Lease Agreement, and who is known to me, acknowledged before me on
this day that, being informed of the contents of this Lease Agreement, he, as
such officer and with full authority, executed the same voluntarily for and as
the act of said corporation.
Given under my hand and official seal this the 29th day of October,
1998.
/s/ Xxxxxx Xxxxxx
---------------------------------
Notary Public
My Commission expires: 12/24/2001
