EXHIBIT 10.17
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LEASE AGREEMENT
Dated as of December 19, 1997
between
SELCO SERVICE CORPORATION,
as Lessor
and
CROWN PACIFIC LIMITED PARTNERSHIP,
as Lessee and Construction Agent
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Bonners Ferry Circle Mill
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TABLE OF CONTENTS
Page
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SECTION 1. DEFINITIONS; CONSTRUCTION OF REFERENCES . . . . . . . . . . . . 1
SECTION 2. LEASE OF THE LEASED PROPERTY. . . . . . . . . . . . . . . . . .14
SECTION 3. TERM AND RENT . . . . . . . . . . . . . . . . . . . . . . . . .15
SECTION 4. CONSTRUCTION AGENT. . . . . . . . . . . . . . . . . . . . . . .16
SECTION 5. ACQUISITION OF COMPONENTS; FINANCING. . . . . . . . . . . . . .19
SECTION 6. CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . . . . .20
SECTION 7. NET LEASE; NON-TERMINABILITY. . . . . . . . . . . . . . . . . .28
SECTION 8. RETURN OF THE LEASED PROPERTY . . . . . . . . . . . . . . . . .29
SECTION 9. WARRANTY OF THE LESSOR. . . . . . . . . . . . . . . . . . . . .30
SECTION 10. LIENS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
SECTION 11. MAINTENANCE AND OPERATION; COMPLIANCE AND USE;
REPLACEMENT PARTS; MODIFICATIONS. . . . . . . . . . . . . . .32
SECTION 12. INSPECTION REPORTS. . . . . . . . . . . . . . . . . . . . . . .35
SECTION 13. LOSS OR DESTRUCTION; REQUISITION OF USE . . . . . . . . . . . .37
SECTION 14. INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . .38
SECTION 15. SUBLETTING; ASSIGNABILITY; AMENDMENT OF CONTRACTS . . . . . . .42
SECTION 16. REPRESENTATIONS AND WARRANTIES OF LESSOR. . . . . . . . . . . .43
SECTION 17. REPRESENTATIONS AND WARRANTIES OF LESSEE. . . . . . . . . . . .44
SECTION 18. ADDITIONAL COVENANTS. . . . . . . . . . . . . . . . . . . . . .52
SECTION 19. OPTIONS UPON LEASE TERMINATION. . . . . . . . . . . . . . . . .55
SECTION 20. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . .57
SECTION 21. REMEDIES. . . . . . . . . . . . . . . . . . . . . . . . . . . .59
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SECTION 22. RIGHT TO PERFORM FOR LESSEE . . . . . . . . . . . . . . . . . .62
SECTION 23. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . .62
SECTION 24. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . .65
SECTION 25. SUCCESSORS AND ASSIGNS. . . . . . . . . . . . . . . . . . . . .65
SECTION 26. AMENDMENTS AND MISCELLANEOUS. . . . . . . . . . . . . . . . . .66
EXHIBITS
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Exhibit A - Form of Lease Supplement
Exhibit B - Form of Requisition
Exhibit C - Approved Construction Budget
Exhibit D - Form of Officer's Certificate for Final Completion Date
Exhibit E - Terms of Single Investor Tax Lease
Exhibit F - Credit Agreement
SCHEDULES
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Schedule 1 - Parcel
Schedule 6(a)(viii) - Permits
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LEASE AGREEMENT
LEASE AGREEMENT dated as of December 19, 1997 between SELCO SERVICE
CORPORATION, an Ohio corporation ("Lessor"), and CROWN PACIFIC LIMITED
PARTNERSHIP, a Delaware limited partnership ("Lessee").
SECTION 1. DEFINITIONS; CONSTRUCTION OF REFERENCES.
In this Lease, unless the context otherwise requires:
(a) All references in this Lease to designated Sections and other
subdivisions are to designated Sections and other subdivisions of this Lease,
and the words "herein", "hereof" and "hereunder" and other words of similar
import refer to this Lease as a whole and not to any particular Section or other
subdivision.
(b) The terms defined in this Section or elsewhere in this Lease
shall, for purposes of this Lease and all Exhibits and Schedules hereto, have
the meanings assigned to them in this Section or elsewhere herein and include
the plural as well as the singular and the singular as well as the plural;
except as otherwise indicated, all the agreements or instruments herein defined
shall mean such agreements or instruments as the same may from time to time be
supplemented or amended or the terms thereof waived or modified to the extent
permitted by, and in accordance with, the terms hereof and thereof and of the
other Operative Documents.
(c) Where the character or amount of any asset or liability or item
of income or expense is required to be determined or any consolidation or other
accounting computation is required to be made for the purposes of this Lease,
such determination or computation shall be done in accordance with GAAP at the
time in effect, to the extent applicable, except where such principles are
inconsistent with the requirements of this Lease.
(d) The following terms shall have the following meanings for all
purposes of this Lease:
ACTUAL PROJECT COSTS shall mean, collectively, (i) all amounts paid or
payable to finance the acquisition of the Components, (ii) all amounts paid or
payable as costs for the construction, operation and maintenance of the Facility
and (iii) amounts constituting interest, fees and expenses paid or payable with
respect to the Facility as set forth in the Approved Construction Budget.
AFFILIATE shall mean, as to a particular entity, a Person (i) which
directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such entity, (ii) which
beneficially owns or holds 5% or more of any class of the Voting Stock of such
entity or (iii) 5% or more of the Voting Stock (or in the case of a Person which
is not a corporation, 5% or more of the equity interest) of which is
beneficially owned or held by such entity. As used herein, the term control
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person, whether through
the ownership of voting securities, by contract or otherwise, the terms
"controlling," "controlled by" and "under common control with" shall have
meanings correlative to the foregoing.
AFTER-TAX BASIS shall mean on a basis such that any payment received
or deemed to have been received by any Person shall, if necessary, be
supplemented by a further payment to that Person so that the sum of the two
payments shall, after deduction of all taxes, penalties, fines, interest,
additions to tax and other charges (taking into account any related credits or
deductions) resulting from the receipt (actual or constructive) of such payments
imposed by or under any Federal, state, local or foreign law or taxing or
governmental authority be equal to the payment received or deemed to have been
received.
APPLICABLE LAW shall mean all applicable laws, rules, codes,
ordinances, permits, certificates, Orders, regulations and treaties of the
United States of America and states, territories and political subdivisions
thereof and of any other Governmental Authority.
APPLICABLE PERMITS shall mean any Permit that is necessary to develop,
build, improve, own, operate or use all or any part of the Leased Property or
any part thereof in accordance with this Lease and the other Operative
Documents.
APPRAISAL shall have the meaning set forth in Section 6(a)(xiv)
hereof.
APPRAISER shall mean Independent Equipment Company.
APPROVED CONSTRUCTION BUDGET shall mean the budget prepared by the
Lessee, in form and substance satisfactory to the Lessor, attached as EXHIBIT C
hereto, which budget specifies the estimated Actual Project Costs including:
(a) all labor, materials and services necessary for the design, engineering and
construction of the Facility, in accordance with the Construction Contract and
the Construction Agreements, and (b) the expenses to be incurred in connection
with the design, engineering and construction of the Facility, as the same may
be amended from time to time in accordance with the provisions of Section 4
hereof and the other Operative Documents.
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APPROVED CREDIT AGREEMENT ACTION shall mean any amendment or
modification to, or waiver under, the Credit Agreement at such times that Key
Bank National Association or any Affiliate of Key Bank National Association is
a "Bank" party to the Credit Agreement.
BASIC RENT shall have the meaning set forth in Section 3(b) hereof.
BASIC RENT PAYMENT DATE shall have the meaning set forth in Section
3(b) hereof.
BASIC RENT RATE shall mean, with respect to each Rental Period, an
interest rate per annum equal to the sum of (i) the rate or interest at which
deposits in U.S. dollars for a one month period are offered in the London
interbank market as quoted on the Reuters Screen page "LIBO" at or about 11:00
A.M. (London time) on the second Business Day prior to the commencement of such
Rental Period, or if such page on such screen ceases to display such
information, such other page as may replace it on that screen for the purpose of
displaying such information PLUS (ii) 125 basis points.
XXXX OF SALE shall mean the Xxxx of Sale by the Ground Lessor in favor
of the Ground Lessee dated the Closing Date, pursuant to which the Lessee
transferred and sold to the Lessor certain Components described therein.
BUSINESS DAY shall mean (a) a day of the year (other than a Saturday
or a Sunday) on which banks are not required or authorized to close in New York
City, Boston, Massachusetts, and San Francisco, California, and (b) if the
applicable Business Day relates to the determination of the Basic Rent Rate, a
day of the year (other than a Saturday or a Sunday) that is also a day on which
dealings are carried on in the London interbank market and banks are open for
business in London.
CERCLIS shall mean the Comprehensive Environmental Response
Compensation and Liability Information System, which is a list maintained by the
United States Environmental Protection Agency of sites where there is a known or
suspected release or potential release of hazardous materials which may require
remediation.
CLAIM shall mean all liabilities (including, without limitation,
negligence, warranty, statutory, product, strict or absolute liability,
liability in tort or otherwise), obligations, responsibilities, losses, damages,
penalties, fines, sanctions, claims, Environmental Claims, actions, causes of
action, suits, investigations, judgments, Liens (including any Lien in favor of
any Governmental Authority for environmental liabilities and costs or violations
of any Environmental Laws), Taxes, costs, expenses and
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disbursements, of any kind or nature, including, without limitation, reasonable
legal fees and expenses and costs of investigation.
CLOSING DATE shall mean December 19, 1997.
CODE shall mean the Internal Revenue Code of 1986, as amended.
COMPONENTS shall mean all furniture, fixtures, equipment and other
real or personal property to be constructed or installed on the Parcel on or
after the Closing Date, along with the real and personal property described in
the Warranty Deed and the Xxxx of Sale, as set forth in detail in the Lease
Supplements, and together shall constitute the Facility.
CONSTRUCTION AGENT shall have the meaning set forth in Section 4(a)
hereof.
CONSTRUCTION AGREEMENTS shall have the meaning set forth in Section
4(c)(iv) hereof.
CONSTRUCTION CONTRACT shall mean the Agreement dated as of July 22,
1997 between Lessee and HCMA relating to the construction of the Facility, as
assigned to the Lessor pursuant to the Construction Contract Assignment.
CONSTRUCTION CONTRACT ASSIGNMENT shall mean the Assignment Agreement
dated as of December 19, 1997 among the Lessee, as assignor, the Lessor, as
assignee, and HCMA.
CONSTRUCTION SCHEDULE shall mean the Construction Schedule for the
Facility, as the same may be amended or supplemented from time to time in
accordance with Section 4 hereof.
CONTRACTUAL OBLIGATION shall mean, as to any Person, any provision of
any security issued by such Person or of any agreement, undertaking contract,
indenture, mortgage, deed of trust or other instrument, document or agreement to
which such Person is a party or by which it or any of its property is bound.
CREDIT AGREEMENT shall mean the Amended and Restated Credit Agreement
dated as of July 31, 1996, as amended October 15, 1996, March 31, 1997, and
October 10, 1997, among the Lessee, Bank of America National Trust and Savings
Association, as Agent, ABN AMRO Bank, N.V. and Societ, Generale, as Co-Agents,
and the other financial institutions party thereto, a copy of which is attached
as EXHIBIT F
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hereto, as it may hereafter be amended or modified or any of its provisions may
hereafter be waived pursuant to any Approved Credit Agreement Action.
DEFAULT shall mean an event which, after the giving of notice or lapse
of time, or both, would constitute an Event of Default.
ENVIRONMENTAL CLAIMS shall mean any Claim, action, cause of action,
investigation or notice (in written form) by any Person or entity alleging
potential liability (including, without limitation, potential liability for
investigatory costs, cleanup costs, Remedial Action, Releases, governmental
response costs, natural resources damages, property damages, personal injuries,
or penalties) arising out of, based on or resulting from (a) the presence,
release into the environment, of any Hazardous Material at any location, whether
or not owned or operated by the Lessee or (b) circumstances forming the basis of
any violation, or alleged violation, of any Environmental Law.
ENVIRONMENTAL CONSULTANT shall mean Century West Engineering
Corporation.
ENVIRONMENTAL LAWS shall mean all applicable federal, state, foreign
and local laws and regulations, and common law relating to pollution or
protection of the environment (including, without limitation, ambient air,
surface, water, groundwater, land surface or subsurface strata, wetlands,
wildlife, aquatic species, vegetation and natural resources), including, without
limitation, laws and regulations relating to emissions, discharges, Releases or
threatened Releases of Hazardous Materials or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials. Environmental Laws include, but
are not limited to, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 ("CERCLA"); the Federal Insecticide, Fungicide, and
Rodenticide Act ("FIFRA"); the Resource Conservation Recovery Act ("RCRA"); Oil
Pollution Act of 1990 ("OPA"); the Superfund Amendments and Reauthorization Act
of 1986 ("XXXX"); the Toxic Substances Control Act ("TSCA"); the Hazardous
Material Transportation Act; the Clean Air Act; the Federal Water Pollution
Control Act; the Safe Drinking Water Act; and their state and local counterparts
or equivalents.
ENVIRONMENTAL PERMITS shall mean all Permits required under
Environmental Laws.
ERISA shall mean the Employee Retirement Income Security Act of 1974,
as amended, and regulations promulgated thereunder.
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ERISA AFFILIATE shall mean any trade or business (whether or not
incorporated) under common control with the Lessee within the meaning of Section
414(b) or 414(c) of the Code.
ERISA EVENT shall mean (a) a Reportable Event with respect to a
Pension Plan; (b) a withdrawal by the Lessee or any ERISA Affiliate from a
Pension Plan subject to Section 4063 of ERISA during a plan year in which it was
a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a
cessation of operations which is treated as such a withdrawal under Section
4062(e) of ERISA; (c) the filing of a notice of intent to terminate the
treatment of a plan amendment as a termination under Section 4041 or 4041A of
ERISA or the commencement of proceedings by the PBGC to terminate a Pension Plan
subject to Title IV of ERISA; (d) a failure by the Lessee or any ERISA Affiliate
to make required contributions to a Pension Plan or other Plan subject to
Section 412 of the Code; (e) an event or condition which might reasonably by
expected to constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Pension Plan; (f) the
imposition of any liability under Title IV of ERISA, other than PBGC premiums
due but not delinquent under Section 4007 of ERISA, upon the Lessee; or (g) an
application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code with respect to any Pension Plan.
EVENT OF DEFAULT shall have the meaning set forth in Section 20
hereof.
EVENT OF LOSS shall mean with respect to the Facility any of the
following events: (i) loss of the Facility or the use thereof due to theft,
disappearance, destruction, damage beyond repair or rendition of the Facility
permanently unfit for commercial operation for any reason whatsoever; (ii) any
damage to the Facility which results in an insurance settlement with respect to
the Facility on the basis of a total loss; (iii) the requisition of title to the
Leased Property or any part thereof by the act of the United States government
or any other Governmental Authority; (iv) the condemnation, confiscation or
seizure of, or requisition of use ("Requisition of Use") of the Leased Property
or any part thereof by the act of the United States Government or any other
Governmental Authority which constitutes a total taking thereof, (v) the
Requisition of Use of the Leased Property or any part thereof by the act of the
United States Government or any other Governmental Authority which has rendered
the operation of the Facility uneconomic to the Lessee. The date of such Event
of Loss shall be the date of such theft, disappearance, destruction, damage,
condemnation, confiscation, seizure, requisition of title, Requisition of Use or
unfitness for use for the stated period.
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EXPECTED TAXES shall mean net income taxes imposed by any federal or
state Governmental Authority on the Lessor with respect to any Rent received by
the Lessor.
FACILITY shall mean the sawmill facility to be constructed on the
Parcel, as more fully described in the Construction Contract and the
Construction Budget and shall be comprised of the Components and the existing
planner and tray sorter facility and dry kiln facility located on the Parcel.
FINAL COMPLETION DATE shall mean the date on and as of which the
Lessee has delivered to the Lessor a fully executed Officer's Certificate in the
form of EXHIBIT D hereto.
FINAL SURVEY shall mean an ALTA/ACSM survey of the Parcel and any
necessary easements, rights of way or similar property rights benefiting the
Parcel, showing the location of all Components, easements, encroachments and
other survey matters together with a certification from the surveyor, such
survey and certification shall be in form and substance satisfactory to the
Lessor.
GAAP shall mean generally accepted accounting principals in the United
States of America in effect from time to time.
GENERAL PARTNER shall mean the general partner of the Lessee, Crown
Pacific Management Limited Partnership, a Delaware limited partnership, or any
successor general partner of the Lessee.
GOVERNMENT ACTION shall mean all actions, authorizations, consents,
approvals, waivers, exceptions, variances, franchises, filings, orders, permits,
licenses, exemptions, publications, notices to and declarations of or with any
Governmental Authority, including, without limitation, those pertaining to
Environmental Laws and Environmental Permits.
GOVERNMENTAL AUTHORITY shall mean and include any Federal, state,
municipal or other governmental department, commission, board, bureau, court,
legislature, agency, instrumentality or authority, domestic, foreign,
transnational or international.
GROUND LEASE shall mean the Ground Lease dated as of December 19, 1997
between the Ground Lessor and the Ground Lessee, conveying to the Lessor a
leasehold estate in the Parcel.
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GROUND LESSEE shall mean the Lessor as ground lessee under the Ground
Lease.
GROUND LESSOR shall mean the Lessee as ground lessor under the Ground
Lease.
HCMA shall mean HCMA Consulting Group, Inc., an Oregon corporation.
HAZARDOUS MATERIALS shall mean (i) all substances defined as such in
the National Oil and Hazardous Substances Pollution Contingency Plan, 40
C.F.R.(S)300.5, (ii) any substance that, whether by its nature or use, is
subject to regulation under any Environmental Law or with respect to which any
Federal, state or local Environmental Law of Governmental Authority requires
environmental investigation, monitoring or remediation and (iii) all substances
defined as such by, or regulated as such under, any Environmental Law.
INDEMNIFIED PERSON shall mean the Lessor, its successors, assigns and
affiliates, and the directors, officers, employees and agents of the foregoing.
INDEPENDENT AUDITOR shall have the meaning set forth in Section
18(a)(i).
INSURANCE REQUIREMENTS shall mean all of the insurance requirements
set forth in Section 14(a) through (c) hereof.
IRS shall mean the Internal Revenue Service, and any Governmental
Authority succeeding to any of its principal functions.
LAW shall mean any law (including, without limitation, any zoning law
or ordinance, any Environmental Law or Legal Requirements), treaty, directive,
statue, rule, regulation, ordination, order, directive, code, interpretation,
judgment decree, injunction, writ, determination, award, Permit, license,
authorization, direction, requirement or decision of or agreement with or by any
Governmental Authority or any official or officer thereof having jurisdiction of
the matter in question.
LEASE shall mean this Lease and shall include each Lease Supplement
entered into pursuant to the terms hereof.
LEASE SUPPLEMENT shall mean a supplement to this Lease duly executed
and delivered by the Lessor and the Lessee pursuant to, and in accordance with,
the terms hereof, in the form of EXHIBIT A hereto.
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LEASE TERM shall mean the period commencing on the Closing Date and
ending on the Lease Termination Date or such shorter period as may result from
earlier termination as provided herein.
LEASE TERMINATION DATE shall mean the earlier of (i) the Final
Completion Date, (ii) September 30, 1998 and (iii) the date on which this Lease
is terminated pursuant to the terms hereof.
LEASED PROPERTY shall mean the Parcel and the Facility.
LEGAL REQUIREMENTS shall mean (i) all Laws, foreseen or unforeseen,
ordinary or extraordinary, or arising from any restriction of record or
otherwise, which now or at any time hereafter may be applicable to the Lessor,
as owner of the Facility, the Lessee, as lessee hereunder, or the Leased
Property or any part thereof, or any of the adjoining sidewalks, or the
maintenance, management, ownership, construction, operation, mortgaging,
occupancy, possessing, use, non-use or condition of the Leased Property or any
part thereof; (ii) and any other governmental rules, orders and determinations
now or hereafter enacted, made or issued, and applicable to the Lessor, as owner
of the Facility, the Lessee, as lessee hereunder, or the Leased Property or any
part thereof or to the maintenance, management, ownership, construction,
operation, mortgaging, occupancy, possession, use, non-use or condition thereof
whether or not presently contemplated; and (iii) all agreements, Permits,
covenants, and restrictions applicable to the Leased Property or any part
thereof or the maintenance, management, ownership, construction, operation,
mortgaging, occupancy, possession, use, non-use or condition thereof.
LESSEE shall mean Crown Pacific Limited Partnership, a Delaware
limited partnership, and its permitted successors and assigns.
LESSOR shall mean SELCO Service Corporation, an Ohio corporation, and
its permitted successors and assigns.
LESSOR'S LIENS shall mean any Lien on or against the Leased Property
arising as a result of (i) Claims against the Lessor which are not related to
the transactions contemplated by the Operative Documents, (ii) any act or
omission of the Lessor which is not related to the transactions contemplated by
the Operative Documents or is in violation of any of the terms of the Operative
Documents or (iii) Claims against the Lessor with respect to Taxes or expenses
against which the Lessee is not required to indemnify Lessor pursuant to any of
the Operative Documents.
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LIEN shall mean any interest in property securing an obligation owed
to, or claimed by, a Person other than the owner of the property, whether such
interest is based on the common law, statute or contract, and including but not
limited to any security interest, mortgage, encumbrance, pledge, conditional
sale or trust receipt or a lease, consignment or bailment for security purposes;
the term "Lien" shall include reservations, exceptions, encroachments,
easements, rights-of-way, covenants, conditions, restrictions, leases and other
title exceptions and encumbrances affecting property.
MANDATORY ALTERATION shall have the meaning set forth in Section 11(d)
hereof.
MATERIAL ADVERSE EFFECT shall mean (a) a material adverse change in,
or a material adverse effect upon, the operations, business, properties,
condition (financial or otherwise) or prospects of the Lessee; (b) a material
impairment of the ability of the Lessee to perform under this Lease or any other
Operative Document and to avoid any Event of Default; (c) a material adverse
effect upon the legality, validity, binding effect or enforceability against the
Lessee of any Operative Document or; (d) a material adverse effect on the
continued economic operation of the Leased Property.
MAXIMUM REQUISITION FUNDING AMOUNT shall mean $16,959,077.67.
MEMORANDUM OF LEASE shall mean the Memorandum of Lease dated as of
December 19, 1997 between the Lessor and the Lessee.
MEMORANDUM OF GROUND LEASE shall mean the Memorandum of Ground Lease
dated as of December 19, 1997 between the Ground Lessor and the Ground Lessee.
MGP GENERAL PARTNERS shall mean, collectively, Freemont Timber, Inc.,
a Delaware corporation, and HS Corp. of Oregon, an Oregon corporation, the sole
general partners of the General Partner, and any successor general partner of
the General Partner.
MODIFICATION shall mean any improvement, modification, alteration or
addition to the Leased Property.
NEW LEASE NOTIFICATION shall have the meaning set forth in Section
19(a) hereof.
NONSEVERABLE MODIFICATION shall mean a Modification to the Leased
Property which is not a Severable Modification.
NPL shall mean the National Priorities List.
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OFFICER'S CERTIFICATE of any Person shall mean a certificate signed by
a president, any vice president and/or any other duly authorized and responsible
officer of such Person.
OPERATIVE DOCUMENTS shall mean and include this Lease, the Lease
Supplements, the Construction Contract, the Construction Contracts Assignment,
the Ground Lease, the Memorandum of Lease, the Memorandum of Ground Lease, the
Xxxx of Sale and the Warranty Deed.
ORDER shall mean and include any order, writ, injunction, decree,
judgment, award, determination, direction or demand of any Governmental
Authority.
OVERDUE RATE shall mean a rate per annum equal to the greater of (i)
2% above the Basic Rent Rate then in effect, or for any period after the Lease
Termination Date, the Basic Rent Rate for the last Rental Period or (ii) 2%
above the Prime Rate.
PARCEL shall mean the real property described on Schedule 1 hereto.
PARTS shall mean all appliances, parts, instruments, appurtenances,
accessories and other equipment of whatever nature, which may from time to time
be incorporated or installed in or attached to and become a part of the Leased
Property as originally constituted.
PENSION PLAN shall mean a pension plan (as defined in Section 3(2) of
ERISA) subject to Title IV of ERISA which the Lessee or any ERISA Affiliate
sponsors, maintains, or to which it makes, is making, or is obligated to make
contributions, or in the case of a multiple employer plan (as described in
Section 4064(a) of ERISA) has made contributions at any time during the
immediately preceding five (5) plans years.
PERMIT shall mean any order, authorization, consent, approval,
license, ruling, permit, certification, exemption, filing or registration by or
with any Governmental Authority.
PERMITTED ENCUMBRANCES shall have the meaning set forth in the Ground
Lease.
PERMITTED LIENS shall mean all Liens permitted by Section 10 hereof.
PERSON shall mean any individual, partnership, corporation, limited
liability company, limited liability partnership, joint stock company, trust,
unincorporated
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association or organization or joint venture, a government or any department or
agency thereof, or any other entity.
PLAN shall mean an employee benefit plan (as defined in Section 3(3)
of ERISA) which the Lessee or any ERISA Affiliate sponsors or maintains or to
which the Lessee makes, is making, or is obligated to make contributions and
includes any Pension Plan.
PRIME RATE shall mean the rate of interest per annum publicly
announced from time to time by Key Bank National Association as its prime rate
in effect at its principal office in Cleveland, Ohio; each change in the Prime
Rate shall be effective from and including the date such change is publicly
announced as being effective.
PURCHASE PRICE shall mean $2,453,200 which represents the amount paid
by the Lessor to the Lessee for the real and personal property described in the
Xxxx of Sale and the Warranty Deed.
RELEASE shall mean the release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migrating into
the environment of any Hazardous Material through or in the air, soil, surface
water or groundwater.
REMEDIAL ACTION shall mean actions required to (i) clean up, remove,
treat or in any other way address Hazardous Materials in the environment, (ii)
prevent the Release or further Release or minimize the further Release of
Hazardous Materials, or (iii) investigate and determine if a remedial response
is needed, to design such a response and post-remedial investigation,
monitoring, operation, maintenance and care.
RENT shall have the meaning set forth in Section 3(c) hereof.
RENTAL PERIOD shall mean the following periods: (i) the Closing Date
through December 31, 1997 and (ii) each calendar month thereafter through the
Lease Termination Date; PROVIDED, that with respect to the calendar month in
which the Lease Termination Date occurs, the Rental Period for that month, if
the Lease Termination Date is not the last day of such month, shall be the first
day of such calendar month through the Lease Termination Date.
REPLACEMENT PARTS shall have the meaning set forth in Section 11(c)
hereof.
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REPORTABLE EVENT shall mean any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder, other than any such event for
which the 30-day notice requirement under ERISA has been waived in regulations
issued by the PBGC.
REQUISITION shall mean a requisition by the Lessee for Requisition
Fundings substantially in the form of EXHIBIT B.
REQUISITION FUNDING shall have the meaning set forth in Section 5(b)
hereof.
REQUISITION FUNDING CONDITIONS shall mean the conditions to each
Requisition Funding set forth in Sections 6(b) and 6(c) hereof.
REQUISITION FUNDING DATE shall mean the Closing Date and the first
Business Day of any month thereafter through the Lease Termination Date.
REQUISITION OF USE shall have the meaning set forth in the definition
of Event of Loss.
SEVERABLE MODIFICATION shall mean any Modification to the Leased
Property permitted hereunder which can be readily removed therefrom without
impairing the current or residual value, utility or remaining useful life of the
Leased Property.
SUBSIDIARY of any Person shall mean any corporation, partnership,
limited liability company, limited liability partnership, joint venture, trust
or estate of which (or in which) more than 50% of (a) the Voting Stock of such
corporation, (b) the interest in the capital or profits of such partnership,
limited liability company, limited liability partnership, or joint venture or
(c) the beneficial interest in such trust or estate is at the time directly or
indirectly owned or controlled by such Person, by such Person and one or more of
its other Subsidiaries or by one or more of such Person's other Subsidiaries.
SUPPLEMENTAL RENT shall have the meaning set forth in Section 3(c)
hereof.
TAX or TAXES shall mean, without limitation, any fee (including
license, filing, recording, transfer, mortgage and registration fees), foreign,
Federal, state or local tax (including any income, gross receipts, withholding,
franchise, excise, sales, use, value added, mortgage, real, personal, tangible
or intangible property tax or any tax similar to any of the foregoing taxes),
interest equalization, recording, transfer or stamp tax (including deed stamp
tax), assessment (including any maintenance charge, owner association dues or
charges), levy, impost, duty, charge or withholding of any kind or nature
whatsoever, imposed or assessed by any foreign, Federal, state or local
13
government or agency, or governmental authority, together with any addition to
tax, penalty, fine or interest thereon, other than Expected Taxes.
TITLE INSURANCE POLICY shall have the meaning set forth in Section
6(a)(vii).
TOTAL FUNDINGS means an amount equal to all Requisition Fundings made
by the Lessor hereunder plus the Purchase Price.
UNFUNDED PENSION LIABILITY shall mean the excess of a Pension Plan's
benefit liabilities under Section 4001(a)(16) of ERISA, over the current value
of that Pension Plan's assets, determined in accordance with the assumptions
used for funding the Pension Plan pursuant to Section 412 of the Code for the
applicable plan year.
UPDATED TITLE POLICY shall mean an update of the Title Insurance
Policy in form and substance satisfactory to the Lessor, including the removal
of the survey exception.
VOTING STOCK shall mean, as to any corporation, all stock of any class
or classes (however designated), or other securities of any kind, having
ordinary voting rights for an election of a majority of the directors (or
Persons performing similar functions) of such corporation, other than shares or
securities having such power only by reason of the happening of a contingency.
WARRANTY DEED shall mean the Warranty Deed by the Ground Lessor in
favor of the Ground Lessee dated the Closing Date, pursuant to which the Lessee
transferred and sold to the Lessor certain Components described therein.
SECTION 2. LEASE OF THE LEASED PROPERTY.
Upon the terms and subject to the conditions set forth in this Lease
and each Lease Supplement, and in consideration for the rents and covenants
herein stipulated to be performed by the Lessee, the Lessor hereby leases to the
Lessee the Leased Property. This Lease shall be effective with respect to any
Components described on Schedule 1 to each Lease Supplement executed and
delivered by the Lessor and the Lessee from time to time and as described in the
Xxxx of Sale and the Warranty Deed. Such Components shall be subject to the
terms and conditions of this Lease from and after the date on which a Lease
Supplement relating to such Components is executed and delivered for the period
commencing on the date of execution and delivery of such Lease Supplement.
Simultaneously with the delivery of each Requisition pursuant to Section 5
hereof, the Lessee shall deliver to the Lessor an executed Lease Supplement with
respect to the Components included in the Actual Project Costs described in such
Requisition.
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SECTION 3. TERM AND RENT.
(a) TERM. The term of this Lease shall begin on the Closing Date and
shall end on the Lease Termination Date.
(b) BASIC RENT. On the first Business Day immediately succeeding the
last day of each Rental Period (each a "Basic Rent Payment Date"), the Lessee
shall pay to the Lessor, as basic rent (herein referred to as "Basic Rent") for
such Rental Period, an amount determined as follows:
(i) an amount equal to the aggregate amount of Actual
Project Costs advanced by the Lessor pursuant to Section 5 hereof from the
date hereof through and including such Basic Rent Payment Date, MULTIPLIED
BY
(ii) the Basic Rent Rate, DIVIDED BY
(iii) 360, and MULTIPLIED BY
(iv) the actual number of days in such Rental Period.
The Lessee agrees not to prepay any payment of Basic Rent except as specifically
provided by the terms hereof.
(c) SUPPLEMENTAL RENT. The Lessee shall pay to the Lessor or such
other Person as shall be entitled thereto the following amounts (herein referred
to as "Supplemental Rent" and, together with all Basic Rent, as "Rent"):
(i) on the date provided herein or in the applicable
Operative Document or if no such date shall be so provided then on demand,
any amount payable hereunder (other than Basic Rent) which the Lessee
assumes the obligation to pay, or agrees to pay, under this Lease or any
other Operative Document to the Lessor or others; and
(ii) on demand, to the extent permitted by applicable law,
interest (computed on the basis of a 360-day year and actual days elapsed)
at the Overdue Rate on any payment of Rent not paid when due for any period
during which the same shall be overdue.
The expiration or other termination of the Lessee's obligation to pay Basic Rent
hereunder shall not limit or modify the obligations of the Lessee with respect
to Supplemental Rent.
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(d) PAYMENTS. All amounts payable by the Lessee hereunder shall be
paid in lawful money of the United States of America and in immediately
available funds by wire transfer by 2:00 p.m. (New York City time) on the
applicable Basic Rent Payment Date or on the date when due, unless any such due
date is not a Business Day, in which case payment shall be due and payable on
the next succeeding Business Day, at an account designated by the Lessor or to
such other Person in the United States of America or in such other manner as the
Lessor from time to time may designate to the Lessee by written instructions.
SECTION 4. CONSTRUCTION AGENT.
(a) APPOINTMENT OF CONSTRUCTION AGENT. The Lessor hereby appoints
the Lessee to act as the Lessor's agent (the Lessee, in such capacity, is herein
called the "CONSTRUCTION AGENT"), and the Construction Agent hereby agrees to
act as the Lessor's agent, to construct the Facility in a manner consistent with
the Construction Contract, the Approved Construction Budget, the Construction
Schedule and Construction Agreements and to undertake such other duties and
obligations as are set forth herein.
(b) TERM OF AGENCY RELATIONSHIP. The agency relationship created
herein between the Construction Agent and the Lessor shall commence as of the
date hereof and shall end on the sooner to occur of: (i) the Lease Termination
Date; (ii) the giving of notice by the Lessor of such termination upon the
occurrence of an Event of Default; or (iii) the Final Completion Date. No
termination of the agency relationship hereunder nor any failure on the part of
the Lessor to perform its obligations under any Operative Document (other than
its failure to make, or cause to make available, the proceeds of each
Requisition Funding in accordance with the terms hereof) shall limit or
otherwise affect the Lessor's rights against the Construction Agent for any
breach or failure to perform hereunder.
(c) DUTIES OF CONSTRUCTION AGENT. In connection with the
construction of the Facility, the Construction Agent shall on the Lessor's
behalf:
(i) construct, and/or cause the renovation and construction
of, the Facility in a good and workmanlike manner and in accordance with
prudent industry practice and free and clear of all Liens (other than
Permitted Liens) arising out of the same;
(ii) cause such construction to be carried on (i) with
diligence and continuity (subject to delays or interruptions resulting from
adverse weather, labor or materials shortages, strikes or other labor
difficulties, acts of God, or other similar circumstances beyond the
reasonable control of the Lessee) so that the Final Completion Date is
achieved by no later than September 30, 1998,
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(ii) substantially in accordance with the Construction Agreements, the
Construction Contract, Approved Construction Budget and the Construction
Schedule, (iii) in accordance in all material respects with all Legal
Requirements and Applicable Permits and (iii) in accordance with all
Insurance Requirements;
(iii) pay, or cause to be paid, in accordance with prudent
industry practice, all costs and expenses of such construction, including,
without limitation, all Actual Project Costs, if any, in excess of an
amount equal to the Maximum Requisition Funding Amount (without
reimbursement by or other obligation of the Lessor), including, to the
extent required, payment of all amounts owing to contractors and
subcontractors, and perform all obligations arising out of such
construction;
(iv) subject to the provisions of paragraph (e) below,
negotiate and enter into (on behalf of the Lessor) such design,
construction contracts, subcontracts, change orders or amendments thereto
(collectively, the "Construction Agreements") as the Construction Agent may
deem necessary or advisable in connection with the construction of the
Facility; provided, that such Construction Agreements shall be with
reputable contractors and subcontractors duly licensed (to the extent
required by Applicable Law) to perform their obligations under such
Construction Agreements and bonded by such reputable bonding companies, in
such amounts, payable in favor of the Lessor, as are consistent with
prudent industry standards and the Lessee's customary standards and
practices;
(v) subject to the limitations set forth in paragraph (e)
below, prepare and adopt such modifications, amendments and supplements to
the Approved Construction Budget and the Construction Schedule as the
Construction Agent may deem necessary or advisable;
(vi) apply for and procure, at its own cost and expense, any
and all Applicable Permits required to be obtained, maintained or held by
either the Construction Agent or the Lessor as and when required by any
Legal Requirement to be obtained and maintain all such Permits in full
force and effect to the extent required by Applicable Law;
(vii) deliver to the Lessor monthly progress reports on the
construction of the Facility no later than January 15, 1998 and on the 15th
of each month thereafter, which reports shall set forth the status of the
construction to date, including a statement setting forth the percentage of
the Facility completed,
17
and certify that the construction has been performed in a good and
workmanlike manner, substantially in accordance with the Construction
Agreements, the Approved Construction Budget and the Construction Schedule;
(viii) at the cost and expense of the Construction Agent, allow
the Lessor or its agent to examine and obtain copies of all Construction
Agreements, Applicable Permits, invoices, purchase orders or receipts for
Actual Project Costs, construction plans, requests for proposal, bids, and
all other information related to the construction of the Facility as the
Lessor may reasonably request; and
(ix) deliver to the Lessor copies of any periodic reports
prepared by, or provided to, the Lessee or the Construction Agent in
connection with the construction and operation of the Facility.
(d) RIGHT TO RECEIVE CONSTRUCTION COSTS.
(i) During the course of the construction of the Facility,
the Construction Agent may, in compliance with the procedures set forth in
Section 5 hereof, request payment by the Lessor of Actual Project Costs.
(ii) Subject to and in accordance with Section 5 hereof, the
Lessor shall make available, or cause to be made available, the proceeds of
each Requisition Funding as directed by the Construction Agent in the
Requisition relating thereto. The Construction Agent will use the proceeds
of each Requisition Funding received by it only to pay the Actual Project
Costs set forth in the Requisition for such Requisition Funding and title
to the Components acquired with proceeds of each Requisition Funding shall
be vested in the Lessor.
(e) CERTAIN LIMITATIONS ON SCOPE OF AGENCY RELATIONSHIP. The
Construction Agent:
(i) may amend or revise the Approved Construction Budget to
reflect amendments or revisions to the Construction Contract or
Construction Schedule made in accordance with the terms hereof and thereof,
PROVIDED, HOWEVER, that the Construction Agent shall not, without the prior
written consent of the Lessor, amend or revise the Approved Construction
Budget to increase the total actual and projected amount of the Actual
Project Costs to an amount which exceeds the sum of the Maximum Requisition
Funding Amount plus ten percent (10%) of the Maximum Requisition Funding
Amount; and
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(ii) shall not, without the prior written consent of the
Lessor, request or make any changes in the design, drawing, specifications,
or construction of any part of the Facility that would (i) reduce the
current or residual fair market value or useful life of the Facility;
(ii) materially change the use of the Facility; or (iii) result in the
failure to complete the construction the Facility (A) in a good and
workmanlike manner and in accordance with prudent industry practice and
free and clear of all Liens (other than Permitted Liens) arising out of the
same and (B) in compliance with all applicable Legal Requirements,
Applicable Permits and Insurance Requirements; and
(iii) shall not amend or revise the Construction Schedule to
extend the scheduled date for completion of the construction of the
Facility beyond September 30, 1998.
SECTION 5. ACQUISITION OF COMPONENTS; FINANCING.
(a) ACQUISITION. In order to finance the acquisition by the Lessor
of the Components and to finance the cost of construction of the Facility, the
Lessor, as more fully described below, will advance to the Construction Agent on
behalf of the Lessor the Actual Project Costs.
(b) REQUISITIONS. No more than ten (10) and no less than five (5)
Business Days prior to each Requisition Funding Date, the Construction Agent
shall submit to the Lessor a Requisition requesting an advance on the
immediately succeeding Requisition Funding Date in an amount not to exceed the
amount of Actual Project Costs incurred since the immediately preceding
Requisition Funding Date (such amount, a "Requisition Funding"). Each
Requisition shall constitute a representation and warranty by the Construction
Agent and the Lessee that the conditions precedent to such Requisition Funding
have been satisfied.
(c) REQUISITION FUNDINGS. Subject to the satisfaction of the
conditions set forth in Section 6(a) hereof, with respect to the Closing Date,
and Sections 6(b) and, if applicable, 6(c) hereof with respect to each other
Requisition Funding Date, the Lessor shall make a Requisition Funding on the
applicable Requisition Funding Date; PROVIDED, HOWEVER, that the Lessor shall
(i) not be obligated to make a Requisition Funding on the Closing Date in an
amount in excess of $3,588,567.11 or a Requisition Funding on January 2, 1998 in
an amount in excess of $1,000,000, unless prior to such applicable date the
Lessor shall have received the Final Survey and the Updated Title Policy and
(ii) not be obligated to make a Requisition Funding if after making such
Requisition Funding the aggregate amount of the Total Fundings less the Purchase
Price would exceed
19
the Maximum Requisition Funding Amount. All Requisition Fundings shall be made
to the Construction Agent in immediately available funds at the account or
accounts designated in the Requisition submitted with respect to such
Requisition Funding.
SECTION 6. CONDITIONS PRECEDENT.
(a) CONDITIONS PRECEDENT TO THE CLOSING DATE. The obligations set
forth in Sections 2, 4 and 5 hereof shall be subject to the fulfillment, to the
satisfaction of the Lessor, on or before the Closing Date, of the following
conditions precedent:
(i) DUE AUTHORIZATION, EXECUTION AND DELIVERY. The
Operative Documents shall have been duly authorized, executed and delivered
by all parties thereto and shall be in full force and effect. No condition
or event shall exist or have occurred which would constitute a Default or
Event of Default under any of the Operative Documents by any party thereto
and the Lessee shall have delivered an Officer's Certificate to such effect
dated the Closing Date.
(ii) REPRESENTATIONS. The representations and warranties of
the Lessee set forth in the Operative Documents shall be true and correct
on and as of the Closing Date, and the Lessee shall have delivered an
Officer's Certificate dated the Closing Date to such effect.
(iii) OPINIONS. The following opinions, dated the Closing
Date and addressed to the Lessor, shall have been delivered to the Lessor:
(A) an opinion of Ball Xxxxx, LLP, special counsel to
the Lessee, addressed to the Lessor in form and substance reasonably
satisfactory to the Lessor and its counsel; and
(B) an opinion of Xxxxx Xxxxxx Xxxxxxxx LLP, Idaho
counsel, addressed to the Lessor, as to matters of Idaho law, and in
form and substance reasonably satisfactory to the Lessor and its
counsel.
(iv) PROCEEDINGS SATISFACTORY AND OTHER EVIDENCE. All
partnership, corporate and other proceedings taken or to be taken in
connection with the transactions contemplated by the Operative Documents
and all documents, papers and authorizations relating thereto shall be
reasonably satisfactory to the Lessor and its counsel. The Lessor and its
counsel shall receive copies of such documents and papers as they have
reasonably requested, in form and substance reasonably satisfactory to
them, including but not limited to the Operative Documents.
20
(v) SECRETARY'S CERTIFICATES; GOOD STANDING CERTIFICATES;
ETC. The Lessor shall have received on or before the Closing Date the
following, each dated the Closing Date (unless otherwise specified) in form
and substance satisfactory to the Lessor:
(A) copies of the resolutions of the board of
directors of each MGP General Partner, as general partners of the
General Partner, as general partner of the Lessee, and the executive
committee of the Board of Control of the General Partner, in each case
approving the execution, delivery and performance by the General
Partner on behalf of the Lessee of the Operative Documents and the
transactions contemplated thereby, certified as of the Closing Date by
the Secretary or an Assistant Secretary of such MGP General Partners
and the General Partner, as the case may be;
(B) a certificate of the Secretary or Assistant
Secretary of the General Partner certifying the names and true
signatures of the officers of the General Partner, as general partner
of the Lessee, authorized to execute, deliver and perform, as
applicable this Lease and the other Operative Documents on behalf of
the Lessee;
(C) the partnership certificate of the Lessee and the
General Partner as in effect on the Closing Date, certified by the
Secretary of State (or similar, applicable Governmental Authority) of
the state of formation of such entities as of a recent date and by the
Secretary or Assistant Secretary of the General Partner as of the
Closing Date, and each of the Lessee's Partnership Agreement and the
General Partner's Partnership Agreement as in effect on the Closing
Date, certified by the Secretary or Assistant Secretary of the General
Partner as of the Closing Date;
(D) the articles or certificate of incorporation of
each MGP General Partner as in effect on the Closing Date, certified
by the Secretary of State (or similar, applicable Governmental
Authority) of the state of incorporation of such MGP General Partner
as of a recent date and by the Secretary or Assistant Secretary of
such MGP General Partner as of the Closing Date, and the bylaws of
each MGP General Partner as in effect on the Closing Date, certified
by the Secretary or Assistant Secretary of such MGP General Partner as
of the Closing Date; and
21
(E) a good standing certificate for the Lessee, the
General Partner and the MGP General Partners from the Secretary of
State (or similar, applicable Governmental Authority) of its state of
incorporation or formation, as applicable, and with respect to the
Lessee, the States of Idaho, Washington and Oregon, as of a recent
date, together with a bring-down certificate by facsimile, dated the
Closing Date;
(vi) CLOSING FEES. The Lessee shall have paid, or caused to
be paid, accrued fees and expenses of the Lessor (including the reasonable
fees and expenses of New York, Washington and Idaho counsels to the
Lessor).
(vii) TITLE AND SURVEY; FLOOD HAZARD.
(A) The Ground Lessor shall have granted to the Ground
Lessee a good and marketable leasehold estate in the Parcel, free and
clear of all Liens, except Permitted Encumbrances. The Ground Lessee
shall have received from a title insurance company acceptable to the
Ground Lessee (the "Title Company") an ALTA prepaid title insurance
policy in a form acceptable to the Ground Lessee insuring the Ground
Lessee's leasehold estate in the Parcel together with any necessary
easements, rights-of-way or similar property rights in an amount not
less than $19,459,077.67; subject only to such exceptions as shall be
approved by the Ground Lessee, including a pending disbursements
clause and containing all endorsements required by the Ground Lessee,
including without limitation, a comprehensive endorsement, a
contiguity endorsement, an endorsement providing mechanics' lien
coverage and an endorsement insuring access to duly open public roads
(the "Title Insurance Policy").
(B) The Lessor shall have received a preliminary
survey of the Parcel.
(C) Evidence that the Parcel is not in a flood hazard
zone or evidence of flood hazard insurance.
(viii) PERMITS AND CERTAIN PROPERTY MATTERS. All Permits that
are or will become Applicable Permits (including, without limitation, those
identified on Schedule 6(a)(viii), shall have been obtained, except
Applicable Permits customarily obtained or which are permitted by Law to be
obtained after the Closing Date (and the Lessee, having completed all
appropriate due diligence in connection therewith, shall have no reason to
believe that such Permits will not be
22
granted in the usual course of business prior to the date that such Permits
are required by Law). All such obtained Permits shall be in proper form,
shall be in full force and effect and shall not be subject to any further
appeal, consent or contest or to any unsatisfied condition that may allow
modification or revocation. The Lessee shall have delivered an Officer's
Certificate certifying satisfaction of the foregoing condition, together
with a copy of each Permit required to be obtained as of the Closing Date
pursuant to this Section 6(a)(viii).
(ix) DOCUMENTS RELATING TO THE PARCEL. The Lessee shall
deliver, or cause to be delivered, to the Lessor documentation with respect
to the condition of the Parcel, the real estate Taxes applicable to the
Parcel and such other documents and agreements relating to the construction
and operation of the Facility or any part thereof as the Lessor may
reasonably request, in form and substance reasonably acceptable to the
Lessor.
(x) INSURANCE. The Lessee shall be in compliance with all
Insurance Requirements and all insurance policies required by Section 14
hereof shall be in full force and effect. The Lessee shall deliver, or
cause to be delivered, to the Lessor (a) certificates of insurance,
applicable reinsurance cover notes or other satisfactory assurances,
evidencing the coverage of such policies in compliance with the Insurance
Requirements; and (b) copies of the exceptions to coverage of such
policies.
(xi) TAXES. Evidence of the Taxes payable for the Parcel
shall be provided to the Lessor. All Taxes, fees and other charges which
have become due and payable in connection with the execution and delivery
of the Operative Documents shall have been paid by the Lessee and evidence
shall be provided to the Lessor that the Parcel is a legally subdivided tax
lot.
(xii) ENVIRONMENTAL MATTERS. A Phase I and Phase II
environmental audit of the Parcel by the Environmental Consultant shall
have been conducted, at the sole cost and expense of the Lessee, and the
Lessor shall have received a copy of the Environmental Consultant's report
on its environmental audit, together with an update thereof, which (i)
shall conclude that (A) no environmental hazards exist on the Parcel that
are unacceptable to the Lessor and (B) neither the Parcel, the Components
nor the Facility are likely to create any environmental hazards based upon
anticipated and permitted practices and procedures and (ii) shall otherwise
be in form and substance satisfactory to the Lessor (in its sole
discretion).
23
(xiii) NO EVENT OF DEFAULT. No event has occurred and no
condition exists which, assuming that all Operative Documents had been
signed prior to the Closing Date, would constitute a Default or an Event of
Default.
(xiv) APPRAISAL. The Lessee shall cause an appraisal of the
Leased Property (the "APPRAISAL") to be delivered to the Lessor, which
Appraisal shall be in form and substance satisfactory to the Lessor. The
Appraisal shall be prepared by the Appraiser at the expense of the Lessee.
(xv) NO MATERIAL ADVERSE CHANGE, ETC. No Applicable Law
shall prohibit, and no litigation, governmental investigation or other
proceeding shall be pending or threatened in which there is a reasonable
possibility, in the reasonable judgment of the Lessor, of an unfavorable
judgment, decree, order or other determination which could prevent or make
unlawful, or impose any material adverse condition upon, the Leased
Property or any material part thereof or the acquisition, use, ownership,
maintenance, management, operation or leasing thereof or the construction
of the Facility or any transaction contemplated hereby or by any other
Operative Document or the Lessee performance of its obligations hereunder
or thereunder. Since December 31, 1996, there shall not have occurred any
material adverse change in the Lessee's (i) business, financial position or
results of operations or (ii) ability to perform its respective obligations
under any Operative Document to which it is a party, and the Lessee shall
have delivered an Officer's Certificate to such effect.
(xvi) INITIAL REQUISITION. The Lessee shall have delivered a
Requisition to the Lessor at least five (5) Business Days prior to the
Closing Date.
(xvii) RECORDING AND FILING. The Memorandum of Ground Lease,
the Memorandum of Lease and a UCC precautionary financing statement shall
have been duly recorded, published, registered and filed by the Lessee, in
such manner and in such places as the Lessor and its counsel shall
determine to be necessary or appropriate to publish notice thereof and
protect the validity and effectiveness thereof and to establish, create,
perfect, preserve and protect the rights of the parties thereto and their
respective successors and assigns, and all Taxes, fees and other charges in
connection with such recording, publishing, registration and filing thereof
shall have been paid by the Lessee.
(xviii) CONSENTS AND APPROVALS. All Governmental Actions which
are required to have been taken, given, obtained, filed or recorded, as the
case may be, on or prior to the Closing Date by, from or with any
Governmental
24
Authority, and all other consents, filings or approvals which are required
to have been taken, given, obtained, filed or recorded, as the case may be,
on or prior to the Closing Date by, from or with any other Person, in each
case, (a) in connection with the transactions contemplated by the Operative
Documents or to authorize the execution, delivery and performance by the
Lessee or the Lessor and each of the Operative Documents to which it is a
party, or the legality, validity, binding effect or enforceability thereof
as against the Lessee, (b) in order that the Leased Property may be leased,
used and operated for its intended purposes and the Facility may be
constructed thereon as contemplated hereby, or (c) otherwise in connection
with the transactions contemplated by the Operative Documents, shall have
been duly taken, given, obtained, filed or recorded, as the case may be,
and all such approvals shall have been duly taken, given, obtained, filed
or recorded, as the case may be, shall be in full force and effect on the
Closing Date, shall not be subject to any pending proceedings or appeals
(administrative, judicial or otherwise) and shall be adequate to authorize
the consummation of the transactions contemplated by the Operative
Documents and the performance by the Lessee of its obligations thereunder
to which it is a party, except such as may be required to be taken,
obtained, given, accomplished or renewed from time to time in connection
with the maintenance or operation of the Leased Property or which are
otherwise required in connection with the transactions contemplated by the
Operative Documents which have been applied for but which cannot be
obtained, or which are not normally applied for or taken, given or
obtained, prior to the Closing Date, and which in the normal course would
be granted; PROVIDED that the failure to obtain such Governmental Actions,
consents or approvals by the Closing Date would not materially adversely
affect the ability of the Lessee to perform its obligations under any
Operative Document to which it is a party.
(xix) SATISFACTION WITH CONTEMPLATED TRANSACTIONS. The Ground
Lessee shall be satisfied, in its sole discretion, with its review of the
Parcel and all material matters in connection with the leasing thereof by
the Ground Lessee.
(xx) ADDITIONAL DOCUMENTS. The Lessor shall have received
such other approvals, certificates or documents as the Lessor may
reasonably request to evidence satisfaction of the conditions set forth in
this Section 6(a).
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(b) CONDITIONS PRECEDENT TO EACH REQUISITION FUNDING SUBSEQUENT TO
THE CLOSING DATE. The obligations of the Lessor to make Requisition Fundings
subsequent to the Closing Date as set forth in Section 5 hereof shall be subject
to the fulfillment, to the satisfaction of the Lessor, by, on or as of the date
of such requested Requisition Funding, of the following conditions:
(i) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Lessee set forth in the Operative Documents shall be true
and correct as if made on and as of the date of such Requisition Funding.
(ii) COMPLIANCE; NO DEFAULT, ETC. The Lessee shall be in
compliance with its obligations under the Operative Documents on such date
and there shall exist no Default or Event of Default under the Operative
Documents.
(iii) REQUISITION; USE OF PROCEEDS. The Lessor shall have
received a timely and complete Requisition pursuant to and in compliance
with Section 5(a). All proceeds of the Requisition Fundings shall have
been applied solely to Actual Project Costs, and the Lessee shall certify
the same in each Requisition and provide such other evidence with respect
to the use of such proceeds as may be reasonably requested by the Lessor.
(iv) COMPLIANCE WITH LAW. The Leased Property, the
construction, and operation of the Facility and the Lessee and the
Construction Agent shall be in material compliance with all Laws including,
without limitation, all building and construction Laws and Environmental
Laws applicable to the Leased Property.
(v) NO MATERIAL ADVERSE EVENT. No Applicable Law shall
prohibit, and no litigation, governmental investigation or other proceeding
shall be pending or threatened in which there is a reasonable possibility,
in the judgment of the Lessor, of an unfavorable judgment, decree, order or
other determination which could prevent or make unlawful, or impose any
material adverse condition upon, the Leased Property or the construction or
operation of the Facility or any transaction contemplated hereby or by any
other Operative Document or the ability of the Lessee to perform its
obligations hereunder or thereunder, and the Lessee shall certify the same
in each Requisition.
(vi) LEGALITY. The making of any Requisition Funding, and
maintenance thereof, by the Lessor shall not be prohibited by any
Applicable Law and shall not subject to any Tax, penalty, liability or
other onerous condition under or pursuant to any Applicable Law.
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(vii) PERMITS. All Permits that are or will become Applicable
Permits shall have been obtained, except Applicable Permits customarily
obtained or which are permitted by Law to be obtained after the date of the
requested Requisition Funding (and the Lessee, having completed all
appropriate diligence in connection therewith, shall have no reason to
believe that such Permits will not be granted in the usual course of
business prior to the date that such Permits are required by Law). All
such obtained Permits shall be in proper form, in full force and effect and
not subject to any appeal, consent or further contest or to any unsatisfied
condition (other than conditions relating to completion in the future) that
may allow modification or revocation.
(viii) NO PROPERTY DAMAGE. None of the Leased Property shall
have suffered an Event of Loss, or any other damage or destruction which
renders the Leased Property unusable in whole or in material part and,
under Applicable Law, the Leased Property may be used for the purposes
contemplated by the Lessee in accordance with this Lease, and the Lessee
shall certify the same in each Requisition.
(ix) TITLE INSURANCE POLICY UPDATE. The Title Insurance
Policy shall have been endorsed and re-dated as required by the Lessor to
cover each Requisition Funding, including, without limitation, a mechanics
lien endorsement, with no title exceptions objectionable to the Lessor.
(x) ADDITIONAL DOCUMENTS. The Lessor shall have received
such other approvals, certificates or documents as the Lessor may
reasonably request to evidence satisfaction of the conditions set forth in
this Section 6(b).
(c) CONDITIONS PRECEDENT TO ANY REQUISITION FUNDING SUBSEQUENT TO
JANUARY 1, 1998. The obligations of the Lessor to make Requisition Fundings
subsequent to January 1, 1998 as set forth in Section 5 hereof shall be subject
to the fulfillment, to the satisfaction of the Lessor, by, on or as of the date
of such requested Requisition Funding, of the following conditions:
(i) OTHER CONDITIONS. The Lessee shall have satisfied the
conditions precedent set forth in Section 6(b) hereof.
(ii) DELIVERY OF FINAL SURVEY AND UPDATED TITLE POLICY. The
Lessor shall have received the Final Survey and the Updated Title Policy.
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SECTION 7. NET LEASE; NON-TERMINABILITY.
(a) This Lease is a net lease and, except as otherwise expressly
provided in this Lease, any present or future Law to the contrary
notwithstanding, shall not terminate, nor shall the Lessee be entitled to any
abatement, reduction, set-off, counterclaim, defense or deduction with respect
to any Rent or other sum payable hereunder. Except as otherwise expressly
provided in this Lease, the obligations of the Lessee shall not be affected by
reason of: (i) any damage to or destruction of the Leased Property or any part
thereof by any cause whatsoever (including, without limitation, by fire, Event
of Loss or act of God or enemy or any other force majeure event); (ii) any
Requisition of Use, including, without limitation, a temporary Requisition of
Use of the Leased Property or any part thereof; (iii) any prohibition,
limitation, restriction or prevention of the Lessee's use, occupancy or
enjoyment of the Leased Property or any part thereof by any Person; (iv) any
matter affecting title to the Leased Property or any part thereof; (v) any
eviction of the Lessee from, or loss of possession by the Lessee of, the Leased
Property or any part thereof, by reason of title paramount or otherwise;
(vi) any default by the Lessor hereunder; (vii) the invalidity or
unenforceability of any provision hereof or in the other Operative Documents or
the impossibility or illegality of performance by the Lessor or the Lessee or
both; (viii) any action of any Governmental Authority; or (ix) any other cause
or occurrence whatsoever, whether similar or dissimilar to the foregoing. The
parties intend that the obligations of the Lessee hereunder shall continue
unaffected unless such obligations shall have been modified or terminated
pursuant to an express provision of this Lease.
(b) The Lessee shall remain obligated under this Lease in accordance
with its terms and shall not take any action to terminate, rescind or avoid this
Lease, notwithstanding any bankruptcy, insolvency, reorganization, liquidation,
dissolution or other proceeding affecting the Lessor or any action with respect
to this Lease which may be taken by any trustee, receiver or liquidator or by
any court. Except as expressly permitted in this Lease, the Lessee waives all
rights to terminate or surrender this Lease, or to any abatement or deferment of
Rent or other sums payable hereunder or under the other Operative Documents.
The Lessee shall remain obligated under this Lease in accordance with its terms,
and the Lessee hereby waives any and all rights now or hereafter conferred by
Law or otherwise to modify or to avoid strict compliance with its obligations
under this Lease. All payments made to or for the benefit of the Lessor
hereunder as required hereby shall be final, and the Lessee shall not seek to
recover any such payment or any part thereof for any reason whatsoever, absent
manifest error.
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SECTION 8. RETURN OF THE LEASED PROPERTY.
(a) RETURN. If upon the expiration or termination of this Lease, the
Lessee or its designee has not purchased the Facility as provided in Section 19
hereof or the Lessee shall not have entered into new leasing arrangements
pursuant to Section 19 hereof, the Lessee shall surrender the Leased Property
and the Facility shall be surrendered in the operating condition, efficiency,
utility and with the useful life the Facility had upon the completion of its
construction, except as repaired, rebuilt, replaced, renovated, altered, added
to or built as permitted or required hereby and except for ordinary wear and
tear. To the extent that the Facility is not in compliance with the above, upon
such expiration or termination (except as a consequence of a Event of Loss, as
to which Section 13 hereof applies), the Lessee shall pay to Lessor (or on
behalf of the Lessor) such additional amounts as are required to place it in
compliance therewith.
(b) NO LIENS. The Lessee shall also surrender the Leased Property to
the Lessor free and clear of all Liens, easements, consents and restrictive
covenants and agreements affecting the Leased Property (other than Lessor's
Liens and Permitted Encumbrances).
(c) COMPLIANCE WITH ENVIRONMENTAL LAWS. The Lessee shall also
surrender the Leased Property in a condition such that they are in compliance
with all applicable Environmental Laws (irrespective of whether the deadline for
such compliance would otherwise expire after the Lease Termination Date).
Nothing contained in this Section 8 shall relieve or discharge or in any way
affect the obligation of the Lessee to cure promptly pursuant to this Lease any
violations of Legal Requirements referred to in this Lease, or to pay and
discharge any Liens against the Leased Property. The Lessee shall cooperate, to
the fullest extent, with the Lessor, its subsequent lessees, operators or
purchasers to effect the transfer of all of Lessee's Applicable Permits for the
Leased Property to such Persons.
(d) REMOVAL AND REPAIR. The Lessee, at its sole cost and expense,
shall remove from the Leased Property on or prior to such expiration or
termination, all property situated thereon which is not owned by the Lessor and
shall repair any damage caused by such removal and shall restore the Facility to
the condition and working order (or reasonable equivalent thereof) in which it
existed immediately prior to the installation of such property, except for
ordinary wear and tear. Lessee shall indemnify and hold harmless the Lessor,
its successors and assigns against any loss, liability, cost, expense, penalty
or claim arising out of the Lessee's removal of such property from the Leased
Property including, without limitation, any environmental liability arising
therefrom. Any such property of the Lessee not so removed shall become the
property of the Lessor,
29
and the Lessor may cause such property to be removed from the Leased Property
and disposed of, and the cost of any such removal and disposition of the
Lessee's property and of repairing any damage caused by such removal and of the
restoration of the Leased Property to the condition and working order (or
reasonable equivalent thereof) in which the Leased Property existed immediately
prior to the installation of such property, ordinary wear and tear excepted,
shall be borne by the Lessee.
(e) SURVIVAL. The obligations of the Lessee under this Section 8
shall survive the expiration or any termination of this Lease (whether by
operation of Law or otherwise) for all matters described in this Section 8 which
occur or arise prior to such expiration or termination or arise out of or result
from facts, events, claims, liabilities, actions or conditions occurring,
arising or existing on or before such expiration or termination.
SECTION 9. WARRANTY OF THE LESSOR.
(a) QUIET ENJOYMENT. During the term of this Lease, the Lessor
covenants that, unless a Default or an Event of Default has occurred and is
continuing, it will not, and will not permit any party claiming by or under the
Lessor (subject to the terms, covenants and provisions of the Ground Lease) to,
(i) grant, create or suffer to exist any Lien upon the Leased Property (or any
part thereof or interest therein) other than the Permitted Encumbrances
(excluding therefrom any Lessor's Lien); or (ii) interfere with the peaceful and
quiet possession and enjoyment of the Leased Property by the Lessee.
(b) LIMITED LESSOR WARRANTY. The warranties set forth in paragraph
(a) of this Section are in lieu of all other warranties of the Lessor, other
than as specifically set forth in the other Operative Documents, whether
written, oral or implied, with respect to this Lease or any of the Leased
Property, and the Lessor shall not be deemed to have modified in any respect the
obligations of the Lessee pursuant to Section 7 hereof, which obligations are
absolute and unconditional.
(c) THE LESSEE REPRESENTS, WARRANTS, ACKNOWLEDGES AND AGREES THAT (I)
THE FACILITY IS OF THE SIZE, DESIGN, CAPACITY AND MANUFACTURE SELECTED BY THE
LESSEE, (II) THE LESSEE IS SATISFIED THAT THE LEASED PROPERTY IS SUITABLE FOR
ITS PURPOSES, (III) THE LESSOR IS NOT A MANUFACTURER OR A DEALER IN PROPERTY OF
SUCH KIND AND (IV) THE LEASED PROPERTY IS LEASED HEREUNDER SUBJECT TO ALL
APPLICABLE LAWS AND GOVERNMENTAL REGULATIONS NOW IN EFFECT OR HEREAFTER ADOPTED
AND, WITH
30
RESPECT TO ANY COMPONENTS CONVEYED TO THE LESSOR ON THE CLOSING DATE, IN THE
SAME STATE AND CONDITION AS WHEN TITLE THERETO WAS FIRST CONVEYED, TRANSFERRED
AND ASSIGNED TO THE LESSOR (NORMAL WEAR AND TEAR EXCEPTED), WITHOUT
REPRESENTATION OR WARRANTY OF ANY KIND BY THE LESSOR, EXPRESS OR IMPLIED, AS TO
THE TITLE, MERCHANTABILITY, COMPLIANCE WITH SPECIFICATIONS, CONDITION, DESIGN,
OPERATION, FREEDOM FROM PATENT OR TRADEMARK INFRINGEMENT, ABSENCE OF LATENT
DEFECTS OR FITNESS FOR USE OF THE LEASED PROPERTY (OR ANY PART THEREOF), OR ANY
OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO
THE LEASED PROPERTY (OR ANY PART THEREOF), OTHER THAN AS SPECIFICALLY SET FORTH
IN THE OPERATIVE DOCUMENTS. It is agreed that except as expressly provided
herein all risks incident to the matters discussed in the preceding sentence, as
between the Lessor and Lessee, are to be borne by the Lessee. Except to the
extent otherwise expressly stated, the foregoing provisions are intended to be a
complete exclusion and negation of any representations or warranties by the
Lessor, express or implied, with respect to the Leased Property, or any part
thereof, whether arising pursuant to the Uniform Commercial Code or any similar
law now or hereafter in effect, or otherwise. The Lessor authorizes the Lessee,
at the Lessee's expense, to assert for the Lessor's account, during the Lease
Term, so long as no Event of Default shall have occurred and be continuing, all
of the Lessor's rights under any applicable manufacturer's or contractor's
warranty and the Lessor agrees to cooperate with the Lessee in asserting such
rights; PROVIDED, HOWEVER, that the Lessee shall indemnify and hold the Lessor
harmless from and against any and all claims, and all costs, expenses, damages,
losses and liabilities incurred or suffered by the Lessor in connection with, as
a result of, or incidental to, any action by the Lessee pursuant to the above
authorization. Any amount received by the Lessee as payment under any such
warranty shall be applied to restore the Facility to the condition required by
Section 11 hereof and any excess shall be paid to the Lessee.
SECTION 10. LIENS.
The Lessee will not directly or indirectly create, incur, assume or
suffer to exist any Liens on or with respect to any of the Leased Property or
any part thereof, the Lessor's title thereto or any interest of the Lessor
therein (and the Lessee will promptly, at its own expense, take such action as
may be necessary duly to discharge any such Lien), except (a) the respective
rights of the Lessor and the Lessee as herein and in the other Operative
Documents provided, (b) Lessor's Liens, (c) Liens for taxes either not yet due
or being contested by the Lessee in good faith with due diligence and by
appropriate proceedings (and with respect to which the Lessee shall have secured
a stay of execution
31
pending such contest and adequate reserves are maintained with respect thereto,
in accordance with GAAP), provided that counsel for the Lessor shall have
determined that the nonpayment of any such tax or the contest of any such
payment in such proceedings does not, in the opinion of such counsel, adversely
affect the title, property or rights of the Lessor in the Leased Property, (d)
inchoate materialmen's, mechanics', workmen's, repairmen's, employees' or other
like Liens arising in the ordinary course of business of the Lessee for amounts
either not yet due or being contested by the Lessee in good faith with due
diligence and by appropriate proceedings (and with respect to which the Lessee
shall have secured a stay of execution pending such contest and adequate
reserves are maintained with respect thereto, in accordance with GAAP), if
counsel for the Lessor shall have determined that the contest of any such
payment in such proceedings does not, in the opinion of such counsel, adversely
affect the title, property or rights of the Lessor in the Leased Property, (e)
easements, rights-of-way and other similar encumbrances arising in the ordinary
course of the Lessee's business and necessary for the operation or the
construction of the Facility which do not impose material financial obligations
on the Lessee and which do not diminish the current or residual value or
interfere with the ordinary intended use of the Leased Property, and (f)
Permitted Encumbrances.
SECTION 11. MAINTENANCE AND OPERATION; COMPLIANCE AND USE;
REPLACEMENT PARTS; MODIFICATIONS.
(a) MAINTENANCE AND OPERATION. The Lessee shall operate, maintain,
inspect, service, repair and overhaul the Facility in accordance with prudent
industry practice and such operating standards as shall be applied by the Lessee
or its Affiliates with respect to similar property owned or leased by the Lessee
or its Affiliates and in any event shall keep the Facility in as good operating
condition as when delivered to the Lessee hereunder, ordinary wear and tear
excepted. Throughout the Lease Term, the possession, operation and maintenance
of the Facility shall be at the sole risk and expense of the Lessee.
(b) COMPLIANCE AND USE. The Lessee agrees that the maintenance, use
and operation, as applicable, of the Leased Property will, in all material
respects, be in compliance with all Applicable Laws. Subject to the provisions
of Section 15 hereof, the Leased Property will at all times (i) be used solely
in the conduct of the Lessee's business and (ii) be and remain in the possession
and control of the Lessee.
(c) REPLACEMENT PARTS. Except as otherwise provided in the
succeeding paragraph (d) of this Section, the Lessee, at its own cost and
expense, will promptly replace all Parts which may from time to time become worn
out, lost, stolen,
32
destroyed, seized, confiscated, damaged beyond repair or permanently rendered
unfit for use (such replacement parts hereinafter called "Replacement Parts").
In addition, in the ordinary course of maintenance, service, repair,
overhaul or testing, the Lessee may, at its own cost and expense, remove any
Parts, whether or not worn out, lost, stolen, destroyed, seized, confiscated,
damaged beyond repair or permanently rendered unfit for use, PROVIDED that the
Lessee shall, at its own cost and expense, replace such Parts as promptly as
practicable. All Replacement Parts shall be free and clear of all Liens and
shall be in as good operating condition as, and shall have a value and utility
at least equal to, the Parts replaced assuming such replaced Parts were in the
condition and repair required to be maintained by the terms hereof. All Parts
at any time removed from the Facility shall remain the property of the Lessor,
no matter where located, until such time as such Parts shall be replaced by
Replacement Parts which have been incorporated or installed in or attached to
and become a part of the Facility and which meet the requirements for
Replacement Parts specified above. Immediately upon any Replacement Part
becoming incorporated or installed in or attached to and becoming a part of any
of the Facility as above provided, without further act, (i) title to the removed
Part shall thereupon vest in the Lessee, free and clear of all rights of the
Lessor, and shall no longer be deemed a Part hereunder, (ii) title to such
Replacement Part shall thereupon vest in the Lessor, and (iii) such Replacement
Part shall become subject to this Lease and be deemed part of the Facility for
all purposes hereof to the same extent as the Parts originally incorporated or
installed in or attached to the Facility. The Lessee agrees to cooperate with
the Lessor in the preparation, execution and filing of such documents as may be
reasonably required to create, perfect and maintain the Lessor's ownership in
any such Replacement Part.
The Lessee shall notify the Lessor of any Replacement Part or any
series of related Replacement Parts (whether related by type or function) for
any Leased Property installed and having a cost per Replacement Part or such
series of related Replacement Parts, as the case may be, of $250,000 or more.
(d) MODIFICATIONS. The Lessee may, without the prior written consent
of the Lessor, but solely at Lessee's expense, either (i) repair the Facility by
the installation of a Replacement Part, or (ii) affix, install or make any
Nonseverable Modification or Severable Modification as the Lessee may deem
desirable in the proper conduct of its business, PROVIDED, that no such
Modification diminishes the current or residual value, utility, useful life or
condition of the Facility below the current or residual value, utility, useful
life or condition thereof immediately prior to the making, affixing or
installing of such Modification, assuming the Facility was then of the value or
utility and in the condition required to be maintained by the terms of this
Lease.
33
The Lessee shall, at its expense, make such Modifications to any of
the Facility ("Mandatory Alteration") as may be required from time to time to
meet the requirements of any Applicable Law or of any Governmental Authority
having jurisdiction, or any applicable Permit, deed, conveyance, lease,
agreement, easement or instrument.
Title to each Nonseverable Modification and each Mandatory Alteration
shall, upon installation or affixation to the Facility, vest in the Lessor and
thereupon such Nonseverable Modification or Mandatory Alteration, as the case
may be, shall become a part of the Facility for all purposes hereof and become
subject to this Lease.
Title to any Severable Modification (other than a Mandatory
Alteration) shall remain in, and be acquired at the expense of, the Lessee. So
long as no Event of Default shall have occurred and be continuing, the Lessee
may remove any Severable Modification (other than a Mandatory Alteration) at any
time prior to the expiration or termination of this Lease so long as such
removal shall not materially reduce the current or residual value, utility,
useful life or condition of the Facility below the current or residual value,
utility, useful life or condition the Facility would have had at such time if
such Severable Modification had not been made. Notwithstanding anything in this
Lease to the contrary, upon the occurrence and during the continuance of an
Event of Default, if this Lease shall be declared to be in default pursuant to
Section 20 hereof, any interest of the Lessee in any Severable Modification at
such time shall, without further act, become the property of the Lessor.
The Lessee shall notify the Lessor of any Mandatory Alterations,
Nonseverable Modifications and Severable Modifications or any series of related
Modifications (whether related by type or function) for the Facility installed
and having an estimated cost per Modification or such series of related
Modifications, as the case may be, in excess of $500,000. In the event any
Nonseverable Modification or Mandatory Alteration or such series of related
Modifications (whether related by type or function) shall have a cost per
Modification or such series of related Modifications, as the case may be
(including installation), in excess of $500,000, the Lessee at its sole cost and
expense shall furnish the Lessor with a full warranty xxxx of sale, in form and
substance satisfactory to the Lessor, conveying title to such Nonseverable
Modification or Mandatory Alteration to the Lessor.
(e) PROTECTION OF INTERESTS. The Lessee agrees to take such action
as shall reasonably be required from time to time by the Lessor to protect the
respective interests of the Lessor in the Leased Property.
34
(f) ENCROACHMENTS. Except for Permitted Encumbrances, in the event
that all or any part of the Facility or any Modification shall encroach upon any
property or right-of-way adjoining or adjacent to the Leased Property or any
part thereof, or shall violate any agreements or conditions affecting the Leased
Property or any part thereof, or shall obstruct any easement or right-of-way to
which the Leased Property or any part thereof may be subject, then the Lessee
shall, at its sole cost and expense, either (i) contest such matter, (ii) obtain
valid and effective Permits for or consents to such encroachments and/or
violations (without any liability to the Lessor for which it is not indemnified
by the Lessee) or waivers or settlements of all claims, liabilities and damages
resulting therefrom, or (iii) make such changes, including alteration or
removal, to the Facility or the Modification (as the case may be) and take such
other action as shall be reasonably necessary to rectify such encroachments,
violations, hindrances, obstructions or impairments, subject to the Lessor's
consent if and to the extent required by paragraph (d) of this Section.
SECTION 12. INSPECTION REPORTS.
(a) INSPECTION. The Lessor shall have the right (which may be
delegated to its consultants, representatives and agents), but not the duty, to
inspect the Leased Property or any part thereof and records directly related to
the construction and operation of the Leased Property or any part thereof and to
discuss with the Construction Agent, the general contractor, subcontractors and
officers of the Lessee such of the affairs, finances, construction and accounts
as are relevant to the Operative Documents or as are necessary or advisable for
the Lessor to evaluate the progress, costs and quality of the construction of
the Facility, in all cases, at reasonable times and in compliance with and
subject to Lessee's and the Construction Agent's reasonable security and safety
procedures, in effect from time to time. Any such inspection shall be made
after advance written notice to the Lessee is given; PROVIDED, HOWEVER, that no
advance written notice need be given if the Lessor, in its sole discretion, has
reason to believe that a Default or Event of Default has occurred or other
exigent or emergency conditions exist; and PROVIDED FURTHER, that all such
inspections upon the occurrence and during the continuance of a Default or an
Event of Default (i) shall be at the expense of the Lessee (and shall otherwise
be at the expense of the Lessor) and (ii) shall be broad enough to provide the
Lessor, its consultants, representatives and agents with access to the Leased
Property or any part thereof and to the Lessor's books and records relating to
the management, operation, use, construction, renovation or occupancy of the
Leased Property or any part thereof as they may require for any purpose,
including, without limitation, for marketing, selling, operating or otherwise
disposing of the Leased Property or any part thereof.
35
(b) LIABILITY; DAMAGE. The Lessee shall give prompt written notice
to the Lessor of each accident likely to result in damages against the Lessee
or, as the case may be, in excess of $750,000 in any way relating to or arising
out of the alleged or apparent improper manufacture, financing, construction,
purchase, acceptance, rejection, ownership, acquisition, delivery, nondelivery,
lease, sublease, preparation, installation, storage, maintenance, repair,
transportation, transfer of title, abandonment, possession, rental, use,
operation, condition, sale, return, importation, exportation, or other
disposition of the Leased Property or any portion thereof; promptly upon the
Lessee becoming aware of same, and on request shall furnish to the Lessor
information as to the time, place and nature thereof, the names and addresses of
the parties involved, any Persons injured, witnesses and owners of any property
damaged, and such other information as may be known to it and shall promptly
upon request, if such request is deemed reasonable under the circumstances by
the Lessee, furnish the Lessor with copies of all material correspondence,
papers, notices and documents whatsoever received by the Lessee (not otherwise
subject to the attorney-client privilege) in connection therewith. In any case,
the Lessor, at its own expense, may inspect all correspondence, papers, notices
and documents whatsoever received by the Lessee (not otherwise subject to the
attorney-client privilege) in connection therewith. In addition, the Lessee
shall give prompt written notice to the Lessor of any damage, loss of use or
destruction of the Leased Property or any part thereof which, in the aggregate,
exceed $750,000 and which would not otherwise constitute an Event of Loss with
respect thereto.
(c) LIENS. Upon the attachment of an aggregate amount of $250,000 or
more of Liens on all the Leased Property or any part thereof (in either case
excluding any Liens for taxes not yet due and payable), the Lessee shall
promptly (and in no event later than ten (10) Business Days after it shall have
obtained knowledge thereof) notify the Lessor of the attachment of all such
Liens and the full particulars thereof unless the same shall have been removed
or discharged by the Lessee.
(d) NOTICES OF NONCOMPLIANCE WITH APPLICABLE LAWS. The Lessee shall
furnish to the Lessor, within five (5) days after receipt thereof, a copy of any
notice or order of any Governmental Authority asserting that the Lessee is not
in compliance with, or may be liable for contamination originating from or on
the Parcel or the Facility under any Applicable Law, in any case in any respect
material to the value of the Leased Property or any part thereof or the
respective interests of the Lessor therein.
(e) PLANS AND SPECIFICATIONS; OPERATING MANUALS. The Lessee shall
maintain or cause its Affiliates to maintain throughout the Lease Term, and keep
on file at its office, a complete set of plans and specifications, including
"as-built" plans and specifications as and when available, with respect to the
Facility (which shall reflect all
36
material Parts incorporated or installed in or attached to the Facility and all
material Modifications made pursuant to Section 11 hereof; PROVIDED, HOWEVER,
that such plans and specifications shall as of any date not be required to
reflect any such Parts so incorporated, installed or attached or any such
Modification made within thirty (30) days prior to such date). Other than any
part of the Leased Property which shall have been transferred to the Lessee
pursuant to the terms hereof, upon the expiration of the Lease Term, the Lessee
shall deliver to the Lessor or to the Lessor's designee a complete set, current
as of the date of such return or retaking, of such plans and specifications and
all work drawings and similar documents with respect to the Leased Property.
SECTION 13. LOSS OR DESTRUCTION; REQUISITION OF USE.
(a) EVENT OF LOSS. Upon the occurrence of an Event of Loss with
respect to Leased Property or any part thereof, the Lessee shall within five (5)
Business Days after the occurrence of such Event of Loss give the Lessor written
notice thereof. If the remaining portion of the Leased Property not suffering
such Event of Loss is not capable of functioning for its intended purpose, the
Lessee shall pay to the Lessor on the next Rent Payment Date occurring after the
occurrence of such Event of Loss as compensation for such Event of Loss an
amount equal to the Total Fundings made by the Lessor from the date hereof
through such Basic Rent Payment Date, together with (i) all Basic Rent due and
owing on or prior to such date and (ii) all Supplemental Rent due and owing
prior to such date and any other Supplemental Rent as to which there is no
dispute and which is agreed to become due and owing within 60 days of such date,
whereupon (1) this Lease and the obligations of the Lessee hereunder shall
terminate and (2) the Lessor shall transfer all right and interest of the Lessor
in and to the Leased Property, as is and where is, to the Lessee, free and clear
of Lessor's Liens but otherwise without representation or warranty, and the
Lessor shall, at the Lessee's expense, execute and deliver to the Lessee a xxxx
of sale or such other documents as the Lessee may reasonably request to evidence
the valid consummation of such transfer.
If, however, an Event of Loss has occurred with respect to the Leased
Property or any part thereof and the portions thereof not suffering such Event
of Loss are capable of functioning for their intended purpose, then the Lessee
shall as promptly as possible rebuild or cause to be rebuilt (or replace or
cause to be replaced) the portions of the Leased Property suffering such Event
of Loss which such rebuilt Leased Property (or replacement) shall have at least
the same current and residual value, utility and remaining useful life as it had
prior to the Event of Loss (assuming such Leased Property has been maintained in
accordance with the terms of this Lease). Any replacement portions of Leased
Property shall be subject to this Lease and the Lessor shall have title thereto.
37
In the case of a Requisition of Use with respect to any portion of the
Leased Property which does not constitute an Event of Loss, such Requisition of
Use shall not terminate this Lease with respect to such portion of the Leased
Property and each and every obligation of the Lessee with respect thereto shall
remain in full force and effect. So long as no Event of Default shall have
occurred and be continuing under this Lease, the Lessee shall be entitled to all
sums attributable to the period the Leased Property or any portion thereof is
subject to this Lease, received by reason of any such Requisition of Use;
PROVIDED that if the Lessor determines that as a result of such partial taking
there is a reduction in the residual value of such Leased Property, the Lessee
will pay to the Lessor that portion of such sums as shall compensate the Lessor
for such reduction.
All condemnation awards and other moneys received by the Lessee or the
Lessor on account of an Event of Loss, other than insurance proceeds, shall be
applied as follows: FIRST, to purchase any Components from the Lessor or rebuild
or replace any Components contemplated by this Section 13(a) if not theretofore
paid by the Lessee, or to reimburse the Lessee for the payment therefor; SECOND,
to the Lessee to compensate it for the loss of the fair value of its leasehold
interest under this Lease, if any; and THIRD, any balance remaining shall be
remitted to the Lessor.
The Lessor authorizes the Lessee, at the Lessee's expense, to assert
for the Lessor's account, during the Lease Term, so long as no Event of Default
shall have occurred hereunder, all of the Lessor's rights and interests in the
course of any condemnation or requisition proceedings and the Lessor agrees to
cooperate with the Lessee in asserting such rights; PROVIDED, HOWEVER, that the
Lessee shall indemnify and hold the Lessor harmless from and against any and all
claims, and all costs, expenses, damages, losses and liabilities incurred or
suffered by the Lessor in connection with, as a result of, or incidental to, any
action by the Lessee pursuant to the above authorization.
(b) RISK OF LOSS; NO RELEASE OF OBLIGATIONS. Except as provided in
this Section, the Lessee shall bear the risk of loss and shall not be released
from its obligations hereunder in the event of any damage to the Leased Property
or any part thereof or any Event of Loss relating thereto.
SECTION 14. INSURANCE.
(a) The Lessee will purchase and maintain, or cause to be purchased
and maintained, insurance with respect to the Leased Property of the following
types and in the following amounts (or in such greater amounts as may become
necessary from time to time to prevent the Lessor and the Lessee from becoming
co-insurers of any loss), and
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in no event in amounts less than those maintained by the Lessee or its
Affiliates for other similar facilities owned and/or operated by them:
(i) PROPERTY INSURANCE: Property damage insurance on an
"all risk" basis, boiler and machinery insurance, including coverage
against damage or loss caused by fire, earthquake, earth movement, flood,
subsidence and collapse and providing (1) coverage equal to one hundred
percent (100%) of the full replacement cost value of the Leased Property
and the Lessee's leasehold interest (with only those deductibles approved
by the Lessor, and, if required by the Lessor, an agreed amount
endorsement), (2) transit coverage during the construction of the Facility
and (3) coverage for foundations and other property below the surface of
the ground;
(ii) GENERAL LIABILITY INSURANCE: Comprehensive general
liability (including contractual, completed operations and product
liability) insurance against claims for bodily injury (including death),
personal injury and property damage occurring on, in or in respect of the
Leased Property or resulting from activities on or related to the Leased
Property, in the minimum combined single limit amount of $15,000,000, for
each occurrence for bodily injury (or death) and/or property damage;
(iii) WORKERS' COMPENSATION INSURANCE: Workers' compensation
insurance at statutory levels and employers' liability insurance or
self-insurance as permitted by Law;
(iv) BUILDER'S RISK INSURANCE: During the construction of
the Facility, builder's "all risks" and "general risks" insurance or
equivalent coverage (with sublimits and deductibles as are acceptable to
Lessor), including fire, earth movement, earthquake, flood, subsidence and
collapse, business interruption/extra expense and testing and commissioning
coverage with respect to the Leased Property and any on-site and off-site
work and materials related thereto protecting the Lessee, the Lessor and
all contractors and subcontractors in an amount not less than the full
replacement cost of such on-site and off-site work;
(v) FLOOD INSURANCE: To the extent that any portion of the
Parcel may lie in a flood zone, flood insurance in the maximum available
amount;
(vi) BUSINESS INTERRUPTION INSURANCE: Business interruption
insurance to cover loss resulting from delay of the completion of the
Facility and, after completion, loss of use, total or partial, of the
Leased Property or any part thereof in an amount sufficient at all times to
pay Basic Rent with respect to the
39
Leased Property for a period adequate to cover the period of loss of use of
the Leased Property or any part thereof plus any other amounts payable by
the Lessee to the Lessor during such period in connection with the
transactions contemplated by the Operative Documents. Such policy shall
provide that the amount payable thereunder shall not be less than the Base
Rent and such other amounts during the entire Lease Term.
(vii) OTHER INSURANCE: Such other insurance, including
automobile liability, in such amounts and against such risks, as is either
(x) customarily carried by companies owning, operating or leasing property
or conducting businesses similar and/or similarly situated to the Leased
Property and/or the Lessee, or (y) reasonably requested from time to time
by Lessor to the extent available on commercially reasonable terms.
Such insurance shall be written by companies which have a Best
Insurance Guide rating of "A-XI" or better (or an equivalent rating from another
publication of a similar nature as shall be in current use by the Lessor and the
Lessee) or as otherwise agreed to by the Lessor, selected by the Lessee, and all
policies of property insurance shall name the Lessor as loss payee and all
liability policies (other than the policies referred to in clause (vii) above)
shall name the Lessor as additional insured and shall identify the Lessor as the
owner of the Facility. In addition, all insurance required hereunder shall be
in form and with coverage and deductibles satisfactory to the Lessor.
Notwithstanding the foregoing, in no event will the Lessee be required to
maintain coverage in amounts in excess of those maintained for businesses
similar in size and nature to the Lessee.
(b) The insurance referred to in Sections 14(a)(i) and (iv) for the
Leased Property (as appropriate) may be a blanket policy and shall (i) at all
times be in an amount at least equal to one hundred percent (100%) of the full
replacement cost value of the Leased Property (as appropriate) and the Lessee's
leasehold interest; (ii) provide that the interests of the Lessor shall be
insured regardless of any intentional or willful breach or violation by the
Lessee of any warranties, declarations or conditions contained in such
insurance; (iii) provide that such insurance shall not be invalidated by any
act, omission or negligence of the Lessee or the Lessor, nor by any foreclosure
or other proceedings or notices thereof relating to the Leased Property (as
appropriate) or any part thereof, nor by legal title to, or ownership of the
Leased Property or any part thereof being or becoming vested in or by Lessor or
its agents, nor by occupancy or use of the Leased Property or any part thereof
for purposes more hazardous than permitted by such policy; and (iv) provide that
all partial loss insurance claims in excess of $10,000,000 pertaining to the
40
Leased Property (as appropriate) or any part thereof shall be adjusted by the
insurers thereunder with the Lessor.
All policies of insurance required to be maintained pursuant to
Section 14(a)(ii) which cover liability for bodily injury or property damage
shall provide that all provisions of such insurance, except the limits of
liability (which shall be applicable to all insureds as a group) and liability
premiums (which shall be solely a liability of the Lessee), shall operate in the
same manner as if there were a separate policy covering each such insured and/or
additional insured, without right of contribution from any other insurance which
may be carried by an insured and/or additional insured.
Every policy required under Section 14(a) shall (i) expressly provide
that it will not be canceled or terminated except upon thirty (30) days' written
notice to the Lessor and the Lessee; (ii) include a waiver of all rights of
subrogation against the Lessor and any recourse against the Lessor for payment
of any premiums or assessments under any policy; (iii) not contain a provision
relieving the insurer thereunder of liability for any loss by reason of the
existence of other policies of insurance covering the Leased Property or any
part thereof against the peril involved, whether collectible or not; and (iv)
provide that no claims shall be paid thereunder without ten (10) days' advance
written notice to the Lessor. The Lessee shall advise the Lessor promptly of
any policy cancellation or any change adversely affecting the coverage provided
thereby.
(c) The Lessee shall deliver to the Lessor the certificates of
insurance and any other documentation required by the Lessor evidencing the
existence of all insurance which is required to be maintained by the Lessee
hereunder including descriptions of the previously mentioned Insurance
Requirements, such delivery to be made (i) within thirty (30) days after the
issuance of any additional policies or amendments or supplements to any of such
insurance, and (ii) at least thirty (30) days prior to the expiration date of
any such insurance. The Lessee shall notify the Lessor of any nonrenewal of any
policy required hereunder and shall cause each insurer under each policy
required hereunder to give the Lessor notice of any lapse under any such policy.
The Lessee shall not obtain or carry separate insurance concurrent in form, or
contributing in the event of loss, with that required by this Section 14 unless
the Lessor is named as loss payee therein. The Lessee shall immediately notify
the Lessor whenever any such separate insurance is obtained and shall deliver to
the Lessor the certificates of insurance and any other documentation (other than
blanket policies) required by Lessor evidencing the same as is required
hereunder. All insurance policies and endorsements shall be fully prepaid and
nonassessable.
41
(d) The requirements of this Section 14 shall not be construed to
negate or modify the Lessee's obligations under Section 23 hereof.
SECTION 15. SUBLETTING; ASSIGNABILITY; AMENDMENT OF CONTRACTS.
(a) The Lessee shall not sublet the Leased Property, or any part
thereof, unless (i) at the time of any such sublease, no Default or Event of
Default or shall have occurred and be continuing; (ii) any such sublease shall
by its terms be expressly made subject and subordinate to the terms of this
Lease (and the Ground Lease) and shall expire on or before the Lease Termination
Date; (iii) the Lessee shall provide the Lessor with notice of such sublease
sixty (60) days prior to the effective date of such sublease; (iv) the Lessee
shall provide the Lessor ten (10) Business Days prior to the effective date of
such sublease with a conformed copy of the instrument creating such sublease;
(v) the Lessor has consented to such sublease, which consent shall not be
unreasonably withheld; and (vi) such sublease shall be made on commercially
reasonable terms.
(b) No sublease pursuant to this Section 15 shall modify or limit any
right or power of the Lessor hereunder or affect or reduce any obligation of the
Lessee hereunder, and all such obligations of the Lessee shall continue in full
force and effect as obligations of a principal and not of a guarantor or surety,
as though no subletting had been made or occupancy permitted.
(c) If the Lessee shall request, in connection with any sublease,
that the Lessor execute an attornment and non-disturbance agreement with respect
to such sublease, the Lessor shall consider each such sublease on a case-by-case
basis and may in its sole discretion consent to its execution and delivery of an
attornment and non-disturbance agreement.
(d) Except as permitted in Section 15(a), the Lessee shall not
mortgage, pledge, assign or otherwise encumber its interest in and to this Lease
or in and to any sublease or the rentals payable thereunder without the prior
written consent of the Lessor, except that the Lessee may assign its right to
purchase the Facility pursuant to Section 19 without the consent of the Lessor
so long as the Lessee remains liable for the performance and payment of the
purchase obligation.
(e) Any sublease made, and any mortgage, pledge or assignment of the
Lessee's interest hereunder or under any such sublease granted, otherwise than
as expressly permitted by this Section 15, shall be null and void and of no
force or effect.
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SECTION 16. REPRESENTATIONS AND WARRANTIES OF LESSOR.
The Lessor represents and warrants to the Lessee that on the Closing
Date:
(a) DUE ORGANIZATION. The Lessor is a corporation duly organized,
validly existing and in good standing under the laws of the State of Ohio and
has the corporate power and authority to enter into and perform its obligations
under this Lease and each other Operative Document to which it is a party.
(b) AUTHORIZATION; EXECUTION; ENFORCEABILITY. The execution,
delivery and performance by the Lessor of this Lease and each other Operative
Document to which it is a party and of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action on the part
of the Lessor and do not and will not require the consent or approval of any
shareholder of the Lessor. This Lease and each other Operative Document to
which the Lessor is a party have been duly authorized, executed and delivered by
the Lessor and, assuming the due authorization, execution and delivery hereof
and thereof by the other parties hereto and thereto, are legal, valid and
binding obligations of the Lessor, enforceable against the Lessor in accordance
with their respective terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, liquidation, moratorium or
similar laws affecting creditors' rights generally and by the application of
general equitable principles which may limit the availability of certain
remedies.
(c) NO VIOLATION. The execution and delivery by the Lessor of this
Lease and each other Operative Document to which it is a party do not and will
not, and the performance by the Lessor of its obligations hereunder and
thereunder do not and will not, (i) violate or be inconsistent with or in
violation of its charter documents or by-laws, (ii) contravene any provision of
any Applicable Law or Governmental Action applicable to it or require any
Governmental Action or (iii) contravene any provision of, or constitute any
default or require any consent under, any provision of any material indenture,
mortgage, contract or other instrument to which the Lessor is a party or by
which it or any of its property is bound.
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SECTION 17. REPRESENTATIONS AND WARRANTIES OF LESSEE.
The Lessee represents and warrants to the Lessor that on the Closing
Date:
(a) DUE ORGANIZATION. The Lessee is a limited partnership, duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the power and authority to carry on its business as presently
conducted and as it is contemplated to be conducted in connection with the
Leased Property, to own or hold under lease its property, and to enter into and
perform its obligations under this Lease and each other Operative Document to
which it is a party. The Lessee is qualified to do business in and is in good
standing under the laws of the States of Washington, Idaho and Oregon and has
not failed to qualify to do business in any jurisdiction where failure so to
qualify could reasonably be expected to materially adversely affect its ability
to conduct its business as it is presently conducted and as it is contemplated
to be conducted in connection with the Leased Property, to own or hold under
lease its property or to perform any of its obligations under this Lease or any
other Operative Document to which it is a party.
(b) AUTHORIZATION. The execution, delivery and performance by the
Lessee of this Lease and each other Operative Document to which it is a party
and of the transactions contemplated hereby and thereby have been duly
authorized by all necessary partnership action on the part of the Lessee and do
not and will not require the consent or approval of any trustee or holder of any
indebtedness or other obligation of the Lessee.
(c) EXECUTION; ENFORCEABILITY. This Lease and each other Operative
Document to which the Lessee is a party have been duly executed and delivered by
the Lessee and, assuming the due authorization, execution and delivery hereof
and thereof by the other parties hereto and thereto, are legal, valid and
binding obligations of the Lessee, enforceable against the Lessee in accordance
with their respective terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, liquidation, moratorium or
similar laws affecting creditors' or lessors' rights generally and by the
application of general equitable principles which may limit the availability of
certain remedies.
(d) NO VIOLATION. The execution and delivery by the Lessee of this
Lease and each other Operative Document to which it is a party do not and will
not, and the performance by the Lessee of its obligations hereunder and
thereunder do not and will not, (i) violate or be inconsistent with its
partnership agreement or any other organizational documents, (ii) contravene any
Applicable Law or Governmental Action
44
applicable to it; (iii) contravene any provision of, or constitute a default
under, any material indenture, mortgage, contract or other agreement or
instrument to which the Lessee is a party or by which it or any of its property
are bound, and (iv) result in or, require the creation or imposition of any Lien
(other than Permitted Liens) upon any of its property or assets.
(e) CONSENTS AND APPROVALS. All Governmental Actions which are
required to have been taken, given, obtained, filed or recorded, as the case may
be, on or prior to the Closing Date by, from or with any Governmental Authority
and all other consents, filings or approvals which are required to have been
taken, given, obtained, filed or recorded, as the case may be, on or prior to
the Closing Date by, from or with any other Person, in each case, (i) in
connection with the transactions contemplated by the Operative Documents, or to
authorize the execution, delivery and performance by the Lessee of the Operative
Documents to which it is a party, or the legality, validity, binding effect or
enforceability thereof as against the Lessee, or (ii) in order that the Leased
Property may be leased, used and operated for its intended purpose and the
Facility may be construed thereon as contemplated hereby (including, without
limitation, all Environmental Permits and all approvals, certificates, permits,
authorizations, licenses or other actions relating to the construction of the
Facility), shall have been duly taken, given, obtained, filed or recorded, as
the case may be, and are in full force and effect, are not subject to any
pending proceedings or appeals (administrative, judicial or otherwise) and are
adequate to authorize the consummation by the Lessee of the transactions
contemplated by the Operative Documents and the performance by the Lessee of its
obligations thereunder to which it is a party, except (A) such as may be
required to be taken, obtained, given, accomplished or renewed from time to time
after the Closing Date in connection with the maintenance or operation of the
Leased Property or (B) which are otherwise required in connection with the
transactions contemplated by the Operative Documents which have been applied for
but which cannot be obtained, or which are not normally applied for or taken,
given or obtained, prior to the Closing Date, and which in the normal course
would be granted, PROVIDED that the failure to obtain such Governmental Actions,
consents, filings and approvals by the Closing Date could not materially
adversely affect the ability of the Lessee to perform its obligations under this
Lease or any other Operative Document to which it is a party.
(f) LITIGATION. There is no action, suit, investigation or
proceeding pending or, to the knowledge of the Lessee, threatened against the
Lessee or affecting Lessee or its property or rights before any Governmental
Authority that questions the validity of any Operative Document or which,
individually or in the aggregate, is reasonably likely (i) materially and
adversely to affect the consummation of the transactions under this Lease or any
other Operative Document to which it is a party or
45
(ii) to have a Material Adverse Effect. The Lessee is not in default with
respect to any order of any Governmental Authority, where such default could
reasonably be expected to have a Material Adverse Effect or could result in the
creation or imposition of any Lien (other than a Permitted Lien) upon the Leased
Property.
(g) NO DEFAULT. No Default or Event of Default has occurred and is
continuing. As of the Closing Date, neither the Lessee nor any of its
Subsidiaries is in default under with respect to any Contractual Obligation in
any respect which, individually or together with all such defaults, could
reasonably be expected to have a Material Adverse Effect or could result in the
creation or imposition of a Lien (other than a Permitted Lien) upon the Leased
Property.
(h) EVENT OF LOSS. No Event of Loss has occurred, and the Leased
Property may be used for the purposes contemplated by the Lessee in accordance
with this Lease and the other Operative Documents.
(i) ENVIRONMENTAL COMPLIANCE. (i) The Leased Property complies in
all material respects with all Environmental Laws; all necessary Environmental
Permits have been obtained and are in effect for the Leased Property and to the
best of the Lessee's knowledge, no circumstances exist that could be reasonably
expected to (A) form the basis of an Environmental Action against the Leased
Property that could reasonably be expected to have a Material Adverse Effect or
(B) cause the Leased Property to be subject to any restrictions on ownership,
occupancy, use or transferability under any Environmental Law.
(ii) Neither the Leased Property nor any part thereof is
listed or, to the knowledge of the Lessee, proposed for listing on the NPL
or on CERCLIS or any analogous state list of sites requiring investigation
or cleanup.
(iii) No Hazardous Materials that have been generated at or
transported from the Leased Property or any part thereof have been disposed
at any location that is listed or, to the best of the Lessee's knowledge,
proposed for listing on the NPL or on the CERCLIS or any analogous state
list, and all Hazardous Materials generated, used, treated, handled or
stored at or transported to or from the Leased Property or any part thereof
and any property currently or formerly owned or operated by the Lessee have
been disposed of in compliance in all material respects with all
Environmental Laws and applicable Environmental Permits.
(iv) The Lessee has not received any written or other notice,
mandate, order, Lien or request which remains pending under an
Environmental
46
Law concerning any of the Leased Property or any part thereof or relating
to an alleged violation of an Environmental Law concerning the Leased
Property or any part thereof or relating to any potential adverse action in
any way involving environmental, health or safety matters affecting the
Leased Property or any part thereof.
(v) There is no proceeding pending or, to the knowledge of
the Lessee, threatened against the Lessee by any Federal, state, or local
court, tribunal, administrative agency, department, commission, board or
other authority or instrumentality with respect to the presence or release
of any Hazardous Material from the Leased Property or any part thereof.
(vi) To the knowledge of the Lessee, no Hazardous Materials
have been Released from or on the Leased Property or any part thereof for
which remedial action could be required under any Environmental Law or may
be necessary to prevent or eliminate a significant risk to human health or
the environment.
(j) ERISA COMPLIANCE. (i) Each Plan is in compliance with the
applicable provisions of ERISA, the Code and other federal or state law, except
for such non-compliance which would not reasonably be expected to have a
Material Adverse Effect. Each Plan is intended to qualify under Section 401(a)
of the Code has received a favorable determination letter from the IRS or an
application for such a determination letter will be submitted no later than the
expiration of the remedial amendment period for effecting amendments required by
reason of Section 1140 of the Tax Reform Act of 1986, as amended, and to the
Lessee's knowledge, nothing has occurred which would cause the loss of such
qualification.
(ii) There are no pending, or to the Lessee's knowledge,
threatened Claims by any Governmental Authority, with respect to any Plan
which has resulted or could reasonably be expected to result in a Material
Adverse Effect. There has been no prohibited transaction or other
violation of the fiduciary responsibility rule with respect to any Plan
which could reasonably result in a Material Adverse Effect.
(iii) No ERISA Event has occurred or is reasonably expected to
occur with respect to any Pension Plan.
(iv) No Pension Plan (other than the multiemployer plans
within the meaning of Section 3(38) of ERISA) has any Unfunded Pension
Liability.
47
(v) Neither the Lessee nor any ERISA Affiliate has incurred,
nor does it reasonably except to incur, any liability under Title IV of
ERISA with respect to any Pension Plan (other than premiums due and no
delinquent under Section 4007 of ERISA).
(vi) Neither the Lessee nor any ERISA Affiliate has
transferred any Unfunded Pension Liability to any Person or otherwise
engaged in a transaction that could be subject to Section 4069 of ERISA.
(k) DESCRIPTION OF COMPONENTS. The descriptions set forth in
Schedule 1 to each of the Lease Supplements are true and accurate descriptions
in all material respects of each Component described therein.
(l) CERTAIN DOCUMENTS. True, correct and complete copies of the
Operative Documents have been delivered to the Lessor. Each of the Operative
Documents is in full force and effect, and no material breach thereof by the
Lessee or, to the Lessee's knowledge, by any other party thereto, has occurred
and is continuing.
(m) PAYMENT OF TAXES, ETC. All Taxes, fees and other charges due and
payable in connection with the execution, delivery and filing of all documents
and instruments, including the Operative Documents, and the performance of the
transactions contemplated by the Operative Documents, have been paid in full.
(n) INVESTMENT COMPANY ACT. The Lessee is not an "investment
company" or a company "controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940, as amended.
(o) HOLDING COMPANY. The Lessee is not subject to regulation as a
"holding company," an "affiliate" of a "holding company," or a "subsidiary
company" of a "holding company," within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
(p) NO MATERIAL ADVERSE CHANGE; ADVERSE CONDITIONS. There has not
occurred a material adverse change in the business, operations or financial
condition of the Lessee since December 31, 1996. No Applicable Law prohibits,
and no litigation, governmental investigation or other proceeding is pending or
overtly threatened in which there is a reasonable possibility of an unfavorable
judgment, decree, order or other determination which could prevent or make
unlawful, or impose any material adverse condition upon, the acquisition,
construction, installation, use, ownership, operation or leasing of, or the
Lessor's ownership of, the Leased Property or any part thereof.
48
(q) INSURANCE. The Lessee is in compliance with all Insurance
Requirements, and all insurance policies required by Section 14 hereof are in
full force and effect.
(r) COMPLIANCE. The Leased Property and each part thereof is in
material compliance with all Applicable Laws.
(s) NO MATERIAL MISSTATEMENTS. No information, report, financial
statement, exhibit or schedule furnished by or on behalf of the Lessee to the
Lessor in connection with the negotiation of this Lease or any other Operative
Document or any transaction contemplated hereby or thereby, contains or will
contain any material misstatement of fact or omitted, omits or will omit to
state any material fact necessary to make the statements therein, taken as a
whole and taken in the light of the circumstances under which they were, are or
will be made, not misleading.
(t) TITLE AND INTEREST. The Lessor has a good and indefeasible
leasehold interest in the Parcel and good and marketable title to the Facility
(together with any necessary easements or rights-of-way or similar property
rights), free and clear of all Liens and deed restrictions except Permitted
Encumbrances, in the case of the Parcel, and Permitted Liens, in the case of the
Facility.
(u) COMPLIANCE WITH LAW. The Lessee is not in violation of any Law
(including any Environmental Law) with respect to the Leased Property or any
part thereof, with respect to the construction of the Facility or installation
of any of the Components, or with respect to its leasing, ownership or operation
of the Leased Property or any part thereof, or with respect to the conduct of
its business relating to the Leased Property or any part thereof or with respect
to its assets which, individually or in the aggregate, would be reasonably
likely to result in a Material Adverse Effect. The Lessee has not received any
notice of, or citation for, any violation of any Law which has not been
resolved, which notice or citation relates to the ownership, leasing or
operation of the Leased Property or any part thereof or the construction of the
Facility.
(v) RECORDATION AND FILING. The Memorandum of Ground Lease and the
Memorandum of Lease have been duly recorded, published, registered and filed and
are in a form sufficient to publish notice of the interests purported to be
created by the Ground Lease and this Lease, respectively. Upon the recordation
of the Memorandum of Ground Lease in Boundary County, Idaho, the Memorandum of
Ground Lease will have been recorded or filed in such place in which recording
or filing is required to publish notice, under Applicable Law, of the interests
created by the Ground Lease and to protect the validity and effectiveness
thereof, and all Taxes, fees and other public charges
49
payable in connection with the filing and recordation of the Ground Lease have
been paid. Upon the recordation of the Memorandum of Lease in Boundary County,
Idaho, the Memorandum of Lease will have been recorded or filed in such place
in which recording or filing is required to publish notice, under Applicable
Law, of the interests created by this Lease and to protect the validity and
effectiveness thereof, and all Taxes, fees and other public charges payable in
connection with the filing and recordation of the Memorandum of Lease have been
paid.
(w) RIGHTS TO PROPERTY, ETC. (i) The Ground Lease grants to the
Ground Lessee all rights-of-way, easements and real property licenses,
environmental allowances, rights in real property (including, without
limitation, fixtures and appurtenances), utilities and other services necessary
for the day-to-day operation of the Facility when constructed or installed on
the Parcel and (A) such rights-of-way, easements, licenses, environmental
allowances, utilities and other services are valid and in full force and effect
and all consents from third parties necessary to enter into the Ground Lease and
the Lease Agreement have been obtained, (B) there is presently no default by the
Ground Lessor or, to the Ground Lessor's knowledge, by any other party thereto
with respect to any such rights-of-way, easements, licenses, utilities and other
services, which would materially and adversely affect such services and (C) all
utility services necessary for the construction of each of the applicable
Components and for the operation of the Facility for its intended purposes are
installed and operational.
(ii) None of the Permitted Encumbrances will interfere in any
material respect with the use or possession of the Leased Property or any
part thereof or any other asset used in connection therewith or the use of
or the exercise by the Lessor of its rights either under any Operative
Document or to the Leased Property.
(iii) The Lessee has given any and all notices required to be
given in connection with the construction of the Facility pursuant to any
easements, right-of-way, licenses or other agreements affecting the Parcel.
(iv) Each of the Components, when constructed or installed,
will be situated wholly within the boundary lines of the Parcel and do not
and will not encroach upon any contiguous or adjoining property; except as
disclosed in writing, neither the Parcel nor any part thereof is considered
part of a larger tax lot; none of the Components when constructed or
installed will violate any rights granted under any easements or rights of
way or any covenants or restrictions affecting the Parcel or any part
thereof, and any future violation will not result in a reversion or
forfeiture of title, right of re-entry or power of termination; and the
50
easements, rights-of-way, covenants and restrictions affecting the Parcel
or any part thereof do not and will not interfere in any material respect
with the use or occupancy of the Leased Property or any part thereof, or
any asset owned or used in connection therewith, nor will the exercise of
rights or remedies thereunder result in any damage to the Leased Property
or any part thereof or diminution of value of the Leased Property or any
part thereof.
(x) CONSTRUCTION BUDGET AND RELATED MATTERS. The Construction Budget
has been prepared in good faith on the basis of reasonable assumptions and
accurately includes all Actual Project Costs currently anticipated to be
incurred in connection with achieving completion of the Facility by the Final
Completion Date. The Construction Schedule accurately describes estimated dates
of completion of the stages of construction of the Facility.
(y) TRADE SECRETS AND PATENTS. (i) The leasing of the Parcel by
Lessor, the ownership of the Facility by the Lessor and the leasing and
operation of the Facility by the Lessee, including the construction or
installation and the proposed operation of the Facility, do not and will not
conflict with, infringe on, or otherwise violate any copyright, trademark, trade
name, trade secret or patent rights of any other Person.
(ii) The Lessee has all rights to all patents, patent
applications, trademarks (whether registered or not), trademark
applications, trade names, proprietary computer software, "know-how" and
copyrights used or to be used in the ordinary course of the operation of
the Facility (the "INTELLECTUAL PROPERTY RIGHTS") that are necessary for
the operation thereof, including the right to assign the Intellectual
Property Rights. There is no judicial proceeding pending or, to the
knowledge of the Lessee, threatened, involving any claim of any
infringement, misuse or misappropriation by the Lessee or any Affiliate
thereof of any patent, trademark, trade name, copyright, license or similar
intellectual property right owned by any third party related to the
Intellectual Property Rights.
(z) CREDIT AGREEMENT. Attached hereto as EXHIBIT F is a true,
correct and complete copy of the Credit Agreement as in effect on the Closing
Date.
(aa) FLOOD ZONE. The Parcel is not in a flood hazard zone.
51
SECTION 18. ADDITIONAL COVENANTS.
The Lessee covenants and agrees that:
(a) FINANCIAL STATEMENTS. The Lessee shall deliver to the Lessor, in
form and detail satisfactory to the Lessor:
(i) as soon as available, but not later than 90 days after
the end of each fiscal year, a copy of the audited consolidated balance
sheet of the Lessee and its Subsidiaries as at the end of such year and the
related consolidated statements of income or operations, partners' equity
and cash flows for such year, setting forth in each case in comparative
form the figures for the previous fiscal year, identifying any material
change in accounting policies or financial reporting practices by the
Lessee or any of its consolidated Subsidiaries, and accompanied by the
opinion of Price Waterhouse LLP or another nationally-recognized
independent public accounting firm ("INDEPENDENT AUDITOR") which report
shall state that such consolidated financial statements present fairly the
financial position for the periods indicated in conformity with GAAP
applied on a basis consistent with prior years. Such opinion shall not be
qualified or limited because of a restricted or limited examination by the
Independent Auditor of any material portion of the Lessee's or any
Subsidiary's records;
(ii) as soon as available, but not later than 60 days after
the end of each of the first three fiscal quarters of each fiscal year, a
copy of the unaudited consolidated balance sheet of the Lessee and its
Subsidiaries as of the end of such quarter and the related consolidated
statements of income, partners' equity and cash flows for the period
commencing on the first day and ending on the last day of such quarter,
identifying any material change in accounting policies or financial
reporting practices by the Lessee or any of its consolidated Subsidiaries,
and certified by a General Partner as fairly presenting, in accordance with
GAAP (subject to ordinary, good faith year-end audit adjustments), the
financial position and the results of operations of the Lessee and its
Subsidiaries;
(iii) as soon as available, but not later than 90 days after
the end of each fiscal year, a copy of an unaudited consolidating balance
sheet of the Lessee and its Subsidiaries as at the end of such year and the
related consolidating statement of income for such year, certified by a
General Partner as having been developed and used in connection with the
preparation of the financial statements referred to in clause (i), above;
52
(iv) as soon as available, but not later than 60 days after
the end of each of the first three fiscal quarters of each fiscal year, a
copy of the unaudited consolidating balance sheets of the Lessee and its
Subsidiaries, and the related consolidating statements of income for such
quarter, all certified by a General Partner as having been developed and
used in connection with the preparation of the financial statements
referred to in clause (ii), above.
(b) NOTICES. The Lessee shall promptly notify the Lessor:
(i) of the occurrence of any Default or Event of Default,
and of the occurrence or existence of any event or circumstance that
foreseeably will become a Default or Event of Default;
(ii) of any matter that has resulted or if adversely
determined would reasonably be expected to result in a Material Adverse
Effect, including (A) breach or non-performance of, or any default under, a
Contractual Obligation of the Lessee, (B) any dispute, litigation,
investigation, proceeding or suspension which may exist at any time between
the Lessee and any Governmental Authority; or (C) the commencement of, or
any material development in, any litigation or proceeding affecting the
Lessee, including pursuant to any applicable Environmental Laws;
(iii) any Material Adverse Effect subsequent to the date of
the most recent audited financial statements of the Lessee delivered to the
Lessor pursuant to Section 18(a)(i);
(iv) of any material labor controversy resulting in or
threatening to result in any strike, work stoppage, boycott, shutdown or
other labor disruption against or involving the Lessee, or any of its
Subsidiaries; or
(v) of any assertion or determination by any Governmental
Authority that the Lessee shall no longer be classified as a partnership
not taxable as a corporation under the Code.
Each notice under this Section shall be accompanied by a written
statement by the General Partner setting forth details of the occurrence
referred to therein, and stating what action the Lessee or any affected
Subsidiary proposes to take with respect thereto and at what time. Each notice
under clause (b)(i) above shall describe with particularity any and all clauses
or provisions of this Lease or other Operative Document that have been (or
foreseeably will be) breached or violated.
53
(c) CREDIT AGREEMENT. The Lessee shall comply, and shall cause each
of its Subsidiaries to comply, with all covenants of the Lessee or such
Subsidiary in the Credit Agreement, and all notices, certificates, reports and
other documents required to be delivered by the Lessee thereunder shall be
simultaneously delivered to the Lessor. Such covenants (together will any
applicable defined terms) shall constitute, and are hereby expressly made, a
part of this Lease; PROVIDED that if there is any conflict between the terms of
this Lease and the terms of the Credit Agreement, then the terms of this Lease
shall govern.
(d) FURTHER ASSURANCES. The Lessee shall (i) ensure that all written
information, exhibits and reports prepared by the Lessee, and (ii) use its best
efforts to ensure that all written information, exhibits and reports not
prepared by the Lessee and, in each case, furnished to the Lessor do not and
will not contain any untrue statement of a material fact and do not and will not
omit to state any material fact or any fact necessary to make the statements
contained therein not misleading in light of the circumstances in which made,
and will promptly disclose to the Lessor and correct any defect or error that
may be discovered in this Lease or any other Operative Document or in the
execution, acknowledgment or recordation hereof or thereof.
(e) "AS-BUILT" SURVEY. Not less than ten (10) days prior to the end
of the Lease Term, the Lessee shall deliver an "as-built" survey of the Parcel
showing the Facility, together with an updated surveyor's certification in form
and substance satisfactory to the Lessor.
(f) ENVIRONMENTAL EVENT. The Lessee shall promptly, but in any case
within five (5) Business Days, notify the Lessor if (i) any environmental event
has occurred or any environmental condition is discovered in, on, from or
involving the Leased Property or any part thereof (including, but not limited
to, the presence, emission or release of Hazardous Materials or the violation of
any applicable Environmental Law) that could reasonably be anticipated to result
in penalties or other liabilities in excess of $500,000 or (ii) the Lessee has
received notification that it, the Leased Property or any part thereof is the
subject of a proceeding that could reasonably be expected to result in any
ordered remediation or corrective action or other liability related to an
environmental event or condition with respect to the Leased Property or any part
thereof the cost of which liability is reasonably expected to exceed $500,000
(each of (i) and (ii) an "Environmental Event").
Following the receipt of a notice pursuant to the immediately
preceding paragraph, the Lessor, may require the Lessee to conduct, or cause to
be conducted, an environmental study by an environmental consultant reasonably
satisfactory to the Lessor
54
(the cost and expenses of such environmental consultant shall be borne by the
Lessee) of the Leased Property or any applicable part thereof on which such
Environmental Event or release shall have occurred, the scope of which study
shall be limited to confirming the magnitude and anticipated cost of the
liability resulting in the Environmental Event and to provide a copy of the
environmental consultant's report on its audit to the Lessor. Notwithstanding
the foregoing, if a pattern, in the opinion of the Lessor, of such Environmental
Events exists, the Lessor may conduct a more comprehensive environmental study
of the Leased Property or the applicable part thereof to determine the scope and
nature of such pattern. If it is the opinion of the Lessor that an
Environmental Event has occurred or exists and a Permitted Remediation (as
defined below) is not available or the Environmental Event cannot be cured
through a Permitted Remediation or the Environmental Event will result in the
cessation of operation of the Facility or the applicable part thereof for 30
days or more such Environmental Event shall constitute an Environmental Trigger
with respect to the Leased Property or the applicable part thereof and shall,
at the option of the Lessor, be deemed an Event of Loss with respect to the
Leased Property or the applicable part thereof (an "Environmental Trigger"). A
"Permitted Remediation" means any remediation of an Environmental Event (a) the
cost of which remediation is not anticipated, in the sole opinion of the Lessor,
to exceed $5,000,000, (b) during and after which such Environmental Event could
not be expected to result in any additional environmental liability incurred by
the Lessor for which the Lessor has not received additional indemnification in
an amount and from a Person satisfactory to the Lessor, in its sole and absolute
discretion and (c) permitted and effected in compliance with all applicable
Environmental Laws.
Irrespective of whether an Environmental Trigger has occurred, the
Lessee shall immediately initiate, at its sole cost and expense, such actions as
may be necessary to comply in all material respects with all applicable
Environmental Laws and to alleviate any significant risk to human health or the
environment if the same arises from a condition on or in respect of the Leased
Property or any part thereof, whether existing prior to, on or after the date of
this Lease. Once the Lessee commences such actions, the Lessee shall thereafter
diligently and expeditiously proceed to comply materially and in a timely manner
with all Environmental Laws and to eliminate any significant risk to human
health or the environment.
SECTION 19. OPTIONS UPON LEASE TERMINATION.
(a) NEW LEASE TRANSACTION. Within 60 days prior to the Lease
Termination Date, the Lessee shall notify (the "New Lease Notification") the
Lessor in writing that it desires to enter into a new lease with respect to the
Facility in the form of either (i) a single investor tax lease on substantially
the terms set forth on EXHIBIT E
55
hereto or (ii) a leverage tax lease with financial institutions arranged by Key
Global Finance on terms to be agreed to between the Lessee and such financial
institutions. Upon receipt of such New Lease Notification, the Lessee and the
Lessor or Key Global Finance shall negotiate in good faith with respect to such
new leasing arrangement. The New Lease Notification shall be irrevocable;
PROVIDED that if the Lessee and the lessor, in the case of a single investor tax
lease, or the financial institutions arranged by Key Global Finance, in the case
of a leverage tax lease, are unable to reach agreement on the terms of the new
leasing arrangement, neither party shall have any obligation to enter into such
arrangement.
(b) PURCHASE OF FACILITY.
(i) If the Lessee fails to provide the Lessor with a New Lease
Notification in accordance with paragraph (a) above, or if, after delivery of a
New Lease Notification, the Lessee and the Lessor (in the case of a single
investor tax lease) or the financial institutions arranged by Key Global
Finance, Ltd. (in the case of a leverage tax lease), are unable to reach
agreement on the terms of the new leasing arrangement, the Lessee may, within 30
days prior to the Lease Termination Date, irrevocably notify the Lessor that the
Lessee desires to purchase from the Lessor, and the Lessor shall sell to the
Lessee, the Facility. If the Lessee elects to purchase the Facility from the
Lessor, then on the Lease Termination Date the Lessor shall sell, transfer and
convey all of its right, title and interest in to the Facility and under the
Ground Lease, as is and where is, to the Lessee, free and clear of any Lessor
Liens but otherwise without any representation or warranty, upon payment in
immediately available funds by the Lessee to the Lessor of a purchase price
therefor equal to the Total Fundings made by the Lessor from the date hereof
through the date of purchase, together with (i) all Basic Rent due and owing on
or prior to such date of purchase and (ii) all Supplemental Rent due and owing
prior to such date of purchase and any other Supplemental Rent as to which there
is no dispute and which is agreed to become due and owing within 60 days of such
date. Subject to the foregoing, on the date of such purchase and sale the
Lessor shall, at the expense of the Lessee, execute and deliver to the Lessee a
xxxx of sale or assignment and such other documents as the Lessee may reasonably
request to evidence the valid consummation of such transfer.
(ii) If after delivery of a New Lease Notification, the Lessee and the
Lessor, in the case of a single investor tax lease, or the financial
institutions arranged by Key Global Finance, in the case of a leverage tax
lease, are unable to reach agreement on the terms of the new leasing
arrangement, the Lessor may, within 10 days prior to the Lease Termination Date,
notify the Lessee that the Lessor desires to sell to the Lessee, and the Lessee
shall purchase from the Lessor, the Facility. If the Lessor elects to sell the
Facility to the Lessee, then on the Lease Termination Date the Lessor shall
sell, transfer
56
and convey all of its right, title and interest in to the Facility and under the
Ground Lease, as is and where is, to the Lessee, free and clear of any Lessor
Liens but otherwise without any representation or warranty, upon payment in
immediately available funds to the Lessor of a purchase price therefor equal to
the Total Fundings made by Lessor from the date hereof through the date of
purchase, together with (i) all Basic Rent due and owing on or prior to such
date of purchase and (ii) all Supplemental Rent due and owing prior to such date
of purchase and any other Supplemental Rent as to which there is no dispute and
which is agreed to become due and owing within 60 days of such date. Subject to
the foregoing, on the date of such sale and purchase the Lessor shall, at the
expense of the Lessee, execute and deliver to the Lessee a xxxx of sale or
assignment and such other documents as the Lessee may reasonably request to
evidence the valid consummation of such transfer.
(c) RETURN OF FACILITY. In the event that the transactions
contemplated in paragraph (a) above are not consummated on or before the Lease
Termination Date, and in the event that the Lessee does not elect to purchase
the Facility from the Lessor or the Lessor does not elect to sell the Facility
to the Lessee pursuant to paragraph (b) above, the Lessee shall return the
Facility to the Lessor according to the terms and conditions set forth in
Section 8 hereof. Upon the return of the Facility to the Lessor in accordance
with Section 8 hereof, the Lessee shall have no obligation to pay any amount to
the Lessor with respect to Total Fundings made by the Lessor hereunder.
SECTION 20. EVENTS OF DEFAULT.
Any of the following shall constitute an "Event of Default":
(a) NON-PAYMENT. The Lessee shall fail to pay (i) when and as
required to be paid herein, any amount of Rent or (ii) within 5 days after the
same becomes due, any amount of Supplemental Rent;
(b) REPRESENTATIONS AND WARRANTIES. Any representation or warranty
made or deemed made by the Lessee set forth herein or in any other Operative
Document to which the Lessee is a party, or any representation, warranty,
statement or information contained in any written report, certificate, financial
statement or other instrument furnished in connection with or pursuant hereto to
any other Operative Document, shall prove to have been false in any material
respect when so made or furnished;
(c) COVENANT DEFAULTS. The Lessee shall fail to perform or observe
any other term or covenant contained in this Lease or any other Operative
Document or any other document or certificate delivered pursuant hereto or
thereto, and such failure shall continue unremedied for a period of thirty (30)
days after the earlier of (i) the date
57
upon which the General Partner knew or reasonably should have known of such
failure or (ii) the date upon which written notice thereof is given to the
Lessee by the Lessor; PROVIDED, HOWEVER, that, if such failure is capable of
being cured and provided the Lessee is diligently pursuing such cure, the time
with which such failure may be cured shall be extended for such period as is
reasonably necessary to complete curing thereof with diligence;
(d) BANKRUPTCY; INSOLVENCY. The Lessee or any of its Subsidiaries
shall generally not pay its debts as such debts become due, or shall admit in
writing its inability to pay its debts generally, or shall make a general
assignment for the benefit of creditors; or any proceeding shall be instituted
by or against the Lessee or any of its Subsidiaries seeking to adjudicate it a
bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or its debts
under any law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment of a
receiver, trustee, custodian or other similar official for it or for any
substantial part of its property and, in the case of any such proceeding
instituted against it (but not instituted by it), either such proceeding shall
remain undismissed or unstayed for a period of 60 days, or any of the actions
sought in such proceeding (including, without limitation, the entry of an order
for relief against, or the appointment of a receiver, trustee, custodian or
other similar official for, it or for any substantial part of its property)
shall occur; or the Lessee or any of its Subsidiaries shall take any corporate
action to authorize any of the actions set forth above in this paragraph (d);
(e) MONETARY JUDGMENTS. One or more non-interlocutory judgments,
non-interlocutory orders, decrees or arbitration awards is entered against the
Lessee or any of its Subsidiaries involving in the aggregate a liability (to the
extent not covered by independent third-party insurance as to which the insurer
does not dispute coverage) as to any single or related series of transactions,
incidents or conditions, of $5,000,000 or more, and the same shall remain
unsatisfied, unvacated and unstayed pending appeal for a period of 30
consecutive days after the entry thereof;
(f) NON-MONETARY JUDGMENTS. Any non-monetary judgment, order or
decree is entered against the Lessee or any of its Subsidiaries which does or
could reasonably be expected to have a Material Adverse Effect, and there shall
be any period of 30 consecutive days during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise, shall not be in
effect;
58
(g) GOVERNMENTAL ACTION. The Lessee shall be prevented or relieved
by any Governmental Authority from performing or observing any monetary payment
or repayment obligation evidenced by this Lease or any other Operative
Documents;
(h) UNENFORCEABILTY OF OPERATIVE DOCUMENTS. Any Operative Document
shall for any reason no longer be in full force and effect in accordance with
its terms;
(i) ABANDONMENT. The Lessee shall have abandoned the Leased Property
or any part thereof;
(j) CREDIT AGREEMENT EVENT OF DEFAULT. An "Event of Default" under
the Credit Agreement shall have occurred and shall not have been waived in
accordance with the terms of the Credit Agreement pursuant to an Approved Credit
Agreement Action;
(k) REPUDIATION OF OPERATIVE DOCUMENTS. Any Operative Document or
any obligation of the Lessee thereunder shall be revoked or repudiated or
attempted to be revoked or repudiated by the Lessee;
(l) UNAUTHORIZED REMOVAL, TRANSFER. The Lessee shall (except as
expressly permitted by the provision of this Lease) attempt to remove, sell,
transfer, encumber, part with possession of, assign or sublet the Leased
Property or any part thereof;
(m) FAILURE TO MAINTAIN INSURANCE. The Lessee shall fail to be in
compliance with the Insurance Requirements, and all other insurance policies
required by Section 14 shall fail to be in full force and effect;
(n) FAILURE TO PURCHASE FACILITY. The Lessee shall fail to purchase
the Facility as and when required pursuant to Section 19(b) hereof;
(o) DELIVERY OF FINAL SURVEY AND UPDATED TITLE POLICY. The Lessee
shall fail to deliver to the Lessor the Final Survey and the Updated Title
Policy on or prior to January 31, 1998.
SECTION 21. REMEDIES.
If any Event of Default shall have occurred and be continuing, then
and in every such case, (A) in the case of an Event of Default set forth in
Sections 20(d), (m) and (n) hereof, this Lease shall be in default without
further act or notice of any kind (all
59
of which are hereby waived), which for all purposes hereof and of the other
Operative Documents shall be deemed to be a declaration of default hereunder,
and (B) in the case of any other Event of Default, the Lessor may, at its
option, declare this Lease to be in default by written notice to such effect
given to the Lessee, and in either case at any time thereafter, the Lessor may
exercise one or more of the following remedies, as the Lessor in its sole
discretion shall lawfully elect:
(a) the Lessor may demand that the Lessee, and the Lessee
shall upon receipt of written demand of the Lessor, deliver the Leased Property
promptly to the Lessor in the manner and condition required by, and otherwise in
accordance with all the provisions of, Section 8 hereof as if the Leased
Property was being returned at the end of the Lease Term and the Lessor shall
not be liable for the reimbursement of the Lessee for any costs and expenses
incurred by the Lessee in connection therewith; or the Lessor may enter upon the
premises of the Leased Property and take immediate possession of (to the
exclusion of the Lessee) the Leased Property by summary proceedings or
otherwise, all without liability to the Lessor for or by reason of such entry or
taking of possession, whether for the restoration of damage to property caused
by such taking or otherwise;
(b) the Lessor may sell all or any part of the Facility and
assign all or any part of its rights under the Ground Lease at public or private
sale, as the Lessor may determine, in a commercially reasonable manner, free and
clear of any rights of the Lessee and without any duty to account to the Lessee
with respect to such action or inaction or any proceeds with respect thereto
(except to the extent provided in paragraph (d) of this Section if the Lessor
shall elect to exercise its rights thereunder), in which event the Lessee's
obligation to pay Basic Rent hereunder for periods commencing after the date of
such sale and assignment shall terminate (except to the extent that Basic Rent
is to be included in computations under paragraph (d) of this Section if the
Lessor shall elect to exercise its rights thereunder);
(c) the Lessor may hold, keep idle or lease to others all or
any part of the Facility as the Lessor in its sole discretion may determine,
free and clear of any rights of the Lessee and without any duty to account to
the Lessee with respect to such action or inaction or for any periods with
respect to such action or inaction, except that the Lessee's obligation to pay
Basic Rent hereunder for periods commencing after the Lessee shall have been
deprived of use of the Facility pursuant to this paragraph (c) shall be reduced
by the net proceeds, if any, received by the Lessor from leasing the Facility to
any Person other than the Lessee for the same period or any portion thereof;
(d) the Lessor may, whether or not the Lessor shall have
exercised or shall thereafter at any time exercise any of its rights under
paragraph (a), (b) or (c) of this
60
Section, demand that the Lessee pay to the Lessor, and the Lessee shall pay to
the Lessor, on the Basic Rent Date specified in such demand, (A) any unpaid
Basic Rent due hereunder prior to such Basic Rent Date plus (B) an amount equal
to the Total Fundings made from the date hereof through and including such Basic
Rent Date (together with interest on such amounts at the Overdue Rate from such
Basic Rent Date to the date of actual payment); and upon such payment of all
amounts then due and payable by the Lessee hereunder or under any other
Operative Document, the Lessor shall transfer to the Lessee its title and
interest in and to the Facility without recourse or warranty (except as to
absence of any Lessor's Liens); or
(e) the Lessor may rescind or terminate this Lease or may
exercise any other right or remedy which may be available to it under Applicable
Law or proceed by appropriate court action to enforce the terms hereof or to
recover damages for the breach hereof; PROVIDED, HOWEVER, that any termination
of the Lease pursuant to the exercise of any such rights and remedies shall not
in any way be deemed to be a release or a waiver by the Lessor of the Lessee's
obligation to pay the sums provided to be paid by the Lessee under this Section.
No termination of this Lease, in whole or in part, or repossession of
all or any part of the Leased Property or exercise of any remedy under this
Section shall, except as specifically provided herein, relieve the Lessee of any
of its liabilities and obligations hereunder, all of which shall survive such
termination, repossession or exercise of remedy. In addition, the Lessee shall
be liable, except as otherwise provided above, for any and all unpaid Rent due
hereunder before, after or during the exercise of any of the foregoing remedies,
including all reasonable legal fees and other costs and expenses incurred by the
Lessor by reason of the occurrence of any Event of Default or the exercise of
the Lessor's remedies with respect thereto, and including all reasonable costs
and expenses of whatsoever kind incurred in connection with the return of the
Facility (including the costs of dismantling and storage) in the manner and
condition required by, and otherwise in accordance with the provisions of,
Section 8 hereof as if the Facility were being returned at the end of the Lease
Term. At any sale of the Facility or any part thereof or the Lessor's interest
in the Ground Lease pursuant to this Section 21, the Lessor may bid for and
purchase the Facility or such interest in the Ground Lease.
To the extent permitted by, and subject to the mandatory requirements
of, Applicable Law, and except as otherwise expressly provided in this Section,
each and every right, power and remedy herein specifically given to the Lessor
or otherwise in this Lease shall be cumulative and shall be in addition to every
other right, power and remedy herein specifically given or now or hereafter
existing at Law, in equity or by statute, and each and every right, power and
remedy whether specifically herein given or otherwise
61
existing may be exercised from time to time and as often and in such order as
may be deemed expedient by the Lessor, and the exercise or the beginning of the
exercise of any power or remedy shall not be construed to be a waiver of the
right to exercise at the same time or thereafter any other right, power or
remedy. No delay or omission by the Lessor in the exercise of any right, remedy
or power or in the pursuit of any remedy shall impair any such right, remedy or
power or be construed to be a waiver of any default on the part of the Lessee or
to be an acquiescence therein. No express or implied waiver by the Lessor of
any Event of Default shall in any way be, or be construed to be, a waiver of any
future or subsequent Event of Default.
SECTION 22. RIGHT TO PERFORM FOR LESSEE.
If the Lessee fails to make any payment of Rent required to be made by
it hereunder or fails to perform or comply with any of its agreements contained
herein, the Lessor may make such payment or perform or comply with such
agreement, without any notice to or demand upon Lessee, in each case without
waiving any default hereunder or releasing the Lessee from any obligation;
PROVIDED, HOWEVER, that any such payment or performance by the Lessor shall not
constitute a cure of such Event of Default for purposes of this Lease. The
amount of such payment and the amount of the reasonable expenses incurred in
connection with such agreement, as the case may be, together with interest
thereon at the Overdue Rate, shall constitute Supplemental Rent hereunder,
payable upon demand to the Lessor.
SECTION 23. INDEMNIFICATION.
(a) INDEMNIFICATION. The Lessee agrees to assume liability for, and
to indemnify, protect, save and keep harmless each Indemnified Person, on an
After-Tax Basis, from and against any and all Claims that may be imposed on,
incurred by or asserted against any Indemnified Person (whether because of an
action or omission by such Indemnified Person or otherwise and whether or not
such Indemnified Person shall also be indemnified as to any such Claim by any
other Person), in any way relating to or arising out of (i) the Leased Property
or any part thereof, (ii) the Operative Documents or the transactions
contemplated thereby, payments made pursuant to any thereof or the enforcement
by any Indemnified Person of any of its rights under the Operative Documents, or
any other transaction contemplated by the Operative Documents, including the
negotiation, execution and delivery of amendments thereto, (iii) the
manufacture, financing, refinancing, design, construction, inspection, purchase,
ownership, acquisition, acceptance, rejection, delivery, nondelivery,
possession, transportation, sublease, sub-sublease, sub-sub-sublease,
mortgaging, granting of a security interest in, preparation, installation,
condition, transfer of title, rental, use,
62
operation, storage, maintenance, modification, alteration, repair, assembly,
sale, return, registration, abandonment or other application or disposition of
all or any part of the Leased Property or any interest therein, including,
without limitation, (A) Claims or penalties arising from any violation of Law or
liability in tort (strict or otherwise), (B) loss of or damage to any property
or the environment (including, without limitation, all Claims associated with
remediation, response, removal, corrective action, clean-up, Remedial Action,
treatment, compliance, restoration, abatement, encapsulation, containment,
revegetation, monitoring, sampling, investigation, assessment, financial
assurance, natural resource damages, the protection of wildlife and aquatic and
vegetation, the interference with or contamination of any wetland or body of
water (whether surface or subsurface) or aquifer, and any relevant mitigative
action under any Environmental Law and any Claims resulting from or relating to
the existence or presence of any Hazardous Material at, in, or under the Leased
Property, or any parts thereof, or the Release, emission or discharge of any
Hazardous Material into the environment (including air, water vapor, surface
water, ground water, and land (whether surface or subsurface)) or death or
injury to any Person, (C) latent or other defects, whether or not discoverable,
and (D) any claim for patent, trademark or copyright infringement, (iv) any
breach of or failure to perform or observe, or any other breach of or failure to
perform or observe, or any other non-compliance with, any covenant, condition or
agreement or other obligation to be performed by the Lessee under any Operative
Document, or the falsity of any representation or warranty of the Lessee in any
of the Operative Documents or in any certificate delivered by the Lessee, (v)
the imposition of any Lien (other than Permitted Liens) on the Leased Property,
or (vi) any violation of any Applicable Law with respect to the Lessee or the
Leased Property; PROVIDED, HOWEVER, that the Lessee shall not be required to
indemnify any Indemnified Person under this Section 23 for any Claim to the
extent resulting from the willful misconduct or gross negligence of such
Indemnified Person (other than willful misconduct or gross negligence imputed to
such Indemnified Person solely by reason of its interest in the Leased
Property). The obligation to provide indemnities in accordance with the terms
of this Section 23 shall survive the termination of this Lease.
(b) NOTICES. If the Lessee shall obtain knowledge of any action,
suit, proceeding or written notice of any Claim indemnified against under this
Section 23, the Lessee shall give prompt notice thereof to the appropriate
Indemnified Person or Indemnified Persons, as the case may be, and if any
Indemnified Person shall obtain any such knowledge, such Indemnified Person
shall give prompt notice thereof to the Lessee, PROVIDED that the failure of
such Indemnified Person to so notify the Lessee shall not affect the Lessee's
indemnification obligations under this Section 23 to such Indemnified Person,
except to the extent, if any, that the Lessee demonstrates that defense of the
Claim is prejudiced by the Indemnified Person's failure to give such notice.
63
(c) CONTESTS. Subject to the rights of insurers under policies of
insurance maintained pursuant to Section 14, the Lessee shall have the right, at
its sole cost and expense, to investigate, and the right in its sole discretion
to defend or contest by appropriate proceedings or compromise, any Claim for
which indemnification is sought under this Section 23, and the Indemnified
Person shall cooperate, at the Lessee's expense, with all reasonable requests of
the Lessee in connection therewith, PROVIDED that the Lessee shall not have the
right without the consent of the Indemnified Person to defend, contest or
compromise any Claim with respect to such Indemnified Person (i) if an Event of
Default shall have occurred and be continuing, (ii) if such proceeding involves
any material danger of the sale, forfeiture or loss of the Leased Property or
any part thereof, or (iii) if such Claim involves a realistic possibility of
criminal sanctions or allegations by a Governmental Authority of criminal
liability to such Indemnified Person, in which event the Indemnified Person
shall be entitled to control and assume responsibility for the defense of such
Claim at the expense of the Lessee. The Lessee shall keep the Indemnified
Person which is the subject of such proceeding fully apprised of the status of
such proceeding and shall provide such Indemnified Person with all information
with respect to such proceeding as such Indemnified Person shall reasonably
request. In the event an Indemnified Person has assumed control of any such
proceeding, it shall keep the Lessee fully apprised of the status of such
proceeding and shall provide the Lessee with all information, including the
receipt of all settlement offers, with respect to such proceeding as such
Indemnified Person shall reasonably request. Where the Lessee or the insurers
under a policy of insurance maintained by the Lessee undertake the defense of an
Indemnified Person with respect to a Claim, no additional legal fees or expenses
of such Indemnified Person in connection with the defense of such Claim shall be
indemnified hereunder unless such fees or expenses were incurred at the request
of the Lessee or such insurers; PROVIDED that, if (i) in the written opinion of
counsel to such Indemnified Person an actual or potential conflict of interest
exists where it is advisable for such Indemnified Person to be represented by
separate counsel or (ii) such Indemnified Person has been indicted or otherwise
charged in a criminal complaint in connection with an indemnifiable Claim and
such Indemnified Person informs the Lessee that such Indemnified Person desires
to be represented by separate counsel, the reasonable fees and expenses of such
separate counsel shall be borne by the Lessee. Subject to the requirements of
any policy of insurance, an Indemnified Person may participate at its own
expense in any judicial proceeding controlled by the Lessee pursuant to the
preceding provisions and such participation shall not constitute a waiver of the
right to receive the indemnification provided in this Section 23.
Notwithstanding anything to the contrary contained herein, during the
continuance of an Event of Default, the Lessee shall not compromise any Claim
without the consent of the applicable Indemnified Person unless such Claim is
simultaneously discharged fully and
64
unconditionally as to such Indemnified Person, such consent not to be
unreasonably withheld.
(d) SUBROGATION. Upon payment in full of any Claim by the Lessee
pursuant to this Section 23 to or on behalf of an Indemnified Person, the
Lessee, without any further action, shall be subrogated to any and all claims
that such Indemnified Person may have in respect of the matters against which
such indemnity was given (other than claims under any insurance policies
maintained by such Indemnified Person). Such Indemnified Person agrees to
cooperate with the Lessee and to execute such further instruments to permit the
Lessee, at the Lessee's expense, to pursue such claims, to the extent reasonably
requested by the Lessee.
(e) PAYMENTS. Any amount payable to any Indemnified Person pursuant
to this Section 23 shall be paid to such Indemnified Person promptly upon
receipt of a written demand therefor from such Indemnified Person, accompanied
by a written statement describing the basis for such indemnity and the amount so
payable.
SECTION 24. NOTICES.
All communications, demands, consents and notices provided for herein
shall be in writing, by fax (receipt confirmed), by tested telex or by personal
delivery and shall become effective if given by fax, telex or personal delivery,
when received, and if given by mail five (5) days after deposit in the United
States mail with proper postage for first-class mail prepaid, addressed (a) if
to the Lessor, at c/o KeyCorp Leasing, 00 Xxxxx Xxxxxx, Xxxxxx, Xxx Xxxx 00000,
Attention: Xxxxxx Xxxxxxx, telephone (000) 000-0000, fax (000) 000-0000, with a
copy to Key Global Finance, 00 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000,
Attention: Chief Credit Officer, telephone (000) 000-0000, fax (000) 000-0000,
and (b) if to the Lessee, at 000 X.X. Xxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxx,
Xxxxxx 00000, Attention: Xxxxx X. Xxxxx, telephone ((000) 000-0000), fax ((503)
000-0000), or, in each case, at such other address as any of the foregoing
Persons may from time to time designate by notice duly given in accordance with
the provisions of this Section to such other Person.
SECTION 25. SUCCESSORS AND ASSIGNS.
This Lease, including all agreements, covenants, representations and
warranties, shall be binding upon and inure to the benefit of, and may be
enforced by, (a) the Lessor and its successors, assigns and agents, and, where
the context so requires, (i) each Indemnified Person, and (ii) the successors,
assigns and agents of such Indemnified Person, and (b) the Lessee and its
successors and, to the extent permitted hereby, assigns.
65
SECTION 26. AMENDMENTS AND MISCELLANEOUS.
(a) AMENDMENTS. The terms of this Lease shall not be waived,
altered, modified, amended, supplemented or terminated in any manner whatsoever
except by written agreement signed by the Lessor and the Lessee.
(b) SURVIVAL OF AGREEMENTS. All agreements, indemnities,
representations and warranties contained in this Lease or any agreement,
document or certificate delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Lease and the expiration or
other termination of this Lease.
(c) ENFORCEMENT. Any provision of this Lease which may be determined
by competent authority to be prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction. To
the extent permitted by Applicable Law, the Lessee hereby waives any provision
of law which renders any provision hereof prohibited or unenforceable in any
respect.
(d) ENTIRE AGREEMENT. This Lease represents the entire agreement of
the parties hereto with respect to the subject matter hereof and supersedes any
and all prior understandings. This Lease shall constitute an agreement of lease
and nothing herein shall be construed as conveying to the Lessee any right,
title or interest in or to the Improvements, except as lessee only.
(e) BINDING EFFECT. All provisions contained in this Lease shall be
binding upon, inure to the benefit of and be enforceable by, the respective
permitted successors and assigns of the Lessor and the Lessee to the same extent
as if each successor and assignee were named as a party hereto.
(f) COUNTERPARTS. The parties may sign this Lease in any number of
counterparts and on separate counterparts, each of which shall be an original
but all of which when taken together shall constitute one and the same
instrument, except that, if this Lease constitutes "chattel paper" within the
meaning of the Uniform Commercial Code only one counterpart stamped or marked
"COUNTERPART NUMBER ONE" or "COUNTERPART NUMBER 1" shall constitute, to the
extent applicable, "chattel paper" or other "collateral" within the meaning of
the Uniform Commercial Code in effect in any jurisdiction.
66
(g) GOVERNING LAW. This Lease shall be governed by, and construed in
accordance with, the laws of the State of Idaho.
(h) SECTIONS, HEADINGS. The division of this Lease into sections,
the provision of a table of contents and the insertion of headings are for the
convenience of reference only and shall not affect the construction or
interpretation of this Lease.
(i) NO MERGER OF TITLE. There shall be no merger of this Lease nor
of the leasehold estate created by this Lease with the fee ownership of the
Parcel, the Facility or the Modifications by reason of the fact that the same
Person may acquire, own or hold, directly or indirectly, this Lease or the
leasehold estate created by this Lease or any interest in this Lease or interest
in the fee or leasehold ownership of the Parcel, the Facility or the
Modifications and no such merger shall occur unless and until all Persons having
any interest in (x) the leasehold estate created by this Lease and (y) the
ownership of the Parcels, the Facility or the Modifications, or any part thereof
shall join in a written instrument effecting such merger and shall duly record
the same.
(j) WAIVER OF TRIAL BY JURY. IN ANY ACTION OR PROCEEDING UNDER OR
RELATED TO THIS AGREEMENT, THE OPERATIVE DOCUMENTS OR ANY AMENDMENT, INSTRUMENT,
DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN
CONNECTION WITH THE FOREGOING, THE LESSOR AND THE LESSEE HEREBY AGREE THAT ANY
SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY,
IRRESPECTIVE OF WHICH PARTY COMMENCES SUCH ACTION OR PROCEEDING.
(k) TRUE LEASE. The Lessee intends to treat this Lease, for
accounting purposes, as an operating lease. If a court of competent
jurisdiction determines that the transaction represented by this Lease and the
other Operative Documents will be treated as a financing transaction, then in
such event it is the intention of the parties hereto (i) that this Lease be
treated as a mortgage and security agreement and fixture filing, or other
similar instrument with a power of sale (the "LESSEE MORTGAGE") from Lessee, as
mortgagor, encumbering the Leased Property, and that the Lessee, as mortgagor,
shall be deemed to have hereby granted a security interest and mortgage to the
Lessor in the Leased Property now owned or hereafter acquired for the purpose of
securing the Lessee's payment and performance obligations under this Lease and
the other Operative Documents, (ii) that the Lessor shall have, as a result of
such determination, all of the rights, powers and remedies of a secured party
and mortgage available under Applicable Law to take possession of and sell
(whether by foreclosure, power of sale or otherwise) the Leased Property,
(iii) that the effective date of the Lessee Mortgage shall be the
67
effective date of this Lease, (iv) that the recording of an instrument
referencing this provision shall be deemed to be the recording of the Lessee
Mortgage and (v) that the Lessee Mortgage shall secure the obligations of the
Lessee under this Lease.
(l) NO CLAIMS AGAINST LESSOR, ETC. Nothing contained in this Lease
shall constitute any consent or request by the Lessor, express or implied, for
the performance of any labor or services or the furnishing of any materials or
other property in respect of the Leased Property or any part thereof, nor as
giving the Lessee any right, power or authority to contract for or permit the
performance of any labor or services or the furnishing of any materials or other
property in such fashion as would permit the making of any claim against the
Lessor in respect thereof. Notice is hereby given that the Lessor shall not be
liable for any labor or services performed or any materials or other property
furnished in respect of the Leased Property or any part thereof and that no
mechanic's or other lien for any such labor, services, materials or other
property shall attach to or affect the interest of the Lessor in the Leased
Property.
(m) LIMITED RECOURSE. Except as otherwise provided in the proviso to
this Section, nothing contained in this Lease or in the other Operative
Documents shall be construed as creating any liability on the part of any past
or present shareholder, limited partner or general partner of the Lessee, the
General Partner, or the MGP General Partners to pay any amount on account of the
Lessee's obligations hereunder or under any other Operative Document to which it
is a party or to perform any covenant of the Lessee contained herein or therein;
PROVIDED, HOWEVER, that nothing in this Section 26(m) shall be construed (i) to
relieve any Person from liability for fraud, concealment, or other intentional
wrongdoing for which such Person would otherwise be liable under any Applicable
Law, either directly or on behalf of the Lessee, (ii) to restrict the joinder in
any action of any necessary party in order to seek enforcement of rights against
the Lessee or any other party to any Operative Document or to restrict
injunctive relief against any Person to the extent necessary to obtain
performance by the Lessee of any of its obligations under any Operative
Document, or (iii) to relieve any Person from liability for distributions,
payments, or other transfers made to such Person in violation of the Operative
Documents or in violation of or otherwise recoverable under any Applicable Law.
68
IN WITNESS WHEREOF, the parties hereto have each caused this Lease to
be duly executed by their respective officers thereunto duly authorized on the
date first written above.
SELCO SERVICE CORPORATION, as Lessor
By
-----------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice President
CROWN PACIFIC LIMITED PARTNERSHIP, as
Lessee and as Construction Agent
By CROWN PACIFIC MANAGEMENT
LIMITED PARTNERSHIP,
its General Partner
By
-----------------------------------------
Name:
Title:
EXHIBIT A TO THE
LEASE AGREEMENT
FORM OF LEASE SUPPLEMENT
This LEASE SUPPLEMENT dated [ ], 199__, is made by and between SELCO
SERVICE CORPORATION, an Ohio corporation, as lessor (the "Lessor"), and CROWN
PACIFIC L.P., a Delaware limited partnership, as lessee (the "Lessee").
W I T N E S S E T H :
WHEREAS, the Lessor and the Lessee have heretofore entered into the
Lease Agreement dated as of December 19, 1997 (hereinafter the "Lease"; unless
otherwise defined herein, the terms defined therein being used herein with the
same meaning) and to which this Lease Supplement is a supplement;
WHEREAS, the Lease provides for the execution and delivery of a Lease
Supplement for the purposes and otherwise as set forth in Section 2 thereof.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements confirmed in the Lease and other good and valuable consideration,
receipt of which is hereby acknowledged, the Lessor and the Lessee hereby agree
as follows:
(1) The Lessor does hereby lease to the Lessee, and the Lessee does
hereby lease from the Lessor, the Components described in the Description of
Components attached hereto on Schedule 1.
(2) The Lessee hereby confirms to the Lessor that the Lessee has
unconditionally accepted the Components for all purposes hereof and of the
Lease.
(3) The Lessee hereby confirms that the Components conform to
specifications, are in good working order and repair and without defect in
title, condition, design, operation or fitness for purpose, and are free and
clear of all Liens except Liens permitted by Section 10 of the Lease Agreement;
PROVIDED, HOWEVER, that nothing contained herein or in the Lease shall in any
way diminish or otherwise affect any right which the Lessee or the Lessor may
have with respect to the Components or any portion thereof against any seller,
contractor, subcontractor, manufacturer or installer thereof or others.
(4) This Lease Supplement may be executed in any number of
counterparts and on separate counterparts, each of which shall be an original
but all of which when taken together shall constitute one and the same
instrument, except that, if this Lease Supplement constitutes "chattel paper"
within the meaning of the Uniform
Commercial Code, only one counterpart stamped or marked "COUNTERPART ONE" or
"COUNTERPART NUMBER 1" shall constitute, to the extent applicable, "chattel
paper" or other "collateral" within the meaning of the Uniform Commercial Code
in effect in any jurisdiction.
(5) All the terms and provisions of the Lease are hereby incorporated
by reference in this Lease Supplement to the same extent as if fully set forth
herein. Without limiting the generality of the foregoing, the representations
and warranties of the Lessee that are set forth in the Lease shall be deemed
incorporated by reference herein with the same effect as though such
representations and warranties are made on and as of the date hereof.
(6) The Lessee hereby represents and warrants as of the date hereof
that no Default or Event of Default has occurred and is continuing under the
Lease.
IN WITNESS WHEREOF, the Lessor and the Lessee have each caused this
Lease Supplement to be duly executed as of the date first written above.
SELCO SERVICE CORPORATION, as Lessor
By
----------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice President
CROWN PACIFIC LIMITED PARTNERSHIP, as Lessee
By CROWN PACIFIC MANAGEMENT
LIMITED PARTNERSHIP,
its General Partner
By
----------------------------------------
Name:
Title:
A-2
SCHEDULE 1
to Lease Supplement
DESCRIPTION OF COMPONENTS
The Components shall consist of the following:
FORM OF REQUISITION
To: Selco Service Corporation
CROWN PACIFIC LIMITED PARTNERSHIP
CERTIFIED CONSTRUCTION REQUISITION NO.___
DATED____________ , 199____
The undersigned, [Name], [Title*] of Crown Pacific Limited
Partnership, acting as construction agent (the "CONSTRUCTION AGENT") for SELCO
Service Corporation, the lessor (the "LESSOR") pursuant to the Lease Agreement
dated as of December [ ], 1997 (the "LEASE AGREEMENT"), and acting as lessee
(the "LESSEE") thereunder, submits this irrevocable Requisition and certifies,
on behalf of the Lessee the following:
1. The total amount of the Actual Project Costs for which a
Requisition Funding is hereby requested is _________ Dollars ($______).
The Lessor is hereby requested to make available the proceeds of a
Requisition Funding on [at least 5 Business Days after the submission date]
____________, 199_, [must be a Requisition Funding Date] subject to the
satisfaction or waiver (as specified in Item 8 below) of all Requisition
Funding Conditions. The Requisition Funding shall be made at [bank],
account number [ ].
2. The proceeds of the Requisition Funding requested herein shall be
used solely to pay Actual Project Costs.
3. No part of the Actual Project Costs paid with the funds advanced
under any previous Requisition is a basis for this Requisition, and none of
the Actual Project Costs which are the subject of this Requisition was
included in any prior Requisition.
4. Attached to this Requisition is a copy of each invoice, purchase
order, receipt or other such document (not previously delivered with a
prior Requisition) (the "INVOICES") for Actual Project Costs, which
Invoices will be, or
--------------------------------------
* To be an "Officer", as defined in the Lease Agreement.
have been, paid with the proceeds of this Requisition Funding, or, as
applicable, the previous Requisition Fundings.
5. There has been no material change in the estimated time of
completion of the construction of the Facility and the Construction Agent
has no reason to believe that (i) the Final Completion Date cannot be
achieved by September 30, 1998 or (ii) the Actual Project Costs of the
construction of the Facility will exceed the Maximum Requisition Funding
Amount.
6. No Applicable Law prohibits, and no litigation, governmental
investigation or other proceeding is pending or threatened in which there
is a reasonable possibility of an unfavorable judgment, decree, order or
other determination which could prevent or make unlawful, or impose any
material adverse condition upon, the Leased Property or the construction or
operation thereof or any transaction contemplated hereby or by any other
Operative Document or the ability of the Lessee to perform its obligations
hereunder or thereunder.
7. [NOT APPLICABLE TO INITIAL REQUISITION] All amounts previously
advanced pursuant to previous Requisitions were or will be paid to the
parties entitled thereto as specified in such Requisitions.
8. [Except as set forth in this item 8,] all Requisition Funding
Conditions required to be satisfied prior to the Requisition Funding
requested herein have been satisfied. [Identify unfulfilled conditions,
the actions being taken by the Construction Agent and the Lessee to satisfy
such conditions and the date(s) by which the Construction Agent plans to
satisfy such conditions].
9. All of the representations and warranties of the Lessee set forth
in the Operative Documents are true and correct on and as of the date
hereof. The Lessee is in compliance with all of its obligations under the
Operative Documents and there exists no Default or Event of Default under
the Operative Documents.
B-2
All terms used herein but not defined herein shall have the meanings
assigned to such terms in the Lease.
Dated this ____ day of _________, 199_.
CROWN PACIFIC LIMITED PARTNERSHIP,
as Lessee and Construction Agent
By CROWN PACIFIC MANAGEMENT LIMITED
PARTNERSHIP, its General Partner
By:
-----------------------------
Name:
Title:
B-3
EXHIBIT C TO THE
LEASE AGREEMENT
APPROVED CONSTRUCTION BUDGET
[Crown to Provide]
[FORM OF FINAL COMPLETION CERTIFICATE]
OFFICER'S CERTIFICATE
This Officer's Certificate is being furnished pursuant to the
requirements of the Lease Agreement, dated as of December 19, 1997, among SELCO
Service Corporation, an Ohio corporation (the "Lessor"), and Crown Pacific
Limited Partnership, a Delaware limited partnership (the "LESSEE" and the
"CONSTRUCTION AGENT") (as the same may be amended, modified or supplemented from
time to time, the "LEASE"). Capitalized terms used but not otherwise defined
herein shall have the meanings set forth in the Lease.
The undersigned, on behalf of the Lessee, hereby certifies that:
1. Completion of the Components as contemplated by the Lease as a
whole has taken place in all respects and the Facility has been constructed. A
permanent certificate of occupancy (the "PCO") for the Facility has been issued
by the applicable Governmental Authority having responsibility for such issuance
and the same is in proper form and not subject to any appeal or contest or to
any unsatisfied conditions (other than conditions relating to completion in the
future) that may allow modification or revocation.
2. All Permits that are or will become Applicable Permits have been
obtained, except Applicable Permits required by Law to be obtained after the
Final Completion Date (as to which the Construction Agent, having completed all
appropriate diligence, has no reason to believe that such Permits will not be
granted in the usual course of business prior to the date that such Permits are
required by Law, and the Lessee has applied for such Permits and satisfied all
legal requirements necessary to authorize continued operation while the Permit
application is pending). All such obtained Permits are in proper form, in full
force and effect and not subject to any appeal or contest or to any unsatisfied
conditions (other than conditions relating to completion in the future) that may
allow modification or revocation.
3. The Leased Property is in compliance in all material respects
with all Applicable Laws. The construction and operation of the Facility is in
accordance in all material respects with all Applicable Laws and all
representations set forth in, or made in connection with, all Permits, as
required for occupancy and operation thereof.
4. The Lessee is in compliance with all Insurance Requirements and
all insurance policies required under Section 14 of the Lease are in force and
effect.
5. The representations and warranties of the Lessee as set forth in
the Operative Documents are true and correct in all material respects as if made
on and as of the date hereof.
6. The Facility is complete and is ready and available for its
intended use by Lessee.
7. Attached hereto as SCHEDULE A is a true and correct list, as of
the date hereof, of all furniture, fixtures and equipment located on the Parcel.
Dated this day of , 199 .
CROWN PACIFIC LIMITED PARTNERSHIP,
as Construction Agent
By CROWN PACIFIC MANAGEMENT LIMITED
PARTNERSHIP, its General Partner
By:
------------------------------
Name:
Title:
D-2
EXHIBIT E TO THE
LEASE AGREEMENT
TERMS OF SINGLE INVESTOR TAX LEASE
[To Follow]
EXHIBIT F TO THE
LEASE AGREEMENT
CREDIT AGREEMENT
SCHEDULE 1
TO LEASE AGREEMENT
DESCRIPTION OF PARCEL
SCHEDULE 6(a)(viii)
TO LEASE AGREEMENT
PERMITS
