EXECUTION COPY
CONFIDENTIAL AND PROPRIETARY
LEASE AGREEMENT
Dated as of July 20, 2001
BETWEEN
WYGEN FUNDING, LIMITED PARTNERSHIP
as Lessor
and
BLACK HILLS GENERATION, INC.
as Lessee
THIS LEASE HAS BEEN ASSIGNED AS SECURITY
FOR INDEBTEDNESS OF THE LESSOR. SEE SECTION 20.
This Lease has been manually executed in 10 counterparts, numbered
consecutively from 1 through 10, of which this is No. ___. To the
extent, if any, that this Lease constitutes chattel paper (as such term
is defined in the Uniform Commercial Code as in effect in any
applicable jurisdiction) no security interest in this Lease may be
created or perfected through the transfer or possession of any
counterpart other than the original executed counterpart which shall be
the counterpart identified as counterpart No. 1.
TABLE OF CONTENTS
Page
SECTION 1. DEFINED TERMS........................................................................................1
SECTION 2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSEE.................................................15
SECTION 3. LEASE OF THE PROJECT................................................................................25
SECTION 4. OPERATING LEASE.....................................................................................26
SECTION 5. ABSOLUTE OBLIGATION.................................................................................26
SECTION 6. INITIAL TERM; EXTENDED TERM.........................................................................29
SECTION 7. RENT AND OTHER PAYMENTS.............................................................................29
SECTION 8. RESTRICTED USE; COMPLIANCE WITH LAWS................................................................31
SECTION 9. MAINTENANCE, IMPROVEMENT AND REPAIR OF THE PROJECT..................................................34
SECTION 10. INSURANCE..........................................................................................36
SECTION 11. INDEMNITIES........................................................................................43
SECTION 12. LESSEE'S RIGHT TO TERMINATE........................................................................47
SECTION 13. LESSEE'S RIGHTS OF PURCHASE AND RENEWAL............................................................50
SECTION 14. LESSOR'S RIGHT TO TERMINATE........................................................................52
SECTION 15. LOSS OF OR DAMAGE TO THE PROJECT...................................................................53
SECTION 16. CONDEMNATION AND DEDICATION OF THE PROJECT; EASEMENTS..............................................54
SECTION 17. SURRENDER OF THE PROJECT...........................................................................55
SECTION 18. EVENTS OF DEFAULT..................................................................................55
SECTION 19. RIGHTS UPON DEFAULT................................................................................58
SECTION 20. SALE OR ASSIGNMENT BY LESSOR.......................................................................61
SECTION 21. INCOME TAXES.......................................................................................62
SECTION 22. NOTICES AND REQUESTS...............................................................................62
SECTION 23. COVENANT OF QUIET ENJOYMENT........................................................................63
SECTION 24. RIGHT TO PERFORM FOR LESSEE........................................................................64
SECTION 25. MERGER, CONSOLIDATION OR SALE OF ASSETS............................................................64
SECTION 26. EXPENSES...........................................................................................64
SECTION 27. PERMITTED CONTESTS.................................................................................64
SECTION 28. LEASEHOLD INTERESTS................................................................................65
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SECTION 29. MISCELLANEOUS......................................................................................66
SECTION 30. NO RECOURSE........................................................................................69
SECTION 31. NO MERGER OF ESTATES...............................................................................70
Exhibit A - Legal Description of Land
Exhibit B - Intentionally Omitted
Exhibit C - List of Project Contracts
Exhibit D - List of Project Authorizations
Exhibit E - Monthly Rent Component
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CONFIDENTIAL
LEASE AGREEMENT
Lease Agreement, dated as of July 20, 2001 (as the same may be amended,
restated, modified or supplemented from time to time, "this Lease"), between
WYGEN FUNDING, LIMITED PARTNERSHIP, a Delaware limited partnership, as lessor
(the "Lessor"), formed by Wygen Capital, Inc., its general partner, and BLACK
HILLS GENERATION, INC., a Wyoming corporation, as lessee (the "Lessee").
SECTION 1. DEFINED TERMS.
Unless the context otherwise requires, each term defined in this Section 1
shall, when used in this Lease, have the meaning indicated:
"Accrued Default Obligations" has the meaning set forth in Section 19
hereof.
"Acquisition Cost" means the Acquisition Cost (as defined in the Agreement
for Lease) under the Agreement for Lease after making the Final Advance, plus
(i) the Completion Amount and (ii) the Retention, if any.
"Additional Rent" has the meaning set forth in paragraph (d) of Section 7
hereof.
"Adjusted Acquisition Cost" means, at the time of determination, the
Acquisition Cost of the Project plus any increase in Adjusted Acquisition Cost
provided for under subsection 2.3 of the Agreement for Lease (as adjusted
pursuant to Section 3 of this Lease) less (i) the aggregate amount of all
Monthly Rent Components theretofore included as portions of Basic Rent for any
periods for which Basic Rent has been paid, less (ii) any reduction in Adjusted
Acquisition Cost provided for under paragraph (i) of Section 10 or paragraph (b)
of Section 16 of this Lease.
"Affiliate" of any Person means any other Person controlling, controlled by
or under direct or indirect common control with such Person. For the purposes of
this definition, "control," when used with respect to any specified Person,
means the power to direct the management and policies of such Person, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Agreement for Lease" means the Agreement for Lease, dated as of the date
hereof, between the Lessor, as owner, and the Lessee, as agent, providing for
the acquisition, design, construction and equipping of the Project, as the same
may be amended, restated, modified or supplemented from time to time.
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"Appraisal Procedure" means the following procedure whereby an independent
appraiser shall be appointed by the Lessor and the Lessee, with the consent of
Assignee, to determine (i) the amount of wear and tear in excess of that
attributable to normal use of the Project to which the provisions of paragraph
(b) (iii) or paragraph (c)(iii) of Section 12 apply or (ii) the fair market
value of the Project, if such determination is required under paragraph (d) of
Section 13 of this Lease. If no such appraiser is appointed by the mutual
agreement of the Lessor and the Lessee within thirty (30) days of the written
request of either the Lessor or the Lessee that an appraiser be appointed, the
Lessor and the Lessee shall each appoint an independent appraiser within thirty
(30) days thereafter, and the two appraisers so appointed shall appoint a third
independent appraiser. Each appraiser appointed pursuant to the foregoing
procedure shall, within thirty (30) days after appointment of the last
appraiser, independently determine the amount of wear and tear in excess of that
attributable to normal use or the fair market value of the Project, as the case
may be. If the Lessor or the Lessee shall fail to appoint an independent
appraiser within the above-mentioned thirty (30) day period, the appraiser
appointed by the other party shall determine such amount or value. If a single
appraiser is appointed, such appraiser's determination shall be final. If three
appraisers are appointed, the amounts or values determined by the three
appraisers shall be averaged, the amount or value which differs the most from
such average shall be excluded, the remaining two amounts or values shall be
averaged and such average shall be final. The expenses of all appraisers shall
be paid by the Lessee. Each appraiser appointed pursuant to an "Appraisal
Procedure" shall have experience in appraising coal-fired power plants similar
in size and capacity to the Project.
"Assignee" means each Person to which any part of the Lessor's interest
under this Lease or in the Project shall at the time have been assigned,
conditionally or otherwise, by the Lessor in accordance with Section 20 of this
Lease. For purposes of paragraphs (i)(d), (i)(g) and paragraphs (ii)(c) and (d)
of Section 2, paragraphs (a) and (b) of Section 5, paragraphs (d) and (h) of
Section 8, paragraph (b) of Section 9, clause (iii) of paragraph (b) of Section
10, Section 11, the last sentence of paragraph (b) of Section 20 and clause
(iii) of paragraph (a) of Section 27, the term "Assignee" shall include each
lender (and any entity providing liquidity to a lender) to the Lessor, and any
entity acting as an agent in any capacity for the benefit of such lenders (and
such liquidity providers), under a Financing Arrangement.
"Assignment" means each assignment agreement referred to in Section 20
hereof, between the Lessor and a third party, pursuant to which the Lessor
assigns certain of its rights under this Lease to such third party, as the same
may be amended, restated, modified or supplemented from time to time.
"Basic Rent" means:
(a) At each Basic Rent Payment Date during the Initial Term and any
Extended Term, the sum of the Monthly Rent Component plus an amount (the
"Variable Component of Basic Rent") equal to the sum of (X) plus (Y) plus (Z),
where (X), (Y) and (Z) have the following meanings:
(X) (i) the Equity Capital before payment of Basic Rent for such monthly
period, multiplied by
2
(ii) a fraction having a numerator equal to the number of days in such
monthly period and a denominator of 360, multiplied by
(iii)the decimal equivalent of a percentage equal to the Monthly Cost of
Project Equity.
(Y) (i) the Debt Capital before payment of Basic Rent for such monthly
period multiplied by
(ii) a fraction having a numerator equal to the number of days in such
monthly period and a denominator of 360, multiplied by
(iii)the decimal equivalent of a percentage equal to the Monthly Cost of
Project Debt.
(Z) (i) the Adjusted Acquisition Cost before payment of Basic Rent for such
monthly period, multiplied by
(ii) a fraction having a numerator equal to the number of days in such
monthly period and a denominator of 360, multiplied by
(iii) 0.20%.
(b) For any partial monthly period during the Initial Term and any Extended
Term, an amount equal to the sum of (X) plus (Y) plus (Z), where (X), (Y) and
(Z) have the following meanings:
(X) (i) the Equity Capital, multiplied by
(ii) a fraction having a numerator equal to the number of days the Project
is under lease during such partial monthly period and a denominator of
360 multiplied by
(iii)the applicable decimal referred to in paragraph (a)(X)(iii) above;
provided that, if the Effective Date falls on or after the Lease Rate
Date during such partial monthly period such decimal shall be the
decimal determined as of the next succeeding Lease Rate Date.
(Y) (i) the Debt Capital multiplied by
(ii) a fraction having a numerator equal to the number of days the Project
is under lease during such partial monthly period and a denominator of
360, multiplied by
(iii)the decimal equivalent of a percentage equal to the Monthly Cost of
Project Debt; provided that, if the Effective Date falls on or after
the Lease Rate Date during such partial monthly period, the Monthly
Cost of Project Debt shall be determined as of the next succeeding
Lease Rate Date.
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(Z) (i) the Adjusted Acquisition Cost, multiplied by
(ii) a fraction having a numerator equal to the number of days the Project
is under lease during such partial monthly period and a denominator of
360, multiplied by
(iii) 0.20%.
(c) For each monthly period during the Renewal Term of the Project, if any,
an amount equal to the fair market rental value thereof, determined as provided
in paragraph (d) of Section 13 hereof.
"Basic Rent Payment Date" means the twentieth (20th) day of each calendar
month during the Initial Term, any Extended Term or any Renewal Term, or, if
such day is not a Business Day, the next succeeding Business Day.
"BHP" means Black Hills Power, Inc., a South Dakota corporation, and its
successors.
"Budget" has the meaning set forth in the Agreement for Lease.
"Business Day" means any day other than a Saturday, a Sunday or a day on
which banking institutions in the City of New York or the State of Wyoming are
authorized by law to close.
"Cash Proceeds" has the meaning set forth in paragraph (a) of Section 12
hereof.
"CERCLA" has the meaning set forth in paragraph (i)(o) of Section 2 hereof.
"CERCLIS" has the meaning set forth in paragraph (i)(o) of Section 2
hereof.
"Code" means the Internal Revenue Code of 1986, as amended.
"Completion Amount" has the meaning set forth in the Agreement for Lease.
"Computation Period" has the meaning set forth in the definition of Monthly
Cost of Project Debt in this Section 1.
"Consent" means each consent of the Lessee to an Assignment, pursuant to
which the Lessee consents to the terms of such Assignment insofar as they relate
to this Lease and the Agreement for Lease, as the same may be amended, restated,
modified or supplemented from time to time.
"Contaminant" means any pollutant or substance that is or may be harmful to
human health, natural resources or the environment and any hazardous substance,
radioactive substance, hazardous material, toxic substance, hazardous waste,
medical or infectious waste, radioactive waste, special waste, industrial waste,
petroleum or petroleum-derived substance or
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waste, asbestos, PCBs, pesticide, explosive, paint or coating containing lead or
mercury, urea formaldehyde, radon, or any hazardous, toxic, radioactive, or
infectious constituent thereof defined as such or, regulated under Environmental
Requirements as harmful to human health, natural resources or the environment.
"Debt Capital" means, at the time of determination, an amount equal to
Adjusted Acquisition Cost minus Equity Capital.
"Easements" means (i) the easements and licenses granted or to be granted
to the Lessor by the Lessee or third parties under or pursuant to the Ground
Lease and (ii) the easements and licenses granted to the Lessor by Black Hills
Power, Inc. and Wyodak Resources Development Corp. under the Easement Agreement,
in each case as such easements and licenses may be amended, restated, modified
or supplemented from time to time in accordance with the terms hereof.
"Easement Agreement" means the Easement Agreement, dated as of the date
hereof, between Black Hills Power, Inc. and Wyodak Resources Development Corp.,
as grantors, and the Lessor, as grantee, as the same may be amended, restated,
modified or supplemented from time to time.
"Effective Date" means the date provided in paragraph (a) of Section 3 of
this Lease.
"Environmental Approvals" means all Permits (as defined in the Agreement
for Lease), consents, licenses, orders, waivers, extensions, variances, notices
to or registration or filings with any governmental or public body or authority,
and other approvals or authorizations which are or will be required under
applicable Environmental Requirements.
"Environmental Damages" means any and all claims, judgments, damages
(including, without limitation, punitive damages), losses, penalties, fines,
interest, fees, liabilities (including, without limitation, strict liability),
taxes, obligations, encumbrances, liens, costs and expenses (including, without
limitation, costs and expenses of investigation and defense of any claim,
whether or not such claim is ultimately defeated, and of any good faith
settlement or judgment), of whatever kind or nature, contingent or otherwise,
matured or unmatured, foreseeable or unforeseeable, direct or indirect,
including, without limitation, reasonable attorneys' fees and disbursements and
consultants' fees (collectively "Damages"), any of which are asserted, imposed
or incurred at any time pursuant to Environmental Requirements, including,
without limitation:
(i) Damages arising from the existence of Contaminants at any location or
compliance or noncompliance with, or violation of, Environmental Requirements,
including any material capital expenditure to achieve or maintain compliance
with Environmental Requirements;
(ii) Damages for personal injury or threatened personal injury (including
sickness, disease or death), or injury or threatened injury to property or
natural resources, foreseeable or unforeseeable, including, without limitation,
the cost of demolition and rebuilding of any improvements on real property;
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(iii) Damages associated with Environmental Matters;
(iv) Damages arising out of any liability in contribution or indemnity to
any third Person or Governmental Authority in connection with the items
referenced in clauses (i), (ii), (iii) and (v) of this definition; and
(v) Reasonable fees incurred for the services of attorneys, consultants,
contractors, doctors, experts, laboratories and all other reasonable costs
incurred in connection with any damages as described in clauses (i) through (iv)
of this definition, and the investigation or remediation of Contaminants or the
suspected presence of Contaminants or the violation or threatened violation of
Environmental Requirements, including, but not limited to, the preparation of
any feasibility studies or reports or the performance of any investigation,
cleanup, treatment, remediation, removal, response, abatement, containment,
closure, storage, disposal, transport, restoration or monitoring work required
by any federal, state, local or foreign governmental agency or political
subdivision, or otherwise expended in connection with such conditions, and
including, without limitation, any reasonable attorneys' fees, costs and
expenses incurred in enforcing this Lease or the Agreement for Lease or
collecting any sums due hereunder or thereunder.
"Environmental Event" has the meaning set forth in paragraph (ii)(f) of
Section 2 hereof.
"Environmental Lien" means a Lien in favor of any Governmental Authority
for any (a) liability under any Environmental Requirement, or (b) damages
arising from, or costs incurred by, such Governmental Authority in response to a
Release or threatened Release of a Contaminant into the environment.
"Environmental Matters" means any matter, fact or situation relating to or
arising from (a) any violation or alleged violation of, or failure to meet, an
Environmental Requirement relating to the Project, (b) any Release or threatened
Release of any Contaminant at, on, under, emanating to or from the Project or
the presence of any Contaminant which has come to be located at, on, from or
under the Project from another location, (c) the generation, treatment,
transport or disposal of any Contaminant at, on, under, to or from the Project,
(d) any injury or threatened injury to human health or safety or the environment
by reason of the matters described in clauses (a), (b) and (c) above, or (e) any
revocation, expiration, termination or failure to obtain or maintain any
Environmental Approval applicable to or required for the Project.
"Environmental Requirements" means all existing and future applicable
federal, state, local and foreign laws (including duties under the common law),
statutes, codes, ordinances, rules, regulations, directives, binding policies,
permits, authorizations, consent decrees or orders relating to or addressing the
environment, natural resources, land use or human health or safety, including,
but not limited to, any law, statute, code, ordinance, rule, regulation,
directive, binding policy, permit, authorization, consent decree or order
relating to (a) the use, handling, disposal, Release or threatened Release of
any Contaminant or (b) worker or public health.
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"EPC Contract" means the Engineering, Procurement and Construction
Agreement dated as of December 27, 2000, as amended by a First Amendment to
Engineering, Procurement and Construction Agreement dated as of April 11, 2001
(the "EPC First Amendment"), between the Lessee and the General Contractor with
respect to the Project, as the same may be amended, restated, modified or
supplemented from time to time in accordance with the terms thereof.
"EPC Subcontracts" means collectively, the Subcontracts and Supply
Contracts (each as defined in the EPC Contract) entered into by the General
Contractor pursuant to the EPC Contract, as the same may be amended, restated,
modified or supplemented from time to time in accordance with the terms hereof.
"Equity Capital" means, at the time of determination, the aggregate amount
of cash contributions to the Lessor's capitalization made by the Lessor's
general partner and limited partners constituting a part of Adjusted Acquisition
Cost, less the aggregate amount of any returns of capital made to such partners
at such time.
"ERISA" has the meaning set forth in paragraph (i)(m) of Section 2 hereof.
"Event of Default" has the meaning set forth in Section 18 hereof.
"Event of Loss" means any of the following events: (a) loss of all or a
substantial portion of the Project or the use thereof due to destruction, damage
beyond economical repair or rendition of the Project permanently unfit for the
use contemplated by the Project Contracts on a commercially feasible basis for
any reason whatsoever; (b) any event which results in an insurance settlement
with respect to the Project on the basis of a total loss or constructive total
loss; or (c) the repair and restoration of the Project cannot be completed by
the expiry of the existing Lease Term. A loss of a "substantial portion" of the
Project shall be deemed to occur if, in the reasonable judgment of the Lessor
and Assignee, after such event, (i) the Project cannot operate to generate
electricity in accordance with all applicable Permits (as defined in the
Agreement for Lease) and at levels and efficiencies in compliance with the
performance standards required for Operational Acceptance under the EPC
Contract, (ii) the Lessee will not be able to fully perform its obligations
under the Project Contracts, the Facility Support Agreement or this Lease or
(iii) a material diminution in the value, utility or remaining economic useful
life of the Project will occur.
"Extended Term" has the meaning set forth in paragraph (b) of Section 6
hereof.
"EWG" means an Exempt Wholesale Generator, as defined in Section 32(a)(1)
of the 1935 Act.
"Facility Support Agreement" means the Facility Support Agreement, dated as
of the date hereof, between the Lessor and the Lessee, as the same may be
amended, restated, modified or supplemented from time to time.
"FERC" means the Federal Energy Regulatory Commission, or any successor
agency thereto.
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"Financing Arrangement" means each credit agreement, note purchase
agreement, subordinated loan agreement, security agreement, indenture, mortgage,
deed of trust and each other agreement or arrangement between the Lessor and a
lender or lenders (including any entity acting in the capacity of an agent in
connection therewith and any entity providing liquidity to any such lender or
lenders) to the Lessor or other Person or Persons providing credit support to
the Lessor or to debt issued by or on behalf of the Lessor related to the
financing or refinancing of the Project, as any of the same may be amended,
restated, modified or supplemented from time to time.
"First Extended Term" has the meaning set forth in paragraph (b) of Section
6 hereof.
"Fuel Supply Agreements" means collectively, (i) the Coal Supply Agreement,
dated as of July 20, 2001, between Wyodak Resources Development Corp. and the
Lessee; and (ii) the Agreement for Rights of Usage of Coal Silo and Coal
Conveyer, dated as of July 20, 2001, between Black Hills Power, Inc. and the
Lessee with respect to the supply of coal to the Project, in each case as the
same may be amended, restated, modified, or supplemented from time to time.
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States, applied on a consistent basis.
"GE Turbine Contract" means the Purchase Order dated May 11, 2001 and the
Terms and Conditions for Procurement and Shipment of Steam Turbine/Generator
Equipment dated May 1, 2001, between General Electric Company and the General
Contractor, as the same may be amended, restated, modified, or supplemented from
time to time.
"General Contractor" means The Xxxxxxx & Xxxxxx Company, a Delaware
corporation.
"Governmental Action" has the meaning set forth in paragraph (i)(d) of
Section 2 hereof.
"Governmental Authority" means any agency, department,
commission, court or other administrative, legislative or regulatory authority
of any federal, state, local or foreign governmental body.
"Ground Lease" means the Ground Lease, dated as of the date hereof, between
the Lessee, as ground lessor, and the Lessor, as ground lessee, relating to the
Premises, as the same may be amended, restated, modified or supplemented from
time to time in accordance with the terms thereof.
"Guarantor" means Black Hills Corporation, a South Dakota corporation, and
its successors.
"Guaranty" means the Guaranty, dated as of the date hereof, by and between
the Guarantor and the Lessor, as the same may be amended, restated, modified, or
supplemented from time to time.
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"Indebtedness" of any Person means, without duplication, (a) all
indebtedness of such Person for borrowed money, (b) all obligations of such
Person for the deferred purchase price of property or services (other than trade
payables not overdue by more than 60 days incurred in the ordinary course of
such Person's business), (c) all obligations of such Person evidenced by notes,
bonds, debentures or other similar instruments, (d) all obligations of such
Person as lessee under leases that have been, in accordance with GAAP, recorded
as capital leases, (e) all obligations of such Person in respect of
reimbursement agreements with respect to acceptances, letters of credit (other
than trade letters of credit) or similar extensions of credit, (f) all
guaranties, and (g) all reasonably quantifiable obligations under indemnities or
under support or capital contribution agreements, and other reasonably
quantifiable obligations (contingent or otherwise) to purchase or otherwise to
assure a creditor against loss in respect of, or to assure an obligee against
loss in respect of, all Indebtedness of others referred to in clauses (a)
through (f) above guaranteed directly or indirectly in any manner by such
Person, or in effect guaranteed directly or indirectly by such Person through an
agreement (i) to pay or purchase such Indebtedness or to advance or supply funds
for the payment or purchase of such Indebtedness, (ii) to purchase, sell or
lease (as lessee or lessor) property, or to purchase or sell services, primarily
for the purpose of enabling the debtor to make payment of such Indebtedness or
to assure the holder of such Indebtedness against loss, (iii) to supply funds to
or in any other manner invest in the debtor (including any agreement to pay for
property or services irrespective of whether such property is received or such
services are rendered) or (iv) otherwise to assure a creditor against loss.
"Indemnified Person" has the meaning set forth in Section 11 hereof.
"Initial Term" has the meaning set forth in Section 6 hereof.
"Insurance Requirements" means all insurance required to be obtained with
respect to the Project pursuant to Section 10 hereof and all terms of any
insurance policy covering or applicable to the Project, all requirements of the
issuer of any such policy, all statutory requirements and all orders, rules,
regulations and other requirements of any governmental body related to insurance
applicable to the Project.
"Intellectual Property Rights" means, collectively, all patents, patent
applications, trademarks (whether registered or not), trademark applications,
trade names, proprietary computer software or copyrights (or any licenses,
permits or agreements with respect to any of the foregoing) necessary to design,
construct, operate, lease or use the Project or any part thereof.
"Interconnections" means the physical points of ongoing operational
interconnection and jurisdictional boundary between the Project and the
facilities located at or available to the Project which are owned, operated and
maintained by the Lessee or any of its Affiliates and shared with the Project.
"Interconnection Agreement" means the Agreement for Interconnection
Service, dated as of July 20, 2001, between Black Hills Power, Inc. and the
Lessee.
"Land" means the premises described in Exhibit A attached hereto.
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"Lease Rate Date" has the meaning set forth in paragraph (b) of Section 7
hereof.
"Lease Term" means the Initial Term, plus, if this Lease is extended, the
First Extended Term and the Second Extended Term.
"Legal Requirements" means all laws, treaties, directives, judgments,
decrees, ordinances and regulations and any other governmental rules, orders and
determinations and all requirements having the force of law, now or hereinafter
enacted, made or issued, whether or not presently contemplated, and all
agreements, covenants, conditions and restrictions, applicable to the Project
and/or the construction, ownership, operation or use thereof, including, without
limitation, all requirements of labor laws and Environmental Requirements,
compliance with which is required at any time from the date hereof through the
Initial Term, each Extended Term and any Renewal Term, whether or not such
compliance shall require structural, unforeseen or extraordinary changes to the
Project or the operation, occupancy or use thereof.
"Lessee" has the meaning set forth in the first paragraph of this Lease.
"Lessor" means Wygen Funding, Limited Partnership or any successor or
successors to all of its rights and obligations as the Lessor hereunder and, for
purposes of Section 11 hereof, shall include any partnership (general or
limited), corporation, limited liability company, trust, individual or other
entity which computes its liability for income or other taxes on a consolidated
basis with Wygen Funding, Limited Partnership or the income of which for
purposes of such taxes is, or may be, determined or affected directly or
indirectly by the income of the Lessor or its successor or successors. "Letter
of Credit" means the Irrevocable Letter of Credit No. NY-20511-30029698, dated
April 18, 2001, issued by CitiBank, N.A., in favor of the Lessee, as the same
may be amended, restated, modified, supplemented, substituted or replaced from
time to time.
"Lien" means any security interest, mortgage, pledge, hypothecation,
assignment, encumbrance, lien (statutory or other), or other security agreement
of any kind or nature whatsoever (including, without limitation, any conditional
sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing
of any financing statement under the Uniform Commercial Code or comparable law
of any jurisdiction in respect of any of the foregoing).
"Management Agreement" means the Management Agreement, dated as of the date
hereof, between the Lessor and Merrill Leasing, as the same may be amended,
restated, modified or supplemented from time to time.
"Material Subsidiary" has the meaning set forth in the Guaranty.
"Merrill" means Xxxxxxx Xxxxx Money Markets Inc., a Delaware corporation.
"Merrill Leasing" means ML Leasing Equipment Corp., a Delaware corporation.
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"Xxxxxxx Xxxxx" means Xxxxxxx Xxxxx & Co., Inc., a Delaware corporation.
"Monthly Cost of Project Debt" means the weighted average percentage cost
per annum (including as part of such cost any fees payable under or pursuant to
any Financing Arrangements, but net of any investment earnings applied to the
payment of costs) of borrowings outstanding under any Financing Arrangements
(whether or not interest is accruing at a default rate) at any time during the
period from and including the first day of the monthly period for which Basic
Rent is being computed to and including the last day of the monthly period for
which Basic Rent is being computed (the "Computation Period") to finance or
refinance the acquisition and ownership of the Project.
"Monthly Cost of Project Equity" means the weighted average percentage cost
per annum (including as part of such cost distributions and any fees payable
under or pursuant to the limited partnership agreement of the Lessor, but net of
any investment earnings applied to the payment of costs) of equity contributions
to the Lessor made pursuant to the limited partnership agreement at any time
during the Computation Period to finance or refinance the acquisition and
ownership of the Project.
"Monthly Rent Component" means, with respect to each monthly period during
the Lease Term, the amount (if any) set forth on Exhibit E hereto, as such
Exhibit E may be amended from time to time pursuant to the terms of this Lease.
"1935 Act" means the Public Utility Holding Company Act of 1935, as
amended, and any related Legal Requirement.
"NPL" has the meaning set forth in paragraph (i)(o) of Section 2 hereof.
"Operative Documents" has the meaning set forth in the Guaranty.
"Operator" means the Lessee, or such other entity designated as successor
operator of the Project by the Lessee in accordance with the terms hereof.
"Operating Account" means the Collateral Account (as such term is defined
in any Financing Arrangement).
"PCBs" has the meaning set forth in paragraph (i)(o) of Section 2 hereof.
"Performance Bonds" means any payment and performance surety bonds
delivered by subcontractors to the General Contractor and the Lessee pursuant to
Section 3.1 of the EPC First Amendment.
"Permitted Contest" has the meaning set forth in paragraph (a) of Section
27 hereof.
"Permitted Liens" means the following Liens and other matters affecting the
Project: (a) Liens securing the payment of taxes, assessments and other
governmental charges or levies which are either not delinquent or, if
delinquent, are being contested by the Lessee in good faith as a Permitted
Contest (provided that the Lessee is in compliance with any security
11
requirements under paragraph (b) of Section 27 hereof relating thereto); (b)
zoning and planning restrictions, subdivision and platting restrictions,
easements, rights-of-way, licenses, reservations, covenants, conditions,
waivers, restrictions on the use of the Project, minor encroachments or minor
irregularities of title, none of which individually or in the aggregate could
reasonably be expected to materially impair the intended use or value of the
Project; (c) reservations of mineral interests, none of which individually or in
the aggregate could reasonably be expected to materially impair the intended use
or value of the Project; (d) the Liens created pursuant to any Financing
Arrangement; (e) the rights and interest of any sublessee under a sublease
permitted by paragraph (e) of Section 8 of this Lease; (f) other leases and
licenses in effect with respect to the Project which are permitted by this Lease
or which are delivered to and accepted by the Lessor and Assignee prior to the
Effective Date; (g) other exceptions to the title of the Project as set forth in
the title insurance policy delivered to the Lessor and Assignee under Section 4
of the Agreement for Lease (for the period prior to Substantial Completion), as
such exceptions are revised by the endorsement issued pursuant to Section
9.24(g) of the Agreement for Lease, and in a notice of continuation or
endorsement to the title insurance policy delivered to the Lessor and Assignee
under Section 6 of the Agreement for Lease (for the period on and after
Substantial Completion) other than Liens securing the payment of taxes,
assessments and other governmental charges or levies; (h) inchoate mechanics'
Liens arising in the ordinary course of business on or in respect of the Project
and for amounts the payment of which is either not yet delinquent or is the
subject of a Permitted Contest (provided that the Lessee is in compliance with
any security requirements under paragraph (b) of Section 27 hereof relating
thereto); and (i) such other or additional matters as may be approved in writing
by the Lessor and each Assignee.
"Person" means any individual, corporation, partnership, limited liability
company, private limited company, joint venture, association, joint-stock
company, trust, unincorporated organization of government or any agency or
political subdivision thereof.
"Pledge Agreement" means the Pledge Agreement, dated as of the date hereof,
by and between the Lessee, as pledgor, and the Lessor, as pledgee, as the same
may be amended, restated, modified or supplemented from time to time.
"Pledged Contracts" means the EPC Contract, the Performance Bonds (from and
after the date each such Performance Bond becomes effective), the Letter of
Credit, the Retention Letter of Credit (if any), the EPC Subcontracts (from and
after the date each such EPC Subcontract becomes effective), the Interconnection
Agreement, the Services Agreement, the Fuel Supply Agreements and the Power
Purchase Agreements, in each case as pledged pursuant to the Pledge Agreement.
"Potential Default" means any event which, but for the lapse of time or
giving of notice, or both, would constitute an Event of Default.
"Power Purchase Agreements" means collectively, (i) the Power Purchase
Agreement, dated as of February 16, 2001, between the Lessee and Cheyenne Light,
Fuel and Power Company, and (ii) the Power Purchase Agreement, dated as of March
5, 2001, between the Lessee and Municipal Energy Agency of Nebraska, as each of
the same may be amended,
12
restated, modified, or supplemented from time to time, pursuant to which the
Lessee will sell certain electric capacity to each such purchaser as specified
therein.
"Premises" means collectively the Land and the Easements.
"Project" means the Premises and the improvements and equipment (including
all related appliances, appurtenances, accessions, controls, interconnection
facilities, transmission lines, wiring, furnishings, materials and parts, and
other related facilities and equipment, along with any replacements thereof)
constructed thereon pursuant to the EPC Contract (or any other construction
contracts entered into by the Lessor or the Lessee) and the Agreement for Lease,
which constitute an approximately 90 megawatt coal-fired power plant known as
Wygen #1, consisting of steam turbine generators and related equipment.
"Project Contracts" means the EPC Contract, the GE Turbine Contract, the
Ground Lease, the Performance Bonds (from and after the date each such
Performance Bond becomes effective), the Letter of Credit, the Retention Letter
of Credit (if any), the EPC Subcontracts (from and after the date each such EPC
Subcontract becomes effective), the Easement Agreement, the Required Easement
Agreements (from and after the date each such Required Easement Agreement
becomes effective), the Interconnection Agreement, the Services Agreement, the
Fuel Supply Agreements and the Power Purchase Agreements, as each of the same
may be amended, restated, modified or supplemented from time to time as
permitted hereunder. A list of the Project Contracts in existence on the date
hereof is attached as Exhibit C hereto.
"Reconciliation Amount" has the meaning set forth in paragraph (f) of
Section 7 hereof.
"Release" means the release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migrating into the indoor
or outdoor environment of any Contaminant through or in the air, soil, surface
water, groundwater, or any structure.
"Remedial Action" means actions required or undertaken by a Governmental
Authority, or which are appropriate as a matter of prudent business practice and
commercial reasonableness, to (i) clean up, remove, treat, contain or in any
other way address Contaminants in the indoor or outdoor environment; (ii)
prevent the Release or threat of Release or minimize the further Release of
Contaminants; (iii) investigate and determine if a removal or remedial response
is needed; or (iv) design such a response and post-remedial investigation,
monitoring, operation, maintenance and care.
"Removable Improvements" has the meaning set forth in paragraph (b) of
Section 8 hereof.
"Renewal Notice" has the meaning set forth in paragraph (c) of Section 13
hereof.
"Renewal Term" has the meaning set forth in paragraph (c) of Section 13
hereof.
13
"Required Easement Agreements" has the meaning set forth in the Agreement
for Lease.
"Responsible Officer" shall mean the President, Vice President, Secretary
or Treasurer of the Lessee.
"Retention" has the meaning set forth in the Agreement for Lease.
"Retention Letter of Credit" shall mean the Retention Letter of Credit
issued pursuant to Section 7.3 of the EPC Contract.
"S&P" means Standard & Poor's Ratings Group, a division of XxXxxx-Xxxx,
Inc., and any successor thereto which is a nationally recognized statistical
rating organization.
"Second Extended Term" has the meaning set forth in paragraph (b) of
Section 6 hereof.
"Services Agreement" means the Services Agreement, dated as of July 20,
2001, between Black Hills Power, Inc. and the Lessee, as the same may be
amended, restated, modified or supplemented from time to time.
"Substantial Completion" has the meaning set forth in the Agreement for
Lease.
"Taking" means the requisition, taking or sale in, by or on account of
actual or threatened eminent domain proceedings or other action by any person or
authority having the power of eminent domain.
"Termination Conditions" means the following conditions made by the Lessee
to the Lessor as a condition to the sale of the Project pursuant to Section 12
hereof: on the date of such sale (i) no Event of Loss, Taking, Termination
Event, Event of Default or Potential Default shall have occurred and be
continuing, (ii) the Project shall not be undergoing any repairs, additions or
alterations that could reasonably be expected to diminish the fair market value,
utility or remaining economic useful life which the Project would have had at
such time had such repair, addition or alteration not been undergoing (assuming
the Project is in the condition required hereby), (iii) the Project shall be in
compliance with all Legal Requirements, (iv) the Lessee shall, at its expense,
deliver to the Lessor an environmental audit satisfactory in scope and content
to the Lessor and Assignee in their reasonable discretion, to the effect that
(A) no Environmental Matters exist with respect to the Project as a result of
the construction, operation and maintenance of the Project and (B) the Project
may be operated to its design capacity in accordance with the Project Contracts
and in compliance with Environmental Requirements, and (v) the Lessee shall
deliver to the Lessor and Assignee a report of an independent engineer
reasonably satisfactory to the Lessor and Assignee, to the effect that the
Project (A) has been maintained in accordance with the terms and conditions of
Section 9 of this Lease and (B) is capable of being operated in accordance with
(1) the design specifications required by the EPC Contract, taking into account
normal and proper wear and tear resulting from the operation of the Project, (2)
the performance standards required for Operational Acceptance under the EPC
Contract, taking into account normal and proper wear and tear resulting from the
operation of the Project and (3) prudent industry practices.
14
"Termination Date" has the meaning set forth in paragraph (a) of Section 12
hereof.
"Termination Event" has the meaning set forth in paragraph (a) of Section
14 hereof.
"Termination Notice" has the meaning set forth in paragraph (a) of Section
12 hereof.
"Unrecovered Liabilities and Judgments" means all liabilities of an
Indemnified Person, including, without limitation, taxes, losses, obligations,
claims, damages (including, without limitation, Environmental Damages and strict
liability in tort), penalties, premiums, breakage costs, causes of action,
suits, costs and expenses (including, without limitation, reasonable attorneys',
experts', consultants' and accountants' fees and expenses) or judgments of any
nature against an Indemnified Person relating to or in any way arising during
the term of the Agreement for Lease and relating to or in any way arising out of
(i) the Lessor's acquisition, ownership and financing of the Project, (ii) the
Lessor's acquisition of a leasehold interest in the Premises, (iii) the Lessee's
construction of the Project or (iv) the operation or use of the Premises or the
Project by the Lessee or any agent or subcontractor of the Lessee, in each case
to the extent that such Indemnified Person has not received full indemnification
for such liabilities or judgments by the Lessee.
"Variable Component of Basic Rent" has the meaning set forth in the
definition of Basic Rent in Section 1 hereof.
SECTION 2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSEE.
(i) The Lessee represents and warrants to the Lessor:
(a) Corporate Matters. The Lessee (i) has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the State
of Wyoming, (ii) has full power, authority and legal right to own and operate
its properties and to conduct its business as presently conducted and to
execute, deliver and perform its obligations under this Lease, the Agreement for
Lease, the Project Contracts, the Pledge Agreement, the Facility Support
Agreement and any Consent, and (iii) is duly qualified to do business as a
foreign corporation in good standing in each jurisdiction in which its ownership
or leasing of properties or the conduct of its business requires such
qualification.
(b) Binding Agreement. This Lease and the Consent have been duly
authorized, executed and delivered by the Lessee and, assuming the due
authorization, execution and delivery of this Lease by the Lessor and the
Consent by the parties thereto other than the Lessee, this Lease and the Consent
is a legal, valid and binding obligation of the Lessee, enforceable according to
its terms.
(c) Compliance with Other Instruments. The execution, delivery and
performance by the Lessee of this Lease, the Project Contracts to which the
Lessee is a party,
15
the Facility Support Agreement, the Pledge Agreement and any Consent will not
result in any violation of any term of the articles of incorporation or the
by-laws of the Lessee, do not require stockholder approval or the approval or
consent of any trustee or holders of indebtedness of the Lessee except such as
have been obtained prior to the date hereof and will not conflict with or result
in a breach of any terms or provisions of, or constitute a default under, or
result in the creation or imposition of any Lien (other than a Permitted Lien)
upon any property or assets of the Lessee under, any indenture, mortgage or
other agreement or instrument to which the Lessee is a party or by which it or
any of its property is bound, or any existing applicable law, rule, regulation,
license, judgment, order or decree of any Governmental Authority or court having
jurisdiction over the Lessee or any of its activities or properties.
(d) Governmental Consents. There are no consents, licenses, orders,
authorizations, approvals, Environmental Approvals, Permits (as defined in the
Agreement for Lease), waivers, exemptions, extensions or variances of, or
notices to or registrations or filings with any Governmental Authority or public
body (each a "Governmental Action") which are or will be required in connection
with the valid execution, delivery and performance of this Lease, the Agreement
for Lease, the Pledge Agreement, the Facility Support Agreement, the Consent or
the Project Contracts, or any Governmental Action (i) which is or will be
required in connection with any participation by the Lessor or any Assignee in
the transactions contemplated by the Project Contracts, the Pledge Agreement,
the Facility Support Agreement, the Consent, this Lease or the Agreement for
Lease, (ii) which is or will be required in connection with the acquisition or
ownership by the Lessor of the Project and all equipment for use with respect
thereto, (iii) which is or will be required for the lease of the Project or the
operation of the Project in accordance with and as contemplated by the Project
Contracts and this Lease, or (iv) which is or will be required to be obtained by
the Lessee, the Lessor, Xxxxxxx, Xxxxxxx Xxxxx, Xxxxxxx Leasing, any Assignee or
any Affiliate of the foregoing, during the term of this Lease, the Agreement for
Lease or the Project Contracts, with respect to the Project or the Project
Contracts, except for (i) the filing of an application for EWG status under
Section 32 of the 1935 Act and (ii) filings, if any, required under Section 6111
of the Code, and except such Governmental Actions (A) each of which has been
duly obtained, given or accomplished, is in full force and effect, is final, is
not under appeal, and all applicable appeal periods have expired, with a true
copy thereof delivered to the Lessor or (B) as may be required by applicable law
not now in effect.
(e) Financial Statements. The Lessee has furnished to the Lessor copies of
(i) the Lessee's annual unaudited financial statements for the year ended
December 31, 2000 and its quarterly unaudited financial statements for the
quarter ended March 31, 2001, and (ii) the Guarantor's Annual Report on Form
10-K for the year ended December 31, 2000, and the Guarantor's Quarterly Report
on Form 10-Q for the quarter ended March 31, 2001. The financial statements
contained in such documents fairly present the financial position, results of
operations and consolidated statements of cash flows of the Lessee and the
Guarantor, as the case may be, as of the dates and for the periods indicated
therein and have been prepared in accordance with GAAP.
(f) Changes. Since December 31, 2000, there has been no material adverse
change in the business, assets, properties, revenues, financial condition,
operations or prospects of the Project, the Lessee or the Guarantor, nor any
change which could reasonably be expected
16
to have a material adverse effect on (i) the construction, operation,
maintenance, leasing, ownership, use, value or regulatory status of the Project,
(ii) the ability of the Lessee to observe and perform its obligations under this
Lease, the Agreement for Lease, the Pledge Agreement, the Facility Support
Agreement, the Consent or the Project Contracts in a timely manner or the
ability of the Guarantor to perform its obligations under the Guaranty in a
timely manner, (iii) the business, assets, properties, financial condition,
operations or prospects of the Lessee or the Guarantor, or (iv) the rights or
interests of the Lessor or Assignee under this Lease, the Agreement for Lease,
the Pledge Agreement, the Facility Support Agreement, the Consent or the Project
Contracts.
(g) Litigation. There is no action, suit, claim, or counterclaim,
proceeding or investigation, at law or in equity, by or before any court,
governmental body, agency, commission or other tribunal now pending or
threatened against or affecting the Project, the Lessee or the Guarantor or any
property or rights of the Lessee or the Guarantor or questioning the
enforceability of this Lease, the Pledge Agreement, the Facility Support
Agreement, the Consent or the Project Contracts, which, if adversely determined,
could reasonably be expected to have a material adverse effect on (i) the
construction, operation, maintenance, leasing, ownership, use, value or
regulatory status of the Project, (ii) the ability of the Lessee to observe and
perform its obligations under this Lease, the Agreement for Lease, the Pledge
Agreement, the Facility Support Agreement, the Consent or the Project Contracts
in a timely manner or the ability of the Guarantor to perform its obligations
under the Guaranty in a timely manner, (iii) the business, assets, properties,
financial condition, operations or prospects of the Lessee or the Guarantor, or
(iv) the rights or interests of the Lessor or Assignee under this Lease, the
Agreement for Lease, the Pledge Agreement, the Facility Support Agreement, the
Consent or the Project Contracts.
(h) Intellectual Property. All Intellectual Property Rights required for
the construction and operation of the Project in accordance with and as
contemplated by the Project Contracts or this Lease, have been or will in the
ordinary course of business be timely obtained and, once obtained, will remain
in full force and effect. The Lessee owns or has the right to use all
Intellectual Property Rights that are material and are required to perform the
Lessee's obligations under the Project Contracts without any conflict with the
rights of others.
(i) Project Contracts. Each Project Contract in existence on the date
hereof has been duly authorized, executed and delivered by the parties thereto
and is a legal, valid and binding obligation of the parties thereto, enforceable
according to its terms. The Lessee has not received notice from any party to a
Project Contract that (i) such party is terminating any Project Contract, (ii) a
default has occurred under any Project Contract or any Person has alleged that a
default has occurred under any Project Contract or (iii) there are any claims
for damages existing as a result of the Lessee's performance of or its failure
to perform any of its obligations under any Project Contract. No default has
occurred and is continuing under any Project Contract on the date hereof.
(j) Compliance with Legal Requirements and Insurance Requirements. The
construction, operation, use, and physical condition of the Project are in full
compliance with all Legal Requirements and Insurance Requirements and all
premiums due with respect to such Insurance Requirements have been paid.
17
(k) Liens. The Project is not subject to any Lien, except Permitted Liens,
and none of such Permitted Liens could reasonably be expected to materially
interfere with the use or possession of the Project or the use or exercise by
the Lessor of its rights under this Lease or any other document contemplated
hereby or entered into in connection herewith.
(l) Agreement for Lease. The Project has been built in accordance with the
terms of the Agreement for Lease. The representations and warranties of the
Lessee, as agent, in the Agreement for Lease are true and correct in all
material respects.
(m) ERISA. The Lessee has not established and does not maintain or
contribute to any employee benefit plan that is covered by Title IV of the
Employee Retirement Income Security Act of 1974, as amended from time to time
("ERISA").
(n) Status of Lessee. All of the Lessee's capital stock is owned (directly
or indirectly) beneficially and of record by the Guarantor.
(o) Environmental Matters. Except as expressly identified in the
environmental reports delivered pursuant to Section 4 of the Agreement for
Lease:
(i) To the best knowledge of the Lessee, after due inquiry, the Lessee
and the Project comply, and have at all times complied, with all
Environmental Requirements applicable to the Project. The Lessee and the
Project shall at all times comply with all material Environmental
Requirements applicable to the Project, including, without limitation, the
use, maintenance and operation of the Project, and all activities and
conduct of business related thereto, including, without limitation, the
treatment, remediation, removal, transport, storage and/or disposal of any
Contaminant, and no material capital expenditures are anticipated to
maintain or achieve compliance with Environmental Requirements;
(ii) The Lessee has obtained or has taken appropriate steps, as
required by Environmental Requirements, to obtain, and shall maintain all
Environmental Approvals necessary for the construction and operation of the
Project, and, in the case of Environmental Approvals necessary for
operation, will take such steps as are necessary to secure such
Environmental Approvals prior to the scheduled commencement of operation,
all such Environmental Approvals already obtained are in good standing, are
in full force and effect, are final, are not under appeal, and all
applicable appeal periods have expired, and the Lessee and the Project are
currently in material compliance and shall remain in material compliance
with all terms and conditions of such Environmental Approvals. No material
change in the facts or circumstances reported or assumed in the
applications for or the granting of such Environmental Approvals exists.
There are no proceedings pending or threatened which may be expected to
rescind, terminate, modify, condition, suspend or otherwise alter such
Environmental Approvals, or which would jeopardize the validity of, or the
ability of the Lessee to obtain, maintain, or comply with, any such
Environmental Approvals in a timely manner;
(iii) The Lessee has not received any notice that any of the third
parties with which the Lessee has arranged, engaged or contracted to
accept, treat,
18
transport, store, dispose or remove any Contaminant
generated or present at the Project, or which otherwise participate or have
participated in activities or conduct related to the Project, were not
properly permitted at the relevant time to perform the foregoing activities
or conduct;
(iv) The Lessee has not received any notice that it or the Project is
subject to any investigation, and is not subject to any judicial or
administrative proceeding, notice, order, judgment, decree or settlement,
alleging or addressing in connection with the Project (A) any violation of
any Environmental Requirements, (B) any Remedial Action, or (C) any
Environmental Damages, claims or liabilities and costs arising from the
Release or threatened Release of any Contaminant;
(v) No Environmental Lien has attached to any portion of the Project,
and the Lessee shall not cause or suffer any action or occurrence that will
allow an Environmental Lien to attach to any portion of the Project;
(vi) The Lessee has not received, and is not otherwise aware of, any
notice, claim or other communication concerning (A) any alleged violation
of any Environmental Requirements at the Project, whether or not corrected
to the satisfaction of the appropriate authority, (B) any alleged liability
of the Lessee for Environmental Damages arising out of or related to the
Project, or (C) any alleged liability of the Lessee arising out of or
related to the Project for the Release or threatened Release of a
Contaminant at any location, and there exists no writ, injunction, decree,
order or judgment outstanding, nor, to the best knowledge of the Lessee,
after due inquiry, any lawsuit, claim, proceeding, citation, directive,
summons or investigation, pending or threatened, relating to the condition,
ownership, use, maintenance, construction or operation of the Project, or
the suspected presence of Contaminants thereon or therefrom, nor does there
exist any basis for such lawsuit, claim, proceeding, citation, directive,
summons or investigation being instituted or filed;
(vii) To the best knowledge of the Lessee, after due inquiry, there
has been no Release of any Contaminants which would constitute a violation
of any Environmental Requirement with respect to the Project or which would
require any Remedial Action at, to or from the Project, and the Lessee
shall not cause or suffer any such Release during the term of this Lease;
(viii) The Project is not listed or proposed for listing on the
National Priorities List ("NPL") pursuant to the Comprehensive
Environmental Response, Compensation, and Liability Act, as amended
("CERCLA"), or listed on the Comprehensive Environmental Response
Compensation Liability Information System List ("CERCLIS") or any similar
state list of sites, and the Lessee is not aware of any conditions at the
Project which, if known to a Governmental Authority, would qualify the
Project for inclusion on any such list;
(ix) Neither the Lessee nor, to the best knowledge of the Lessee,
after due inquiry, any contractor engaged by the Lessee in connection with
the Project has transported or arranged for the transport of any
Contaminant from the Project to any
19
facility or site for the purpose of treatment or disposal which (A) is
included on the NPL, or (B) to the best knowledge of the Lessee, is or was,
at the time of disposal, subject to a Remedial Action requirement (other
than routine, anticipated regulatory requirements, including, but not
limited to, closure-related corrective action obligations affecting closed
solid waste management units at such facility) issued under the federal
Resource Conservation and Recovery Act or any state, local or foreign solid
or hazardous waste regulatory law, or (C) at the time of the disposal had
received a notice of violation or was otherwise subject to a governmental
enforcement action with respect to alleged violations of any Environmental
Requirements, and the Lessee shall use its best efforts not to suffer or
permit any such transportation or arrangement to any such facility or site
during the term of this Lease;
(x) Neither the Lessee nor, to the best knowledge of the Lessee, after
due inquiry, any contractor engaged by the Lessee in connection with the
Project has engaged in or permitted, nor shall the Lessee engage in or
permit, any operations or activities upon, or any use or occupancy of the
Project or any portion thereof, for the purpose of or in any way involving
the illegal or improper release, discharge, refining or dumping of any
Contaminant or the illegal or improper handling, storage, use or disposal
of any Contaminant, nor has the Lessee or any other Person caused any
Contaminant to be deposited, released, stored, disposed, leached or
otherwise come to be located on, under, in or about the Premises, nor to
the knowledge of the Lessee has any Contaminant migrated from the Premises
onto or underneath other properties;
(xi) To the best knowledge of the Lessee, after due inquiry, there is
not constructed, placed, deposited, stored, disposed nor located on the
Project or the Premises any asbestos in any form which has become or
threatens to become friable. The Lease shall not cause or suffer the use of
any asbestos containing material in connection with its management and
operation of the Project during the term of this Lease;
(xii) To the best knowledge of the Lessee, after due inquiry, there is
not constructed, placed, deposited, released, stored, disposed, leached nor
located on the Project any mono- or poly-chlorinated biphenyls ("PCBs") or
transformers, capacitors, ballasts, or other equipment which contain
dielectric fluid containing PCBs. The Lessee shall not cause or suffer the
use of any article containing PCBs at or on the Project during the term of
this Lease;
(xiii) To the best knowledge of the Lessee, the Lessee has no
liability, and has neither received nor is otherwise aware of any notice,
claim or other communication alleging liability on the part of the Lessee,
for the violation of any Environmental Requirements, for Environmental
Damages, or for the presence, Release, or threatened Release of any
Contaminant in connection with the Project; and
(xiv) None of the matters identified in the environmental reports
delivered pursuant to Section 4 of the Agreement for Lease, individually or
in the aggregate, could reasonably be expected to have a material adverse
effect on (A) the construction, operation, maintenance, leasing, ownership,
use, value or regulatory status of the Project, (B) the ability of the
Lessee to observe and perform its obligations under this Lease, the
Agreement for Lease, the Pledge Agreement, the Facility Support Agreement,
the Consent or the Project Contracts in a timely manner or the ability of
the Guarantor to perform its obligations under the Guaranty in a timely
manner, (C) the business, assets, properties, financial condition,
operations or prospects of the Lessee or the Guarantor, or (D) the rights
or interests of the Lessor or Assignee under this Lease, the Agreement for
Lease, the Pledge Agreement, the Facility Support Agreement, the Consent or
the Project Contracts.
20
(p) Project Authorizations. The Lessee has obtained, or
shall in the ordinary course of business obtain prior to the time required, all
certificates, Permits, Governmental Actions, licenses, authorizations and
approvals required (i) in the management and operation of the Project in
accordance with and as contemplated by the Project Contracts, the Facility
Support Agreement and this Lease, (ii) for any change or modification of the use
of the Project, (iii) for construction of any improvements thereto and (iv) for
acquisition of equipment related to the Project for use with respect thereto,
and a list of all such certificates, Permits, Governmental Actions, licenses,
authorizations and approvals required by all applicable law in effect on the
date hereof is attached as Exhibit D hereto.
(q) Compliance with Project Contracts. The physical condition of the
Project as it is presently constructed complies with all material requirements
of each Project Contract and will enable the Lessee to perform all of its
obligations under the Project Contracts, the Facility Support Agreement and this
Lease in accordance with their respective terms.
(r) Pledge Agreement. The Pledge Agreement has been duly authorized,
executed and delivered by the Lessee and, assuming the due authorization,
execution and delivery of the Pledge Agreement by the Lessor, is a legal, valid
and binding obligation of the Lessee, enforceable according to its terms. The
Pledge Agreement creates a valid first priority security interest in the
Collateral (as defined in the Pledge Agreement), securing the payment of the
Secured Obligations (as defined in the Pledge Agreement). All action necessary
to perfect the security interest in the Collateral has been taken and such
security interest has priority over any other Lien on the Collateral, except for
Permitted Liens.
(s) Operation of the Project. The Project is being constructed such that,
on and after the achievement of Operational Acceptance (as such term is defined
in the EPC Contract) it will be able (i) to be operated on a safe and reasonably
economic basis in compliance with all material Governmental Actions existing at
the time, the Project Contracts, the Facility Support Agreement and this Lease
for a period of at least 30 years thereafter, and (ii) to be mechanically
operated on a safe basis in compliance with all existing material Governmental
Actions for a period of at least 30 years thereafter.
(t) Utility Availability. All utility services and Interconnections
necessary for the operation of the Project (including, without limitation, gas,
electrical, water, coal supply and storage and sewage services and facilities)
are available for use at the boundaries of the Premises or within a reasonable
distance from the Premises.
21
(u) Guaranty. The Guaranty has been duly authorized, executed and delivered
by the Guarantor and constitutes a legal, valid and binding obligation of the
Guarantor, enforceable according to its terms.
(v) Disclosure. None of the representations made by the Lessee in this
Lease or the Agreement for Lease or the financial statements referred to in
paragraph (i)(e) of Section 2 hereof, contained as of its date any untrue
statement of a material fact or omitted to state a material fact necessary in
order to make the representations contained herein or the statements contained
therein not misleading in light of the circumstances under which they were made.
(w) No Default. Neither the Lessee nor the Guarantor is in violation of or
in default under or with respect to any Legal Requirement in any respect which
could reasonably be expected to have a material adverse effect on (i) the
construction, operation, maintenance, leasing, ownership, use, value or
regulatory status of the Project, (ii) the ability of the Lessee to observe and
perform its obligations under this Lease, the Agreement for Lease, the Pledge
Agreement, the Facility Support Agreement, the Consent or the Project Contracts
in a timely manner or the ability of the Guarantor to perform its obligations
under the Guaranty in a timely manner, (iii) the business, assets, properties,
financial condition, operations or prospects of the Lessee or the Guarantor, or
(iv) the rights or interests of the Lessor or Assignee under this Lease, the
Agreement for Lease, the Pledge Agreement, the Facility Support Agreement, the
Consent or the Project Contracts.
(x) Taxes. The Lessee has filed or caused to be filed all tax returns which
are required to be filed by it, and has paid all taxes shown to be due and
payable on said returns or on any assessments made against it or any of its
assets and properties and has paid all other taxes, fees or other charges
imposed on it by any Governmental Authority (except taxes, fees and charges
subject to a Permitted Contest).
(y) Budgets. All budgets (including the Budget) furnished or to be
furnished to the Lessor and Assignee by or on behalf of the Lessee and the
summaries of significant assumptions related thereto, if any (i) have been and
will be prepared with due care in accordance with prudent business practices,
(ii) fairly present, and will fairly present the Lessee's expectations as to the
matters covered thereby as of their date, (iii) are based on, and will be based
on, assumptions that are reasonable as to all factual and legal matters material
to the estimates therein and (iv) are in all material respects consistent with,
and will be in all material respects consistent with, the provisions of this
Lease, the Agreement for Lease and the Project Contracts. The Budget includes
all costs and expenses that could reasonably be expected to be incurred in
connection with the construction of the Project.
(z) Facility Support Agreement. The Facility Support Agreement has been
duly authorized, executed and delivered by the Lessee and, assuming the due
authorization, execution and delivery of the Facility Support Agreement by the
Lessor, is a legal, valid and binding obligation of the Lessee, enforceable
according to its terms.
(ii) The Lessee covenants to the Lessor:
22
(a) Distributions in Default. So long as an Event of Default pursuant to
paragraph (a) of Section 18 hereof has occurred and is continuing, the Lessee
will not make any distributions or return of capital of any kind to any of its
equity investors or any payment of management fees or any payments of principal
or interest on any subordinated debt.
(b) Conduct of Business and Maintenance of Corporate Existence. The Lessee
will (i) preserve, renew and keep in full force and effect its existence as a
corporation in good standing under the laws of the State of Wyoming until the
expiration or other termination of this Lease and the indefeasible payment of
all amounts owing hereunder, and (ii) maintain all rights, privileges and
franchises material to the conduct of its business; provided, however, that
nothing contained in this paragraph (b) shall prevent the Lessee from
consummating any merger, consolidation or sale permitted by the provisions of
Section 25 hereof.
(c) Delivery of Information. The Lessee shall deliver to the Lessor and
Assignee from time to time, (i) (A) promptly, and in any event not more than 120
days after the end of each fiscal year of the Lessee (commencing with the fiscal
year 2001), copies of the Lessee's annual audited financial statements and
promptly, and in any event not more than 60 days after the end of each of the
first three fiscal quarters of each relevant fiscal year of the Lessee, copies
of the Lessee's quarterly unaudited financial statements, both prepared in
accordance with GAAP, and (B) promptly, and in any event not more than 120 days
after each fiscal year of the Guarantor, copies of the Guarantor's Annual Report
on Form 10-K and promptly, and in any event not more than 60 days after the end
of each of the first three fiscal quarters of each relevant fiscal year of the
Guarantor, copies of the Guarantor's Quarterly Reports on Form 10-Q and promptly
any other reports the Guarantor files with the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934, (ii) promptly upon
request, such other information with respect to the Lessee's or the Guarantor's
operations, business, properties, assets, financial condition or litigation as
the Lessor or any Assignee shall reasonably request, (iii) promptly after a
Responsible Officer obtains knowledge of any Event of Default, Potential
Default, Event of Loss, Taking or Termination Event, a certificate of a
Responsible Officer specifying the nature and period of existence of such Event
of Default, Potential Default, Event of Loss, Taking or Termination Event, and
what action, if any, the Lessee has taken, is taking, or proposes to take with
respect thereto, (iv) promptly after a Responsible Officer obtains knowledge of
any material adverse change in the financial condition or business of the
Lessee, or of any liabilities or obligations arising as a result of tortious
action or omission or Environmental Damages or in respect of governmental fines
or obligations (other than taxes) or liabilities or obligations arising as a
result of Environmental Matters, or of any material adverse change in the
financial condition or business of the Guarantor or of any litigation of the
type described in paragraph (i)(g) of this Section 2, a certificate of a
Responsible Officer describing such change, liabilities, obligations or
litigation, as the case may be, and what action, if any, the Lessee has taken,
is taking, or proposes to take with respect thereto, (v) simultaneously with the
delivery of each set of annual and quarterly financial statements referred to in
clause (i) of this paragraph (c), a certificate of a Responsible Officer
stating, to the best knowledge of such Responsible Officer after reasonable
inquiry, whether there exists on the date of such certificate any Event of
Default, Potential Default, Event of Loss, Taking or Termination Event or
default under any Project Contract, and if any Event of Default, Potential
Default, Event of Loss, Taking or Termination Event or default under any Project
Contract exists, specifying the nature and period of existence thereof and what
action, if any, the Lessee has taken, is taking, or
23
proposes to take with respect thereto and (vi) promptly after a Responsible
Officer obtains knowledge of any legal, governmental or regulatory proceeding
that could have a material adverse effect on (A) the construction, operation,
maintenance, leasing, ownership, use, value or regulatory status of the Project,
(B) the ability of the Lessee to observe and perform its obligations under this
Lease, the Agreement for Lease, the Pledge Agreement, the Facility Support
Agreement, the Consent or the Project Contracts in a timely manner or the
ability of the Guarantor to perform its obligations under the Guaranty in a
timely manner, (C) the business, assets, properties, financial condition,
operations or prospects of the Lessee or the Guarantor or (D) the rights or
interests of the Lessor or Assignee under this Lease, the Agreement for Lease,
the Pledge Agreement, the Facility Support Agreement, the Consent or the Project
Contracts, a certificate of a Responsible Officer describing each such
proceeding and what action, if any, the Lessee has taken, is taking, or proposes
to take with respect thereto.
(d) Regulation. Neither the Lessor nor any Assignee nor any of their
respective Affiliates is or will be, solely by reason of (i) its entering into
this Lease, the Agreement for Lease or any other document contemplated hereby,
(ii) the acquisition, ownership, leasing or financing of the Project (or any
part thereof) or (iii) the operation of the Project (or any part thereof) in
accordance with and as contemplated by the Project Contracts and this Lease,
during the term of this Lease, the Agreement for Lease or the Power Purchase
Agreements, subject to regulation under any Legal Requirement (including any
Legal Requirement (A) under the 1935 Act, (B) imposed by any state or local
public utility commission or other similar regulatory body, authority or group,
or (C) under the Federal Power Act, as amended).
(e) Project Information. The Lessee shall furnish to the Lessor and
Assignee:
(i) all material written communications relating to any pending
or threatened investigations, claims or proceedings with respect to
any Governmental Action or proposing to amend, modify or affect any
Governmental Action then required to be in effect with respect to the
Project;
(ii) written notice of the occurrence of any event giving rise
(or that could reasonably be expected to give rise) to a claim under
any insurance policy maintained pursuant to the terms of this Lease in
an amount greater than $100,000 together with copies of any document
relating thereto (including copies of any such claim) in the
possession or control of the Lessee; and
(iii) promptly upon its execution, a copy of any replacement
Project Contract.
(f) Notice of Environmental Events:
(i) The Lessee shall promptly, but in any case within five (5)
Business Days of receiving actual or constructive notice thereof,
notify the Lessor and Assignee if, after the date of this Lease, (A)
any Environmental Matter has occurred involving the Project or any
part thereof (including, but not limited to, the presence, emission or
unpermitted Release of Contaminants or the violation of any applicable
Environmental Requirements) that could reasonably be expected to
result in penalties or other liabilities
24
in excess of $100,000, or (B) the Lessee has received notification
that it, the Project or any part thereof is the subject of a
proceeding that could reasonably be expected to result in any ordered
remediation or corrective action or other liability related to an
Environmental Matter, the cost of which liability is reasonably
expected to exceed $100,000 (each of (A) and (B) an "Environmental
Event").
(ii) Following the receipt of a notice pursuant to (i) above, the
Lessor and Assignee, in each case in their sole discretion, may
require the Lessee to cause to be conducted by a qualified
environmental consultant satisfactory in all respects to the Lessor
and Assignee, an environmental audit of the Project or related
operation on which the Lessor or Assignee may rely, the scope of which
audit shall be limited to confirming the magnitude and anticipated
cost of the liability resulting from the Environmental Event and to
provide a copy of such environmental consultant's report on its audit
to the Lessor and Assignee.
(iii) The Lessee shall immediately initiate, or cause to be
initiated at no cost to the Lessor or Assignee, such actions as may be
necessary to comply in all respects with all applicable Environmental
Requirements and to alleviate any significant risk to human health or
the environment if the same arises from a condition on or in respect
of the Project or any part thereof, whether existing prior to, on or
after the date of this Lease. Once the Lessee commences such actions,
the Lessee shall thereafter diligently and expeditiously proceed to
comply materially and in a timely manner with all Environmental
Requirements and to eliminate any significant risk to human health or
the environment and shall, at the request of the Lessor or Assignee
during the Initial Term or any Extended Term, give periodic progress
reports on its compliance efforts and actions.
(g) Environmental. The Lessee shall not use or dispose of any Contaminant
or allow any Contaminant to be brought onto or stored or used on or transported
or Released to or from the Project, other than in the ordinary course of
business and in compliance in all material respects with all applicable
Environmental Requirements.
SECTION 3. LEASE OF THE PROJECT.
(a) The date upon which the Lessee receives the Final Advance (as defined
in the Agreement for Lease) under the Agreement for Lease, shall be the
"Effective Date". From and after the Effective Date, and during the Initial Term
and any Extended Term and any Renewal Term, the Lessor does hereby lease the
Project (including a sublease of the Lessor's interest in the Premises) to the
Lessee and the Project and the rights and obligations of the Lessor and the
Lessee shall be governed by this Lease and not the Agreement for Lease, except
to the extent otherwise expressly provided in this Lease and the Agreement for
Lease. On the Effective Date, the Lessee shall be deemed to have certified that
all representations and warranties of the Lessee contained in this Lease are
true and correct in all material respects on and as of the Effective Date. As
provided in the Agreement for Lease, on the Effective Date, the Acquisition Cost
and the Adjusted Acquisition Cost shall be adjusted, if necessary, to reflect
(i) the Completion Amount advanced to the Lessee under the Agreement for Lease
and (ii) the Retention, if any.
25
(b) Up to six (6) months after the Final Advance (as defined in the
Agreement for Lease), the Lessee may request a Completion Advance under the
Agreement for Lease by delivering a Certificate of Increased Cost (as defined in
the Agreement for Lease) to the Lessor and otherwise complying with the terms of
Section 7 of the Agreement for Lease. On or before the fifth Business Day prior
to the date upon which the Lessee receives the Final Advance (as defined in the
Agreement for Lease), the Lessee shall designate the Completion Amount. After
such designation the aggregate amount of the Completion Advance shall not exceed
the Completion Amount. The provisions of paragraph (b) of subsection 2.3 and
Section 7 of the Agreement for Lease shall govern (i) the designation of the
Completion Amount, (ii) the making of the Completion Advance and (iii) any
adjustments to the Acquisition Cost and the Adjusted Acquisition Cost occasioned
thereby. At the time the Completion Advance is made, the Lessee shall be deemed
to have certified that all representations and warranties of the Lessee
contained in this Lease are true and correct in all material respects on and as
of such date.
SECTION 4. OPERATING LEASE.
(a) It is the intent of the Lessee and the Lessor that: (i) this Lease
constitutes an operating lease from the Lessor to the Lessee for purposes of the
Lessee's financial reporting, (ii) this Lease and other transactions
contemplated hereby preserve the ownership of the Project in the Lessee for
federal, state and local income tax and bankruptcy purposes, and (iii) this
Lease grants to the Lessor a Lien on the Project. The Lessee and the Lessor
agree that the Lessor shall be deemed to have a valid and binding security
interest in and Lien on the Project, free and clear of all Liens, other than
Permitted Liens, as security for the obligations of the Lessee under this Lease
and the Agreement for Lease (it being understood and agreed that the Lessee does
hereby xxxxx x Xxxx, and convey, transfer, assign, mortgage and warrant to the
Lessor and its successors, transferees and assigns, for the benefit of the
Lessor and its successors, transferees and assigns, on the Project and any
proceeds or products thereof, to have and hold the same as collateral security
for the payment and performance of the obligations of the Lessee under this
Lease and the Agreement for Lease).
(b) Specifically, without limiting the generality of paragraph (a) of this
Section 4, the Lessee and the Lessor intend and agree that in the event of any
insolvency or receivership proceedings or a petition under the United States
bankruptcy laws or any other applicable insolvency laws or statute of the United
States of America or any State thereof affecting the Lessee, the Lessor, any
Assignee or any collection actions relating thereto, the transactions evidenced
by the Agreement for Lease and this Lease shall be regarded as loans made by the
Lessor to the Lessee.
SECTION 5. ABSOLUTE OBLIGATION.
(a) The obligations of the Lessee to pay all amounts payable pursuant to
this Lease (including specifically and without limitation amounts payable under
Sections 7 and 11 hereof) shall be absolute and unconditional under any and all
circumstances of any character, and such amounts shall be paid without notice,
demand, defense, set-off, deduction or counterclaim and without abatement,
suspension, deferment, diminution or reduction of any kind whatsoever,
26
except as herein expressly otherwise provided. The obligation of the Lessee to
lease and pay Basic Rent, Additional Rent, and any other amounts due hereunder
(including, without limitation, the amounts required to be paid pursuant to
paragraph (e) of Section 7 hereof) for the Project accepted for lease pursuant
to this Lease is without any warranty or representation, express or implied, as
to any matter whatsoever on the part of the Lessor or any Assignee or any
Affiliate of either, or anyone acting on behalf of any of them.
THE LESSEE HAS SELECTED THE PROJECT ON THE BASIS OF ITS OWN JUDGMENT.
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN UPON A TRANSFER OF THE LESSOR'S
INTEREST IN THE PROJECT TO THE LESSEE OR A THIRD PARTY, NEITHER THE LESSOR NOR
ANY ASSIGNEE NOR ANY AFFILIATE OF EITHER, NOR ANYONE ACTING ON BEHALF OF ANY OF
THEM MAKES ANY REPRESENTATION OR WARRANTY OF ANY KIND WHATSOEVER, EXPRESS OR
IMPLIED, INCLUDING, WITHOUT LIMITATION, AS TO THE SAFETY, TITLE, CONDITION,
QUALITY, QUANTITY, FITNESS FOR USE, MERCHANTABILITY, CONFORMITY TO
SPECIFICATION, OR ANY OTHER CHARACTERISTIC, OF THE PROJECT, OR AS TO WHETHER THE
PROJECT OR THE OWNERSHIP, USE, OCCUPANCY OR POSSESSION THEREOF COMPLIES WITH ANY
LAWS, RULES, REGULATIONS OR REQUIREMENTS OF ANY KIND.
AS BETWEEN THE LESSEE AND THE LESSOR, ANY ASSIGNEE OR ANY INDEMNIFIED
PERSON, THE LESSEE ASSUMES ALL RISKS AND WAIVES ANY AND ALL DEFENSES, SET-OFFS,
DEDUCTIONS, COUNTERCLAIMS (OR OTHER RIGHTS), EXISTING OR FUTURE, AS TO THE
LESSEE'S OBLIGATION TO PAY BASIC RENT AND ALL OTHER AMOUNTS PAYABLE HEREUNDER,
INCLUDING, WITHOUT LIMITATION, ANY RELATING TO:
(A) THE SAFETY, TITLE, CONDITION, QUALITY, FITNESS FOR USE,
MERCHANTABILITY, CONFORMITY TO SPECIFICATION, OR ANY OTHER QUALITY OR
CHARACTERISTIC OF THE PROJECT, LATENT OR NOT;
(B) ANY SET-OFF, COUNTERCLAIM, RECOUPMENT, ABATEMENT, DEFENSE OR OTHER
RIGHT WHICH THE LESSEE MAY HAVE AGAINST THE LESSOR, ANY ASSIGNEE OR ANY
INDEMNIFIED PERSON FOR ANY REASON WHATSOEVER ARISING OUT OF THIS OR ANY OTHER
TRANSACTION OR MATTER;
(C) ANY DEFECT IN TITLE OR OWNERSHIP OF THE PROJECT OR ANY TITLE
ENCUMBRANCE NOW OR HEREAFTER EXISTING WITH RESPECT TO THE PROJECT;
(D) ANY FAILURE OR DELAY IN DELIVERY OR ANY LOSS, THEFT OR DESTRUCTION OF,
OR DAMAGE TO, THE PROJECT, IN WHOLE OR IN PART, OR CESSATION OF THE USE OR
POSSESSION OF THE PROJECT BY THE LESSEE FOR ANY REASON WHATSOEVER AND OF
WHATEVER DURATION, OR ANY CONDEMNATION, CONFISCATION, REQUISITION, SEIZURE,
PURCHASE, TAKING OR FORFEITURE OF THE PROJECT, IN WHOLE OR IN PART;
27
(E) ANY INABILITY OR ILLEGALITY WITH RESPECT TO THE USE, OWNERSHIP,
OCCUPANCY OR POSSESSION OF THE PROJECT BY THE LESSEE;
(F) ANY INSOLVENCY, BANKRUPTCY, REORGANIZATION OR SIMILAR PROCEEDING BY OR
AGAINST THE LESSEE OR THE LESSOR OR ANY ASSIGNEE;
(G) ANY FAILURE TO OBTAIN, OR EXPIRATION, SUSPENSION OR OTHER TERMINATION
OF, OR INTERRUPTION TO, ANY REQUIRED LICENSES, PERMITS, CONSENTS,
AUTHORIZATIONS, APPROVALS OR OTHER LEGAL REQUIREMENTS;
(H) THE INVALIDITY OR UNENFORCEABILITY OF THIS LEASE OR ANY OTHER INFIRMITY
HEREIN OR ANY LACK OF POWER OR AUTHORITY OF THE LESSOR OR THE LESSEE TO ENTER
INTO THIS CONTRACT;
(I) THE INVALIDITY OR UNENFORCEABILITY OF ANY XXXX OF SALE EXECUTED IN
CONNECTION WITH THIS LEASE OR ANY OTHER INFIRMITY THEREIN OR LACK OF POWER OR
AUTHORITY OF ANY PARTY THERETO TO ENTER INTO SUCH XXXX OF SALE; OR
(J) ANY OTHER CIRCUMSTANCES OR HAPPENING WHATSOEVER, WHETHER OR NOT SIMILAR
TO ANY OF THE FOREGOING.
THE LESSEE HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY
AND ALL RIGHTS WHICH IT MAY NOW HAVE OR WHICH AT ANY TIME HEREAFTER MAY BE
CONFERRED UPON IT, BY STATUTE OR OTHERWISE, TO TERMINATE, CANCEL, QUIT, RESCIND
OR SURRENDER THIS LEASE EXCEPT IN ACCORDANCE WITH THE EXPRESS TERMS HEREOF. Each
payment of Basic Rent, Additional Rent and any other amount due hereunder made
by the Lessee shall be final, and the Lessee, without waiving any other remedies
it may have, will not seek or have any right to recover all or any part of such
payment from the Lessor or any Assignee for any reason whatsoever.
(b) Notwithstanding any other provision contained in this Lease, it is
specifically understood and agreed that neither the Lessor nor any Assignee nor
any Affiliate of either, nor anyone acting on behalf of any of them makes any
warranties or representations or has any responsibility to disclose any relevant
information, nor, except as set forth in Section 21 of this Lease, has the
Lessor or any Assignee or any Affiliate of either, or anyone acting on behalf of
any of them made any covenants or undertakings or has any other responsibility
or duty, as to the accounting treatment to be accorded the Lessee or as to the
U.S. Federal or any state income or any other tax consequences, if any, to the
Lessee as a result of or by virtue of the transactions contemplated by this
Lease.
28
SECTION 6. INITIAL TERM; EXTENDED TERM.
(a) The "Initial Term" shall commence on the Effective Date and shall
continue until June 30, 2008, unless terminated earlier pursuant to Section 13,
14, 15, 16 or 19 hereof.
(b) The "First Extended Term" shall commence on the day following the last
day of the Initial Term and shall continue for up to sixty (60) months, unless
terminated earlier pursuant to Section 12, 13, 14, 15, 16 or 19 hereof. The
"Second Extended Term" shall commence on the day following the last day of the
First Extended Term and shall continue for up to sixty (60) months, unless
terminated earlier pursuant to Section 12, 13, 14, 15, 16 or 19 hereof. The
First Extended Term and the Second Extended Term shall be collectively referred
to herein as the "Extended Term".
SECTION 7. RENT AND OTHER PAYMENTS.
(a) The Lessee hereby agrees to pay the Lessor on each Basic Rent Payment
Date, in immediately available funds, as provided in paragraph (e) of this
Section 7, Basic Rent for the calendar month (or part thereof) in which such
Basic Rent Payment Date falls; provided that, if the Effective Date is on or
after the Lease Rate Date in any first partial monthly period of the Initial
Term, Basic Rent for such partial monthly period shall be payable on the next
succeeding Basic Rent Payment Date.
(b) The Lessor shall furnish to the Lessee on the 16th day of each calendar
month in which a Basic Rent Payment Date falls the Monthly Cost of Project Debt
for such monthly period, or, if such day is not a Business Day, on the next
succeeding Business Day (the "Lease Rate Date"). Prior to each Basic Rent
Payment Date, the Lessor shall furnish the Lessee with a summary of the
calculations of Basic Rent for such Basic Rent Payment Date.
(c) The Lessee hereby agrees to pay on demand all amounts (other than Basic
Rent) payable hereunder, including, without limitation, all amounts payable to
any Indemnified Person pursuant to Section 11 hereof.
(d) Without prejudice to the full exercise by the Lessor of its rights
under Sections 18 and 19 hereof, the Lessee shall pay to the Lessor from time to
time, on demand, as additional rent ("Additional Rent") (i) amounts required to
reimburse the Lessor for its obligations, costs and expenses (not previously
included in Basic Rent or Acquisition Cost) incurred in acquiring, financing
(including obtaining equity financing and refinancing (including without
limitation any amounts owing by the Lessor to its partners as a result of a sale
of limited partnership interests by a limited partner of the Lessor or a
modification of the terms of such equity financing) and maintaining security for
and exercising remedies in connection with any such financing) and leasing the
Project (including, without limitation, all obligations, costs and expenses of
the Lessor arising in connection with the termination of any Financing
Arrangement (whether as a result of a default thereunder or otherwise)), all
interest (including, without limitation, interest at a default rate), breakage
costs and other costs, fees and expenses incurred by the Lessor under any
Financing Arrangement (including any such accruing after the commencement of a
bankruptcy or similar proceeding), fees owing to the general partner of the
29
Lessor under the terms of the Lessor's partnership agreement, rent under the
Ground Lease and amounts owing under any Project Contracts and (ii) to the
extent legally enforceable, an amount computed by multiplying (A) all sums not
paid by the Lessee to the Lessor as provided in this Lease on or before the date
such payments are due, by (B) the decimal equivalent of the Monthly Cost of
Project Debt as most recently furnished by the Lessor, and by (C) a fraction
having a numerator equal to the number of days in the period from but excluding
such due date to and including the date of payment thereof and a denominator of
360. The Lessee shall also pay to the Lessor on demand an amount equal to any
expenses incurred by the Lessor in collecting such unpaid sums.
(e) Basic Rent and Additional Rent and any other amount payable by the
Lessee to the Lessor shall be paid such that immediately available funds in the
full amount due are available on the date due, to the account of the Lessor at
such bank, or to such account of such other Person at such bank, or otherwise as
the Lessor may from time to time designate.
(f) During the Lease Term the Lessor shall calculate, on each Lease Rate
Date (except the first Lease Rate Date hereunder), the difference, if any,
between (i) the Variable Component of Basic Rent paid by the Lessee for the
previous calendar month and (ii) an amount equal to what the Variable Component
of Basic Rent would have been for such calendar month had the Variable Component
of Basic Rent been calculated using the weighted average equivalent percentage
cost per annum of borrowings outstanding at any time (as specified in the
definition of Monthly Cost of Project Debt) and equity contributions made (as
specified in the definition of Monthly Cost of Project Equity) during the
previous calendar month (rather than during the applicable Computation Period);
provided, that with respect to the Variable Component of Basic Rent for the last
month of the Lease Term, such calculation shall occur on the last day of the
Lease Term. On or about August 16 of each year of the Lease Term, and on the
last day of the Lease Term, the Lessor shall furnish to the Lessee a calculation
of the aggregate difference between the amounts determined under clause (i)
above and the correlating amounts determined under clause (ii) above (the
"Reconciliation Amount") for each calendar month since the date of this Lease or
each calendar month since the last time the Reconciliation Amount was
calculated, whichever is later. The Lessor and the Lessee agree that if the
Reconciliation Amount is a positive number, then such amount shall be credited
against the amount of Basic Rent that the Lessee is required to pay on the next
Basic Rent Payment Date (or Basic Rent Payment Dates, if such amount shall
exceed the amount of Basic Rent payable in the next succeeding month), and if
the Reconciliation Amount is a negative number, then such amount shall be
payable by the Lessee on the next Basic Rent Payment Date in addition to the
amount of Basic Rent due and payable on such Basic Rent Payment Date, except
that with respect to the Reconciliation Amount computed on the last day of the
Lease Term, such amount shall be paid by the Lessor to the Lessee (in the case
of a positive number) or by the Lessee to the Lessor (in the case of a negative
number) on the last day of the Lease Term. Any notices required by this
paragraph (f) which are furnished to the Lessee by the Lessor shall be
conclusive, absent manifest error, as to the contents thereof.
30
SECTION 8. RESTRICTED USE; COMPLIANCE WITH LAWS.
(a) The Lessee will not do or permit any act or thing which might impair,
other than normal wear and tear arising out of the proper and normal use
thereof, the value or usefulness of the Project.
(b) The Lessee shall promptly and duly execute, deliver, file and record,
at the Lessee's expense, all such documents, statements, filings and
registrations, and take such further action, as the Lessor shall from time to
time reasonably request in order to establish, perfect and maintain the Lessor's
title to and interest in the Project (other than Removable Improvements) and any
Assignee's interest in this Lease or the Project as against the Lessee or any
third party in any applicable jurisdiction. Equipment, machinery, apparatus,
fixtures, structures and installations may be substituted for portions of the
Project (other than Removable Improvements) if (i) the Lessor and Assignee
consent to such substitution, such consent not to be unreasonably withheld or
denied, (ii) the Lessor and Assignee shall determine that such substitution is
consistent with prudent business practices and could not reasonably be expected
to adversely affect the Lessee's ability to perform its obligations under this
Lease, the Facility Support Agreement and the Project Contracts nor result in a
reduction in the value, utility or remaining economic useful life of the Project
(assuming the Project is in the condition required hereby), or (iii) such
substitution is performed by the Lessee or the Operator in the normal course of
operating and maintaining the Project in accordance with the Project Contracts
and is consistent with prudent industry practices. As equipment, machinery,
apparatus, fixtures, structures and installations are added to, or substituted
for, portions of the Project (other than Removable Improvements), title to such
additional or substitute equipment, machinery, apparatus, fixtures, structures
and installations shall automatically be transferred to the Lessor and such
equipment, machinery, apparatus, fixtures, structures and installations shall
become a part of the Project and shall be subject to this Lease and title to the
existing equipment, machinery, apparatus, fixtures, structures and installations
which are being substituted for (other than Removable Improvements) shall be
released by the Lessor to the Lessee. The Lessee may, so long as no Potential
Default, Event of Default, Event of Loss, Taking or Termination Event has
occurred and is continuing, remove any Removable Improvement in its entirety.
"Removable Improvement", for the purposes hereof, shall mean any part that (i)
is in addition to, and not in replacement of or substitution for (x) any part
originally incorporated or installed in or attached to the Project on the
Effective Date or (y) any part in replacement of, or substitution for, any such
part, (ii) is not required to be incorporated or installed in or attached or
added to the Project pursuant to the terms of the Plans (as defined in the
Agreement for Lease), the Project Contracts or this Lease and (iii) can be
removed from the Project without causing damage to the Project or any portion
thereof, without adversely affecting the ability of the Project to operate in
accordance with the Project Contracts, the Facility Support Agreement and this
Lease and without diminishing the value, utility or remaining economic useful
life which the Project would have had at such time had such alteration,
modification or addition not been made (assuming the Project is in the condition
required hereby). Upon the removal by the Lessee of any Removable Improvement as
provided in the immediately preceding two sentences, title thereto shall,
without further act, vest in the Lessee and such Removable Improvement will no
longer be deemed part of the Project. Any Removable Improvement not removed by
the Lessee prior to the return of the Project to the Lessor hereunder shall
remain the property of the Lessor.
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(c) The Lessee shall use every reasonable precaution to prevent loss or
damage to the Project and to prevent injury to third persons or property of
third persons. The Lessee shall cooperate fully with the Lessor and all
insurance companies providing insurance pursuant to Section 10 hereof in the
investigation and defense of any claims or suits arising from the ownership,
operation, occupancy or use of the Project; provided that nothing contained in
this paragraph (c) shall be construed as imposing on the Lessor any duty to
investigate or defend any such claims or suits. The Lessee shall comply and
shall cause all Persons using, operating or occupying the Project to comply with
the Project Contracts and with all Insurance Requirements and Legal Requirements
applicable to the Project, to the Lessee or such Person in connection with such
Person's use, operation or occupancy of the Project (as the case may be) and to
the acquiring, titling, registering, leasing, insuring, using, occupying,
operating and disposing of the Project or any part thereof, and the licensing of
operators thereof.
(d) The Lessor or any Assignee, or any authorized representative of either,
may during reasonable business hours from time to time inspect the Project and
deeds, registration certificates, certificates of title and related documents,
including as to Environmental Matters, covering the Project wherever the same
may be located, but neither the Lessor nor any Assignee shall have any duty to
make any such inspection.
(e) The Lessee shall not, without the prior written consent of the Lessor,
permit, or suffer to exist, any Lien upon the Project, including mechanics'
liens or create any Lien upon the Premises, other than Permitted Liens, nor may
it sell or assign any right or interest herein or in the Project. The Lessee
shall not relinquish possession of the Project or any part thereof, except to
the Operator, the General Contractor and to any other contractor for use in
performing work on the Project for the Lessee pursuant to and in accordance with
the Project Contracts; provided that such relinquishment of possession shall in
no way affect the obligations of the Lessee or the rights of the Lessor
hereunder and with respect to the Project. The Lessee may sublease the Project;
provided, that (i) the terms of the instrument of sublease and the identity of
the sublessee shall be subject to the prior written approval of the Lessor and
any Assignee, which approval shall not be unreasonably withheld or delayed, (ii)
each such sublease shall expressly be made subject and subordinate to the
provisions hereof and shall, at the sole option of the Lessor and Assignee, by
its terms be subject to termination upon the termination for any reason of this
Lease, (iii) no such sublease shall modify or limit any right or power of the
Lessor or Assignee hereunder or affect or reduce any obligation of the Lessee
hereunder, and all such obligations shall continue in full force and effect as
obligations of a principal and not of a guarantor or surety, as though no such
subletting had been made, and (iv) any such sublease made otherwise than as
expressly permitted by this paragraph (e) shall be void and of no force and
effect. As additional security to the Lessor for the performance of the Lessee's
obligations under this Lease, the Lessee hereby assigns to the Lessor and
Assignee all of its right, title and interest in and to all subleases permitted
hereby and agrees to cause any sublessee to enter into attornment agreements
with the Lessor as the Lessor or Assignee shall request. The Lessor shall have
the present and continuing right to collect and enjoy all rents and other sums
of money payable under any such sublease, and the Lessee hereby irrevocably
assigns such rents and other sums to the Lessor for the benefit and protection
of the Lessor; provided that, unless an Event of Default, Event of Loss, Taking
or Termination Event shall have occurred and be continuing hereunder, the Lessee
shall be entitled to collect and enjoy such rents and other sums. The Lessee
shall, within thirty (30) days after the execution of any such sublease, deliver
32
a conformed copy thereof to the Lessor and Assignee. Nothing contained in this
Lease shall be construed as constituting the consent or request of the Lessor or
Assignee, express or implied, to or for the performance by any contractor,
laborer, materialman or vendor of any labor or services or for the furnishing of
any materials for any construction, alteration, addition, repair or demolition
of or to the Project or any part thereof. Notice is hereby given that the Lessor
will not be liable for any labor, services or materials furnished or to be
furnished to the Lessee, or to anyone holding the Project or any part thereof
through or under the Lessee, and that no mechanics' or other liens for any such
labor, services or materials shall attach to or affect the interest of the
Lessor or Assignee in and to the Project.
(f) If any Lien or charge of any kind or any judgment, decree or order of
any court or other Governmental Authority (including, without limitation, any
state or local tax lien affecting the Project), whether or not valid, shall be
asserted or entered which might interfere with the due and timely payment of any
sum payable or the exercise of any of the rights or the performance of any of
the duties or responsibilities under this Lease, the Lessee shall, upon
obtaining knowledge thereof or upon receipt of notice to that effect from the
Lessor, promptly take such action as may be necessary to prevent or terminate
such interference.
(g) So long as this Lease is in effect or thereafter if the Lessee remains
as party to any Project Contract as a result of its failure to assign to the
Lessor (or its designated purchaser) all right, title and interest of the Lessee
in and to such Project Contract pursuant to the terms of this Lease, the Lessee
shall not create, incur, assume or permit to exist any Lien upon the Lessee's
rights or obligations with respect to any Project Contract (other than the Lien
of the Pledge Agreement), or sell or assign the Lessee's interest in any Project
Contract, other than as permitted pursuant to a Financing Arrangement and the
Pledge Agreement. The Lessee agrees that without the prior written consent of
the Lessor and Assignee, no amendment, modification, supplement or restatement
shall be made to any Project Contract, nor shall any Project Contract be
terminated or replaced by a substitute agreement, nor shall the Lessee grant or
request any waiver pursuant to any Project Contract other than (i) change orders
under the EPC Contract in the manner and to the extent permitted under the
Agreement for Lease, (ii) the expiration of the EPC Contract in accordance with
its terms, and (iii) any amendment, modification, supplement, restatement
consent or waiver which could not reasonably be expected to have a material
adverse effect on (A) the construction, operation, maintenance, leasing,
ownership, use, value or regulatory status of the Project, (B) the ability of
the Lessee to observe and perform its obligations under this Lease, the
Agreement for Lease, the Pledge Agreement, the Facility Support Agreement, the
Consent or the Project Contracts in a timely manner or the ability of the
Guarantor to perform its obligations under the Guaranty in a timely manner, (C)
the business, assets, properties, financial condition, operations or prospects
of the Lessee or the Guarantor, or (D) the rights or interests of the Lessor or
Assignee under this Lease, the Agreement for Lease, the Pledge Agreement, the
Facility Support Agreement, the Consent or the Project Contracts.
(h) The Project shall be maintained and operated solely as contemplated by
the Project Contracts. The Lessee shall at its own expense take all actions as
may from time to time be necessary so that neither the Lessor, Assignee nor any
of their Affiliates will, solely as a result of entering into this Lease or any
other document contemplated hereby or entered into in connection herewith or the
transactions contemplated hereby or thereby (including, without limitation, the
acquisition, operation, leasing, ownership or financing of the Project (or any
33
part thereof) or the delivery of electricity) be deemed to be, or be subject to
regulation as, a public utility, an electric utility or a public utility holding
company under any Legal Requirement, and the Lessee shall promptly and duly
prepare and, if necessary, execute and file, and prepare for execution and
filing by the Lessor, Assignee or any Affiliate thereof, such notices,
applications and other documents as shall be necessary so that the Lessor,
Assignee or any such Affiliate, as the case may be, shall be free of all such
regulation. The Lessor, Assignee or any Affiliate thereof shall cooperate with
the Lessee with respect to all actions of the Lessee required by this paragraph
(h).
SECTION 9. MAINTENANCE, IMPROVEMENT AND REPAIR OF THE PROJECT.
(a) Upon the request of the Lessee, the Lessor will, so long as no Event of
Default shall have occurred and be continuing, assign or otherwise make
available to the Lessee any and all rights the Lessor may have under any
vendor's or manufacturer's warranties or undertakings with respect to any
equipment constituting a part of the Project.
(b) The Lessee shall pay all costs, expenses, fees and charges incurred in
connection with the ownership, use, operation or occupancy of the Project.
Except as otherwise provided in Section 15, the Lessee shall at all times, at
its own expense, and subject to reasonable wear and tear, maintain or cause the
Operator to maintain the Project as contemplated by, and during the term of, the
Project Contracts, and upon the expiration of the Project Contracts to maintain
the Project in accordance with generally accepted industry practices. The Lessee
hereby agrees to indemnify and hold the Lessor and each Assignee harmless from
and against all costs, expenses, claims, losses, damages, fines or penalties,
including reasonable counsel fees, arising out of or due to the Lessee's failure
to fulfill its obligations under this paragraph (b).
(c) The Lessee shall pay or discharge: (i) all taxes, assessments, levies,
fees, water and sewer rents and charges, and all other governmental charges,
general and special, ordinary and extraordinary, foreseen and unforeseen, which
are, at any time, imposed or levied upon or assessed against (A) the Project,
(B) any Basic Rent, any Additional Rent or other sum payable hereunder or (C)
this Lease or the leasehold estate hereby created, or which arises in respect of
the ownership, operation, occupancy, possession or use of the Project; (ii) all
gross receipts or similar taxes (i.e., taxes based upon gross income which fail
to take into account all customary deductions (e.g., ordinary operating
expenses, depreciation and interest) relating to the Project) imposed or levied
upon, assessed against or measured by any Basic Rent, or any Additional Rent or
other sum payable hereunder; (iii) all sales, value added, use and similar taxes
at any time levied, assessed or payable on account of the acquisition, leasing
or use of the Project; and (iv) all charges of utilities and communications
services serving the Project. Notwithstanding the previous sentence, the Lessee
shall not be required to pay any estate, income or similar tax of the Lessor or
any of its Affiliates (other than any tax referred to in clause (ii) above)
unless such tax is imposed, levied or assessed in substitution for any other
tax, assessment, charge or levy which the Lessee is required to pay pursuant to
this paragraph (c); provided, however, that, if at any time during the term of
this Lease, the method of taxation shall be such that there shall be levied,
assessed or imposed on the Lessor a capital levy or other tax
34
directly on the rents received therefrom, or upon the value of the Project or
any present or any future improvement or improvements on the Project, then all
such taxes, assessments, levies or charges or the part thereof so measured or
based, shall be payable by the Lessee, and the Lessee shall pay and discharge
the same as herein provided; provided, further, that the provisions of this
paragraph (c) shall not apply to taxes which are excluded from the indemnity
provisions of paragraph (b) of Section 11 hereof. The Lessee will furnish to the
Lessor, promptly after demand therefor, proof of payment of all items referred
to above which are payable by the Lessee. If any such assessments may legally be
paid in installments, the Lessee may pay such assessment in installments. The
Lessee will pay and discharge, or cause to be paid and discharged, all taxes,
assessments and governmental charges or levies imposed upon it or its income or
properties, prior to the date on which penalties attach thereto, except to the
extent that any such tax, assessment, governmental charge or levy is the subject
of a Permitted Contest.
(d) So long as no Potential Default, Event of Default, Event of Loss,
Taking or Termination Event shall have occurred and be continuing, the Lessee
may, at its expense, make or permit additions to and alterations to the Project;
provided that the Lessee has obtained the prior approval of the Lessor and
Assignee that during construction and upon completion of such additions or
alterations (i) neither the fair market value of the Project shall be lessened
thereby nor the condition of the Project impaired, below the value, utility or
condition thereof immediately prior to such action (assuming the Project was
then of a condition and repair required to be maintained pursuant to paragraph
(b) of Section 9 hereof), (ii) such work shall be completed in a good and
workmanlike manner in accordance with generally accepted and prudent engineering
and construction practices and in compliance with all applicable Legal
Requirements and Insurance Requirements applicable to it and (iii) at all times
the Project will be capable of delivering electricity at or above the level of
its capability prior to the undertaking of such additions or alterations and
will continue to be able to fully perform under (without any default or excuse
to performance) all Project Contracts and this Lease.
(e) The Lessee agrees to, or to cause the Operator to, maintain at the
Project at all times the necessary equipment in such condition so as to enable
the Project to be operated and maintained in accordance with generally accepted
and prudent industry practices and any other standards required by the Project
Contracts and this Lease. The Lessee shall obtain or cause to be obtained in a
timely manner and maintain or cause to be maintained in full force and effect
all Governmental Actions required for the ownership, construction, leasing,
operation and maintenance of the Project in accordance with and as contemplated
by the Project Contracts and this Lease and as otherwise necessary to perform
its obligations under the Project Contracts and the Facility Support Agreement
and will promptly upon the request of the Lessor or Assignee provide a copy of
each such Governmental Action to the Lessor and Assignee. The Lessee shall
obtain and maintain, or cause to be obtained and maintained, all Intellectual
Property Rights necessary in connection with the construction, operation and
maintenance of the Project.
(f) The Lessee shall give notice to the Lessor promptly upon the receipt of
any notices from any party to any Project Contract that (i) such party is
amending, modifying or waiving or has proposed to amend, modify or waive any
term of any Project Contract, (ii) such party is commencing or proposes to
commence any dispute resolution procedure under the terms of any Project
Contract, (iii) such party is terminating or has proposed to terminate any
Project Contract, (iv) a default or a force majeure event has occurred under any
Project Contract or any
35
Person has alleged that a default or a force majeure event has occurred under
any Project Contract, or (v) there are claims for damages existing as a result
of the Lessee's performance of or its failure to perform any of its obligations
under any Project Contract.
SECTION 10. INSURANCE.
(a) Insurance pursuant to the Project Contracts. The Lessee shall maintain
or cause to be maintained in full force and effect at all times insurance
required by the terms of the Project Contracts.
(b) Insurance by the Lessee.
(i) The Lessee shall procure at its own cost and expense and maintain in
full force and effect at all times on and after the Effective Date (except with
respect to the physical damage described in clause (ii) below), and continuing
throughout the term of this Lease insurance policies with responsible insurance
companies authorized to do business in the State of Wyoming with a Best
Insurance Reports rating of "A" or better and a financial size category of "IX"
or higher, or if not rated by Best, an S&P claims paying ability rating of
"BBB+" or higher, or, if not rated by either of the foregoing, the Lessee's
insurance companies shall be of substantially equivalent financial strength and
creditworthiness of insurance companies that maintain such ratings (or such
other company acceptable to the Lessor and Assignee), with such deductibles as
are approved by the Lessor and Assignee, and with such limits and coverage as is
consistent with prudent industry practices, but in no event less than the limits
and coverage provisions set forth below:
(1) Workers' Compensation Insurance. Workers' compensation insurance
in accordance with and as required under the laws of the State of
Wyoming.
(2) Employer's Liability Insurance. Employer's liability insurance
providing compensation for occupational diseases and for injuries
sustained by or death resulting to employees of the Lessee or its
subcontractors as required by law, including the laws of each
state wherein any work is performed under the Lease and where
employment contracts of such employees were made, including
employer's liability insurance coverage with a $1,000,000 minimum
limit per accident.
(3) Commercial General Liability Insurance. Liability insurance on an
occurrence (or AEGIS or EIM claims-made form) basis against
claims for personal injury (including bodily injury and death)
and property damage. Such insurance shall provide coverage for
products-completed operations, blanket contractual, explosion,
collapse and underground coverage, broad form property damage,
personal injury insurance, and the hostile fire exception to the
pollution liability exclusion with a $1,000,000 minimum limit per
occurrence for combined bodily injury and property damage.
36
(4) Automobile Liability Insurance. Automobile liability insurance
against claims for personal injury (including bodily injury and
death) and property damage covering all owned, leased non-owned
and hired motor vehicles, including loading and unloading, with a
$1,000,000 minimum limit per occurrence for combined bodily
injury and property damage and containing appropriate no-fault
insurance provisions wherever applicable.
(5) Excess Liability Insurance. Excess liability insurance on an
occurrence (or AEGIS or EIM claims-made form) basis covering
claims in excess of the underlying insurance described in the
foregoing subsections (2), (3) and (4), with a $100,000,000
minimum limit per occurrence; provided, however, in the event the
available limit of liability is less than $50,000,000 due to
claims against such excess liability insurance, the Lessee shall
purchase additional coverage so that the available limit of
liability under such excess liability insurance is not less than
$100,000,000.
The amounts of insurance required in the foregoing subsections (2), (3),
(4) and this subsection (5) may be satisfied by the Lessee purchasing coverage
in the amounts specified or by any combination of primary and excess insurance,
so long as the total amount of insurance meets the requirements specified above.
(ii) The Lessee shall procure at its own cost and expense and maintain in
full force and effect at all times on and after the Effective Date and
continuing throughout the term of this Lease insurance policies with responsible
insurance companies authorized to do business in the State of Wyoming with a
Best Insurance Reports rating of "A" or better and a financial size category of
"IX" or higher, or if not rated by Best, an S&P's claims paying ability rating
of "BBB+" or higher, or, if not rated by either of the foregoing, the Lessee's
insurance companies shall be of substantially equivalent financial strength and
creditworthiness of insurance companies that maintain such ratings (or such
other company acceptable to the Lessor and Assignee), with such limits and
coverage provisions sufficient to satisfy the requirements set forth in each of
the Project Contracts, but in no event less than the limits and coverage
provisions set forth below:
All Risk Property Insurance. Property damage insurance on an "all
risk" basis, boiler and machinery insurance on a comprehensive
basis (covering all production machinery, including but not
limited to pressure vessels, electrical turbines, generators,
transformers and other related equipment, motors, air tanks,
boilers, machinery, pressure piping or any other similar objects)
including coverage against damage or loss caused by earth
movement (including but not limited to earthquake, landslide,
subsidence and volcanic eruption) fire, lightning and flood and
providing coverage for (1) the Project in a minimum aggregate
amount equal to the "full insurable value" of the Project, but in
no event less than the Adjusted Acquisition Cost of the Project,
(2) transit including ocean marine transit, if applicable, with
sub-limits of $5,000,000, (3) gas, steam and electrical
transmission lines along with related equipment for which the
Lessee has an insurable
37
interest, (4) foundations and other property below the surface of
the ground and (5) attorneys' fees, engineering and other
consulting costs, and permit fees directly incurred in order to
repair or replace damaged insured property in a minimum amount of
$1,000,000. For purposes of this Section 10(b)(ii), "full
insurable value" shall mean the full replacement value of the
Project, including any improvements, equipment, spare parts, fuel
and supplies, without deduction for physical depreciation and/or
obsolescence. All such insurance may have deductibles of not
greater than $250,000 per occurrence. Such insurance shall (1)
not include any coinsurance provision, (2) provide for increased
cost of construction and loss to undamaged property as the result
of enforcement of building laws or ordinances, and (3) include
debris removal with sub-limits not less than $1,000,000. The
earth movement coverage may be insured with a sub-limit not less
than $100,000,000, and the flood coverage may be insured with a
sub-limit not less than $50,000,000. The property damage coverage
shall not contain an exclusion for freezing, mechanical
breakdown, loss or damage covered under any guaranty or warranty,
or resultant damage caused by faulty workmanship, design or
materials.
If the insurance company providing the physical damage insurance
is different from the insurance company providing the boiler &
machinery insurance required in this Section 10, then a joint
loss agreement between such companies will be required and
included as part of the respective policies.
Environmental Impairment Liability Insurance. Environmental
impairment liability insurance for third party damages and
injuries arising from a sudden and accidental occurrence, in an
amount not less than $10,000,000 per occurrence.
(iii) Endorsements. All policies of insurance required by this Section 10
shall provide for waivers of subrogation by the insurers in favor of the Lessor,
Xxxxxxx, Xxxxxxx Xxxxx, Xxxxxxx Leasing, the general partner of the Lessor and
its shareholders, officers and directors, the limited partners of the Lessor and
Assignee and their respective officers, directors, members, trustees and
employees (and such other Persons as may be required by the Project Contracts).
All policies of liability insurance required to be maintained by the Lessee
under paragraphs (b)(i)(3), (4) and (5) of this Section 10 shall be endorsed as
follows:
(1) To provide a severability of interest or cross liability clause;
(2) Such that the insurance shall be primary and not excess to or
contributing with any insurance or self-insurance maintained by
the Lessor, Xxxxxxx, Xxxxxxx Xxxxx, Xxxxxxx Leasing, the general
partner of the Lessor and its shareholders, officers and
directors, the limited partners of the Lessor or Assignee;
38
(3) To name Xxxxxxx, Xxxxxxx Xxxxx, Xxxxxxx Leasing, the general
partner of the Lessor and its shareholders, officers and
directors, the limited partners of the Lessor and Assignee and
their respective officers, directors, members, trustees and
employees (and such other Persons as may be required by the
Project Contracts) as additional insureds; and
(4) To name the Lessor and its respective officers and employees as a
named insured or an additional insured, as the Lessor may
require.
All policies of insurance required to be maintained by the Lessee under
paragraph (b)(ii) of this Section 10 shall name the Lessor as a named insured
and name Xxxxxxx, Xxxxxxx Xxxxx, Xxxxxxx Leasing, the general partner of the
Lessor and its shareholders, officers and directors, the limited partners of the
Lessor and Assignee and its respective officers and employees (and such other
Persons as may be required by the Project Contracts) as additional insureds.
(iv) Waiver of Subrogation. The Lessee hereby waives any and all claims for
recovery from the Lessor, Xxxxxxx, Xxxxxxx Xxxxx, Xxxxxxx Leasing, the general
partner of the Lessor and its shareholders, officers and directors, the limited
partners of the Lessor and Assignee and their respective officers, directors,
members, trustees and employees for any and all loss or damage covered by any of
the insurance policies to be maintained under this Lease to the extent that such
loss or damage is recovered under any such policy. Inasmuch as the foregoing
waiver will preclude the assignment of any such claim to the extent of such
recovery, by subrogation (or otherwise), to an insurance company (or other
Person), the Lessee shall give written notice of the terms of such waiver to
each insurance company which has issued, or which may issue in the future, any
such policy of insurance (if such notice is required by the insurance policy)
and shall cause each such insurance policy to be properly endorsed by the issuer
thereof, or to otherwise contain one or more provisions that prevent the
invalidation of the insurance coverage provided thereunder by reason of such
waiver.
(c) Additional Requirements.
(i) The Lessee shall promptly notify the Lessor and Assignee of any loss in
excess of $100,000 covered by any insurance maintained pursuant to paragraph
(b)(ii) of this Section 10.
(ii) All policies of insurance required to be maintained pursuant to
paragraph (b)(ii) of this Section 10 shall provide that Assignee shall be the
sole loss payee thereunder and that the proceeds of such policies shall be
payable solely to the Operating Account pursuant to a standard first mortgage
endorsement substantially equivalent to the Lenders Loss Payable Endorsement
438BFU or ISO endorsement CP12181091, without contribution. The Lessor and
Assignee shall have the right to join the Lessee in adjusting any loss in excess
of $100,000. All policies (other than in respect to liability or workers
compensation insurance) shall insure the interests of the Lessor, Xxxxxxx,
Xxxxxxx Xxxxx, Xxxxxxx Leasing, the general partner of the Lessor, the limited
partners of the Lessor and Assignee regardless of any breach or violation by the
Lessee or Lessor of any warranties,
39
declarations or conditions contained in such policies, any action or inaction of
the Lessee or the Lessor or others, or any foreclosure relating to the Project
or any change in ownership of all or any portion of the Project.
(iii) A loss under any insurance required to be carried under paragraph
(b)(ii) of this Section 10 shall be adjusted with the insurance companies,
including the filing in a timely manner of appropriate proceedings by the
Lessee, subject to the approval of the Lessor and Assignee if such loss is in
excess of $100,000. In addition the Lessee may in its reasonable judgment
consent to the settlement of any loss; provided that, in the event that the
amount of the loss exceeds $100,000, the terms of such settlement shall be
consented to by the Lessor and Assignee.
(iv) All policies of insurance required to be maintained pursuant to
paragraph (b) of this Section 10 shall be endorsed so that if at any time they
should be canceled, or coverage shall be reduced in a manner which affects the
interests of the Lessor, Xxxxxxx, Xxxxxxx Xxxxx, Xxxxxxx Leasing, the general
partner of the Lessor, the limited partners of the Lessor or Assignee, such
cancellation or reductions shall not be effective as to the Lessor, Xxxxxxx,
Xxxxxxx Xxxxx, Xxxxxxx Leasing, the general partner of the Lessor, officers and
directors, the limited partners of the Lessor and Assignee for 60 days (except
for non-payment of any premium, which shall be for 10 days), after receipt by
the Lessor and Assignee of written notice from such insurer of such cancellation
or reduction.
(v) All policies of insurance required to be maintained pursuant to
paragraph (b)(ii) of this Section 10 shall not include any annual or term
aggregate limits of liability or clause requiring the payment of additional
premium to reinstate the limits after loss except as regards the insurance
applicable to the perils of flood, earth movement, sabotage and terrorism.
(vi) The Lessee may, at its own cost and expense, prosecute any claim
against any insurer or contest any settlement proposed by any insurer, and the
Lessee may bring any such prosecution or contest in the name of the Lessor, the
Lessee, or both, and the Lessor will join therein at the Lessee's request,
provided that the Lessee shall indemnify the Lessor against any losses, costs or
expenses (including reasonable attorney's fees) which the Lessor may incur in
connection with such prosecution or contest.
(d) Evidence of Insurance. On the date of this Lease and on an annual basis
at least 10 days prior to each policy anniversary, the Lessee shall furnish the
Lessor and Assignee with (1) a certificate or other evidence reasonably
acceptable to the Lessor and Assignee that all insurance required under this
Section 10 is in force with respect to the Project and (2) a schedule of the
insurance policies held by or for the benefit of the Lessee and required to be
in force by the provisions of paragraph (b) of this Section 10. Each certificate
shall be executed by each insurer or by an authorized representative of each
insurer where it is not practical for such insurer to execute the certificate
itself. Upon request, the Lessee will promptly furnish the Lessor and Assignee
with copies of all insurance policies, binders and cover notes or other evidence
of such insurance relating to the insurance required to be maintained by the
Lessee.
40
(e) Reports. Upon the request of the Lessor, concurrently with the
furnishing of the certificate referred to in paragraph (d) above, the Lessee
shall furnish the Lessor and Assignee with a letter, signed by an officer of the
Lessee or one of its Affiliates or a member of the risk management group of the
Lessee or one of its Affiliates, stating that in the opinion of such officer or
member, the insurance then carried or to be renewed is in accordance with the
terms of paragraph (b) of this Section 10 and attaching an updated copy of the
schedule of insurance required by paragraph (d) above. In addition, the Lessee
will advise the Lessor and Assignee in writing promptly of any default in the
payment of any premium and of any other act or omission on the part of the
Lessee which may invalidate or render unenforceable, in whole or in part, any
insurance being maintained by the Lessee pursuant to paragraph (b) of this
Section 10.
(f) Failure to Maintain Insurance. In the event the Lessee fails to
maintain the full insurance coverage required by paragraph (b) of this Section
10, the Lessor or Assignee, upon 30 days' prior notice (unless the
aforementioned insurance would lapse within such period, in which event notice
should be given as soon as reasonably possible) to the Lessee of any such
failure, may (but shall not be obligated to) take out the required policies of
insurance and pay the premiums on the same.
(g) No Duty of the Lessor or Assignee to Verify or Review. No provision of
this Section 10, or any provision of this Lease or any Project Contract, shall
impose on the Lessor or Assignee any duty or obligation to verify the existence
or adequacy of the insurance coverage maintained by the Lessee, nor shall the
Lessor or Assignee be responsible for any representations or warranties made by
or on behalf of the Lessee to any insurance company or underwriter. Any failure
on the part of the Lessor or Assignee to pursue or obtain the evidence of
insurance required by this Lease from the Lessee and/or failure of the Lessor or
Assignee to point out any non-compliance of such evidence of insurance shall not
constitute a waiver of any of the insurance requirements in this Lease.
(h) Application of Insurance and Other Proceeds for and Event of Loss and
Certain Takings. It is agreed that (i) any insurance payments received as the
result of the occurrence of any Event of Loss, and (ii) any amounts received in
connection with any event of Taking described in paragraph (a) of Section 16
hereof, shall be paid to the Operating Account and disposed of as set forth in
paragraph (c) of Section 15 hereof.
(i) Application of Insurance and Other Proceeds for Other than Loss or
Taking. The insurance proceeds of any property damage loss to the Project not
constituting an Event of Loss, or any amounts received in connection with any
event of Taking described in paragraph (b) of Section 16 hereof will be held in
the Operating Account and applied in payment (or to reimburse the Lessee) for
repairs or replacement in accordance with the terms of paragraph (b) of Section
15 hereof or paragraph (b) of Section 16 hereof. The Lessee shall be entitled,
subject to its compliance with the immediately succeeding sentence, (i) to
receive the amounts so deposited against certificates, invoices or bills
reasonably satisfactory to the Lessor, delivered to the Lessor from time to time
as such work or repair progresses, and (ii) to direct the investment of the
amounts so deposited as provided in paragraph (j) of this Section 10. To the
extent that the Lessor reasonably estimates that the cost of such work or repair
shall exceed the amount of proceeds, the Lessee shall make adequate provisions
for the payment thereof, which provisions
41
shall be reasonably acceptable to the Lessor and Assignee (as to the terms of
the commitment and the creditworthiness of the funding party). Any moneys
remaining in the aforesaid account after final payment for repairs has been made
shall be used by the Lessor to reduce the Adjusted Acquisition Cost by such
amount. Thereupon, the Lessor shall adjust the Adjusted Acquisition Cost to
reflect such reduction.
(j) Investment. The Lessor, at the Lessee's instruction, shall invest the
amounts deposited with the Lessor pursuant to paragraph (i) of this Section 10
in any investments permitted under a Financing Arrangement. Such investments
shall mature in such amounts and on such dates so as to provide that amounts
shall be available on the draw dates sufficient to pay the amounts requested by
and due to the Lessee. Any interest earned on investments of such funds shall be
paid to the Lessee. The Lessor shall not be liable for any loss resulting from
the liquidation of each and every such investment and the Lessee shall bear the
risk of such loss, if any.
(k) Application. Any amount referred to in paragraphs (c)(ii), (i) or (j)
of this Section 10 which is payable to the Lessee shall not be paid to the
Lessee or, if it has been previously paid to the Lessee, shall not be retained
by the Lessee, if at the time of such payment any Potential Default, Event of
Default, Event of Loss, Taking or Termination Event shall have occurred and be
continuing. In such event, all such amounts shall be paid to and held by the
Lessor as security for the obligations of the Lessee hereunder or, at the
Lessor's option, applied by the Lessor toward payment of any of such obligations
of the Lessee at the time due hereunder as the Lessor may elect. At such time as
there shall not be continuing any Potential Default, Event of Default, Event of
Loss or Taking, all such amounts at the time held by the Lessor in excess of the
amount, if any, which the Lessor shall have elected to apply as above provided
shall be paid to the Lessee.
(l) "Claims Made" Policies for Certain Types of Insurance. If any liability
insurance required under the provisions of this Section 10 is allowed to be
written on a "claims made" basis, then such insurance shall include the
following:
(i) The retroactive date (as such term is specified in each of
such policies) shall be no later than the date of this
Lease; and
(ii) each time any policy written on a "claims made" basis is not
renewed or the retroactive date of such policy is to be
changed, the Lessee shall obtain or cause to be obtained for
each such policy or policies the broadest extended reporting
period coverage, or "tail" reasonably available in the
commercial insurance market for each such policy or
policies, as determined in the reasonable judgment of the
Lessor and Assignee, but in no event less than two years
after the expiration of such policy or policies.
(m) Use or Operation of the Project. The Lessee covenants that it will not
use, occupy or operate the Project or permit the use, occupancy or operation of
the Project at a time when the insurance required by this Section 10 is not in
force.
42
SECTION 11. INDEMNITIES.
(a) The Lessee shall indemnify, protect, defend and hold harmless the
Lessor, each general and limited partner of the Lessor, Xxxxxxx, Xxxxxxx Xxxxx,
Xxxxxxx Leasing, each Assignee, and their respective assigns and successors, and
each Affiliate of each of them, and their respective officers, directors,
trustees, incorporators, shareholders, members, partners (general and limited),
employees, agents and servants (each of the foregoing an "Indemnified Person")
from and against any and all liabilities (including, without limitation,
Environmental Damages and strict liability in tort), taxes, losses, obligations,
claims, damages, penalties, causes of action, suits, costs and expenses
(including, without limitation, attorneys', experts', consultants' and
accountants' fees and expenses) or judgments of any nature relating to or in any
way arising out of:
(i) the purchasing, ordering, delivery, acquisition, construction, title on
acquisition, rejection, installation, possession, titling, retitling,
registration, re-registration, custody by the Lessee of title and registration
documents, ownership, leasehold or easement interest in the Premises, lease,
sublease, lease or easement interests under the Ground Lease, use, non-use,
misuse, financing (including, without limitation, all obligations of the Lessor
under or in respect of any Financing Arrangement), operation, transportation,
repair or control of the Project or any part thereof, and any accident, injury,
death or property damage on or about the Project, the Project Contracts, or any
other event, act or omission arising from or relating to the execution,
performance, termination or enforcement of this Lease or any other Operative
Document or the transactions contemplated therein, (A) except to the extent that
such costs are included in the Acquisition Cost or Adjusted Acquisition Cost of
the Project or have been paid by the Lessee as Basic Rent or Additional Rent,
(B) except for any general administrative expenses of the Lessor, (C) except the
income taxes with respect to which indemnification is excluded under paragraph
(b) of this Section 11 and (D) except that this indemnity shall not increase any
payment required to be made by the Lessee pursuant to paragraph (b)(iii)(A) or
(c)(iii)(A) of Section 12 of this Lease;
(ii) the assertion of any claim or demand based upon any infringement or
alleged infringement of any patent or other right, by or in respect of the
Project or any part thereof; provided, however, that, upon request of the
Lessee, the Lessor will make available to the Lessee the Lessor's rights under
any similar indemnification arising from any manufacturer's or vendor's
warranties or undertakings with respect to any equipment constituting a part of
the Project;
(iii) any violation, or alleged violation, by the Lessee of this Lease, the
Project Contracts, any Operative Document or of any contracts or agreements to
which the Lessee is a party or by which it is bound or of any laws, rules,
regulations, orders, writs, injunctions, decrees, consents, approvals,
exemptions, authorizations, licenses and withholdings of objection, of any
governmental or public body or authority and all other Legal Requirements
applicable to the Project;
(iv) any breach of a representation, warranty or covenant made herein, in
the Agreement for Lease or in the Guaranty or which is contained in any
certificate,
43
document or financial or other statement furnished by or on behalf of the Lessee
or the Guarantor under or in connection with this Lease, the Agreement for Lease
or the Guaranty;
(v) any default by the Lessee in the performance or observance of any term,
covenant, condition or obligation contained in this Lease or any failure by the
Lessee to comply with the Ground Lease, the Easements, the Facility Support
Agreement, any Project Contract or any other Operative Document;
(vi) any and all Environmental Damages relating to or in any way arising
out of the Project, including, without limitation:
(A) the violation or alleged violation of or compliance or
non-compliance with any Environmental Requirements (i) in connection with
the ownership or operation of the Project, and (ii) by any prior owner or
operator of the Premises in connection with the ownership or operation of
the Premises;
(B) the Release or threatened Release at, to or from any location of
any Contaminants, or Remedial Action or corrective action (as the latter
term is used in Section 3004(u), 3004(v), and 3008(h) of the Resource
Conservation and Recovery Act or any equivalent state, local or foreign
law) to address any Contaminants, (i) generated, treated, recycled, stored,
processed, used or disposed by or on behalf of the Lessee at or in
connection with the Project, (ii) generated, treated, recycled, stored,
processed, used or disposed by or on behalf of any prior owner or operator
of the Premises in connection with the ownership or operation of the
Premises, (iii) transported by or on behalf of the Lessee or any other
Person to or from the Project for treatment, recycling, processing, use or
disposal at any location, or (iv) removed by any Person from any portion of
the Project; and
(C) the presence or alleged presence of any Contaminant at, in, on or
under the Project;
(D) the failure to report, disclose or remediate any of the foregoing
or to comply with any applicable consent order or voluntary agreement with
any Governmental Authority; and
(E) any allegations of any of the foregoing; and
(vii) the Project Contracts and the Operative Documents.
(b) The Lessee agrees to indemnify, protect, defend and hold harmless each
Indemnified Person from and against all U.S. Federal, state, county, municipal,
foreign or other fees and taxes of whatsoever nature, including, but not limited
to, license, qualification, franchise, rental, withholding, sales, use, net
income, gross income, gross receipts, ad valorem, business, personal property,
real estate, value added, excise, motor vehicle, occupation fees and stamp or
other taxes or tolls of any nature whatsoever, and penalties and interest
thereon, whether assessed, levied against or payable by the Lessor or any
Indemnified Person, with respect to the Project or the acquisition, purchase,
sale, rental, use, operation, control or
44
ownership of the Project (including, without limitation, any claim by any
Governmental Authority for transfer tax, transfer gains tax, mortgage recording
tax, filing or other similar taxes or fees in connection with the acquisition of
the Project by the Lessor or otherwise in connection with this Lease) or
measured in any way by the value thereof or by the business of, investment in,
or ownership by the Lessor with respect thereto; provided that this indemnity
shall not apply to (x) Federal, state or local taxes that are based upon or
measured by net income or taxes in lieu of net income taxes (including taxes
based on capital gains and minimum taxes) imposed directly upon any of the
limited or general partners of Wygen Funding, Limited Partnership, or upon Wygen
Funding, Limited Partnership itself, except that such indemnity shall apply to
(1) such net income taxes imposed by a state or local government or other taxing
authority thereof (A) as a result of the location or use of the Project within
the jurisdiction of such government or taxing authority or (B) to the extent
imposed in whole or in part by reason of a relationship or asserted relationship
between such government or other taxing authority and the Project or the
transactions contemplated herein, and (2) such net income taxes to the extent
imposed as a result of the inability to claim, or disallowance or other loss of
deductions customarily allowed in computing net income relating directly or
indirectly to the Project (e.g., interest expense, financing, administrative,
ordinary operating expenses and other fees and expenses); (y) any taxes imposed
upon an Indemnified Person with respect to any voluntary transfer, sale,
financing or other voluntary disposition of any interest in the Project or any
part thereof, or any interest therein or any interest under this Lease (other
than any transfer, sale or other disposition (i) pursuant to the terms of this
Lease, (ii) after the occurrence of an Event of Default, or (iii) in connection
with an Event of Loss); and (z) taxes imposed on an assignee to the extent that
any such taxes exceed the taxes that would have been imposed had no such
assignment taken place, determined under the law as in effect on the date of
such assignment; provided, that this exclusion shall not apply to an assignee
that acquires the interest of an Indemnified Person pursuant to an assignment
during the continuance of an Event of Default.
(c) Subject to paragraph (a) of Section 27 hereof, the Lessee shall
forthwith upon demand, reimburse any Indemnified Person for any sum or sums
expended with respect to any of the foregoing or, upon request from any
Indemnified Person, shall pay such amounts directly. Any payment made to, or on
behalf of, any Indemnified Person pursuant to this Section 11 shall be increased
to such amount as will, after taking into account all taxes imposed with respect
to the accrual or receipt of such payment (as the same may be increased pursuant
to this sentence), equal the amount of the payment, reduced by the amount of any
savings in such taxes actually realized by the Indemnified Person as a result of
the payment or accrual of the amounts in respect of which the payment to or on
behalf of the Indemnified Person hereunder is made. To the extent that the
Lessee in fact indemnifies any Indemnified Person under the indemnity provisions
of this Lease, the Lessee shall be subrogated to such Indemnified Person's
rights in the affected transaction and shall have a right to determine the
settlement of such indemnified claims therein.
(d) The indemnities contained in this Section 11 shall not be affected by
any termination or expiration of this Lease.
(e) Notwithstanding any provisions of this Section 11 to the contrary, the
Lessee shall not indemnify and hold harmless any Indemnified Person against any
claims and
45
liabilities to the extent arising solely from the gross negligence or
willful misconduct of such Indemnified Person.
(f) In the event the Lessor or any Indemnified Person shall be a party
defendant to any litigation arising out of any provision contained in this Lease
for which the Lessee has given indemnification, the Lessor or such other
Indemnified Person shall give prompt notice thereof to the Lessee by telephone
and in writing and shall consult and cooperate, at the Lessee's expenses with
the Lessee, and if the Lessor shall not have appeared or pleaded to any such
action then the Lessor does hereby empower any attorney of any court of record
appointed by the Lessee (who shall give prompt written notice to the Lessor of
such appointment) to appear for the Lessor and in good faith and with due
diligence defend such action, to enter counterclaims, to institute actions
against third parties and to do all things necessary or desirable in the
judgment of such attorney after consultation with the Lessor and the Lessee to
preserve the rights of the Lessor and the Lessee, all at the Lessee's own cost
and expense. No failure or delay of the Lessor to give the notice required by
this Section 11 shall excuse the obligation of the Lessee to indemnify the
Lessor with respect to such litigation except to the extent that any increase in
liability is a direct result of such failure or delay.
(g) The Lessee or its agent shall withhold any taxes required to be
withheld on any payment to or on behalf of the Lessor as a result of such
Indemnified Person not being a United States person within the meaning of
Section 7701 of the Code. The amount payable to the Lessor shall be reduced by
the amount of any such withholding taxes required to be withheld by the Lessee
pursuant to the preceding sentence and the Lessee shall have no liability or
obligation to any Indemnified Person with respect to such withholding taxes,
except to the extent that such withholding taxes arise as the result of a change
in Legal Requirements in which case the Lessee and the Guarantor shall be
responsible for, and shall indemnify and hold harmless any Indemnified Person
(without duplication of any indemnification required in paragraph (b) of this
Section 11) against, any claims regarding such withholding taxes made against
the Lessor to the extent, but only to the extent, the Lessor and its agent has
actually paid funds to a taxing authority with respect to such withholding taxes
or receives a demand for such payments from any taxing authority. In the event
there is a change in Legal Requirements and a withholding tax is otherwise
indemnifiable under paragraph (b) of this Section 11, any payments made after
the change in Legal Requirements hereunder to the Lessor shall be increased to
the amount necessary so that the amount received by the Lessor equals the amount
that would have been received if no withholding tax were payable. If an
Indemnified Person is permitted under Legal Requirements to file or complete a
form, certificate or other document that would entitle such Indemnified Person
to an exemption from or reduction in a withholding tax indemnified hereunder,
the Lessee shall provide such form, certificate or other document to such
Indemnified Person on a timely basis, and each such Indemnified Person hereby
covenants to execute and deliver to the Lessee any such form, certificate or
other document in such manner as shall entitle such Indemnified Person to enjoy
such exemption or reduction to the fullest extent permitted under Legal
Requirements with respect to each payment hereunder unless such Indemnified
Person reasonably determines in its sole discretion that providing such form,
certificate or other document will adversely affect it. In accepting and
carrying out its duties with respect to withholding taxes pursuant to this
paragraph (g), the Lessor shall act as the duly authorized agent of the Lessee
under the withholding provisions of Chapter 3 of the Code. The Lessee shall file
notice of such appointment with the Director of Foreign Operations District of
the Internal
46
Revenue Service in accordance with Treas. Reg. Section 1.1441-7(b). Such agency
shall terminate in the event that Legal Requirements are amended so as to
release the Lessee of the obligation to withhold taxes with respect to payments
made by the Lessee under this Lease and in any event upon termination or
expiration of this Lease. For purposes of this paragraph (g), it shall be
assumed that this Lease constitutes a loan for United States federal income tax
purposes (as is the parties' intention).
SECTION 12. LESSEE'S RIGHT TO TERMINATE.
(a) So long as the Lessee can satisfy the Termination Conditions, the
Lessee shall have the right, upon eighteen (18) months' notice to the Lessor
(the "Termination Notice"), to terminate the lease of the Project as a whole (i)
on the last day of the Initial Term or (ii) on the last day of any Extended Term
or Renewal Term (either of such dates as identified in the Termination Notice
being hereinafter called the "Termination Date"), by arranging, at its own cost
and expense, for the sale of the Project in an arm's-length transaction on the
Termination Date and the receipt by the Lessor of cash in an amount equal to the
sale price of the Project (the "Cash Proceeds"). In the event the Lessee has
given a Termination Notice pursuant to this paragraph (a) and has failed to
arrange for the sale of the Project in an arm's-length transaction on the last
day of the Initial Term pursuant to paragraph (b) of this Section 12, or on the
last day of any Extended Term or Renewal Term pursuant to paragraph (c) of this
Section 12, the Cash Proceeds shall be deemed to be $1.
In the event the Lessee is unable to satisfy the Termination Conditions on
the Termination Date, the Lessee shall not terminate this Lease pursuant to this
paragraph (a), and the Lessee shall purchase the Project as provided in
paragraph (e) of Section 13 hereof, unless the Lessee has obtained the prior
written consent of the Lessor and Assignee to such termination of this Lease and
the sale of the Project. In addition, if the Lessee has given a Termination
Notice and an Event of Default occurs, the Termination Notice shall be
invalidated and the Lessee shall no longer have the right to cause the
termination of the lease of the Project and sale of the Project to its designee
in accordance with the terms of this paragraph (a). At the time the Project is
sold pursuant to this Section 12, the Lessor shall deliver the documents
described in paragraph (h) of Section 29 hereof, and the Lessor's rights and
obligations in respect of the Ground Lease, the Easements, the EPC Contract and
any other Project Contract to which the Lessor is a party, shall be assumed by
the purchaser, with the Lessor released from liability in respect thereof. In
addition, (i) the Lessee shall assign (or if not legally assignable, cooperate
and assist to the extent necessary or required in the transfer or reissuance
thereof) to the purchaser, at no cost, all right, title and interest of the
Lessee in, to and under all Governmental Actions and Intellectual Property
Rights needed for the equipping, maintenance, operation or use of the Project
and obtained and held by the Lessee at that time, (ii) the Lessee shall assign
to the purchaser, at no cost, and the purchaser shall assume, all right, title
and interest of the Lessee in, to and under the Project Contracts, and in the
event any additional consent of any party to a Project Contract is required as a
precondition thereunder to an assignment to any such non-foreclosure purchaser
designated by the Lessee, to use its best efforts to obtain any such required
consent to such proposed non-foreclosure assignment and assumption of the
Project Contracts, (iii) the Lessee shall assign to the purchaser, at no cost,
all right, title and interest of the Lessee in, to and under all service
agreements in existence at that time in connection with the equipping,
47
maintenance, operation or use of the Project, and (iv) as a condition to such
sale, the purchaser shall be entitled to succeed to the Lessor's rights and
obligations under the Facility Support Agreement. In the event the Lessee fails
to obtain any consents required in clause (ii) of the immediately preceding
sentence, at the request of such purchaser, the Lessee shall agree to (1) at the
expense of such purchaser, continue to perform under and maintain in full force
and effect the Project Contracts and pay all sums received under the Project
Contracts to such purchaser, (2) at the expense of such purchaser, and subject
to the receipt of indemnification reasonably acceptable to the Lessee, take all
actions requested by such purchaser with respect to such Project Contracts
(including all actions with respect to the enforcement of the Lessee's rights
and remedies under such Project Contracts), and (3) not amend, modify,
supplement, waive a provision of, grant any consent under or terminate any such
Project Contract without the prior written consent of such purchaser.
(b) In the event the Lessee exercises its right to terminate the lease of
the Project pursuant to this Section 12 on the last day of the Initial Term, or
in the event a termination of the lease of the Project occurs pursuant to
paragraph (a) of Section 14 hereof on or before the last day of the Initial Term
and the Lessee chooses to effect a sale pursuant to this Section 12:
(i) if the Cash Proceeds (or deemed proceeds) are greater than
the Adjusted Acquisition Cost, the Lessor shall pay to the
Lessee the amount by which such Cash Proceeds exceed the
Adjusted Acquisition Cost;
(ii) if the Cash Proceeds (or deemed proceeds) are equal to the
Adjusted Acquisition Cost, no additional payments shall be
required under this clause (ii); and
(iii)if the Cash Proceeds (or deemed proceeds) are less than the
Adjusted Acquisition Cost (the difference being the "Section
12(b) Shortfall"), the Lessee shall pay to the Lessor an
amount equal to the sum of (A) the lesser of (1) the Section
12(b) Shortfall and (2) 83.5% of the Adjusted Acquisition
Cost plus (B) the amount by which the residual value of the
Project has been reduced by wear and tear in excess of that
attributable to normal and proper use (the amount of such
excess wear and tear to be such amount as the Lessor and the
Lessee agree, or if no agreement is reached, the amount
determined pursuant to the Appraisal Procedure).
(c) In the event the Lessee exercises its right to terminate the lease of
the Project pursuant to this Section 12 on the last day of any Extended Term or
any Renewal Term, or in the event a termination of the lease of the Project
occurs pursuant to paragraph (a) of Section 14 hereof, or in the event the
Lessee exercises its option under paragraph (e) of Section 13 to arrange for the
Project to be sold (or if a sale shall be deemed to occur pursuant to such
Section 13(e)), and the date on which such termination occurs is during any
Extended Term or any Renewal Term and the Lessee chooses to effect a sale
pursuant to this Section 12:
48
(i) if the Cash Proceeds (or deemed proceeds) are greater than
the Adjusted Acquisition Cost, the Lessor shall pay to the
Lessee the amount by which such Cash Proceeds exceed the
Adjusted Acquisition Cost;
(ii) if the Cash Proceeds (or deemed proceeds) are equal to the
Adjusted Acquisition Cost, no additional payments shall be
required under this clause (ii); and
(iii)if the Cash Proceeds (or deemed proceeds) are less than the
Adjusted Acquisition Cost (the difference being the "Section
12(c) Shortfall"), the Lessee shall pay to the Lessor an
amount equal to the sum of (A) the lesser of (1) the Section
12(c) Shortfall and (2) 83.5% of the Adjusted Acquisition
Cost plus (B) the amount by which the residual value of the
Project has been reduced by wear and tear in excess of that
attributable to normal and proper use (the amount of such
excess wear and tear to be such amount as the Lessor and the
Lessee agree, or if no agreement is reached, the amount
determined pursuant to the Appraisal Procedure.
(d) All payments and credits referred to in paragraphs (b) and (c) above
shall be made on the Termination Date of the Project pursuant to this Section
12, and the parties shall account to each other for such payments and credits,
and the Lessee shall pay to the Lessor (i) all Basic Rent payable through the
date of termination of this Lease, (ii) the Variable Component of Basic Rent
accrued through the date of termination of this Lease, (iii) any Additional Rent
owing, (iv) all amounts payable pursuant to Sections 11, 24 and 26 hereof, (v)
all losses, damages, costs and expenses (including, without limitation,
attorneys' fees and expenses, commissions, filing fees and sales or transfer
taxes) sustained by the Lessor by reason of such sale, and (vi) all other
amounts owing hereunder (after taking into account the application under the
Financing Arrangements of such purchase price and other payments hereunder),
each as of the Termination Date. Upon indefeasible receipt by the Lessor of the
Cash Proceeds and all other amounts then due and owing hereunder, including,
without limitation, the amount of excess wear and tear determined pursuant to
paragraph (b)(iii) or (c)(iii) of Section 12, as the case may be, the Lessor
shall transfer its interest in the Project to the purchaser at the sale
designated by the Lessee. The "Cash Proceeds" referred to in paragraphs (b) and
(c) of this Section 12 shall mean the cash proceeds (or deemed proceeds) of sale
without reduction for any amounts paid by the Lessee. In the event of a sale
pursuant to this Section 12, neither the Lessee nor any Affiliate of the Lessee
shall purchase the Project.
(e) In its Termination Notice given pursuant to paragraph (a) of this
Section 12, the Lessee shall advise the Lessor if the sale provided for in such
Termination Notice will result in Cash Proceeds (or deemed proceeds) of less
than 16.5% of the Adjusted Acquisition Cost (in the case of paragraph (b)(iii)
above) or 16.5% of the Adjusted Acquisition Cost (in the case of paragraph
(c)(iii) above). If such Termination Notice does not indicate such sale will
result in cash proceeds of less than 16.5% of Adjusted Acquisition Cost, then
the Lessee may not thereafter arrange for a sale which will result in the
application of clause (A)(2) of paragraph (b)(iii) or (c)(iii) of Section 12
hereof. If the Lessee advises the Lessor that such Cash Proceeds will be
applicable, the Lessor shall have the right to arrange for a sale of the Project
to be made to a purchaser designated by the Lessor, if such purchaser will pay
an amount greater than the
49
amount offered by the Lessee's purchaser. Unless the Lessor shall arrange for
such sale and shall give the Lessee notice thereof within one hundred eighty
(180) days of the Lessor's receipt of the Termination Notice, the Lessee may
proceed with the sale to a purchaser designated by it. Within thirty (30) days
of the Lessee's receipt of the Lessor's notice provided for in the preceding
sentence, the Lessee may arrange for such sale to be made to another purchaser
designated by it, if such purchaser shall pay an amount equal to or greater than
16.5% of the Adjusted Acquisition Cost (in the case of paragraph (b)(iii) above)
or 16.5% of the Adjusted Acquisition Cost (in the case of paragraph (c)(iii)
above).
SECTION 13. LESSEE'S RIGHTS OF PURCHASE AND RENEWAL
(a) The Lessee shall have the right, upon ninety (90) days' written notice
to the Lessor, to purchase the Project as a whole on any Basic Rent Payment Date
for an amount equal to its Adjusted Acquisition Cost; provided, however, that,
if an Event of Default has occurred and is continuing, and, prior to the
purchase by the Lessee pursuant to this paragraph (a), the Lessor arranges for
the sale of the Project to a third party purchaser, the Lessee shall no longer
have the right to purchase the Project in accordance with the terms of this
paragraph (a). In connection with, and as a condition to, any purchase under
this Section 13, on the Basic Rent Payment Date upon which such purchase occurs,
the Lessee shall pay to the Lessor (i) the purchase price, (ii) all Basic Rent
payable through the date of purchase, (iii) the Variable Component of Basic Rent
accrued through the date of purchase, (iv) any Additional Rent owing, (v) all
amounts payable pursuant to Sections 11, 24 and 26 hereof, (vi) all Unrecovered
Liabilities and Judgments, (vii) all losses, damages, costs and expenses
(including, without limitation, attorneys' fees and expenses, commissions,
filing fees and sales or transfer taxes) sustained by the Lessor by reason of
such purchase, and (viii) all other amounts owing hereunder (after taking into
account the application under the Financing Arrangements of such purchase price
and other payments hereunder). At the time the Project is sold pursuant to this
paragraph (a), the Lessor shall deliver the documents described in paragraph (h)
of Section 29 hereof, and the Lessor's rights and obligations in respect of the
Ground Lease, the Easements, the EPC Contract and any other Project Contract
shall be assumed by the Lessee, with the Lessor released from liability in
respect of each thereof.
(b) Upon the occurrence of an Event of Default and upon the written request
of the Lessee, which shall be received no later than fifteen (15) Business Days
subsequent to receipt of notice from the Lessor or any Assignee pursuant to this
Lease that an Event of Default has occurred, the Lessee shall have the right,
not later than thirty (30) Business Days after the Lessor's receipt of such
request, to purchase the Project as a whole at a price equal to its then
Adjusted Acquisition Cost; provided that the purchase option contained in this
paragraph shall only be available to the Lessee if (i) in the reasonable
judgment of the Lessor and any Assignee, the purchase price and all other
amounts paid by the Lessee will not in the circumstances in which such payment
is made constitute a preferential payment or a voidable transfer or otherwise be
subject to recapture pursuant to the provisions of the Federal Bankruptcy Code
in a bankruptcy proceeding by or against the Lessee and will not otherwise
result in the payment being subject to recapture from the Lessor or (ii) the
Guarantor has provided a guaranty of the payment of such purchase price and all
other amounts required to be paid by the Lessee under this paragraph (b) in the
event payment of such amounts is recovered as such a preferential
50
payment or a voidable transfer, which guaranty shall be in form and substance
reasonably satisfactory to the Lessor and any Assignee. In connection with, and
as a condition to, the purchase of the Project pursuant hereto, (i) the Lessee
shall pay at the time of purchase, in addition to the purchase price, (A) all
Basic Rent owing through the date of termination, (B) the Variable Component of
Basic Rent accrued through the date of termination of this Lease, (C) any
Additional Rent owing, (D) all amounts payable pursuant to Sections 11, 24 and
26 hereof, (E) all Unrecovered Liabilities and Judgments, (F) all losses,
damages, costs and expenses (including, without limitation, attorneys' fees and
expenses, commissions, filing fees and sales or transfer taxes), sustained by
the Lessor by reason of such purchase, and (G) all other amounts owing by the
Lessee hereunder as of the date of termination, and (ii) when the Lessor
transfers title, such transfer shall be on an as-is, non-installment sale basis,
without warranty by, or recourse to, the Lessor. At the time the Project is sold
pursuant to this paragraph (b), the Lessor shall deliver the documents described
in paragraph (h) of Section 29 hereof, and the Lessor's rights and obligations
in respect of the Ground Lease, the Easements, the EPC Contract and any other
Project Contract shall be assumed by the Lessee, with the Lessor released from
liability in respect of each thereof.
(c) Subject to the provisions of paragraph (a) of Section 14 of this Lease,
so long as (i) no Event of Default, Event of Loss, Taking or Termination Event
has occurred and is continuing and (ii) all amounts owing under any Financing
Arrangements and all Equity Capital have been indefeasibly paid in full (after
taking into account the application under the Financing Arrangements of all
payments hereunder), the Lessee shall have the right, upon twelve (12) months'
written notice to the Lessor (the "Renewal Notice"), to renew the lease of the
Project for an additional term (the "Renewal Term") to be determined by the
Lessee, commencing on the first day of the calendar month following the last day
of the Second Extended Term, on the same terms and conditions (including,
without limitation, being subject to all rights and remedies of the Lessor and
any Assignee relating to Events of Default and Events of Loss) as existed during
the Lease Term, at the fair market value rental.
(d) The fair market value rental of the Project for purposes of paragraph
(c) of this Section 13 shall be an amount agreed to by the Lessor and the Lessee
or, if they are unable to agree, an amount determined pursuant to the Appraisal
Procedure.
(e) In the event the Lessee does not deliver the Renewal Notice in
accordance with the provisions of paragraph (c) of this Section 13, the Lessee
shall be required to select one of the following two options: (i) to purchase,
on the last day of the Lease Term or the Renewal Term, as the case may be, the
Lessor's interest in the Project for cash at its Adjusted Acquisition Cost, in
accordance with the provisions of paragraph (a) of this Section 13 (including
the payment of all amounts described in such paragraph (a)); or (ii) if the
Lessee has provided the Termination Notice to the Lessor in accordance with the
provisions of paragraph (a) of Section 12 hereof, to arrange for the Project to
be sold in accordance with the provisions of Section 12 hereof and with the
consequences therein provided (including, without limitation, receipt by the
Lessor of the Cash Proceeds and all other amounts described in such Section 12),
except that such sale must occur on the last day of such Lease Term or the
Renewal Term, as the case may be; provided, however, that if (A) the Lessee has
provided the Termination Notice to the Lessor in a timely manner and has
complied with all of the other terms and conditions of Section 12, (B) the
Project is not sold pursuant to Section 12 hereof on the last day of the Lease
Term or the
51
Renewal Term, as the case may be and (C) the Lessee does not purchase the
Project pursuant to clause (i) above on the last day of the Lease Term or the
Renewal Term, as the case may be, then a sale of the Lessee's interest in the
Project to the Lessor pursuant to Section 12 shall be deemed to occur, the Cash
Proceeds shall be deemed to be $1, and the provisions of Section 12 and the
eighth paragraph of Section 19 hereof shall be applicable.
SECTION 14. LESSOR'S RIGHT TO TERMINATE.
(a) The Lessor shall have the right, upon written notice to the Lessee, to
terminate the lease of the Project as a whole as of a date stipulated in such
notice, if (i) for any reason (other than an Event of Default by the Lessor
under a Financing Arrangement (as therein defined)) the Lessor does not arrange
for financing to finance or refinance the Project upon terms reasonably
acceptable to the Lessor, and the Lessor may no longer continue its financing
under a Financing Arrangement sufficient to finance or refinance the Project or
(ii) any of the following events (each a "Termination Event") shall occur during
the term of this Lease: (A) solely as a result of this Lease, the Agreement for
Lease, a Financing Arrangement, the Project Contracts and the transactions
contemplated hereby or thereby, the Lessor becomes (or with the passage of time
would become), or is declared by any Governmental Authority to be a
"public-utility company" as defined in the 1935 Act, or the Lessor, Xxxxxxx,
Xxxxxxx Leasing, Xxxxxxx Xxxxx, any Assignee, any Affiliate of the foregoing or
their respective officers, directors, members, trustees, shareholders, partners
(general and limited, including, without limitation, the general and limited
partners of the Lessor) or employees shall become subject to regulation under
the 1935 Act; (B) solely as a result of this Lease, the Agreement for Lease, a
Financing Arrangement, the Project Contracts and the transactions contemplated
hereby or thereby, the Lessor becomes (or with the passage of time would
become), or is declared by the Secretary of Energy (or any successor thereto) or
the FERC to be, a public utility, an electric utility or a utility holding
company subject to regulation under the Federal Power Act, as amended, or the
Lessor, Xxxxxxx, Xxxxxxx Leasing, Xxxxxxx Xxxxx, any Assignee, any Affiliate of
the foregoing or their respective officers, directors, shareholders, partners
(general and limited, including, without limitation, the general and limited
partners of the Lessor) or employees shall become subject to regulation by the
FERC; (C) solely as a result of this Lease, the Agreement for Lease, a Financing
Arrangement, the Project Contracts and the transactions contemplated hereby or
thereby, the Lessor becomes (or with the passage of time would become), or is
declared by any relevant Governmental Authority under the laws of any state or
locality to be, subject to regulation as a public utility, an electric utility
or a utility holding company or the Lessor, Xxxxxxx, Xxxxxxx Leasing, Xxxxxxx
Xxxxx, any Assignee, any Affiliate of the foregoing or their respective
officers, directors, shareholders, partners (general and limited, including,
without limitation, the general and limited partners of the Lessor) or employees
shall become subject to regulation as a public utility, an electric utility or a
utility holding company under any such laws; or (D) any law or regulation or
interpretation of any law or regulation shall be adopted or enforced by any
Governmental Authority (including, without limitation, the Secretary of Energy,
the FERC, the public service commission of any state or any similar commission
of any locality and the Securities and Exchange Commission), and as a result of
such adoption or enforcement, approval of this Lease, the Agreement for Lease, a
Financing Arrangement, the Facility Support Agreement, any Project Contract or
the transactions contemplated thereby shall be required and shall not have been
obtained within any grace period after such adoption or enforcement, or as a
result of which adoption or enforcement this Lease,
52
the Agreement for Lease, a Financing Arrangement, the Facility Support
Agreement, any Project Contract or the transactions contemplated thereby,
including any payments to be made by or to the Lessee or the ownership of the
Project by the Lessor, shall be or become unlawful or unenforceable or the
performance of this Lease, the Agreement for Lease, a Financing Arrangement, the
Facility Support Agreement, any Project Contract or the transactions
contemplated thereby shall be rendered impracticable in any material way.
Promptly upon learning of any action or event, the effect of which results in
any Termination Event, the Lessee shall notify the Lessor of such action or
event.
(b) In the event of a termination with respect to the Project pursuant to
paragraph (a) of this Section 14, the Lessee shall be required, at its option,
either (i) to arrange for the Project to be sold in accordance with the terms of
Section 12 above and with the consequences therein provided, except that if such
sale does not occur on or before the date stipulated in the written notice
contemplated in paragraph (a) of this Section 14 (which date shall be at least
ninety (90) days after the date such notice is given) and the Lessee does not
purchase the Project pursuant to clause (ii) below on the date stipulated in
such notice, then a sale of the Lessee's interest in the Project to the Lessor
pursuant to Section 12 shall be deemed to occur, the Cash Proceeds shall be
deemed to be $1, and the provisions of Section 12 and the eighth paragraph of
Section 19 hereof shall be applicable, or (ii) to purchase, on the date
stipulated in the written notice contemplated by paragraph (a) of this Section
14, the Project for cash at its Adjusted Acquisition Cost. In connection with,
and as a condition to, any purchase under this paragraph, on the date upon which
such purchase occurs, the Lessee shall pay to the Lessor, in addition to any
purchase price payable, all other amounts owing hereunder as of the date of such
purchase including, without limitation, (i) all Basic Rent payable and the
Variable Component of Basic Rent accrued through the date of purchase, (ii) any
Additional Rent owing, (iii) all amounts payable pursuant to Sections 11, 24 and
26 hereof, (iv) all losses, damages, costs and expenses (including, without
limitation, attorneys' fees and expenses, commissions, filing fees and sales or
transfer taxes) sustained by the Lessor by reason of such purchase, (v) all
Unrecovered Liabilities and Judgments and (vi) all other amounts owing hereunder
(after taking into account the application under the Financing Arrangements of
such purchase price and other payments hereunder). At the time the Project is
sold pursuant to this paragraph (b), the Lessor shall deliver the documents
described in paragraph (h) of Section 29 hereof, and the Lessor's rights and
obligations in respect of the Ground Lease, the Easements, the EPC Contract and
any other Project Contract shall be assumed by the purchaser, with the Lessor
released from liability in respect thereof.
SECTION 15. LOSS OF OR DAMAGE TO THE PROJECT.
(a) The Lessee hereby assumes all risk of loss of or damage to the Project,
however caused. No loss of, or damage to, the Project shall impair any
obligation of the Lessee under this Lease, which shall continue in full force
and effect regardless of such loss or damage. The foregoing shall not be
construed as requiring the Lessee to repair the Project when it is not otherwise
required to do so under paragraph (b) of this Section 15.
(b) In the event of damage of any kind whatsoever to the Project, (i) the
Lessee shall promptly notify the Lessor and Assignee in writing of such event,
and (ii) the
53
Lessee (unless the same is reasonably determined by the Lessor and Assignee to
be an Event of Loss), at its own cost and expense, shall place the same in good
operating order, repair, condition and appearance. The Lessee's right to any
proceeds paid under any insurance policy or policies required under Section 10
of this Lease with respect to any such damage to the Project which has been so
placed by the Lessee in good operating order, repair, condition and appearance
is governed by paragraph (i) of Section 10 hereof.
(c) If (A) an Event of Loss shall occur, or (B) a Taking as described in
paragraph (a) of Section 16 shall occur, then in any such event, (i) the Lessee
shall promptly notify the Lessor and Assignee in writing of such event, (ii)
within one hundred eighty (180) days of such event the Lessee shall pay to the
Lessor an amount equal to the Adjusted Acquisition Cost and all other amounts
described in this paragraph (c) and (iii) the Lease Term or Renewal Term shall
continue until the Lessor receives payment from the Lessee of the amount payable
pursuant to this paragraph (c) including, without limitation, (1) all Basic Rent
payable and the Variable Component of Basic Rent accrued through the date of
purchase, (2) any Additional Rent owing, (3) all Unrecovered Liabilities and
Judgments and all amounts payable pursuant to Sections 24 and 26 hereof, (4) all
losses, damages, costs and expenses (including, without limitation, attorneys'
fees and expenses, commissions, filing fees and sales or transfer taxes)
sustained by the Lessor by reason of such event and (5) all other amounts owing
hereunder after taking into account the application under the Financing
Arrangements of such payments hereunder, and shall thereupon terminate. Upon the
indefeasible payment by the Lessee of all amounts referred to in the immediately
preceding sentence, (i) all insurance and condemnation proceeds (net of all
collection costs and all Unrecovered Liabilities and Judgments), shall be paid
by the Lessor to the Lessee, (ii) the Lessee shall be subrogated to the Lessor's
rights resulting from the events described in clauses (A) and (B) above, and
(iii) upon payment by the Lessee to the Lessor of all Unrecovered Liabilities
and Judgments not satisfied from insurance and condemnation proceeds, the Lessor
shall convey title to the Project pursuant to the documents described in
paragraph (h) of Section 29 hereof, including, without limitation, the Lessor's
interest in the Easements, the Ground Lease and the EPC Contract, to the Lessee,
free and clear of the Lien pursuant to any Financing Arrangement.
SECTION 16. CONDEMNATION AND DEDICATION OF THE PROJECT; EASEMENTS.
(a) If the use, occupancy or title to all or a substantial portion of the
Project is subject to a Taking, then the Lessee shall make the payment provided
in, and the Lease Term or Renewal Term shall terminate as provided in, paragraph
(c) of Section 15 hereof. The portion of the proceeds from any award or sale
made in connection with such Taking attributable to the Lessor's interest in the
Project shall be deposited in the Operating Account and, upon the indefeasible
payment by the Lessee of all amounts referred to in respect of clause (B) of
paragraph (c) of Section 15 hereof, such amount shall be paid to the Lessee. A
Taking shall be deemed to affect a "substantial portion" of the Project if, in
the reasonable judgment of the Lessor and Assignee, after such Taking, (i) the
Lessee is not able to fully perform its obligations under the Project Contracts
or this Lease, or (ii) a material diminution in the value, utility or remaining
economic useful life of the Project will occur, or (iii) the Project cannot be
restored by the expiry of the existing Lease Term.
54
(b) If less than a substantial portion of the Project is subject to a
Taking, then this Lease shall continue in effect as to the portion of the
Project not taken and any net proceeds, so long as (i) no Potential Default,
Event of Default, Event of Loss or Termination Event has occurred and is
continuing, and (ii) the Lessor and Assignee shall determine that restoration of
the Project is consistent with prudent business practices and that sufficient
funds are available to complete such restoration, shall be deposited in the
Operating Account and made available to the Lessee for the restoration of the
Project in accordance with paragraph (i) of Section 10 hereof; provided that, if
either of the conditions set forth in clauses (i) or (ii) above are not
satisfied, then the net proceeds held in the Operating Account shall be paid to
the Lessor and if and to the extent that such proceeds are not applied to (or
paid to the Lessee in reimbursement for) the restoration of the Project, the
Adjusted Acquisition Cost shall be reduced by the Lessor by the amount of such
proceeds. Thereupon, the Lessor shall adjust the Adjusted Acquisition Cost to
reflect such reduction.
SECTION 17. SURRENDER OF THE PROJECT.
(a) Subject to the provisions of Sections 12, 13, 14, 15 or 19 hereof, upon
termination of the lease of the Project under this Lease, the Lessee shall
surrender the Project to the Lessor, and the Lessee's rights and obligations in
respect of all Project Contracts shall be assumed by the Lessor, with the Lessee
released from liability in respect thereof. The Project shall be surrendered in
the condition required by paragraph (b) of Section 9.
(b) Upon the surrender of the Project, to the extent possessed by the
Lessee, the Lessee shall deliver to the Lessor or its designee all logs,
manuals, inspection data, books and records or copies thereof and other
information, which are necessary to operate the Project and which are in
accordance with sound industry practice customarily retained (or that the Lessee
actually did retain) or are required by law to be retained with respect to
similar property and equipment, including, without limitation, all software and
manuals applicable to the Project and all design plans, know-how, records and
information used by the Lessee or the Operator during the prior 12 months of
operation of the Project.
SECTION 18. EVENTS OF DEFAULT.
Any of the following events of default shall constitute an "Event of
Default" and shall give rise to the rights on the part of the Lessor described
in Section 19 hereof:
(a) Failure of the Lessee to pay amounts due to the Lessor at the time of
any scheduled sale or deemed sale of the Project hereunder, or under paragraph
(c) of Section 15 hereof, or failure of the Lessee to pay Basic Rent for more
than five (5) days after such payment is due pursuant to Section 7 hereof or
failure of the Lessee to pay any other amount payable by the Lessee hereunder
for more than ten (10) days after such payment is due (or if no due date is
specified, ten (10) days after demand therefor); or
(b) Failure to maintain the insurance required by Section 10 hereof, or
default in the performance of the covenants contained in paragraphs (ii)(a),
(ii)(b), (ii)(c), or (ii)(f) of
55
Xxxxxxx 0, xxxxxxxxx (x) xx Xxxxxxx 0, xxxxxxxxx (x) of Xxxxxxx 00, Xxxxxxx 00
xx xxxxxxxxx (x) of Section 29; or
(c) The Lessee shall default in the performance or observance of any other
term, covenant, condition or obligation contained in this Lease and, in the case
of such default, such default shall continue for thirty (30) days after the
earlier of the date (i) the Lessee becomes aware of such default or (ii) written
notice shall have been given to the Lessee by the Lessor specifying such default
and requiring such default to be remedied; or
(d) One or more of the events referred to in the Ground Lease shall occur
which would cause the Ground Lease to terminate without notice or action by the
landlord thereunder or which would entitle the landlord under the Ground Lease
to terminate the Ground Lease and the term thereof by the giving of notice to
the Lessor without opportunity to cure, as tenant thereunder, or if the Ground
Lease shall be terminated or canceled for any reason or under any circumstance
whatsoever; or
(e) The occurrence of any event or circumstance relating to Environmental
Matters with respect to the Project that could reasonably be expected to have a
material adverse effect on (i) the construction, operation, maintenance,
leasing, ownership, use, value or regulatory status of the Project, (ii) the
ability of the Lessee to observe and perform its obligations under this Lease,
the Agreement for Lease, the Pledge Agreement, the Facility Support Agreement,
the Consent or the Project Contracts in a timely manner or the ability of the
Guarantor to perform its obligations under the Guaranty in a timely manner,
(iii) the business, assets, properties, financial condition, operations or
prospects of the Lessee or the Guarantor, or (iv) the rights or interests of the
Lessor or Assignee under this Lease, the Agreement for Lease, the Pledge
Agreement, the Facility Support Agreement, the Consent or the Project Contracts;
or
(f) Any representation or warranty made by the Lessee herein or in any
Consent or which is contained in any certificate, document or financial or other
statement furnished under or in connection with this Lease shall prove to have
been false, misleading or inaccurate in any material respect on or as of the
date made or deemed made; or
(g) (i) The Pledge Agreement ceases to be in full force and effect, (ii)
the Lessee defaults in the performance of any obligation or covenant contained
in the Pledge Agreement, any required notice of such default shall have been
given, and any applicable grace period shall have expired, or (iii) the
representation contained in the second or third sentence of paragraph (i)(r) of
Section 2 shall at any time become untrue; or
(h) (i) If the Lessee shall receive notice from a party to any Project
Contract alleging or asserting that such party has (or after the passage of any
applicable grace period will have) the right to terminate such Project Contract,
or that such Project Contract is being terminated by such party, as a result of
a default by the Lessee under such Project Contract; or
(ii) If a party to any Project Contract has received notice from the
Lessee that such Project Contract is being terminated by the Lessee without
the prior
56
written consent of the Lessor and Assignee (other than as a
result of a default by such party); or
(iii) If any default by the Lessee shall occur under any of the
Project Contracts which would, after the giving of any required notice
and/or the expiration of any applicable grace period, entitle the other
party to such Project Contract to terminate such Project Contract as a
result of such default by the Lessee; or
(i) The entry of a decree or order for relief in respect of the Lessee or
the Guarantor by a court having jurisdiction in the premises or the appointment
of a receiver, liquidator, assignee, custodian, trustee, sequestrator (or
similar official) of the Lessee or the Guarantor or of any substantial part of
the Lessee's or the Guarantor's property, or ordering the winding up or
liquidation of the Lessee's or the Guarantor's affairs, in an involuntary case
under the Federal bankruptcy laws, as now or hereafter constituted, or any other
applicable Federal or state bankruptcy, insolvency or other similar law, and
such decree or order remains unstayed and in effect for thirty (30) consecutive
days; or the commencement against the Lessee or the Guarantor of an involuntary
case under the Federal bankruptcy laws, as now or hereafter constituted, or any
other applicable Federal or state bankruptcy, insolvency or other similar law,
and the continuance of any such case unstayed and in effect for a period of
thirty (30) consecutive days; or
(j) The suspension or discontinuance of the Lessee's or the Guarantor's
business operations, or the Lessee's or the Guarantor's insolvency (however
evidenced), or the Lessee's or the Guarantor's admission of insolvency or
bankruptcy, or the commencement by the Lessee or the Guarantor of a voluntary
case under the Federal bankruptcy laws, as now or hereafter constituted, or any
other applicable Federal or state bankruptcy, insolvency or other similar law,
or the consent by the Lessee or the Guarantor to the appointment of or taking
possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator
(or other similar official) of the Lessee or the Guarantor or of any substantial
part of the Lessee's or the Guarantor's property, or the making by the Lessee or
the Guarantor of an assignment for the benefit of creditors, or the failure of
the Lessee or the Guarantor generally to pay its debts as such debts become due,
or the taking of corporate action by the Lessee or the Guarantor in furtherance
of any such action; or
(k) (i) The Guaranty ceases to be in full force and effect prior to the
termination thereof in accordance with its terms, (ii) the Guarantor asserts
that the Guaranty is not valid or in full force and effect, (iii) the Guarantor
shall take any action which impairs in any material respect the ability of the
Guarantor to fulfill its obligations under the Guaranty, (iv) the Guarantor
defaults in the performance of any obligation or covenant contained in the
Guaranty, any required notice of such default shall have been given, and any
applicable grace period shall have expired, or (v) an Event of Default (as
defined in the Guaranty) shall occur under the Guaranty; or
(l) Any representation or warranty made by the Guarantor in the Guaranty or
in any Consent or in any document contemplated hereby or thereby shall prove to
have been false, misleading or inaccurate in any material respect on or as of
the date made or deemed made; or
57
(m) The Lessee or the Guarantor or any of its Material Subsidiaries shall
fail to pay any principal of or premium or interest on any Indebtedness which is
outstanding in a principal amount of at least $10,000,000 in the aggregate of
the Lessee or the Guarantor or any such Material Subsidiary (as the case may
be), when the same becomes due and payable (whether by scheduled maturity,
required prepayment, acceleration, demand or otherwise), and such failure shall
continue after the applicable grace period, if any, specified in the agreement
or instrument relating to such Indebtedness; or any other event shall occur or
condition shall exist under any agreement or instrument relating to any such
Indebtedness and shall continue after the applicable grace period, if any,
specified in such agreement or instrument, if the effect of such event or
condition is to accelerate, or to permit the acceleration of, the scheduled
maturity of such Indebtedness; or any such Indebtedness shall be declared to be
due and payable, or required to be prepaid (other than by a regularly scheduled
required prepayment), prior to the stated maturity thereof; or
(n) Final judgment or judgments for the payment of money in excess of
$10,000,000 in the aggregate shall be rendered against the Lessee or the
Guarantor by any court of competent jurisdiction and the same shall remain
undischarged for a period of thirty (30) days during which execution of such
judgment or judgments shall not be effectively stayed.
SECTION 19. RIGHTS UPON DEFAULT.
Upon the occurrence and continuation of any Event of Default, the Lessor
may do any one or more of the following (subject to the provisions of paragraph
(b) of Section 13 of this Lease):
(i) Terminate the lease of the Project hereunder;
(ii) Whether or not the lease of the Project is terminated, take
immediate possession of the Project and remove any equipment or
property of the Lessor in the possession of the Lessee, wherever
situated, and for such purpose, enter upon the Premises without
liability to the Lessee for so doing;
(iii) Whether or not any action has been taken under clause (i)
or (ii) above, sell the Project (with or without the concurrence or
request of the Lessee);
(iv) Hold, use, occupy, operate, repair, remove, lease or keep
idle the Project as the Lessor in its sole discretion may determine,
without any duty to mitigate damages with respect to any such action
or inaction or with respect to any proceeds thereof; and
(v) Exercise any other right or remedy which may be available
under applicable law and in general proceed by appropriate judicial
proceedings, either at law or in equity, to enforce the terms hereof.
Suit or suits for the recovery of any default in the payment of any sum due
hereunder or for damages may be brought by the Lessor from time to time at the
Lessor's election, and nothing herein contained shall be deemed to require the
Lessor to await the date
58
whereon this Lease or the term hereof would have expired by limitation had there
been no such default by the Lessee or no such termination or cancellation.
The receipt of any payments under this Lease by the Lessor with knowledge
of any breach of this Lease by the Lessee or of any default by the Lessee in the
performance of any of the terms, covenants or conditions of this Lease, shall
not be deemed to be a waiver of any provision of this Lease.
No receipt of moneys by the Lessor from the Lessee after the termination or
cancellation hereof in any lawful manner shall reinstate, continue or extend the
Lease Term or Renewal Term, or affect any notice theretofore given to the
Lessee, or operate as a waiver of the right of the Lessor to enforce the payment
of Basic Rent or Additional Rent or other charges payable hereunder, or operate
as a waiver of the right of the Lessor to recover possession of by proper suit,
action, proceedings or remedy; it being agreed that, after the service of notice
to terminate or cancel this Lease, and the expiration of the time therein
specified, if the default has not been cured in the meantime, or after the
commencement of any suit, action or summary proceedings or of any other remedy,
or after a final order, warrant or judgment for the possession of the Project,
the Lessor may demand, receive and collect any moneys payable hereunder, without
in any manner affecting such notice, proceedings, suit, action, order, warrant
or judgment. Acceptance of the keys to the Project, or any similar act, by the
Lessor, or any agent or employee of the Lessor, during the term hereof, shall
not be deemed to be an acceptance of a surrender of the Project unless the
Lessor and Assignee shall consent thereto in writing.
After any Event of Default, the Lessee shall be liable for, and the Lessor
may recover from the Lessee, (i) all Basic Rent payable and the Variable
Component of Basic Rent accrued through the date of termination of this Lease,
(ii) any Additional Rent owing, (iii) all amounts payable pursuant to Sections
11, 24 and 26 hereof, (iv) all losses, damages, costs and expenses (including,
without limitation, attorneys' fees and expenses, commissions, filing fees and
sales or transfer taxes and all costs and expenses related to (x) the conduct of
investigations, studies, sampling and/or testing of the Premises and (y) the
taking of any action, including, without limitation, any remedial measures or
removal with respect to the Premises, each as required by an Assignee pursuant
to the terms of a Financing Arrangement) sustained by the Lessor by reason of
such Event of Default and the exercise of the Lessor's remedies with respect
thereto, including without limitation, in the event of a sale by the Lessor of
its interest in the Project pursuant to this Section 19, all costs and expenses
associated with such sale and (v) all other amounts owing hereunder (after
taking into account the application under the Financing Arrangements of any
payments made under this Section 19) excluding, in all cases, costs or expenses
included in Adjusted Acquisition Cost. The amounts payable in clauses (i)
through (v) above are hereinafter sometimes referred to as the "Accrued Default
Obligations".
After an Event of Default, the Lessor may sell its interest in the Project
upon any terms that the Lessor deems satisfactory, free of any rights of the
Lessee or any Person claiming through or under the Lessee (including, without
limitation, any rights hereunder or under the Agreement for Lease). In the event
of any such sale, the Lessor shall be entitled to recover from the Lessee, as
liquidated damages and not as a penalty, and subject to the second succeeding
sentence, an amount equal to the Adjusted Acquisition Cost. Proceeds of sale
received by the Lessor in excess of the Adjusted Acquisition Cost shall be
credited against the amounts the
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Lessee is required to pay under this Section 19 and any other provision hereof.
If such proceeds plus the Adjusted Acquisition Cost, exceed the sum of (i) the
Adjusted Acquisition Cost and (ii) any Unrecovered Liabilities and Judgments,
and if the Lessee has indefeasibly paid the Adjusted Acquisition Cost, plus all
Unrecovered Liabilities and Judgments and all other amounts required to be paid
under this Section 19 and any other provision hereof, such excess shall be paid
by the Lessor to the Lessee; provided, however, that the Lessee shall remain
liable for any Unrecovered Liabilities and Judgments that arise after the
payment of such excess proceeds to the extent such Unrecovered Liabilities and
Judgments arise from or relate to acts or omissions occurring, or circumstances
or conditions created or existing at any time as of or prior to the expiration
or termination of this Lease. As an alternative to any such sale, the Lessor may
require the Lessee to pay to the Lessor, and the Lessee shall pay to the Lessor,
as liquidated damages and not as a penalty, an amount equal to the Adjusted
Acquisition Cost. If the Lessor subsequently sells its interest in the Project,
the proceeds of any such sale shall be distributed as provided in the third and
fourth sentences of this paragraph. If the Lessee converts the Project or any
part thereof after an Event of Default, or if the Project suffers an Event of
Loss or is otherwise lost or destroyed at the time of the Event of Default the
Lessor may require the Lessee to pay to the Lessor, and the Lessee shall pay to
the Lessor, as liquidated damages and not as a penalty, an amount equal to the
Adjusted Acquisition Cost. In the event the Lessor receives indefeasible payment
from the Lessee of the Adjusted Acquisition Cost of the Project and all
Unrecovered Liabilities and Judgments, the Lessor shall transfer all of the
Lessor's right, title and interest in and to the Project, the Ground Lease, the
Easements, the EPC Contract and any other Project Contract to the Lessee.
In the event of a sale pursuant to this Section 19, upon indefeasible
receipt by the Lessor of the amounts payable hereunder, the Lessor shall
transfer all of the Lessor's right, title and interest in and to the Project to
a purchaser other than the Lessee or to the Lessee, as the case may be.
In the event the Lessor is not paid an amount equal to the Adjusted
Acquisition Cost and all Unrecovered Liabilities and Judgments, then, in
addition to the Lessor's other rights in this Section 19, the Lessee shall upon
the Lessor's request (i) assign (or if not legally assignable, cooperate and
assist to the extent necessary or required in the transfer or reissuance
thereof) to the Lessor (or to an assignee designated by the Lessor or Assignee),
at no cost, all right, title and interest of the Lessee in, to and under all
Governmental Actions and Intellectual Property Rights needed for the equipping,
maintenance, operation or use of the Project and obtained and held by the Lessee
at that time, (ii) assign to the Lessor (or to a foreclosure purchaser
designated by the Lessor or Assignee), at no cost, all right, title and interest
of the Lessee in, to and under the Project Contracts, and in the event any
additional consent of any party to a Project Contract is required as a
precondition thereunder to an assignment to any other third party assignee
designated by the Lessor or Assignee, use its best efforts to obtain any such
required consent to such proposed non-foreclosure assignment and assumption of
the Project Contracts; and (iii) assign to the Lessor, at no cost, all right,
title and interest of the Lessee in, to and under all service agreements in
existence at the time of such sale and transferable by the Lessee and any
easements available to the Lessee and transferable by the Lessee in connection
with the equipping, maintenance, operation or use of the Project. The Lessee
acknowledges that it would be difficult to ascertain the value to the Lessor of
the Lessee's agreement to assign, transfer or have reissued to the Lessor such
Governmental Actions and Intellectual Property
60
Rights, to assign such Project Contracts (and, if necessary, to obtain such
consents to such assignment) and to assign to the Lessor such service agreements
and easements or to adequately compensate the Lessor by an award of damages for
the Lessee's failure to assign to the Lessor such Governmental Actions and
Intellectual Property Rights, to assign such Project Contracts (and, if
necessary, to obtain such consents to such assignment) and to assign to the
Lessor such service agreements and easements, and that therefore the Lessor
would not have an adequate remedy at law for breach by the Lessee of its
agreement hereunder to the Lessor. Accordingly, the Lessee acknowledges that the
Lessor shall be entitled to obtain specific performance of the Lessee's
obligation to assign to the Lessor such Governmental Actions and Intellectual
Property Rights, to obtain such consents to such assignment and to assign to the
Lessor the service agreements and easements. In the event the Lessee fails to
obtain any consents required in clause (ii) of the third preceding sentence, at
the request of the Lessor or such purchaser, as the case may be, the Lessee
shall agree to (A) at the expense of such purchaser or the Lessor, as the case
may be, continue to perform under and maintain in full force and effect the
Project Contracts and pay all sums received under the Project Contracts to such
third party or the Lessor, as the case may be, (B) at the expense of such third
party or the Lessor, as the case may be, and subject to the receipt of
indemnification reasonably acceptable to the Lessee, take all actions requested
by such third party or the Lessor, as the case may be, with respect to such
Project Contracts (including all actions with respect to the enforcement of the
Lessee's rights and remedies under such Project Contracts), and (C) not amend,
modify, supplement, waive a provision of, grant any consent under or terminate
any such Project Contract without the prior written consent of such third party
or the Lessor, as the case may be.
In addition to its other rights in this Section 19, the Lessor may exercise
its various rights under the Facility Support Agreement or transfer such rights
to the purchaser in a sale and the Lessee acknowledges hereby its agreement to
perform its obligations thereunder.
No remedy referred to in this Section 19 is intended to be exclusive, but
each shall be cumulative and in addition to any other remedy referred to above
or otherwise available to the Lessor at law or in equity, and the exercise in
whole or in part by the Lessor of any one or more of such remedies shall not
preclude the simultaneous or later exercise by the Lessor of any or all such
other remedies.
No waiver by the Lessor of any Event of Default hereunder shall in any way
be, or be construed to be, a waiver of any future or subsequent Event of
Default.
With respect to the termination of this Lease as a result of an Event of
Default, the Lessee hereby waives service of any notice of intention to
re-enter. The Lessee hereby waives any and all rights to recover or regain
possession of the Project or to reinstate this Lease as permitted or provided by
or under any statute, law or decision now or hereafter in force and effect.
SECTION 20. SALE OR ASSIGNMENT BY LESSOR.
(a) The Lessor shall have the right to obtain equity and debt financing for
the acquisition and ownership of the Project by selling or assigning its right,
title and interest in any
61
or all amounts due from the Lessee or any third party under this Lease and
granting a security interest in this Lease and the Project to a lender or
lenders under a Financing Arrangement (or any entity acting in the capacity of
an agent in connection therewith), notice of the identity of which shall be
given to the Lessee; provided that, any sale or assignment by the Lessor shall
be made consistent with the terms of this Lease and shall be subject to
Permitted Liens and the rights and interests of the Lessee under this Lease and
the Agreement for Lease.
(b) Any Assignee shall, except as otherwise agreed by the Lessor and such
Assignee, have all the rights, powers, privileges and remedies of the Lessor
hereunder, and the Lessee's obligations as between itself and such Assignee
hereunder shall not be subject to any claims or defense that the Lessee may have
against the Lessor. Upon written notice to the Lessee of any such assignment,
the Lessee shall thereafter make payments of Basic Rent and the Variable
Component of Basic Rent, Additional Rent and other sums due hereunder to
Assignee, to the extent specified in such notice, and such payments shall
discharge the obligation of the Lessee to the Lessor hereunder to the extent of
such payments. Anything contained herein to the contrary notwithstanding, no
Assignee shall be obligated to perform any duty, covenant or condition required
to be performed by the Lessor hereunder, and any such duty, covenant or
condition shall be and remain the sole obligation of the Lessor.
SECTION 21. INCOME TAXES.
The Lessor agrees that it will not file any Federal, state or local income
tax returns or state or local sales tax returns during the Initial Term, or any
Extended Term or Renewal Term with respect to the Project that are inconsistent
with the treatment of the Lessee as owner of the Project for Federal, state and
local income tax purposes and state and local sales tax purposes.
SECTION 22. NOTICES AND REQUESTS.
All notices, offers, acceptances, approvals, waivers, requests, demands and
other communications hereunder or under any other instrument, certificate or
other document delivered in connection with the transactions described herein
shall be in writing, shall be addressed as provided below and shall be
considered as properly given (a) if delivered in person, (b) if sent by express
courier service (including, without limitation, Federal Express, Xxxxx, DHL,
Airborne Express, and other similar express delivery services), (c) in the event
overnight delivery services are not readily available, if mailed through the
United States Postal Service, postage prepaid, registered or certified with
return receipt requested, or (d) if sent by telecopy and confirmed; provided
that, in the case of a notice by telecopy, the sender shall in addition confirm
such notice by writing sent in the manner specified in clause (a), (b) or (c) of
this Section 22. All notices shall be effective upon receipt by the addressee;
provided, however, that, if any notice is tendered to an addressee and the
delivery thereof is refused by such addressee, such notice shall be effective
upon such tender. For the purposes of notice, the addresses of the parties shall
be as set forth below; provided, however, that any party shall have the right to
change its address for notice hereunder to any other location by giving written
notice to the other party in the manner set forth herein. The initial addresses
of the parties hereto are as follows:
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If to the Lessor:
Wygen Funding, Limited Partnership
c/o ML Leasing Equipment Corp.
Controller's Xxxxxx
00 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxx Xxxx, Xxx Xxxxxx 00000
Attention: Xxxx Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy of all notices under this Section 22 to be simultaneously given,
delivered or served to the following:
ML Leasing Equipment Corp.
00 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxx Xxxx, Xxx Xxxxxx 00000
Attention: Xxxxx Xxxxxx
Facsimile: (000) 000-0000
If to the Lessee:
Black Hills Generation, Inc.
000 Xxxxx Xxxxxx
Xxxxx Xxxx
Xxxxx Xxxxxx 00000
Attention: Xxxx Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy of all notices under this Section 22 to Assignee at such address as
such Assignee may specify by written notice to the Lessor and the Lessee.
SECTION 23. COVENANT OF QUIET ENJOYMENT.
During the Initial Term, or any Extended Term or Renewal Term hereunder and
so long as no Event of Default, Event of Loss, Taking or Termination Event shall
have occurred and be continuing, the Lessor recognizes the Lessee's right to
quiet enjoyment of the Project on the terms and conditions provided in this
Lease without any interference from the Lessor or anyone claiming through or
under the Lessor.
63
SECTION 24. RIGHT TO PERFORM FOR LESSEE.
(a) If the Lessee fails to perform or comply with any of its
covenants or agreements contained in this Lease, and any period to cure such
failure has expired without the Lessee curing such failure, the Lessor may, upon
notice to the Lessee but without waiving or releasing any obligations or
default, itself perform or comply with such covenant or agreement, and the
amount of the reasonable expenses of the Lessor incurred in connection with such
performance or compliance shall be payable by the Lessee, not later than ten
(10) days after written notice by the Lessor.
(b) Without in any way limiting the obligations of the Lessee hereunder,
the Lessee hereby irrevocably appoints the Lessor as its agent and attorney at
the time at which the Lessee is obligated to deliver possession of the Project
to the Lessor, to demand and take possession of the Project in the name and on
behalf of the Lessee from whomsoever shall be at the time in possession thereof.
SECTION 25. MERGER, CONSOLIDATION OR SALE OF ASSETS.
The Lessee may consolidate with or merge into any other corporation or sell
all or substantially all of its assets to any Person; provided that, following
such consolidation, merger or sale of assets, (a) the Guarantor shall own
beneficially and of record greater than fifty percent (50%) of the capital stock
of the Lessee (in the case of a consolidation or merger) or greater than fifty
percent (50%) of the equity interests of the transferee (in the case of a sale
of assets), and (b) no Event of Default shall exist under this Lease. The terms
and provisions of this Lease shall be binding upon and inure to the benefit of
the Lessee and its respective successors and assigns.
SECTION 26. EXPENSES.
The Lessee shall pay all of the out-of-pocket costs and expenses incurred
by the Lessor and any Assignee in connection with this Lease, including, without
limitation, the reasonable fees and disbursements of counsel to the Lessor and
counsel to any Assignee.
SECTION 27. PERMITTED CONTESTS.
(a) The Lessee shall not be required, nor shall the Lessor have the right,
to pay, discharge or remove any tax, assessment, levy, fee, rent, charge or
Lien, or to comply or cause the Project to comply with any Legal Requirements
applicable thereto or the occupancy, use or operation thereof, so long as no
Potential Default, Event of Default, Event of Loss, Taking or Termination Event
exists under this Lease, and, in the reasonable judgment of the Lessee's
counsel, the Lessee shall have reasonable grounds to contest the existence,
amount, applicability or validity thereof by appropriate proceedings, which
proceedings in the reasonable judgment of the Lessor and Assignee (i) shall not
involve any danger that the Project or any portion thereof or any Basic Rent or
any Additional Rent would be subject to sale, forfeiture or loss, as a result of
failure to comply therewith, (ii) shall not affect the payment of any Basic Rent
or any Additional Rent or other sums due and payable hereunder or result in any
such sums being payable to any Person other than the Lessor or any Assignee,
(iii) will not place either the Lessor or any
64
Assignee in any danger of civil liability or subject the Lessor or any Assignee
to any danger of criminal liability, (iv) if involving taxes, shall suspend the
collection of taxes (unless the Lessee has provided a bond for the full amount
in dispute), (v) are consistent with prudent business practices, and (vi) shall
be permitted under and be conducted in accordance with the provisions of any
other instrument to which the Lessee or the Project is subject and shall not
constitute a default thereunder (a "Permitted Contest"). The Lessee shall
conduct all Permitted Contests in good faith and with due diligence and shall
promptly after the final determination (including appeals) of any Permitted
Contest (or, if earlier, upon any of the above criteria no longer being
satisfied) pay and discharge all amounts which shall be determined to be payable
therein. The Lessor shall cooperate in good faith with the Lessee with respect
to all Permitted Contests conducted by the Lessee pursuant to this Section 27.
(b) In the event the Lessor or Assignee deems, in its reasonable
discretion, that its interests under this Lease or in the Project are not
adequately protected in connection with a Permitted Contest brought by the
Lessee as permitted under this Section 27, the Lessee shall give such reasonable
security as may be demanded by the Lessor or any Assignee to ensure payment of
such tax, assessment, levy, fee, rent, charge or Lien and compliance with Legal
Requirements and to prevent any sale or forfeiture of the Project or any portion
thereof, any Basic Rent or any Additional Rent by reason of such nonpayment or
noncompliance. The Lessee hereby agrees that the Lessor may assign such security
provided by the Lessee to any Assignee.
(c) At least ten (10) days prior to the commencement of any Permitted
Contest, the Lessee shall notify the Lessor in writing thereof if the amount in
contest exceeds $100,000, and shall describe such proceeding in reasonable
detail. In the event that a taxing authority or subdivision thereof proposes an
additional assessment or levy of any tax for which the Lessee is obligated to
reimburse the Lessor under this Lease, or in the event that the Lessor is
notified of the commencement of an audit or similar proceeding which could
result in such an additional assessment, then the Lessor shall in a timely
manner notify the Lessee in writing of such proposed levy or proceeding.
SECTION 28. LEASEHOLD INTERESTS.
(a) The Lessee hereunder covenants and agrees to perform and to observe all
of the terms, covenants, provisions, conditions and agreements of the Ground
Lease on the Lessor's part as lessee and grantee thereunder to be performed and
observed to the end that all things shall be done which are necessary to keep
unimpaired the rights of the lessee under the Ground Lease and the rights of the
Lessor as grantee with respect to the Easements, except to the extent such
performance is solely under the control of the Lessor.
(b) The Lessee covenants and agrees pursuant to Section 11 hereof to
indemnify and hold harmless the Lessor and each Assignee from and against any
and all liability, loss, damage, suits, penalties, claims and demands of every
kind and nature (including, without limitation, reasonable attorneys' fees and
expenses) by reason of the Lessee's failure to comply with the Ground Lease, the
Easements or the provisions of this Section 28 other than to the extent arising
solely from the gross negligence or willful misconduct of the Lessor.
65
(c) The Lessor and the Lessee agree that during the term of this Lease and
the Agreement for Lease the Lessor shall have no obligation or responsibility to
provide services or equipment required to be provided or repairs or restorations
required to be made in accordance with the provisions of the Ground Lease by the
lessee or grantee thereunder. The Lessor shall in no event be liable to the
Lessee nor shall the obligations of the Lessee hereunder be impaired or the
performance thereof excused because of any failure or delay on the part of the
Lessor as the lessee under the Ground Lease or with respect to the Easements in
providing such services or equipment or making such restorations or repairs and
such failure or delay shall not constitute a basis for any claim against the
Lessor or any offset against any amount payable to the Lessor under this Lease.
SECTION 29. MISCELLANEOUS.
(a) All agreements, indemnities, representations and warranties, and the
obligation to pay Basic Rent and the Variable Component of Basic Rent,
Additional Rent and other amounts contained in this Lease shall survive until
the expiration or other termination of this Lease, provided that (i) any
obligations under this Lease accrued at the time of or related to periods prior
to such expiration or other termination (including, without limitation, any
obligation to pay Unrecovered Liabilities and Judgments) shall survive such
expiration or other termination, and (ii) any obligation under this Lease which
is expressly provided to be performed after or to survive the expiration or
termination of this Lease shall survive the expiration or other termination
hereof.
(b) This Lease and the instruments, documents or agreements referred to
herein constitute the entire agreement between the parties and no
representations, warranties, promises, guarantees or agreements, oral or
written, express or implied, have been made by any party hereto with respect to
this Lease or the Project, except as provided herein or therein.
(c) This Lease may not be amended, modified or terminated, nor may any
obligation hereunder be waived orally, and no such amendment, modification,
termination or waiver shall be effective for any purpose unless it is in
writing, signed by the party against whom enforcement thereof is sought. A
waiver on one occasion shall not be construed to be a waiver with respect to any
other occasion.
(d) The captions in this Lease are for convenience of reference only and
shall not be deemed to affect the meaning or construction of any of the
provisions hereof. Any provision of this Lease which is prohibited by law or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and the parties hereto shall negotiate in good
faith appropriate modifications to reflect such changes as may be required by
law, and, as nearly as possible, to produce the same economic, financial and tax
effects as the provision which is prohibited or unenforceable; and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. To the extent
permitted by applicable law, the Lessee and the Lessor hereby waive any
provision of law which renders any provision hereof prohibited or unenforceable
in any respect. THIS LEASE HAS BEEN EXECUTED AND DELIVERED IN THE STATE OF NEW
YORK. THE LESSEE AND THE LESSOR AGREE THAT, TO THE MAXIMUM EXTENT
66
PERMITTED BY THE LAW OF THE STATE OF NEW YORK, THIS LEASE, AND THE RIGHTS AND
DUTIES OF THE LESSEE AND THE LESSOR HEREUNDER, SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (INCLUDING,
WITHOUT LIMITATION, SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW) IN ALL RESPECTS, INCLUDING, WITHOUT LIMITATION, IN RESPECT OF
ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THE LESSEE HEREBY
IRREVOCABLY SUBMITS, FOR ITSELF AND ITS PROPERTIES, TO THE JURISDICTION OF THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND THE
SUPREME COURT OF THE STATE OF NEW YORK IN THE COUNTY OF NEW YORK IN ANY ACTION,
SUIT OR PROCEEDING BROUGHT AGAINST IT AND RELATED TO OR IN CONNECTION WITH THIS
LEASE, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE LESSEE HEREBY WAIVES
AND AGREES NOT TO ASSERT BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE IN ANY SUCH
SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE
JURISDICTION OF SUCH COURT, THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN
INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS
IMPROPER, OR THAT THIS LEASE OR THE SUBJECT MATTER HEREOF MAY NOT BE LITIGATED
IN OR BY SUCH COURT. THIS SUBMISSION TO JURISDICTION IS NONEXCLUSIVE ANDDOES NOT
PRECLUDE LESSOR OR ANY ASSIGNEE FROM OBTAINING JURISDICTION OVER THE LESSEE IN
ANY COURT OTHERWISE HAVING JURISDICTION. TO THE EXTENT PERMITTED BY APPLICABLE
LAW, THE LESSEE AGREES NOT TO SEEK AND HEREBY WAIVES THE RIGHT TO ANY REVIEW OF
THE JUDGMENT OF ANY SUCH COURT BY ANY COURT OF ANY OTHER NATION OR JURISDICTION
WHICH MAY BE CALLED UPON TO GRANT AN ENFORCEMENT OF SUCH JUDGMENT. THE LESSEE
AGREES THAT SERVICE OF PROCESS MAY BE MADE UPON IT BY CERTIFIED OR REGISTERED
MAIL TO THE ADDRESS FOR NOTICES SET FORTH IN THIS LEASE OR ANY METHOD AUTHORIZED
BY THE LAWS OF NEW YORK. THE LESSOR APPOINTS CT CORPORATION SYSTEM WHICH
CURRENTLY MAINTAINS A NEW YORK CITY OFFICE SITUATED AT 000 XXXXXX XXXXXX, 00XX
XXXXX, XXX XXXX, XXX XXXX 00000, XXXXXX XXXXXX, AS ITS AGENT TO RECEIVE SERVICE
OF PROCESS AND AGREES, SO LONG AS THE LESSOR HAS ANY OBLIGATION UNDER THIS
LEASE, THAT IT WILL MAINTAIN A DULY APPOINTED AGENT IN NEW YORK CITY FOR THE
SERVICE OF SUCH PROCESS, AND FURTHER AGREES THAT IF IT FAILS TO MAINTAIN SUCH AN
AGENT, ANY SERVICE OF PROCESS MAY BE MADE UPON IT BY CERTIFIED OR REGISTERED
MAIL TO THE ADDRESS FOR NOTICES SET FORTH IN THIS AGREEMENT OR ANY METHOD
AUTHORIZED BY THE LAWS OF NEW YORK. THE LESSOR AND THE LESSEE EXPRESSLY WAIVE
ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM RELATED TO
THIS LEASE OR THE TRANSACTIONS CONTEMPLATED HEREBY. THE LESSOR AND THE LESSEE
ACKNOWLEDGE THAT THE PROVISIONS OF THIS PARAGRAPH (D) OF SECTION 29 HAVE BEEN
BARGAINED FOR AND THAT THEY HAVE BEEN REPRESENTED BY COUNSEL IN CONNECTION
THEREWITH.
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(e) In connection with any sale of the Project pursuant to Section 12, 13,
14, 15 or 19 of this Lease, when the Lessor transfers title, such transfer shall
be on an as-is, non-installment sale basis, without warranty by, or recourse to,
the Lessor.
(f) In connection with the sale or purchase of the Project pursuant to
Section 12, 13, 14, 15 or 19 of this Lease, the Lessee shall pay or shall cause
the purchaser of the Project to pay, in addition to the purchase price, all
transfer taxes, transfer gains taxes, mortgage recording tax, if any, recording
and filing fees and all other similar taxes, fees, expenses and closing costs
(including reasonable attorneys' fees) in connection with the conveyance of the
Project to the Lessee or any purchaser.
(g) Each time that the Adjusted Acquisition Cost is increased or decreased
pursuant to the terms of this Lease (other than a decrease in connection with
the amortization of the Acquisition Cost of the Project as contemplated by this
Lease), the Lessor shall promptly revise Exhibit E hereto to reflect such
increase or decrease pro rata over all remaining payments of Monthly Rent
Component and shall provide the Lessee and Assignee a copy of such revised
Exhibit E within three (3) Business Days of such increase or decrease.
(h) In connection with the purchase of the Project by the Lessee or any
third party pursuant to the provisions of this Lease, the Lessor shall deliver
to the Lessee or such third party, as the case may be, a xxxx of sale, deed or
similar document assigning and conveying to the Lessee or such third party, as
the case may be, and the Lessee or such third party, as the case may be, shall
accept an assignment of, the Lessor's interest in the Ground Lease, the
Easements, the EPC Contract, the Facility Support Agreement and, if applicable,
any other Project Contract, such assignment, conveyance, or other documents to
be without warranty by, or recourse to, the Lessor (provided that the purchase
price paid by the Lessee to the Lessor, exclusive of the other amounts payable
hereunder in connection with such purchase, shall equal the Adjusted Acquisition
Cost).
(i) In the event of any Event of Default, or if a sale of the Project to
the Lessor is deemed to occur pursuant to paragraph (e) of Section 13, the
Lessee shall, to the extent required by the Lessor or Assignee, exercise all
commercially reasonable efforts (i) to provide the Lessor (or a designated
assignee of the Lessor or Assignee) with all easements, manuals and other
matters and services to be provided by the Operator (to the extent such
easements, manuals and other matters and services are not being provided
pursuant to the Project Contracts) necessary to enable the Project to operate on
commercially reasonable terms, (ii) to provide the Lessor (or a designated
assignee of the Lessor or Assignee) with any Project Contracts, Governmental
Actions and Intellectual Property Rights not assigned to the Lessor (or a
designated assignee of the Lessor or Assignee) pursuant to the applicable terms
hereof that are necessary to enable the Project to operate on commercially
reasonable terms, (iii) to provide the Lessor (or a designated assignee of the
Lessor or Assignee) with any permits, licenses or other Governmental Actions (to
the extent not already provided to such party by the Lessee or the Guarantor)
that are necessary to enable the Project to operate on commercially reasonable
terms in connection with its operation as an EWG, including without limitation
all permits, licenses or other Governmental Actions required to enable such
party (provided that such party is not a "public-utility company", as such term
is defined in Section 2(a)(5) of the 1935 Act, or otherwise subject to
regulation as a public utility by any relevant governmental body or similar
entity under the laws of any state or locality) to operate the Project on
commercially reasonable terms as an
68
EWG, and (iv) to negotiate in good faith with the Lessor (or a designated
assignee of the Lessor or Assignee), or exercise all commercially reasonable
efforts to locate a third party reasonably acceptable to the Lessor and Assignee
who is capable of operating the Project for the Lessor (or a designated assignee
of the Lessor or Assignee), to operate the Project for the Lessor (or such
designated assignee of the Lessor or Assignee), for fair market value
compensation for such services. The Lessee's obligations contained in this
paragraph (i) shall survive the expiration or other termination of this Lease
until the Lessor receives payment of (1) all amounts payable pursuant to this
Lease and the Agreement for Lease, (2) all losses, damages, costs and expenses
(including, without limitation, attorneys' fees and expenses, commissions,
filing fees and sales or transfer taxes) sustained by the Lessor, (3) all
amounts owing under the Financing Arrangements and (4) any unreimbursed costs
incurred by the Lessor or Assignee with respect to the Project or the Project
Contracts after the term of this Lease, net of any revenues received from the
operation of the Project.
(j) The Lessee may not assign any of its obligations under this Lease to
any other party, except to an Affiliate of the Lessee; provided, that (i) such
Affiliate shall assume the obligations of the Lessee hereunder, under the
Agreement for Lease and the Project Contracts, by execution and delivery of
instruments satisfactory to the Lessor and Assignee (including, without
limitation, consents under the applicable Project Contracts (if required), the
execution of an assignment and assumption agreement and the reaffirmation of the
Guaranty, in each case in form and substance satisfactory to the Lessor and
Assignee, (ii) no Potential Default, Event of Default or Termination Event shall
occur by reason of giving effect to such assignment, and (iii) such assignee
shall have complied with any requirements set forth in the Project Contracts.
SECTION 30. NO RECOURSE.
The Lessor's obligations hereunder are intended to be the obligations of
the limited partnership and of the corporation which is the general partner
thereof only and no recourse for the payment of any amount due under this Lease,
any Project Contract, or any other agreement contemplated hereby, or for any
claim based thereon or otherwise in respect thereof, shall be had against any
limited partner of the Lessor or any incorporator, shareholder, officer,
director or Affiliate, as such, past, present or future of such corporate
general partner or of any corporate limited partner or of any successor
corporation to such corporate general partner or any corporate limited partner
of the Lessor, or against any direct or indirect parent corporation of such
corporate general partner or of any limited partner of the Lessor or any other
subsidiary or Affiliate of any such direct or indirect parent corporation or any
incorporator, shareholder, officer or director, as such, past, present or
future, of any such parent or other subsidiary or Affiliate. Nothing contained
in this Section 30 shall be construed to limit the exercise or enforcement, in
accordance with the terms of this Lease, the Project Contracts and any other
documents referred to herein, of rights and remedies against the limited
partnership or the corporate general partner of the Lessor or the assets of the
limited partnership or the corporate general partner of the Lessor.
69
SECTION 31. NO MERGER OF ESTATES.
There shall be no merger of this Lease or of the leasehold
estate hereby created with the fee estate in the Project by reason of the fact
that the same person acquires or holds, directly or indirectly, this Lease or
the leasehold estate hereby created or any interest herein or in such leasehold
estate as well as the fee estate in the Project or any interest in such fee
estate.
[Signature Page Follows]
70
IN WITNESS WHEREOF, the Lessor and the Lessee have caused this
Lease to be executed and delivered as of the day and year first above written.
WYGEN FUNDING, LIMITED PARTNERSHIP,
By Wygen Capital, Inc.,
its General Partner
By
-------------------------------------------------
Name:
Title:
BLACK HILLS GENERATION, INC.
By
------------------------------------------------
Name:
Title:
71
EXHIBIT A
LEGAL DESCRIPTION OF LAND
A-1
EXHIBIT B
INTENTIONALLY OMITTED
B-1
EXHIBIT C
LIST OF PROJECT CONTRACTS
o The Engineering, Procurement and Construction Agreement dated as of
December 27, 2000, as amended by a First Amendment to Engineering,
Procurement and Construction Agreement dated as of April 11, 2001, between
the Lessee and the General Contractor.
o The Irrevocable Letter of Credit No. NY-20511-30029698, dated April 18,
2001, issued by CitiBank, N.A., in favor of the Lessee.
o The Performance Bonds issued by subcontractors pursuant to the EPC
Contract.
o The Subcontracts and Supply Contracts entered into by the General
Contractor pursuant to the EPC Contract.
o The equipment purchase contract to be entered into by and between General
Electric Company and the General Contractor.
o The Ground Lease Agreement, dated as of July 20, 2001, between the Lessee,
as ground lessor, and the Lessor, as ground lessee.
o The Easement Agreement, dated as of July 20, 2001, between Black Hills
Power, Inc. and Wyodak Resources Development Corp., as grantors, and the
Lessor, as grantee.
o The Power Purchase Agreement, dated as of February 16, 2001, between the
Lessee and Cheyenne Light, Fuel and Power Company.
o The Power Purchase Agreement, dated as of March 5, 2001, between the Lessee
and Municipal Energy Agency of Nebraska.
o The Coal Supply Agreement, dated as of July 20, 2001, between Wyodak
Resources Development Corp. and the Lessee.
o The Agreement for Rights of Usage of Coal Silo and Coal Conveyer, dated as
of July 20, 2001, between Black Hills Power, Inc. and the Lessee.
o The Agreement for Interconnection Service, dated as of July 20, 2001,
between Black Hills Power, Inc. and the Lessee.
o The Services Agreement, dated as of July 20, 2001, between Black Hills
Power, Inc. and the Lessee.
C-1
EXHIBIT D
LIST OF PROJECT AUTHORIZATIONS
o Air Quality Permit No. CT-1236, as modified in Permit No. MD-510A.
o Determination of No Hazard to Air Navigation issued by the Federal Aviation
Administration on February 28, 2001.
o Determination of Exempt Wholesale Generation Status dated April 10, 2001,
95 F.E.R.C.ss.62.025; 2001 WL 357465.
o Acceptance for filing of rate schedule of market-based rates, June 22,
0000, X.X.X.X. Xxxxxx Xx. XX00-0000-000.
D-1
EXHIBIT E
MONTHLY RENT COMPONENT
[As of the date of this Lease, there is no Monthly Rent Component.]
E-1
