Exhibit 10.2
Execution Copy
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
XXXX XX XXXXXX, XXXXXX,
As Lessor
AND
DCI HOLDINGS FAE, LLC,
As Lessee
-------------
LEASE AGREEMENT
Dated as of September 1, 2006
-------------
Relating to:
$3,680,000 $400,000
City of Olathe City of Olathe
Tax Exempt Industrial Revenue Bonds Tax Exempt Industrial Revenue Bonds
(DCI, Inc. Project) (DCI, Inc. Project)
Series 2006A Series 2006B
$100,000 $820,000
City of Olathe City of Olathe
Taxable Industrial Revenue Bonds Taxable Subordinate Industrial Revenue Bonds
(DCI, Inc. Project) (DCI, Inc. Project)
Series 2006C Series 2006D
================================================================================
The interest of the City of Olathe, Kansas (the "Issuer") in this Lease
Agreement has been pledged and assigned to UMB Bank, N.A., as Trustee under the
Trust Indenture dated as of September 1, 2006, between the Issuer and the
Trustee.
LEASE
TABLE OF CONTENTS
Page
ARTICLE I
SECTION 1.1. DEFINITIONS..................................................1
SECTION 1.2. REPRESENTATIONS AND COVENANTS BY CORPORATION.................5
SECTION 1.3. REPRESENTATIONS AND COVENANTS BY ISSUER......................7
ARTICLE II
SECTION 2.1. GRANTING OF LEASEHOLD........................................8
ARTICLE III
SECTION 3.1. BASIC RENT...................................................8
SECTION 3.2. ACQUISITION OF BONDS.........................................8
SECTION 3.3. ADDITIONAL RENT..............................................8
SECTION 3.4. RENT PAYABLE WITHOUT ABATEMENT OR SETOFF.....................8
SECTION 3.5. PREPAYMENT OF BASIC RENT.....................................9
SECTION 3.6. DEPOSIT OF RENT BY TRUSTEE...................................9
ARTICLE IV
SECTION 4.1. DISPOSITION OF ORIGINAL PROCEEDS.............................9
ARTICLE V
SECTION 5.1. ACQUISITION OF LAND AND IMPROVEMENTS.........................9
SECTION 5.2. ENVIRONMENTAL MATTERS........................................9
SECTION 5.3. PROJECT COMPLETION...........................................9
SECTION 5.4. PAYMENT OF PROJECT COSTS FOR BUILDINGS AND IMPROVEMENTS.....10
SECTION 5.5. PAYMENT OF PROJECT COSTS FOR MACHINERY AND EQUIPMENT........10
SECTION 5.6. COMPLETION OF PROJECT.......................................10
SECTION 5.7. DEFICIENCY OF PROJECT FUND..................................10
SECTION 5.8. SURPLUS IN PROJECT FUND.....................................10
SECTION 5.9. RIGHT OF ENTRY BY ISSUER....................................10
SECTION 5.10. MACHINERY AND EQUIPMENT PURCHASED BY CORPORATION............11
SECTION 5.11. PROJECT PROPERTY OF ISSUER..................................11
SECTION 5.12. KANSAS RETAILERS' SALES TAX.................................11
ARTICLE VI
SECTION 6.1. INSURANCE AS A CONDITION TO DISBURSEMENT....................12
SECTION 6.2. INSURANCE AFTER COMPLETION..................................12
SECTION 6.3. GENERAL INSURANCE PROVISIONS................................12
SECTION 6.4. EVIDENCE OF TITLE...........................................13
(i)
ARTICLE VII
SECTION 7.1. IMPOSITIONS.................................................13
SECTION 7.2. RECEIPTED STATEMENTS........................................13
SECTION 7.3. ISSUER MAY NOT SELL.........................................13
SECTION 7.4. CONTEST OF IMPOSITIONS......................................13
SECTION 7.5. AD VALOREM TAXES............................................14
SECTION 7.6. PAYMENT IN LIEU OF TAXES....................................14
ARTICLE VIII
SECTION 8.1. USE OF PROJECT..............................................14
ARTICLE IX
SECTION 9.1. SUBLEASE BY CORPORATION.....................................15
SECTION 9.2. ASSIGNMENT BY CORPORATION...................................15
SECTION 9.3. RELEASE OF CORPORATION......................................15
SECTION 9.4. MERGERS AND CONSOLIDATIONS..................................15
SECTION 9.5. COVENANT AGAINST OTHER ASSIGNMENTS..........................15
SECTION 9.6. ASSIGNMENT TO DCI...........................................16
ARTICLE X
SECTION 10.1. REPAIRS AND MAINTENANCE.....................................16
SECTION 10.2. REMOVAL, DISPOSITION AND SUBSTITUTION OF
MACHINERY AND EQUIPMENT.....................................16
ARTICLE XI
SECTION 11.1. ALTERATION OF PROJECT.......................................17
ARTICLE XII
SECTION 12.1. ADDITIONAL IMPROVEMENTS.....................................18
ARTICLE XIII
SECTION 13.1. SECURING OF PERMITS AND AUTHORIZATIONS......................18
SECTION 13.2. MECHANICS' LIENS............................................18
SECTION 13.3. CONTEST OF LIENS............................................18
SECTION 13.4. UTILITIES...................................................19
ARTICLE XIV
SECTION 14.1. INDEMNITY...................................................19
ARTICLE XV
SECTION 15.1. ACCESS TO PROJECT...........................................19
(ii)
ARTICLE XVI
SECTION 16.1. OPTION TO EXTEND TERM.......................................19
ARTICLE XVII
SECTION 17.1. OPTION TO PURCHASE PROJECT..................................20
SECTION 17.2. QUALITY OF TITLE AND PURCHASE PRICE.........................20
SECTION 17.3. CLOSING OF PURCHASE.........................................20
SECTION 17.4. EFFECT OF FAILURE TO COMPLETE PURCHASE......................21
SECTION 17.5. APPLICATION OF CONDEMNATION AWARDS IF CORPORATION
PURCHASES PROJECT...........................................21
SECTION 17.6. OPTION TO PURCHASE UNIMPROVED PORTIONS OF LAND..............21
SECTION 17.7. QUALITY OF TITLE - PURCHASE PRICE...........................22
SECTION 17.8. CLOSING OF PURCHASE.........................................22
SECTION 17.9. EFFECT OF PURCHASE ON LEASE.................................22
SECTION 17.10. EFFECT OF FAILURE TO COMPLETE PURCHASE......................22
ARTICLE XVIII
SECTION 18.1. DAMAGE AND DESTRUCTION......................................23
SECTION 18.2. CONDEMNATION................................................24
ARTICLE XIX
SECTION 19.1. TERMINATION BY REASON OF CHANGE OF CIRCUMSTANCES............24
ARTICLE XX
SECTION 20.1. REMEDIES ON DEFAULT.........................................25
SECTION 20.2. SURVIVAL OF OBLIGATIONS.....................................26
SECTION 20.3. NO REMEDY EXCLUSIVE.........................................26
ARTICLE XXI
SECTION 21.1. PERFORMANCE OF CORPORATION'S OBLIGATIONS BY ISSUER..........26
ARTICLE XXII
SECTION 22.1. SURRENDER OF POSSESSION.....................................26
ARTICLE XXIII
SECTION 23.1. NOTICES. 29
ARTICLE XXIV
SECTION 24.1. NET LEASE...................................................27
SECTION 24.2. FUNDS HELD BY TRUSTEE AFTER PAYMENT OF BONDS................27
(iii)
ARTICLE XXV
SECTION 25.1. RIGHTS AND REMEDIES.........................................27
SECTION 25.2. WAIVER OF BREACH............................................27
SECTION 25.3. ISSUER SHALL NOT UNREASONABLY WITHHOLD CONSENTS
AND APPROVALS...............................................27
ARTICLE XXVI
SECTION 26.1. FINANCIAL REPORT............................................28
SECTION 26.2. QUIET ENJOYMENT AND POSSESSION..............................28
ARTICLE XXVII
SECTION 27.1. INVESTMENT TAX CREDIT; DEPRECIATION.........................28
ARTICLE XXVIII
SECTION 28.1. AMENDMENTS..................................................28
SECTION 28.2. GRANTING OF EASEMENTS.......................................29
SECTION 28.3. SECURITY INTERESTS..........................................29
SECTION 28.4. CONSTRUCTION AND ENFORCEMENT................................29
SECTION 28.5. INVALIDITY OF PROVISIONS OF LEASE...........................29
SECTION 28.6. COVENANTS BINDING ON SUCCESSORS AND ASSIGNS.................29
SECTION 28.7. SECTION HEADINGS............................................30
SECTION 28.8. EXECUTION OF COUNTERPARTS...................................30
SECTION 28.9. ELECTRONIC TRANSACTION......................................30
Signatures and Seals.......................................31
Exhibit A - Form of Certificate for Payment of Project Costs
Exhibit B - Performance Agreement
Schedule I - Property Subject to Lease
(iv)
LEASE AGREEMENT
THIS LEASE AGREEMENT dated as of September 1, 2006 (the "Lease"), between
the CITY OF OLATHE, KANSAS, a municipal corporation organized and existing under
the laws of the State of Kansas (the "Issuer"), as lessor, and DCI HOLDINGS FAE,
LLC, a Kansas limited liability company (the "Corporation"), as lessee;
WITNESSETH:
WHEREAS, the Issuer is authorized under the provisions of K.S.A. 12-1740 to
12-1749d, inclusive, as amended (the "Act"), to purchase, acquire, construct,
improve, equip, remodel, sell and lease certain facilities within its
jurisdiction for commercial purposes, and to issue revenue bonds for the purpose
of paying the cost of such facilities, and to pledge the income and revenues to
be derived from the operation of such facilities to secure the payment of the
principal of and interest on such bonds;
WHEREAS, pursuant to the Act, the governing body of the Issuer has
heretofore passed Ordinance No. 06-95 on August 15, 2006 (the "Ordinance")
authorizing the Issuer to issue its: (a) Tax Exempt Industrial Revenue Bonds
(DCI, Inc. Project), Series 2006A, in the aggregate principal amount of
$3,680,000 (the "Series 2006A Bonds"); (b) Tax Exempt Industrial Revenue Bonds
(DCI, Inc. Project), Series 2006B, in the aggregate principal amount of $400,000
(the "Series 2006B Bonds"); (c) Taxable Industrial Revenue Bonds (DCI, Inc.
Project), Series 2006C, in the aggregate principal amount of $100,000 (the
"Series 2006C Bonds"); and (d) Taxable Subordinate Industrial Revenue Bonds
(DCI, Inc. Project), Series 2006D, in the aggregate principal amount of $820,000
(the "Series 2006D Bonds," and together with the Series 2006A Bonds, the Series
2006B Bonds and the Series 2006C Bonds, the "Bonds"), for the purpose of
acquiring, constructing and equipping a Project (as defined in the hereafter
referred to Indenture), and authorizing the Issuer to lease the Project to the
Corporation;
WHEREAS, pursuant to the Ordinance, the Issuer is authorized to enter into
a Trust Indenture of even date herewith (the "Indenture"), with UMB Bank, N.A.,
as trustee (the "Trustee"), for the purpose of issuing and securing the Bonds,
as therein provided, and to enter into this Lease with the Corporation under
which the Issuer will acquire, purchase, construct, improve, equip and remodel
the Project and will lease the Project to the Corporation in consideration of
rental payments by the Corporation which will be sufficient to pay the principal
of and interest on the Bonds; and
WHEREAS, pursuant to the foregoing, the Issuer desires to lease the Project
to the Corporation and the Corporation desires to lease the Project from the
Issuer, for the rentals and upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual
representations, covenants and agreements herein contained, the Issuer and the
Corporation do hereby represent, covenant and agree as follows:
ARTICLE I
Section 1.1. Definitions. In addition to the words, terms and phrases
elsewhere defined in this Lease, capitalized words, terms and phrases as used
herein shall have the meanings given to such words, terms and phrases in Section
101 of the Indenture (which definitions are hereby incorporated by
reference) and the following meanings unless the context or use indicates
another or different meaning or intent:
"Additional Rent" means (i) all fees, charges and expenses of the Trustee,
(ii) all Impositions, (iii) all amounts required to be rebated to the United
States pursuant to the Indenture, (iv) all Default Administration Costs (as
defined in the Indenture), (v) all other payments of whatever nature payable or
to become payable pursuant to the Indenture or which Corporation has agreed to
pay or assume under the provisions of this Lease, and (vi) any and all expenses
(including reasonable attorney's fees) incurred by Issuer in connection with the
issuance of the Bonds or the enforcement of any rights under this Lease or the
Indenture. The fees, charges and expenses of the Trustee shall include all costs
incurred in connection with the issuance, transfer, exchange, registration,
redemption or payment of the Bonds except (a) the reasonable fees and expenses
in connection with the replacement of a Bond or Bonds mutilated, stolen, lost or
destroyed or (b) any tax or other government charge imposed on the Trustee in
relation to the transfer, exchange, registration, redemption or payment of the
Bonds.
"Additional Term" shall mean that term commencing on the last day of the
Basic Term and terminating five (5) years thereafter.
"Bankruptcy Code" means Title 11 of the United States Code, as amended.
"Basic Rent" means the amount of the interest due on the next Interest
Payment Date and of the principal due on the next Principal Payment Date which,
when added to Basic Rent Credits, will be sufficient to pay, on the next Payment
Date, all principal of, redemption premium, if any, and interest on the Bonds
which is due and payable on such Payment Date.
"Basic Rent Credits" means all funds on deposit in the Principal and
Interest Payment Account and available for the payment of principal of,
redemption premium, if any, and interest on the Bonds on any Payment Date.
"Basic Rent Payment Date" means (i) with respect to the Superior Bonds, the
first day of each month, commencing October 1, 2006, and (ii) with respect to
the Series 2006D Bonds, each March 1 and September 1, commencing March 1, 2007,
until the principal of, redemption premium, if any, and interest on the Bonds
have been fully paid or provision made for their payment in accordance with the
provisions of the Indenture.
"Basic Term" means that term commencing as of the date of this Lease and
ending on September 1, 2026, subject to prior termination as specified in this
Lease, but to continue thereafter until all of the principal of, redemption
premium, if any, and interest on all outstanding Bonds shall have been paid in
full or provision made for their payment in accordance with the provisions of
the Indenture.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. ss.9601, et seq.
"Certificate of Completion" means a written certificate signed by the
Authorized Corporation Representative stating (1) the date on which the Project
has been completed in accordance with the plans and specifications approved by
the Corporation, (2) that all other facilities necessary in connection with the
Project have been purchased, constructed, and installed, (3) that the Project
and such other facilities have been purchased, constructed, and installed in
accordance with the Performance Agreement and this Lease Agreement and in
conformance with all applicable zoning, planning, building, environmental, and
2
other similar governmental regulations, (4) that, except for Project Costs
described in accordance with clause (5) of this Section, all Project Costs have
been paid, (5) the amounts, if any, to be retained in the Project Fund for the
payment of Project Costs, if any, not yet due or Project Costs whose liability
the Corporation is contesting, and amounts that otherwise should be retained and
the reasons they should be retained, (6) that the Project has been completed in
a good and workmanlike manner, (7) that no mechanic's or materialmen's liens
have been filed, nor is there any basis for the filing of such liens, with
respect to the Project, (8) that all Improvements constituting a part of the
Project are located or installed upon the Land, and (9) that an appropriate
certificate of occupancy has been issued with respect to the Project .
"DCI" means DCI, Inc., a Kansas corporation.
"Default" means any event or condition the occurrence of which, with the
lapse of time or the giving of notice or both, constitutes an Event of Default.
"Environmental Law" means CERCLA, XXXX, and any other federal, state or
local environmental statute, regulation or ordinance presently in effect or
coming into effect during the term of this Lease.
"Event of Bankruptcy" means an event whereby the Corporation shall: (i)
admit in writing its inability to pay its debts as they become due; or (ii) file
a petition in bankruptcy or for reorganization or for the adoption of an
arrangement under the Bankruptcy Code as now or in the future amended, or file a
pleading asking for such relief; or (iii) make an assignment for the benefit of
creditors; or (iv) consent to the appointment of a trustee or receiver for all
or a major portion of its property; or (v) be finally adjudicated as bankrupt or
insolvent under any federal or state law; or (vi) suffer the entry of a final
and nonappealable court order under any federal or state law appointing a
receiver or trustee for all or a major part of its property or ordering the
winding-up or liquidation of its affairs, or approving a petition filed against
it under the Bankruptcy Code, which order, if the Corporation has not consented
thereto, shall not be vacated, denied, set aside or stayed within 60 days after
the day of entry; or (vii) suffer a writ or warrant of attachment or any similar
process to be issued by any court against all or any substantial portion of its
property, and such writ or warrant of attachment or any similar process is not
contested, stayed, or is not released within 60 days after the final entry, or
levy or after any contest is finally adjudicated or any stay is vacated or set
aside.
"Event of Default" means any one of the following events:
(a) Failure of Corporation to make any payment of Basic Rent at the
time and in the amounts required hereunder; or
(b) Failure of Corporation to make any payment of Additional Rent at
the times and n the amounts required hereunder, or failure by the
Corporation to observe or perform any other covenant, agreement, obligation
or provision of this Lease or the Tax Compliance Agreement, and the same is
not remedied within 30 days after the Issuer or the Trustee has given the
Corporation written notice specifying such failure (or such longer period
as shall be reasonably required to correct such default; provided that (i)
Corporation has commenced such correction within said 30-day period, and
(ii) Corporation diligently prosecutes such correction to completion); or
(c) An Event of Bankruptcy; or
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(d) The occurrence of a Determination of Taxability; or
(e) Corporation abandons the Project; or
(f) An Event of Default under the Indenture or the Performance
Agreement shall have occurred and be continuing.
"Full Insurable Value" means the full actual replacement cost less physical
depreciation as determined from time to time in accordance with Article VI of
the Lease upon the request of Issuer, Corporation or the Trustee (but not more
frequently than once in every 24 months) by an architect, appraiser, appraisal
company or one of the insurers, selected and paid by Corporation.
"Hazardous Substances" shall mean "hazardous substances" as defined in
CERCLA.
"Impositions" means all taxes and assessments, general and special, which
may be lawfully taxed, charged, levied, assessed or imposed upon or against or
payable for or in respect of the Project or any part thereof, or any
improvements at any time thereon or Corporation's interest therein, including
any new lawful taxes and assessments not of the kind enumerated above to the
extent that the same are lawfully made, levied or assessed in lieu of or in
addition to taxes or assessments now customarily levied against real or personal
property, and further including all water and sewer charges, assessments and
other governmental charges and impositions whatsoever, foreseen or unforeseen.
"Indenture" means the Trust Indenture dated as of September 1, 2006, as
from time to time amended and supplemented by Supplemental Indentures in
accordance with the provisions thereof.
"Land" means the real property described in Schedule I attached hereto and
made a part hereof on which the Project is located.
"Lease" means this Lease by and between the Issuer and the Corporation, as
from time to time supplemented and amended in accordance with the provisions
hereof and of the Indenture.
"Net Proceeds" means, when used with respect to any insurance or
condemnation award with respect to the Project, the proceeds from the insurance
or condemnation award remaining after the payment of all expenses (including
attorneys' fees and any extraordinary expenses of the Trustee) incurred in the
collection of such proceeds.
"Notice Address" shall mean:
(1) With respect to the Corporation:
DCI Holdings FAE, LLC
C/O First American Exchange Company
0000 Xxxxxxx Xxxxx
000 Xxxxxxxx Xxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxx
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(2) With respect to the Issuer:
City of Olathe, Kansas
City Hall
000 X. Xxxxx Xx
Xxxxxx, Xxxxxx 00000
Attention: City Clerk
(3) With respect to the Trustee:
UMB Bank, N.A.
Attention: Corporate Trust Division
0000 Xxxxx Xxxx., Xxxxx 000
Xxxxxx Xxxx, Xxxxxxxx 00000
"Official Action Date" means September 6, 2005, the date on which the
governing body of the Issuer adopted a resolution indicating an intent to issue
the Bonds.
"Performance Agreement" means the Performance Agreement dated as of
September 1, 2006, between the Issuer and the Corporation.
"XXXX" means the Superfund Amendments and Reauthorization Act of 1986, as
now in effect and as hereafter amended.
Section 1.2. Representations and Covenants by Corporation. Corporation
makes the following covenants and representations as the basis for the
undertakings on its part herein contained.
(a) The Corporation (i) is a limited liability company duly organized
and validly existing under the laws of the State of Kansas, and is
qualified to transact business under the laws of the State, (ii) has the
power and authority to own its properties and assets and to carry on its
business as now being conducted (and as now contemplated by this Lease) and
(iii) has the full legal right, power and authority to execute and deliver
this Lease and to perform all the undertakings of the Corporation
thereunder.
(b) The execution, delivery and performance of this Lease by the
Corporation, the consummation of the transactions contemplated thereby, and
the fulfillment of the terms and conditions thereof do not and will not
conflict with or result in a breach of any of the terms or conditions of
its Articles of Organization and Operating Agreement, any restriction or
any agreement or instrument to which the Corporation is now a party or by
which it is bound or to which any property of the Corporation is subject,
and do not and will not constitute a default under any of the foregoing, or
to the best of the Corporation's knowledge, cause the Corporation to be in
violation of any order, decree, statute, rule or regulation of any court or
any state or federal regulatory body having jurisdiction over the
Corporation or its properties, including the Project, and do not and will
not result in the creation or imposition of any lien, charge or encumbrance
of any nature upon any of the property or assets of the Corporation
contrary to the terms of any instrument or agreement to which the
Corporation is a party or by which it is bound.
(c) There are no actions, suits, proceedings or inquiries or
investigations at law or in equity pending or, to the knowledge of the
Corporation, threatened against the Corporation or any property of the
Corporation in any court or before any federal, state, municipal or other
governmental agency, which are reasonably likely to have a material adverse
effect upon the Corporation or upon the business or
5
properties of the Corporation or upon their power, authority and right to
enter into this Lease; and the Corporation is not in default with respect
to any order of any court or governmental agency.
(d) The operation of the Project in the manner presently contemplated
and as described herein will not conflict in any material respect with any
existing zoning, water or air pollution or other ordinance, order, law or
regulations applicable thereto. To the best of the Corporation's knowledge
the Project has been designed in accordance with all applicable federal,
state and local laws or ordinances (including rules and regulations)
relating to zoning, building, safety and environmental quality. All
necessary permits, licenses, consents and permissions with respect to the
Project have been obtained as of the date of execution of this Lease to the
extent that the same are obtainable as of such date.
(e) The Corporation will operate the Project in material compliance
with all applicable federal, state and local laws, ordinances and
regulations and all agreements and instruments to which it is a party.
(f) Subject to Section 9.6, the Corporation is not in the trade or
business of selling properties such as the Project and is acquiring the
Project for investment purposes only or otherwise for use by the
Corporation in its trade or business, and therefore the Corporation has no
intention now or in the foreseeable future to voluntarily sell, surrender
or otherwise transfer, in whole or part, its interest in the Project.
(g) The Corporation is not in default in the payment of the principal
of or interest on any indebtedness for borrowed money; or under any
instrument or agreement under and subject to which any indebtedness for
borrowed money has been issued.
(h) The Corporation has filed all federal and state income tax returns
which, to the knowledge of the Corporation, are required to be filed and
has paid all taxes shown on said returns and all assessments and
governmental charges received by it to the extent that they have become
due.
(i) The Corporation has reviewed the provisions of the Indenture. By
the execution and delivery of this Lease, the Corporation approves the
Indenture and agrees to be bound by all provisions thereof applicable to
the Corporation.
(j) To the best of the Corporation's knowledge, no member of the
governing body of the Issuer or any other officer of the Issuer has any
significant or conflicting interest, financial, employment or otherwise, in
the Corporation, the Project or in the transactions contemplated hereby.
(k) The Corporation shall not:
(i) except pursuant to the provisions of this Lease or except
upon a sale, transfer or conveyance of the Project in accordance with
the terms of this Lease, permit the sale, transfer, conveyance or
encumbrance of the Project or any part thereof during the effective
term of this Lease, provided this covenant shall not apply to any
encumbrance, conveyance or transfer in connection with a sale,
transfer or other conveyance of the Project that complies with the
requirements of this Lease; or
(ii) demolish any part of the Project except in accordance with
the plans and specifications or substantially remove from the Project
any real or personal property.
6
(l) The Corporation warrants that it has not and will not execute any
other agreement with provisions contradictory to, or in opposition to, the
provisions hereof, and that in any event, the requirements of this Lease
are paramount and controlling as to the rights and obligations herein set
forth and supersede any other requirements in conflict herewith.
(m) If the Corporation becomes aware of any situation, event or
condition which would result in the interest on the Bonds becoming subject
to federal or Kansas income taxation, the Corporation shall promptly give
written notice thereof to the Issuer, the Trustee and the Original
Purchaser.
(n) The Corporation represents, warrants and agrees that if, as a
result of fire or other casualty, the Project, or any part thereof, shall
be condemned or acquired for public use, the Corporation will use its best
efforts to repair and restore the Project to substantially the same
condition as existed prior to the event causing such damage or destruction,
or to relieve the condemnation, and thereafter to operate the Project in
accordance with the terms of this Lease.
(o) The Corporation has not and will not sell, transfer or otherwise
dispose of the Project except as provided in this Lease and the Tax
Compliance Agreement, and the Corporation hereby further agrees that any
sale, transfer or other disposition of the Project in violation hereof or
thereof shall be null, void and without effect, shall cause a reversion of
title to the Corporation and shall be ineffective to relieve the
Corporation of its obligations under this Lease.
Section 1.3. Representations and Covenants by Issuer. Issuer makes the
following representations and covenants as the basis for the undertakings on its
part herein contained:
(a) It is a municipal corporation existing under the Constitution and
laws of the State. Under the provisions of the Act, Issuer has the power to
enter into and perform the transactions contemplated by this Lease and the
Indenture and to carry out its obligations hereunder and thereunder.
(b) It has not, in whole or in part, assigned, leased, hypothecated or
otherwise created any other interest in, or disposed of, or caused or
permitted any lien, claim or encumbrance to be placed against, the Project,
except for this Lease and the pledge of the Project pursuant to the
Indenture.
(c) Except as otherwise provided herein or in the Indenture, it will
not during the Term, in whole or in part, assign, lease, hypothecate or
otherwise create any other interest in, or dispose of, or cause or permit
any lien, claim or encumbrance to be placed against, the Project, except
this Lease and the pledge of the Project pursuant to the Indenture.
(d) It has duly authorized the execution and delivery of this Lease
and the Indenture and the issuance, execution and delivery of the Bonds.
(e) It has obtained the consent to and/or approval of the issuance of
the Bonds by each municipal corporation and political subdivision the
consent of approval of which is required by the provisions of the Act and
the Code.
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ARTICLE II
Section 2.1. Granting of Leasehold. Issuer by these presents hereby rents,
leases and lets unto Corporation and Corporation hereby rents, leases and hires
from Issuer, for the rentals and upon and subject to the terms and conditions
hereinafter set forth, the Project for the Basic Term.
ARTICLE III
Section 3.1. Basic Rent. Issuer reserves and Corporation covenants and
agrees to pay to the Trustee hereinafter and in the Indenture designated, for
the account of Issuer and during the Basic Term, for deposit in the Principal
and Interest Payment Account hereinafter and in the Indenture established, on
each Basic Rent Payment Date, Basic Rent in immediately available funds.
Section 3.2. Acquisition of Bonds. In the event Corporation acquires any
Outstanding Bonds, it may present the same to Issuer for cancellation, and upon
such cancellation, Corporation's obligation to pay Basic Rent shall be reduced
accordingly, but in no event shall Corporation's obligation to pay Basic Rent be
reduced in such a manner that the Trustee shall not have on hand in the
Principal and Interest Payment Account funds sufficient to pay the maturing
principal of, redemption premium, if any, and interest on Outstanding Bonds as
and when the same shall become due and payable in accordance with the provisions
of the Indenture.
Section 3.3. Additional Rent. Within 30 days after receipt of written
notice thereof, Corporation shall pay any Additional Rent required to be paid
pursuant to this Lease; provided, however, any Additional Rent described in
subparagraph (iv) of the definition of Additional Rent shall be due upon written
demand of the Trustee.
Section 3.4. Rent Payable Without Abatement or Setoff. Corporation
covenants and agrees with and for the express benefit of Issuer and the
Bondowners that all payments of Basic Rent and Additional Rent shall be made by
Corporation as the same become due, and that Corporation shall perform all of
its obligations, covenants and agreements hereunder without notice or demand and
without abatement, deduction, setoff, counterclaim, recoupment or defense or any
right of termination or cancellation arising from any circumstance whatsoever,
whether now existing or hereafter arising, and irrespective of whether the
Improvements shall have been acquired, started or completed, or whether Issuer's
title to the Project or any part thereof is defective or non-existent, and
notwithstanding any failure of consideration or commercial frustration of
purpose, the eviction or constructive eviction of Corporation, any Change of
Circumstances, any change in the tax or other laws of the United States of
America, the State, or any municipal corporation of either, any change in
Issuer's legal organization or status, or any default of Issuer hereunder, and
regardless of the invalidity of any action of Issuer or any other event or
condition whatsoever, and regardless of the invalidity of any portion of this
Lease, and Corporation hereby waives the provisions of any statute or other law
now or hereafter in effect contrary to any of its obligations, covenants or
agreements under this Lease or which releases or purports to release Corporation
therefrom. Nothing in this Lease shall be construed as a waiver by Corporation
of any rights or claims Corporation may have against Issuer under this Lease or
otherwise, but any recovery upon such rights and claims shall be had from Issuer
separately, it being the intent of this Lease that Corporation shall be
unconditionally and absolutely obligated to perform fully all of its
obligations, agreements and covenants under this Lease (including the obligation
to pay Basic Rent and Additional Rent) for the benefit of the Bondowners.
8
Section 3.5. Prepayment of Basic Rent. Corporation may at any time prepay
all or any part of the Basic Rent.
Section 3.6. Deposit of Rent by Trustee. The Trustee shall deposit, use and
apply all payments of Basic Rent and Additional Rent in accordance with the
provisions of this Lease and the Indenture.
ARTICLE IV
Section 4.1. Disposition of Original Proceeds. The Original Proceeds shall
be paid over to the Trustee for the account of Issuer and deposited by the
Trustee in the Project Fund to be used and applied as provided in this Lease and
the Indenture, without further order or authorization.
ARTICLE V
Section 5.1. Acquisition of Land and Improvements. Corporation shall prior
to or concurrently with the issuance of the Bonds, convey or cause to be
conveyed to Issuer the Land and such of the Improvements as are then completed,
installed or in progress. Corporation shall also concurrently with such
conveyance make provisions for the discharge of any liens or encumbrances
incurred by it in connection with the construction, installation or development
of the Project.
Section 5.2. Environmental Matters. Corporation acknowledges that is it
responsible for maintaining the Project in compliance with all Environmental
Laws. In the event that Corporation does not expeditiously proceed with any
compliance action with respect to the Project lawfully required by any local,
state or federal authority under applicable Environmental Law, Issuer,
immediately after notice to Corporation, may elect (but may not be required) to
undertake such compliance. Any moneys expended by Issuer in efforts to comply
with any applicable Environmental Law (including the cost of hiring consultants,
undertaking sampling and testing, performing any cleanup necessary or useful in
the compliance process and attorneys' fees) shall be due and payable as
Additional Rent hereunder with interest thereon at the rate of 12% from the date
such cost is incurred. There shall be unlimited recourse to Corporation to the
extent of any liability incurred by Issuer with respect to any breaches of the
provisions of this section.
Corporation shall and does hereby indemnify the Issuer, the Trustee and the
Bondowners and agree to defend and hold them harmless from and against all loss,
cost, damage and expense (including, without limitation, attorneys' fees and
costs associated incurred in the investigation, defense and settlement of
claims) that they may incur, directly or indirectly, as a result of or in
connection with the assertion against them or any of them of any claim relating
to the presence on, escape or removal from the Project of any hazardous
substance or other material regulated by any applicable Environmental Law, or
compliance with any applicable Environmental Law, whether before, during or
after the term of this Lease, including claims relating to personal injury or
damage to property.
Section 5.3. Project Completion. The Corporation warrants that the
construction and/or acquisition of the Improvements have been completed (other
than punch list items and landscaping which the Corporation will cause to be
completed) and that the Project will be suitable for use by the Corporation for
its purposes. Any and all amounts received by Issuer, Trustee or Corporation
from any
9
of the contractors or other suppliers by way of breach of contract, refunds or
adjustments shall become a part of and be deposited in the Project Fund.
Section 5.4. Payment of Project Costs for Buildings and Improvements.
Issuer hereby agrees to pay for the construction of the Improvements, but solely
from the Project Fund, and hereby authorizes and directs the Trustee to pay for
the same, but solely from the Project Fund, from time to time, upon receipt by
the Trustee of a certificate signed by the Authorized Corporation Representative
in the form set forth by Exhibit A hereto which is incorporated herein by
reference.
The sole obligation of Issuer under this paragraph shall be to cause the
Trustee to make such disbursements upon receipt of such certificates. The
Trustee may rely fully on any such certificate and shall not be required to make
any investigation in connection therewith.
Section 5.5. Payment of Project Costs for Machinery and Equipment. Issuer
hereby agrees to pay for the purchase and acquisition of any machinery,
equipment or other personal property constituting a part of the Improvements,
but solely from the Project Fund, from time to time, upon receipt by the Trustee
of a certificate signed by the Authorized Corporation Representative in the form
provided by Exhibit A hereto.
The sole obligation of Issuer under this Section shall be to cause the
Trustee to make such disbursements upon receipt of said certificates. The
Trustee may rely fully on any such certificate and shall not be required to make
any independent investigation in connection therewith, except that the Trustee
shall investigate requests for reimbursements directly to Corporation and shall
require such supporting evidence as would be required by a reasonable and
prudent trustee. All machinery, equipment and for personal property acquired, in
whole or in part, from funds deposited in the Project Fund pursuant to this
section shall be and become a part of the Project.
Section 5.6. Completion of Project. Corporation warrants that the Project,
when completed, will be necessary or useful in its development for use by
Corporation or DCI for their respective purposes. Issuer and Corporation each
covenant and agree to proceed diligently to complete the Project on or before
the Completion Date. Upon completion of the Project, Corporation shall cause the
Authorized Corporation Representative to deliver a Certificate of Completion to
the Trustee.
Section 5.7. Deficiency of Project Fund. If the Project Fund shall be
insufficient to pay fully all Project Costs and to fully complete the Project,
lien free, Corporation covenants to pay the full amount of any such deficiency
by making payments directly to the contractors and to the suppliers of
materials, machinery, equipment, property and services as the same shall become
due, and Corporation shall save Issuer whole and harmless from any obligation to
pay such deficiency.
Section 5.8. Surplus in Project Fund. In the event funds remain on hand in
the Project Fund on the date the Certificate of Completion is furnished to
Trustee or on the Completion Date, whichever shall first occur, such remaining
funds shall be transferred by the Trustee to the Principal and Interest Payment
Account on the Completion Date and shall be applied in accordance with the
provisions of Section 504 of the Indenture.
Section 5.9. Right of Entry by Issuer. The duly authorized agents of Issuer
shall have the right at any reasonable time prior to the completion of the
Project to have access to the Project or any parts thereof for the purpose of
inspecting and supervising the acquisition, installation or construction
thereof.
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Section 5.10. Machinery and Equipment Purchased by Corporation. If no part
of the purchase price of an item of machinery, equipment or personal property is
paid from funds deposited in the Project Fund pursuant to the terms of this
Lease, then such item of machinery, equipment or personal property shall not be
deemed a part of the Project.
Section 5.11. Project Property of Issuer. All buildings, improvements and
work constituting a part of the Project, all work and materials on the Project
as such work progresses, and the Project as fully completed, anything under this
Lease which becomes, is deemed to be, or constitutes a part of the Project, and
the Project as repaired, rebuilt, rearranged, restored or replaced by
Corporation under the provisions of this Lease, except as otherwise specifically
provided herein, shall immediately when erected or installed become the absolute
property of Issuer.
Section 5.12. Kansas Retailers' Sales Tax.
(a) The parties have entered into this Lease in contemplation that,
under the existing provisions of K.S.A. 79-3606(d) and other applicable
laws, sales of tangible personal property or services purchased in
connection with construction of the Project are entitled to exemption from
the tax imposed by the Kansas Retailers' Sales Tax Act. The parties agree
that Issuer shall, upon the request of and with Corporation's assistance,
promptly obtain from the State and furnish to the contractors and suppliers
an exemption certificate for the construction of the Project. Corporation
covenants that said exemption shall be used only in connection with the
purchase of tangible personal property or services becoming a part of the
Project.
(b) The parties further acknowledge that, under the existing
provisions of K.S.A. 79-3603(h), a tax may be levied at the currently
lawful rate upon the gross receipts derived by Issuer from the renting or
leasing of personal property, if any, purchased from the proceeds of the
Bonds. Corporation agrees to pay, as Additional Rent hereunder, the full
amount of any such tax as hereinafter determined. Such payments, if
required, shall be made at the same time as the installments of Basic Rent
provided for hereby, and shall be made directly to Issuer, or in such other
manner as Issuer may from time to time direct in writing. It shall be the
duty of Issuer to promptly file any returns and remit any such taxes to the
State, or to make suitable provision therefor, in accordance with
applicable laws, rulings and regulations. Issuer's taxable gross receipts
shall be determined by multiplying that portion of each installment of
Basic Rent which represents the payment of principal of the Bonds by a
fraction in which the total proceeds of the Bonds is the denominator, and
the amount expended from Bond proceeds for the acquisition of personal
property, which amount shall be determined by Corporation and set forth in
a certificate delivered to Issuer, Corporation and the Trustee immediately
following completion of construction of the Project, is the numerator. The
amount of each installment of tax due shall be determined by multiplying
Issuer's taxable gross receipts determined in accordance with the preceding
sentence (unless a different determination has been made in a judicial or
administrative proceeding as hereinafter provided), by such other tax rate
percentage as may from time to time be imposed by applicable law.
Notwithstanding the foregoing provisions, if it shall be determined in any
judicial or administrative proceeding that Issuer's taxable gross receipts
are in an amount other than the amount determined by applying the foregoing
provisions, Corporation shall be obligated to pay and hereby agrees to pay
the full amount of such tax, based upon such judicially or administratively
determined gross receipts, it being the intent of this provision that
Corporation shall pay in full the amount of any such tax, but no more than
such amount, which Issuer is obligated to collect under the present or any
future laws of the State.
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ARTICLE VI
Section 6.1. Insurance as a Condition to Disbursement. As a condition
precedent to disbursement of funds from the Project Fund pursuant to Article V
hereunder (other than any disbursement made in connection with the issuance of
the Bonds), the following policies of insurance shall be in full force and
effect:
(a) General accident and public liability insurance covering
Corporation's and/or DCI's operations in or upon the Project (including
coverage for all losses whatsoever arising from the ownership, maintenance,
use or operation of any automobile, truck or other vehicle in or upon the
Project) under which DCI shall be named as insured and Issuer, Corporation
(until such time that this Lease is assigned to DCI) and Trustee shall be
additional named insureds, as their interests in the Project shall appear,
in an amount not less than $1,000,000; which policy shall provide that such
insurance may not be cancelled by the issuer thereof without at least 30
days' advance written notice to Issuer, Corporation and Trustee, such
insurance to be maintained throughout the life of this Lease; and
(b) Workers' Compensation Insurance.
Section 6.2. Insurance After Completion. Corporation shall and covenants
and agrees that it will, throughout the Basic Term at its sole cost and expense,
keep the Project constantly insured against loss or damage by fire, lightning
and all other risks covered by the broadest form extended coverage insurance
endorsement then in use in the State in an amount equal to the Full Insurable
Value thereof (subject to reasonable loss deductible provisions) in such
insurance company or companies as it may select and shall at all times maintain
general accident and public liability insurance required pursuant to Section
6.l(a).
Section 6.3. General Insurance Provisions.
(a) Not less than 30 days prior to the expiration dates of the
expiring policies, originals or certificates or acceptable binders of the
policies provided for in this Article, each bearing notations evidencing
payment of the premiums or other evidence of such payment satisfactory to
Issuer, shall be delivered by Corporation to Issuer and Trustee. All
policies of such insurance and all renewals thereof shall name DCI as
insured and Issuer, Corporation (until such time that this Lease is
assigned to DCI) and the Trustee as additional insureds as their respective
interests may appear, shall contain a provision that such insurance may not
be cancelled or amended by the issuer thereof without at least 30 days'
written notice to Issuer, Corporation and the Trustee and shall be payable
to the Issuer, Corporation and Trustee as their respective interests
appear. Issuer and Corporation each hereby agree to do anything necessary,
be it the endorsement of checks or otherwise, to cause any such payment to
be made to the Trustee, as long as such payment is required by this Lease
to be made to the Trustee. Any charges made by the Trustee for its services
shall be paid by Corporation.
(b) Each policy of insurance hereinabove referred to shall be issued
by a nationally recognized responsible insurance company qualified under
the laws of the State to assume the risks covered therein except that
Corporation may be self-insured as to any required insurance
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coverages with the consent of the Issuer and the Trustee, which consent
will not be unreasonably withheld.
(c) Certificates of insurance evidencing the insurance coverages
herein required shall be filed with the Trustee continuously during the
term of this Lease.
(d) Each policy of insurance hereinabove referred to may be subject to
a reasonable deductible in an amount approved by the Trustee.
(e) Each policy of insurance required herein may be provided through
blanket policies maintained by Corporation.
(f) Anything in this Lease to the contrary notwithstanding,
Corporation shall be liable to Issuer pursuant to the provisions of this
Lease or otherwise, as to any loss or damage which may have been occasioned
by the negligence of Corporation, its agents or employees.
Section 6.4. Evidence of Title. Corporation shall purchase, from the
Project Fund or from Corporation's own funds, a policy of or an endorsement to
owner's title insurance, insuring fee simple title to the Project in Issuer,
subject to Permitted Encumbrances in an amount equal to the maximum insurable
value thereof for title insurance purposes. Issuer and Corporation agree that
any and all proceeds therefrom during the Basic Term (a) if received before the
completion of the Project shall be paid into and become a part of the Project
Fund, (b) if received thereafter but before the Bonds and interest thereon have
been paid in full, shall be paid into and become a part of the Principal and
Interest Payment Account, and (c) if received after the Bonds, redemption
premium, if any, and interest thereon have been paid in full, shall belong and
be paid to Corporation.
ARTICLE VII
Section 7.1. Impositions. Corporation shall, during the Lease Term, bear,
pay and discharge, before the delinquency thereof, any and all Impositions. In
the event any Impositions may be lawfully paid in installments, Corporation
shall be required to pay only such installments thereof as become due and
payable during the life of this Lease as and when the same become due and
payable.
Section 7.2. Receipted Statements. Unless Corporation exercises its right
to contest any Impositions in accordance with Section 7.4 hereof, Corporation
shall, within 30 days after the last day for payment, without penalty or
interest, of an Imposition which Corporation is required to bear, pay and
discharge pursuant to the terms hereof, deliver to Issuer a photostatic or other
suitable copy of the statement issued therefor duly receipted to show the
payment thereof.
Section 7.3. Issuer May Not Sell. Issuer covenants that, unless Corporation
is in default under this Lease it will not, without Corporation's written
consent, unless required by law, sell or otherwise part with or encumber its fee
or other ownership interest in the Project at any time during the life of this
Lease.
Section 7.4. Contest of Impositions. Corporation shall have the right, in
its own or Issuer's name or both, to contest the validity or amount of any
Imposition by appropriate legal proceedings instituted at least 10 days before
the Imposition complained of becomes delinquent if, and provided, Corporation
(i) before instituting any such contest, shall give Issuer written notice of its
intention to do
13
so and, if requested in writing by Issuer, shall deposit with the Trustee a
surety bond of a surety company acceptable to Issuer as surety, in favor of
Issuer, or cash, in a sum of at least the amount of the Imposition so contested,
assuring the payment of such contested Impositions together with all interest
and penalties to accrue thereon and court costs, and (ii) diligently prosecutes
any such contest and at all times effectively stays or prevents any official or
judicial sale therefor, under execution or otherwise, and (iii) promptly pays
any final judgment enforcing the Imposition so contested and thereafter promptly
procures record release or satisfaction thereof. Corporation shall hold Issuer
whole and harmless from any costs and expenses Issuer may incur related to any
such contest.
Section 7.5. Ad Valorem Taxes. The Issuer and the Corporation acknowledge
that under the existing provisions of K.S.A. 79-201a, as amended, the property
acquired, constructed or installed with the proceeds of the Bonds is entitled to
exemption from general ad valorem and property taxes (other than special
assessments levied on account of special benefits) on real and personal
property, other than inventory, for a period of 10 calendar years after the
calendar year in which the Bonds are issued, provided proper application is made
therefor. The Issuer covenants that it will not voluntarily take any action
which may be reasonably construed as tending to cause or induce the levy or
assessment of such ad valorem or property taxes on the Project so long as any of
the Bonds are outstanding and unpaid or for said 10-year period, whichever shall
be the shorter time, and at the Corporation's request, fully cooperate with the
Corporation in all reasonable ways to prevent any such levy or assessment. The
Issuer further covenants that it will make all necessary filing regarding the
application for such ad valorem and property tax exemption, and will renew said
application from time to time and take any other action as may be necessary to
maintain such ad valorem and property tax exemption in full force and effect, in
accordance with K.S.A. 79-210, et seq., and the regulations of the State
Department of Revenue. The Corporation agrees to pay any such levies or
assessments that are lawful on the Project.
Section 7.6. Payment in Lieu of Taxes. The Issuer shall use its best
efforts to obtain and maintain in effect the exemption from ad valorem taxes and
personal property taxes referred to in Section 7.5 above. The Corporation agrees
that, during each year the Project is exempt from ad valorem and personal
property taxes by reason thereof, the Corporation will make a payment in lieu of
taxes to the Issuer in the amounts and at the times set forth in the Performance
Agreement providing for payments in lieu of such ad valorem and personal
property taxes. Such payment shall be made each year at the time ad valorem
taxes on the Project would first be due and payable but for such exemption.
ARTICLE VIII
Section 8.1. Use of Project. Subject to the provisions of this Lease,
Corporation shall have the right to use the Project for any and all purposes
allowed by law and contemplated by the Constitution of the State and the Act.
Corporation shall comply with all statutes, laws, ordinances, orders, judgments,
decrees, regulations, directions and requirements of all federal, state, local
and other governments or governmental authorities, now or hereafter applicable
to the Project or to any adjoining public ways, as to the manner of use or the
condition of the Project or of adjoining public ways. Corporation shall comply
with the mandatory requirements, rules and regulations of all insurers under the
policies required to be carried under the provisions of this Lease. Corporation
shall pay all costs, expenses, claims, fines, penalties and damages that may in
any manner arise out of, or be imposed as a result of, the failure of
Corporation to comply with the provisions of this Article.
14
ARTICLE IX
Section 9.1. Sublease by Corporation. Corporation may sublease the Project
to any single party or entity, but only with the prior written consent of
Issuer, which consent Issuer shall not unreasonably withhold, and the prior
written consent of 100% of the Bondowners. The Corporation may sublease the
Project to DCI without the prior written consent of the Issuer or the
Bondholders. Corporation may sublease portions of the Project for use by others
in the normal course of its business without Issuer's prior consent or approval,
but with the prior written consent of 100% of the Bondowners (which consent
shall not be unreasonably withheld if the sublease at issue plus the total of
all other subleases do not exceed 25% of the Improvements). In the event of any
such subleasing, Corporation shall remain fully liable for the performance of
its duties and obligations hereunder, and no such subleasing and no dealings or
transactions between Issuer or the Trustee and any such subtenant shall relieve
Corporation of any of its duties and obligations hereunder. Any such sublease
shall be subject and subordinate in all respects to the provisions of this
Lease.
Section 9.2. Assignment by Corporation. Subject to Section 9.6, the
Corporation may assign its interest in this Lease with the prior written consent
of Issuer (which consent Issuer shall not unreasonably withhold) and the prior
written consent of 100% of the Bondowners. In the event of any such assignment,
Corporation shall remain fully liable for the performance of its duties and
obligations hereunder, except to the extent hereinafter provided, and no such
assignment and no dealings or transactions between Issuer or the Trustee and any
such assignee shall relieve Corporation of any of its duties and obligations
hereunder, except as may be otherwise provided in the following section.
Section 9.3. Release of Corporation. If, in connection with an assignment
by Corporation of its interest in this Lease, (1) the Issuer and the Owners of
100% in aggregate principal amount of the Outstanding Bonds (including any
Additional Bonds) shall file with the Trustee and the Original Purchaser their
prior written consent to such assignment, and (2) the proposed assignee shall
expressly assume and agree to perform all of the obligations of Corporation
under this Lease; then Corporation shall be fully released from all obligations
accruing hereunder after the date of such assignment.
Section 9.4. Mergers and Consolidations. Notwithstanding the provisions of
Sections 9.1 and 9.2 above, if Corporation shall assign or transfer, by
operation of law or otherwise, its interests in this Lease in connection with a
transaction involving the merger or consolidation of Corporation with or into,
or a sale, lease or other disposition of all or substantially all of the
property of Corporation as an entirety to another person, association, limited
liability company, corporation or other entity, and (1) Issuer shall file with
the Trustee its prior written consent to such assignment, transfer or merger,
(2) the proposed assignee, transferee or surviving company or corporation shall
expressly assume and agree to perform all of the obligations of Corporation
under this Lease and the Guaranty Agreement with regard to the Bonds, and (3)
Corporation shall furnish the Trustee and Issuer with evidence in the form of
financial statements accompanied by the certificate of an independent certified
public accountant of recognized standing establishing that the net worth of such
proposed assignee, transferee or surviving company or corporation immediately
following such assignment, transfer or merger will be at least equal to the net
worth of Corporation as shown by the most recent financial statement of
Corporation furnished to Trustee pursuant to this Lease; then and in such event
Corporation shall be fully released from all obligations accruing hereunder
after the date of such assignment, transfer or merger.
Section 9.5. Covenant Against Other Assignments. Corporation will not
assign or in any manner transfer its interests under this Lease, nor will it
suffer or permit any assignment thereof by operation of law, except in
accordance with the limitations, conditions and requirements herein set forth.
15
Section 9.6. Assignment to DCI. The Corporation and the Issuer agree that
the Corporation shall assign this Lease to DCI prior to January 1, 2007. The
Corporation shall deliver written notice to the Issuer and the Trustee at the
time of the assignment, along with an assignment and assumption agreement
executed by both the Corporation and DCI, at the time of the assignment. Upon
the acknowledgment of the assignment and assumption agreement by the City, the
Corporation shall be released from its obligations under this Lease.
ARTICLE X
Section 10.1. Repairs and Maintenance. Corporation covenants and agrees
that it will, during the Term of this Lease, keep and maintain the Project and
all parts thereof in good condition and repair, including but not limited to the
furnishing of all parts, mechanisms and devices required to keep the machinery,
equipment and personal property constituting a part of the Project in good
mechanical and working order, and that during said period of time it will keep
the Project and all parts thereof free from filth, nuisance or conditions
unreasonably increasing the danger of fire.
Section 10.2. Removal, Disposition and Substitution of Machinery and
Equipment. Corporation shall have the right, provided Corporation is not in
default in the payment of Basic Rent and Additional Rent, to remove and sell or
otherwise dispose (any such removal, sale or disposition referred to as a
"Removal") of any machinery and equipment which constitutes a part of the
Project and which are no longer used by Corporation or, in the opinion of
Corporation, are no longer suitable for use by Corporation in its operations
(whether by reason of changed processes, changed techniques, obsolescence,
depreciation or otherwise), subject, however, to the following conditions:
(1) With respect only to such items of machinery and equipment that
originally cost $25,000 or more, to the following:
(a) Prior to any such Removal, Corporation shall deliver to the
Trustee a certificate signed by the Authorized Corporation
Representative (i) containing a complete description, including the
make, model and serial numbers, if any, of any machinery and equipment
constituting a part of the Project which it proposes to remove, (ii)
stating the reason for such Removal, (iii) stating what disposition,
if any, of the machinery and equipment is to be made by Corporation
after such Removal and the names of the party or parties to whom such
disposition is to be made and the consideration to be received by
Corporation therefor, if any, and (iv) setting forth the original cost
and the current fair market value of such machinery and equipment;
provided, however, that in no event shall the current fair market
value of such machinery and equipment be less than the consideration
to be received by Corporation upon the disposition thereof be less
than the current fair market value.
(b) Prior to any such Removal, Corporation shall pay the current
fair market value of such machinery and equipment as set forth in said
certificate to the Trustee and the Trustee shall deposit such amount
in the Principal and Interest Payment Account.
(c) Corporation may remove any machinery and equipment
constituting a part of the Project without first complying with the
provisions of subparagraph (b) above; provided, however, that
Corporation shall promptly replace any such machinery and equipment so
removed with machinery
16
and equipment of the same or a different kind but which are capable of
performing the same function, efficiently, as the machinery and
equipment so removed, and the machinery and equipment so acquired by
Corporation to replace such machinery and equipment shall be deemed a
part of the Project. Within 30 days after any such replacement by
Corporation, Corporation shall deliver to the Trustee a certificate of
the Authorized Corporation Representative setting forth a complete
description, including make, model and serial numbers, if any, of the
machinery and equipment which Corporation has acquired to replace the
machinery and equipment so removed by Corporation, the cost thereof
and that said machinery and equipment have been installed.
(2) With respect to such items of machinery and equipment that
originally cost less than $25,000, Corporation shall deliver to the Trustee
a certificate setting forth the facts provided for in subparagraph (l)(a)
above. In no event shall Corporation pursuant to this Subsection (2) remove
items of machinery and equipment having an aggregate original cost of
$25,000 or more.
All machinery and equipment constituting a part of the Project and removed
by Corporation pursuant to this Section shall become the absolute property of
Corporation and may be sold or otherwise disposed of by Corporation without
accounting to Issuer with respect thereto. In all cases, Corporation shall pay
all the costs and expenses of any such Removal and shall immediately repair at
its expense all damage caused thereby. Corporation's rights under this Article
to remove machinery and equipment constituting a part of the Project is intended
only to permit Corporation to maintain an efficient operation by the Removal of
such machinery and equipment no longer suitable to Corporation's use for any of
the reasons set forth in this paragraph and such right is not to be construed to
permit a Removal under any other circumstances and shall not be construed to
permit the wholesale Removal of such machinery and equipment by Corporation.
ARTICLE XI
Section 11.1. Alteration of Project. Corporation shall have and is hereby
given the right, at its sole cost and expense, to make such additions, changes
and alterations in and to any part of the Project as Corporation from time to
time may deem necessary or advisable; provided, however, Corporation shall not
make any major addition, change or alteration which will adversely affect the
intended use or structural strength of any part of the Project. All additions,
changes and alterations made by Corporation pursuant to the authority of this
Article shall (a) be made in a workmanlike manner and in strict compliance with
all laws and ordinances applicable thereto, (b) when commenced, be prosecuted to
completion with due diligence, and (c) when completed, shall be deemed a part of
the Project; provided, however, that additions of machinery, equipment and/or
personal property of Corporation, not purchased or acquired from funds deposited
with the Trustee hereunder and not constituting a part of the Project shall
remain the separate property of Corporation and may be removed by Corporation
prior to termination of this Lease; provided further, however, that all such
additional machinery, equipment and/or personal property which remain in the
Project after the termination of this Lease for any cause other than the
purchase of the Project pursuant to Article XVII hereof shall, upon and in the
event of such termination, become the separate and absolute property of Issuer.
17
ARTICLE XII
Section 12.1. Additional Improvements. Corporation shall have and is hereby
given the right, at its sole cost and expense, to construct on the Land or
within areas occupied by the Improvements, or in airspace above the Project,
such additional buildings and improvements as Corporation from time to time may
deem necessary or advisable. All additional buildings and improvements
constructed by Corporation pursuant to the authority of this Article shall,
during the Term, remain the property of Corporation and may be added to, altered
or razed and removed by Corporation at any time during the Term hereof.
Corporation covenants and agrees (a) to make all repairs and restorations, if
any, required to be made to the Project because of the construction of, addition
to, alteration or removal of, said additional buildings or improvements, (b) to
keep and maintain said additional buildings and improvements in good condition
and repair, ordinary wear and tear excepted, and (c) to promptly and with due
diligence either raze and remove from the Land, in a good, workmanlike manner,
or repair, replace or restore such of said additional buildings or improvements
as may from time to time be damaged by fire or other casualty, and (d) that all
additional buildings and improvements constructed by Corporation pursuant to
this Article which remain in place after the termination of this Lease for any
cause other than the purchase of the Project pursuant to Article VII
hereof shall, upon and in the event of such termination, become the separate and
absolute property of Issuer.
ARTICLE XIII
Section 13.1. Securing of Permits and Authorizations. Corporation shall not
do or permit others under its control to do any work in or in connection with
the Project or related to any repair, rebuilding, restoration, replacement,
alteration of or addition to the Project, or any part thereof, unless all
requisite municipal and other governmental permits and authorizations shall have
first been procured and paid for. All such work shall be done in a good and
workmanlike manner and in compliance with all applicable building, zoning and
other laws, ordinances, governmental regulations and requirements and in
accordance with the requirements, rules and regulations of all insurers under
the policies required to be carried under the provisions of this Lease.
Section 13.2. Mechanics' Liens. Corporation shall not do or suffer anything
to be done whereby the Project, or any part thereof, may be encumbered by any
mechanics' or other similar lien and if, whenever and so often as any mechanics'
or other similar lien is filed against the Project, or any part thereof,
Corporation shall discharge the same of record within 30 days after the date of
filing. Notice is hereby given that Issuer does not authorize or consent to and
shall not be liable for any labor or materials furnished to Corporation or
anyone claiming by, through or under Corporation upon credit, and that no
mechanics' or similar lien for any such labor, services or materials shall
attach to or affect the reversionary or other estate of Issuer in and to the
Project, or any part thereof.
Section 13.3. Contest of Liens. Corporation, notwithstanding the above,
shall have the right to contest any such mechanics' or other similar lien if
within said 30-day period stated above it (i) notifies Issuer in writing of its
intention so to do, and (ii) diligently prosecutes such contest, at all times
effectively staying or preventing any official or judicial sale of the Project
or any part thereof or interest therein, under execution or otherwise, and (iii)
promptly pays or otherwise satisfies any final judgment adjudging or enforcing
such contested lien claim and thereafter promptly procures record release or
satisfaction thereof.
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Section 13.4. Utilities. All utilities and utility services used by
Corporation in, on or about the Project shall be contracted for by Corporation
in Corporation's own name and Corporation shall, at its sole cost and expense,
procure any and all permits, licenses or authorizations necessary in connection
therewith.
ARTICLE XIV
Section 14.1. Indemnity. Corporation shall and hereby covenants and agrees
to indemnify, protect, defend and save Issuer and the Trustee harmless from and
against any and all claims, demands, liabilities and costs, including attorneys'
fees, arising from damage or injury, actual or claimed, of whatsoever kind or
character, to property or persons, occurring or allegedly occurring in, on or
about the Project during the Term hereof, and upon timely written notice from
Issuer or the Trustee, Corporation shall defend Issuer and the Trustee in any
action or proceeding brought thereon; provided, however, that nothing contained
in this Section shall be construed as requiring Corporation to indemnify Issuer
or the Trustee for any claim resulting from any act or omission of Issuer or the
Trustee, or their respective agents and employees.
ARTICLE XV
Section 15.1. Access to Project. Issuer, for itself and its duly authorized
representatives and agents, including Trustee, reserves the right to enter the
Project at all reasonable times during usual business hours throughout the Term
for the purpose of (a) examining and inspecting the same, (b) performing such
work made necessary by reason of Corporation's default under any of the
provisions of this Lease, and (c) while an Event of Default is continuing
hereunder, for the purpose of exhibiting the Project to prospective purchasers,
lessees or mortgagees. Issuer may, during the progress of said work mentioned in
(b) above, keep and store on the Project all necessary materials, supplies and
equipment and shall not be liable for necessary inconvenience, annoyances,
disturbances, loss of business or other damage suffered by reason of the
performance of any such work or the storage of such materials, supplies and
equipment.
ARTICLE XVI
Section 16.1. Option to Extend Term. Corporation shall have and is hereby
given the right and option, to extend the term of this Lease for the Additional
Term provided that (a) Corporation shall give Issuer written notice of its
intention to exercise each such option at least 30 days prior to the expiration
of the Basic Term and (b) Corporation is not in default hereunder in the payment
of Basic Rent or Additional Rent the time it gives Issuer such notice or at the
time the Additional Term commences. In the event Corporation exercises such
option, the terms, covenants, conditions and provisions set forth in this Lease
shall be in full force and effect and binding upon Issuer and Corporation during
the Additional Term except that the Basic Rent during any extended term herein
provided for shall be the sum of $100.00 per year, payable in advance on the
first Business Day of such Additional Term.
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ARTICLE XVII
Section 17.1. Option to Purchase Project. Subject to the provisions of this
Article, Corporation shall have the right and option to purchase the Project at
any time during the Term hereof. Corporation shall exercise its aforesaid option
by giving Issuer written notice of Corporation's election to exercise its option
and specifying the date, time and place of closing, which date (the "Closing
Date") shall neither be earlier than 30 days nor later than 180 days after the
notice is given. Corporation may not, however, exercise its said option if
Corporation is in default hereunder on the Closing Date.
Section 17.2. Quality of Title and Purchase Price. If said notice of
election to purchase be given as aforesaid, Issuer shall and covenants and
agrees to sell and convey its interests in and to the Project to Corporation on
the Closing Date free and clear of all liens and encumbrances whatsoever except
(a) those to which the title was subject on the date of Corporation's conveyance
to Issuer of the Project, or to which title became subject with Corporation's
written consent, or which resulted from any failure of Corporation to perform
any of its covenants or obligations under this Lease, (b) taxes and assessments,
general and special, if any, and (c) the rights, titles and interests of any
party having condemned or who is attempting to condemn title to, or the use for
a limited period of, all or any part of the Project, for the price and sum as
follows (which Corporation shall and covenants and agrees to pay in cash at the
time of delivery of Issuer's deed or other instrument or instruments of transfer
to the Project to Corporation as hereinafter provided):
(i) The full amount which is required to provide Issuer and the
Trustee with funds sufficient, in accordance with the provisions of the
Indenture, to pay at maturity or to redeem and pay in full (A) the
principal of all of the Outstanding Bonds, (B) all interest due thereon to
date of maturity or redemption, whichever first occurs, and (C) all costs,
expenses and premiums incident to the redemption and payment of said Bonds
in full, plus
(ii) $100.00.
Nothing in this Article shall release or discharge Corporation from its duty or
obligation under this Lease to make any payment of Basic Rent or Additional Rent
which, in accordance with the terms of this Lease, becomes due and payable prior
to the Closing Date, or its duty and obligation to fully perform and observe all
covenants and conditions herein stated to be performed and observed by
Corporation prior to the Closing Date.
Section 17.3. Closing of Purchase. On the Closing Date, Issuer shall
deliver to Corporation its special warranty deed or other appropriate instrument
or instruments of conveyance or assignment, properly executed and conveying the
Project to Corporation free and clear of all liens and encumbrances whatsoever
except as set forth in the preceding section above or conveying such other title
to the Project as may be acceptable to Corporation, and then and there
Corporation shall pay the full purchase price for the Project as follows: (a)
the amount specified in clause (i) of Section 17.2 shall be paid to the Trustee
who shall deposit the same in the Principal and Interest Payment Account and
shall use the same to pay or redeem the Bonds and the interest thereon as
provided in the Indenture, and (b) the amount specified in clause (ii) of said
Section 17.2 shall be paid to Issuer; provided, however, nothing herein shall
require Issuer to deliver its said special warranty deed or other appropriate
instrument or instruments of assignment or conveyance to Corporation until after
all duties and obligations of Corporation under this Lease to the date of such
delivery have been fully performed and satisfied. Upon the delivery to
Corporation of Issuer's said special warranty deed or other appropriate
instrument or instruments of
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assignment or conveyance and payment of the purchase price by Corporation, this
Lease shall, ipso facto, terminate.
Section 17.4. Effect of Failure to Complete Purchase. If, for any reason
whatsoever, the purchase of the Project by Corporation pursuant to valid notice
of election to purchase given as aforesaid is not effected on the Closing Date,
this Lease shall be and remain in full force and effect according to its terms
the same as though no notice of election to purchase had been given, except
that:
(a) If such purchase is not effected on the Closing Date because of
the failure or refusal of Corporation to fully perform and observe all of
the covenants and conditions herein contained on Corporation's part to be
performed or observed to the Closing Date, Corporation shall be deemed to
be in default under this Lease and Issuer shall have such rights and
Corporation shall have such duties and obligations as are stated in Article
XX hereof with like effect as though written notice of default had been
given and any grace period for the correction of such default had expired
and said default remains unsatisfied.
(b) If such purchase is not effected on the Closing Date because on
said date Issuer does not have or is unable to convey to Corporation such
title to the Project as Corporation is required to accept, the Issuer shall
use its best efforts to cure any such defect in its title to the Project.
In the event the Issuer is unable to cure such defect in its title to the
Project, or if Issuer's failure to close would be a breach of its
obligations hereunder, Corporation shall have the right to cancel this
Lease forthwith if, but only if, the principal of and interest on the Bonds
and all costs incident to the redemption and payment of the Bonds have been
paid in full.
Section 17.5. Application of Condemnation Awards if Corporation Purchases
Project. The right of Corporation to exercise its option to purchase the Project
under the provisions of this Article shall remain unimpaired notwithstanding any
condemnation of title to, or the use for a limited period of, all or any part of
the Project. If Corporation shall exercise its said option and pay the purchase
price as provided in this Article, all of the condemnation awards received by
Issuer after the payment of said purchase price, less all attorneys' fees and
other expenses and costs incurred by Issuer in connection with such
condemnation, shall belong and be paid to Corporation.
Section 17.6. Option to Purchase Unimproved Portions of Land. Corporation
shall have and is hereby given the right and option to purchase at any time and
from time to time during the Term any vacant part or vacant parts of the
unimproved Land constituting a part of the Project; provided, however,
Corporation shall furnish Issuer with a certificate of an Authorized Corporation
Representative, dated not more than 30 days prior to the date of the purchase
and stating that, in the opinion of the Authorized Corporation Representative,
(a) the portion of said Land with respect to which the option is exercised is
not needed for the operation of the Project for the purposes herein stated and
(b) the purchase will not impair the usefulness or operating efficiency or
materially impair the value of the Project and will not destroy or materially
impair the means of ingress thereto and egress therefrom. Corporation shall
exercise this option by giving Issuer written notice of Corporation's election
to exercise its option and specifying the legal description and the date, time
and place of closing, which date shall neither be earlier than 45 days nor later
than 60 days after the notice is given, and (c) specifying the appraised current
fair market value of the portions of the Land with respect to which
Corporation's Option is exercised as determined by an independent, qualified
appraiser whose report shall be furnished to the Trustee together with
Corporation's notice of election to purchase and (d) a certificate signed by the
chief executive or chief financial officer of Corporation stating that no event
has occurred and is continuing which, with notice or lapse of time or both,
would constitute an Event of Default; provided,
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however, that Corporation may not exercise this option if there has occurred and
is continuing any event which, with notice or lapse of time or both, would
constitute an Event of Default at the time said notice is given and may not
purchase said real property on the specified closing date if any such event has
occurred and is continuing on said date. The option hereby given shall include
the right to purchase a perpetual easement for right-of-way to and from the
public roadway and the right to purchase such land as is necessary to assure
that there will always be access between the real property purchased pursuant to
these Sections 17.6 through 17.10 and the public roadway.
Section 17.7. Quality of Title - Purchase Price. If said notice of election
to purchase is given as provided in Section 17.6, Issuer shall sell and convey
the real property described in Corporation's aforesaid notice to Corporation on
the specified date free and clear of all liens and encumbrances whatsoever
except (i) those to which the title was subject on the date of commencement of
the term of this Lease, or to which title became subject with Corporation's
written consent, or which resulted from any failure of Corporation to perform
any of its agreements or obligations under this Lease, (ii) taxes and
assessments, general or special, if any, and (iii) the rights, titles and
interests of any party having condemned or who is attempting to condemn title
to, or the use for a limited period of, all or any part of the real property
described in Corporation's aforesaid notice. The purchase price shall be an
amount equal to the then current fair market value thereof, as determined with
reference to the independent appraiser's report furnished to the Trustee.
Section 17.8. Closing of Purchase. If Issuer has title to the real property
free and clear of all liens and encumbrances whatsoever except as stated above
or has such other title to the real property as may be acceptable to
Corporation, then on the specified date, Issuer shall deliver to Corporation its
special warranty deed, properly executed and conveying the real property to
Corporation free and clear of all liens and encumbrances whatsoever except as
stated above, and then and there Corporation shall pay the aforesaid purchase
price, for the real property, said purchase price to be paid to the Trustee for
the account of the Issuer and deposited by the Trustee in the Principal and
Interest Payment Account and shall be used to pay or redeem Bonds on the date
the Bonds are first subject to redemption as provided in the Indenture;
provided, however, nothing herein shall require Issuer to deliver its said
special warranty deed to Corporation until after all duties and obligations of
Corporation under this Lease to the date of such delivery have been fully
performed and satisfied.
Section 17.9. Effect of Purchase on Lease. The exercise by Corporation of
the option granted under these Sections 17.6 through 17.10 and the purchase and
sale and conveyance of a portion or portions of the Land constituting a part of
the Project pursuant hereto shall in no way whatsoever affect this Lease, and
all the terms and provisions hereof shall remain in full force and effect the
same as though no notice of election to purchase had been given, and
specifically, but not in limitation of the generality of the foregoing, exercise
of such option shall not affect, alter, diminish, reduce or xxxxx Corporation's
obligations to pay all Basic Rent and Additional Rent required hereunder.
Section 17.10. Effect of Failure to Complete Purchase. If, for any reason
whatsoever, the purchase by Corporation of the real property described in said
notice is not effected on the specified date, this Lease shall be and remain in
full force and effect according to its terms the same as though no notice of
election to purchase had been given.
Section 17.11. Option to Purchase Machinery and Equipment. The Corporation
shall have the right and option to purchase the portion of the Project that
consists of machinery and equipment at any time during the Term hereof but only
after payment of all of the principal of all of the Outstanding Series 2006B
Bonds and all of the Outstanding Series 2006C Bonds, plus all interest due
thereon and all
22
costs, expenses and premiums incident to the payment of such Bonds in full. The
Corporation shall exercise its aforesaid option by giving the Issuer and the
Trustee written notice of Corporation's election to exercise its option along
with payment in the amount of $100. Upon receipt of the notice and payment, the
Issuer shall execute and delivery of xxxx of sale for the machinery and
equipment to the Corporation.
ARTICLE XVIII
Section 18.1. Damage and Destruction.
(a) If, during the Basic Term, the Project is damaged or destroyed, in
whole or in part, by fire or other casualty, the Corporation shall promptly
notify the Issuer and the Trustee in writing as to the nature and extent of
such damage or loss and whether it is practicable and desirable to rebuild,
repair, restore or replace such damage or loss.
(b) If the Corporation shall determine that such rebuilding,
repairing, restoring or replacing is practicable and desirable, the
Corporation shall forthwith proceed with and complete with reasonable
dispatch such rebuilding, repairing, restoring or replacing. In such case,
any Net Proceeds of casualty insurance required by this Lease and received
with respect to any such damage or loss to the Project shall be paid to the
Trustee and shall be deposited in the Project Replacement Fund and shall be
used and applied for the purpose of paying the cost of such rebuilding,
repairing, restoring or replacing such damage or loss. Any amount remaining
in the Project Replacement Fund after such rebuilding, repairing, restoring
or replacing shall be deposited into the Principal and Interest Payment
Account and used to pay principal of the Bonds.
(c) If the Corporation shall determine that rebuilding, repairing,
restoring or replacing the Project are not practicable and desirable, any
Net Proceeds of casualty insurance required by this Lease and received with
respect to any such damage or loss to the Project shall be paid into the
Principal and Interest Payment Account. The Corporation agrees that it
shall be reasonable in exercising its judgment pursuant to this subsection
(c).
(d) The Corporation shall not, by reason of its inability to use all
or any part of the Project during any period in which the Project is
damaged or destroyed, or is being repaired, rebuilt, restored or replaced
nor by reason of the payment of the costs of such rebuilding, repairing,
restoring or replacing, be entitled to any reimbursement or any abatement
or diminution of the Basic Rent or Additional Rent payable by the
Corporation under this Lease nor of any other obligations of the
Corporation under this Lease except as expressly provided in this Section.
(e) Anything in this Article to the contrary notwithstanding, the
Issuer and Trustee shall have the right at any time and from time to time
to withhold payment of all or any part of the Net Proceeds from the Project
Replacement Fund attributable to damage or destruction of the Project to
Corporation or any third party if an Event of Default has occurred and is
continuing, or Issuer or Trustee has given notice to Corporation of any
Default which, with the passage of time, will become an Event of Default.
In the event Corporation shall cure any Defaults specified herein, the
Trustee may make payments from the Net Proceeds to Corporation in
accordance with the provisions of this Article. However, if this Lease is
terminated or Issuer or Trustee otherwise re-enters and takes possession of
the Project without terminating this Lease, the Trustee shall pay
23
all the Net Proceeds held by it into the Principal and Interest Payment
Account and all rights of the Corporation in and to such Net Proceeds shall
cease.
Section 18.2. Condemnation.
(a) If, during the Basic Term title to, or the temporary use of, all
or any part of the Project shall be condemned by any authority exercising
the power of eminent domain, the Corporation shall, within 90 days after
the date of entry of a final order in any eminent domain proceedings
granting condemnation, notify the Issuer and the Trustee in writing as to
the nature and extent of such condemnation and whether it is practicable
and desirable to acquire or construct substitute improvements.
(b) If the Corporation shall determine that such substitution is
practicable and desirable, the Corporation shall forthwith proceed with and
complete with reasonable dispatch the acquisition or construction of such
substitute improvements. In such case, any Net Proceeds received from any
award or awards with respect to the Project or any part thereof made in
such condemnation or eminent domain proceeds shall be paid to the Trustee
and shall be deposited in the Project Replacement Fund and shall be used
and applied for the purpose of paying the cost of such substitution. Any
amount remaining in the Project Replacement Fund after such acquisition or
construction shall be deposited into the Principal and Interest Payment
Account.
(c) If the Corporation shall determine that it is not practicable and
desirable to acquire or construct substitute improvements, any Net Proceeds
of condemnation awards received by the Corporation shall be paid into the
Principal and Interest Payment Account. The Corporation agrees that it
shall be reasonable in exercising its judgment pursuant to this subsection
(c).
(d) The Corporation shall not, by reason of its inability to use all
or any part of the Project during any such period of restoration or
acquisition nor by reason of the payment of the costs of such restoration
or acquisition, be entitled to any reimbursement or any abatement or
diminution of the Basic Rent or Additional Rent payable by the Corporation
under this Lease nor of any other obligations hereunder except as expressly
provided in this Section.
(e) The Issuer shall cooperate fully with the Corporation in the
handling and conduct of any prospective or pending condemnation proceedings
with respect to the Project or any part thereof. In no event will the
Issuer voluntarily settle or consent to the settlement of any prospective
or pending condemnation proceedings with respect to the Project or any part
thereof without the written consent of the Corporation.
ARTICLE XIX
Section 19.1. Termination by Reason of Change of Circumstances. If, at any
time during the Basic Term, a Change of Circumstances occurs or the Bonds are
called for redemption and payment upon the occurrence of a Determination of
Taxability, then and in such event Corporation shall have the option to purchase
the Project pursuant to Article XVII hereof or option to terminate this Lease by
giving Issuer notice of such termination within 90 days after Corporation has
actual knowledge of the event giving rise to such option; provided, however,
that such termination shall not become effective unless and until none of the
Bonds are Outstanding.
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ARTICLE XX
Section 20.1. Remedies on Default. Whenever any Event of Default shall have
happened and be continuing, the Issuer may take any one or more of the following
remedial actions:
(a) By written notice to the Corporation upon acceleration of maturity
of the Bonds as provided in the Indenture, the Trustee may declare the
aggregate amount of all unpaid Basic Rent or Additional Rent then or
thereafter required to be paid under this Lease by the Corporation to be
immediately due and payable as liquidated damages from the Corporation,
whereupon the same shall become immediately due and payable by the
Corporation;
(b) Give Corporation written notice of intention to terminate this
Lease on a date specified therein, which date shall not be earlier than 10
days after such notice is given and, if all defaults have not then been
cured on the date so specified, Corporation's rights to possession of the
Project shall cease, and this Lease shall thereupon be terminated, and
Issuer may re-enter and take possession of the Project; or
(c) Without terminating the Term hereof, or this Lease, conduct
inspections or an environmental assessment of the Project, re-enter the
Project or take possession thereof pursuant to legal proceedings or
pursuant to any notice provided for by law, and having elected to re-enter
or take possession of the Project without terminating the Term or this
Lease, Issuer shall use reasonable diligence to relet the Project, or parts
thereof, for such term or terms and at such rental and upon such other
terms and conditions as Issuer may deem advisable, with the right to make
alterations and repairs to the Project, and no such re-entry or taking of
possession of the Project by Issuer shall be construed as an election on
Issuer's part to terminate this Lease, and no such re-entry or taking of
possession by Issuer shall relieve Corporation of its obligation to pay
Basic Rent or Additional Rent (at the time or times provided herein), or of
any of its other obligations under this Lease, all of which shall survive
such re-entry or taking of possession, and Corporation shall continue to
pay the Basic Rent and Additional Rent provided for in this Lease until the
end of the Term, whether or not the Project shall have been relet, less the
net proceeds, if any, of any reletting of the Project after deducting all
of Issuer's expenses incurred in connection with such reletting, including
without limitation, all repossession costs, brokerage commissions, legal
expenses, expenses of employees, alteration costs and expenses of
preparation of the Project for reletting.
Net proceeds of any reletting shall be deposited in the Principal and
Interest Payment Account. Having elected to re-enter or take possession of the
Project pursuant to subsection (c) hereunder, Issuer may (subject, however, to
any restrictions against termination of this Lease in the Indenture), by notice
to Corporation given at any time thereafter while Corporation is in default in
the payment of Basic Rent or Additional Rent or in the performance of any other
obligation under this Lease, elect to terminate this Lease in accordance with
subsection (b) hereunder If, in accordance with any of the foregoing provisions
of this Article, Issuer shall have the right to elect to re-enter and take
possession of the Project, Issuer may enter and expel Corporation and those
claiming through or under Corporation and remove the property and effects of
both or either (forcibly if necessary) without being guilty of any manner of
trespass and without prejudice to any remedies for arrears of Basic Rent or
Additional Rent or preceding breach of covenant.
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Section 20.2. Survival of Obligations. Corporation covenants and agrees
with Issuer and the Bondowners that until the Bonds and the interest thereon and
redemption premium, if any, are paid in full or provision made for the payment
thereof in accordance with the Indenture, its obligations under this Lease shall
survive the cancellation and termination of this Lease, for any cause, and that
Corporation shall continue to pay Basic Rent and Additional Rent and perform all
other obligations provided for in this Lease, all at the time or times provided
in this Lease.
Section 20.3. No Remedy Exclusive. No remedy herein conferred upon or
reserved to the Issuer is intended to be exclusive of any other available remedy
or remedies, but each and every such remedy shall be cumulative and shall be in
addition to every other remedy given under this Lease or now or hereafter
existing at law or in equity or by statute, subject to the provisions of the
Indenture. No delay or omission to exercise any right or power accruing upon any
Event of Default shall impair any such right or power, or shall be construed to
be a waiver thereof, but any such right or power may be exercised from time to
time and as often as may be deemed expedient. In order to entitle the Issuer to
exercise any remedy reserved to it in this Article, it shall not be necessary to
give any notice, other than notice required herein.
ARTICLE XXI
Section 21.1. Performance of Corporation's Obligations by Issuer. If
Corporation shall fail to keep or perform any of its obligations as provided in
this Lease, then Issuer may (but shall not be obligated to do so) upon the
continuance of such failure on Corporation's part for 90 days after notice of
such failure is given Corporation by Issuer or the Trustee and without waiving
or releasing Corporation from any obligation hereunder, as an additional but not
exclusive remedy, make any such payment or perform any such obligation, and
Corporation shall reimburse Issuer for all sums so paid by Issuer and all
necessary or incidental costs and expenses incurred by Issuer in performing such
obligations through payment of Additional Rent. If such Additional Rent is not
so paid by Corporation within 10 days of demand, Issuer shall have the same
rights and remedies provided for in Article XX in the case of default by
Corporation in the payment of Basic Rent.
ARTICLE XXII
Section 22.1. Surrender of Possession. Upon accrual of Issuer's right of
re-entry as the result of Corporation's default hereunder or upon the
cancellation or termination of this Lease by lapse of time or otherwise (other
than as a result of Corporation's purchase of the Project), Corporation shall
peacefully surrender possession of the Project to Issuer in good condition and
repair, ordinary wear and tear excepted; provided, however, Corporation shall
have the right, prior to or within 60 days after the termination of this Lease,
to remove from or about the Project the buildings, improvements, machinery,
equipment, personal property, furniture and trade fixtures which Corporation
owns under the provisions of this Lease and are not a part of the Project. All
repairs to and restorations of the Project required to be made because of such
removal shall be made by and at the sole cost and expense of Corporation. All
buildings, improvements, machinery, equipment, personal property, furniture and
trade fixtures owned by Corporation and which are not so removed from or about
the Project prior to or within 60 days after such termination of this Lease
shall become the separate and absolute property of Issuer.
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ARTICLE XXIII
Section 23.1. Notices. All notices required or desired to be given
hereunder shall be in writing and shall be delivered in person to the Notice
Representative or mailed by registered or certified mail to the Notice Address.
All notices given by certified or registered mail as aforesaid shall be deemed
duly given as of the date they are so mailed, provided that notice to the
Trustee shall only be effective upon actual receipt.
ARTICLE XXIV
Section 24.1. Net Lease. The parties hereto agree (a) that this Lease is
intended to be a net lease, (b) that the payments of Basic Rent and Additional
Rent are designed to provide Issuer and the Trustee with funds adequate in
amount to pay all principal of and interest on the Bonds as the same become due
and payable and to pay and discharge all of the other duties and requirements
set forth herein, and (c) that to the extent that the payments of Basic Rent and
Additional Rent are not adequate to provide Issuer and the Trustee with funds
sufficient for the purposes aforesaid, Corporation shall be obligated to pay,
and it does hereby covenant and agree to pay, upon demand therefor, as
Additional Rent, such further sums of money as may from time to time be required
for such purposes.
Section 24.2. Funds Held by Trustee After Payment of Bonds. If, after the
principal of and interest on the Bonds and all costs incident to the payment of
Bonds have been paid in full, the Trustee holds unexpended funds received in
accordance with the terms hereof, such unexpended funds shall, except as
otherwise provided in this Lease and the Indenture and after payment therefrom
to Issuer of any sums of money then due and owing by Corporation under the terms
of this Lease, be the absolute property of and be paid over forthwith to
Corporation.
ARTICLE XXV
Section 25.1. Rights and Remedies. The rights and remedies reserved by
Issuer and Corporation hereunder and those provided by law shall be construed as
cumulative and continuing rights. No one of them shall be exhausted by the
exercise thereof on one or more occasions. Issuer and Corporation shall each be
entitled to specific performance and injunctive or other equitable relief for
any breach or threatened breach of any of the provisions of this Lease, and each
party hereby waives the right to raise such defense in any proceeding in equity.
Section 25.2. Waiver of Breach. No waiver of any breach of any covenant or
agreement herein contained shall operate as a waiver of any subsequent breach of
the same covenant or agreement or as a waiver of any breach of any other
covenant or agreement, and in case of a breach by either party of any covenant,
agreement or undertaking, the nondefaulting party may nevertheless accept from
the other any payment or payments or performance hereunder without in any way
waiving its right to exercise any of its rights and remedies provided for herein
or otherwise with respect to any such default or defaults which were in
existence at the time such payment or payments or performance were accepted by
it.
Section 25.3. Issuer Shall Not Unreasonably Withhold Consents and
Approvals. Wherever in this Lease it is provided that Issuer shall, may or must
give its approval or consent, or execute supplemental agreements, exhibits or
schedules, Issuer shall not unreasonably, arbitrarily or
27
unnecessarily withhold or refuse to give such approvals or consents or refuse to
execute such supplemental agreements, exhibits or schedules.
ARTICLE XXVI
Section 26.1. Financial Report. So long as any Bonds are Outstanding and
unpaid and subject to the terms of the Indenture, Corporation shall furnish or
cause to be furnished to Trustee and the Original Purchaser, as soon as
practicable after the end of each fiscal year and in any event within 120 days
thereafter, financial statements of the Corporation. Such financial statements
shall set forth in comparative form the figures for the previous fiscal year and
such financial statements shall be prepared in accordance with those accounting
principles which are used by the Corporation and consistently applied.
Section 26.2. Quiet Enjoyment and Possession. So long as Corporation shall
not be in default under this Lease, Corporation shall and may peaceably and
quietly have, hold and enjoy the Project.
ARTICLE XXVII
Section 27.1. Investment Tax Credit; Depreciation. Corporation shall be
entitled to claim the full benefit of (1) any investment credit against federal
or state income tax allowable with respect to expenditures of the character
contemplated hereby under any federal or state income tax laws now or from time
to time hereafter in effect, and (2) any deduction for depreciation with respect
to the Project from federal or state income taxes. Issuer agrees that it will
upon Corporation's request execute all such elections, returns or other
documents which may be reasonably necessary or required to more fully assure the
availability of such benefits to Corporation.
ARTICLE XXVIII
Section 28.1. Amendments. This Lease may be amended, changed or modified in
the following manner:
(a) With respect to an amendment, change or modification which reduces
the Basic Rent or Additional Rent, or any amendment which reduces the
percentage of Bondowners whose consent is required for any such amendment,
change or modification, by an agreement in writing executed by Issuer and
Corporation and consented to in writing by the owners of 100% of the
aggregate principal amount of each series of the Bonds then Outstanding
affected by such amendment; and
(b) With respect to any other amendment, change or modification which
will materially adversely affect the security or rights of the Bondowners,
by an agreement in writing executed by Issuer and Corporation and consented
to in writing by the Owners of a majority of the aggregate principal amount
of each series of the Bonds then Outstanding affected by such amendment;
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(c) With respect to all other amendments, changes, or modifications,
by an agreement in writing executed by Issuer and Corporation.
At least 30 days prior to the execution of any agreement pursuant to (c) above,
Issuer and Corporation shall furnish the Trustee and the Original Purchaser of
the Bonds with a copy of the amendment, change or modification proposed to be
made.
Section 28.2. Granting of Easements. If no Event of Default under this
Lease shall have happened and be continuing, Corporation may, at any time or
times, (a) grant easements, licenses and other rights or privileges in the
nature of easements with respect to any property included in the Project, free
from any rights of Issuer or the Bondowners, or (b) release existing easements,
licenses, rights-of-way and other rights or privileges, all with or without
consideration and upon such terms and conditions as Corporation shall determine,
and Issuer agrees, to the extent that it may legally do so, that it will execute
and deliver any instrument necessary or appropriate to confirm and grant or
release any such easement, license, right-of-way or other right or privilege or
any such agreement or other arrangement, upon receipt by Issuer of: (i) a copy
of the instrument of grant or release or of the agreement or other arrangement,
(ii) a written application signed by the Authorized Corporation Representative
requesting such instrument, and (iii) a certificate executed by Corporation
stating (A) that such grant or release is not detrimental to the proper conduct
of the business of Corporation, and (B) that such grant or release will not
impair the effective use or interfere with the efficient and economical
operation of the Project and will not materially adversely affect the security
of the Bondowners. If the instrument of grant shall so provide, any such
easement or right and the rights of such other parties thereunder shall be
superior to the rights of Issuer and the bondowners and shall not be affected by
any termination of this Lease or default on the part of Corporation hereunder.
If no Event of Default shall have happened and be continuing, any payments or
other consideration received by Corporation for any such grant or with respect
to or under any such agreement or other arrangement shall be and remain the
property of Corporation, but, in the event of the termination of this Lease
because of Default of Corporation, all rights then existing of Corporation with
respect to or under such grant shall inure to the benefit of and be exercisable
by Issuer.
Section 28.3. Security Interests. Issuer and Corporation agree to execute
and deliver all instruments (including financing statements and statements of
continuation thereof) necessary for perfection of and continuance of the
security interest of Issuer in and to the Project.
Section 28.4. Construction and Enforcement. This Lease shall be construed
and enforced in accordance with the laws of the State. The provisions of this
Lease shall be applied and interpreted in accordance with the rules of
interpretation set forth in the Indenture. Wherever in this Lease it is provided
that either party shall or will make any payment or perform or refrain from
performing any act or obligation, each such provision shall, even though not so
expressed, be construed as an express covenant to make such payment or to
perform, or not to perform, as the case may be, such act or obligation.
Section 28.5. Invalidity of Provisions of Lease. If, for any reason, any
provision hereof shall be determined to be invalid or unenforceable, the
validity and effect of the other provisions hereof shall not be affected
thereby.
Section 28.6. Covenants Binding on Successors and Assigns. The covenants,
agreements and conditions herein contained shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns.
29
Section 28.7. Section Headings. The section headings hereof are for the
convenience of reference only and shall not be treated as a part of this Lease
or as affecting the true meaning of the provisions hereof. The reference to
section numbers herein or in the Indenture shall be deemed to refer to the
numbers preceding each section.
Section 28.8. Execution of Counterparts. This Lease may be executed
simultaneously in multiple counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute one and the same
instrument.
Section 28.9. Electronic Transaction. The parties agree that the
transaction described herein may be conducted and related documents may be
stored by electronic means. Copies, telecopies, facsimiles, electronic files and
other reproductions of original executed documents shall be deemed to be
authentic and valid counterparts of such original documents for all purposes,
including the filing of any claim, action or suit in the appropriate court of
law.
[Remainder of page intentionally blank.]
30
IN WITNESS WHEREOF, the parties hereto have executed these presents as of
the day and year first above written.
CITY OF OLATHE, KANSAS
By:
--------------------------------------
Mayor
(Seal)
ATTEST:
By:
-----------------------------------
City Clerk
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DCI HOLDINGS FAE, LLC,
a Kansas limited liability company
By: First American Exchange Company,
LLC, a Delaware limited liability
company, its sole member
By:
---------------------------------
Xxxxxx X. Xxxxxx
Vice President
S-2
EXHIBIT A
FORM OF CERTIFICATE FOR PAYMENT OF PROJECT COSTS
CITY OF OLATHE, KANSAS
Project Fund
(DCI, Inc. Project)
Payment Order No. ____
To: UMB Bank, N.A.
Attention: Corporate Trust Division
0000 Xxxxx Xxxx., Xxxxx 000
Xxxxxx Xxxx, Xxxxxxxx 00000
You are hereby authorized and directed by the undersigned, the
Authorized Corporation Representative, acting on behalf of DCI, Inc. (the
"Corporation") to disburse funds held by you as Trustee in the above mentioned
Project Fund for the purposes and in the amounts set forth in the Payment
Schedules attached hereto and incorporated herein by reference (the "Payment
Schedules").
I hereby certify that the amounts requested in the attached Payment
Schedules have either been advanced by the Corporation or are justly due to
contractors, subcontractors, suppliers, vendors, materialmen, engineers,
architects or other persons named in the Payment Schedules who have performed
necessary and appropriate work in connection with any installation of machinery,
equipment or personal property, or have furnished necessary and appropriate
materials in the construction or acquisition of land, buildings and improvements
constituting a part of the Project. I further certify that the fair value of
such work or materials, machinery and equipment, is not exceeded by the amount
requested.
I further certify that, except for the amounts set forth in the Payment
Schedules, there are no outstanding indebtednesses which are now due and payable
for labor, wages, materials, supplies or services in connection with the
construction of said buildings and improvements or the purchase and/or
installation of machinery, equipment and personal property which, if unpaid,
might become the basis of a vendor's, mechanic's, laborer's or materialmen's
statutory or other similar lien upon the Project or any part thereof.
I further certify that no part of the amounts set forth in the Payment
Schedules have been the basis for any previous withdrawal of any moneys from the
said Project Fund.
I further certify that each of the representations and covenants on the
part of the Corporation contained in the Lease dated as of September 1, 2006 by
and between City of Olathe, Kansas, as Issuer, and the Corporation were, on the
date of said Lease, and on the date hereof, true and correct in all respects and
are being complied with in every respect.
I further certify that funds expended for Costs of Issuance have not
exceeded 2% of the aggregate principal amount of the Tax-Exempt Bonds.
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I further certify that the amounts set forth in the Payment Schedules
constitute Project Costs, as said term is defined in the Lease, and that all
insurance policies which are required to be in force as a condition precedent to
disbursement of funds from the Project Fund pursuant to the provisions of
Section 6.1 of the Lease are in full force and effect.
EXECUTED at _______________, ________________, this _____ day of _____.
DCI, INC.
By:
--------------------------------------
Authorized Corporation Representative
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EXHIBIT A - Payment Order No. _____
PAYMENT SCHEDULE
I hereby request payment of the amounts specified below to the payees
whose names and addresses are stated below, and I certify that the description
of the purchase or nature of each payment is reasonable, accurate and complete:
PAYMENT SCHEDULE
Payee Name Payee Address Purpose of Nature of Payment Amount
--------
Initials
A-3
SCHEDULE I
PROPERTY SUBJECT TO LEASE
(a) The following described real estate located in Xxxxxxx County,
Kansas, to wit:
Xxx 00, XXXXXX XXXX XXXX XXXXXXXX XXXX, XXXXX PLAT, a subdivision in
the City of Olathe, Xxxxxxx County, Kansas
said real property constituting the "Land" as referred to in said Lease.
(b) All buildings, improvements, machinery and equipment now or
hereafter constructed, located or installed on the Land pursuant to said Lease
and paid for in whole or in part with Bond proceeds, constituting the
"Improvements" as referred to in said Lease and said Indenture.
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