EXHIBIT 10.33
THIS INSTRUMENT PREPARED BY
AND AFTER RECORDING RETURN TO:
Xxxxxxxxxxx X. Xxxxxx, Esq.
Xxxxx, Day, Xxxxxx & Xxxxx
0000 XxxXxxxx Xxxxx
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
LEASE AGREEMENT
Dated as of February 29, 1998
Between
WACHOVIA CAPITAL MARKETS, INC.,
as the Lessor,
and
U.S. XPRESS ENTERPRISES, INC.,
as the Lessee
________________________________________________________________________________
This Lease Agreement is also a deed of trust and security agreement between the
Lessee, U.S. Xpress Enterprises, Inc., as grantor and debtor, Xxxxxxxx-Xxxxxxxx
Guaranty Title Agency, Inc., as trustee, and the Lessor, WACHOVIA Capital
Markets, Inc., as beneficiary and secured party (for itself and in trust for the
lease participants), securing indebtedness in the principal amount of
$18,000,000. The collateral subject to the security interest includes personal
property that is, or may become, fixtures attached to the real property
described in this Lease Agreement. This Lease Agreement should be filed and
recorded in the real estate records as a lease and as a deed of trust and
fixture filing. WACHOVIA Capital Markets, Inc. should be indexed as the grantor
of the lease, Xxxxxxxx-Xxxxxxxx Guaranty Title Agency, Inc. should be indexed as
the grantee of the deed of trust and security interest, for the benefit of
WACHOVIA Capital Markets, Inc., as beneficiary and secured party (for itself and
in trust for the lease participants). U.S. Xpress Enterprises, Inc. should be
indexed as the grantee of the Lease and the grantor of the deed of trust and
security interest. The addresses of the Lessee and the Lessor are set forth on
the signature pages hereof.
NOTE TO TENNESSEE TAX COMMISSIONER: THE MAXIMUM PRINCIPAL INDEBTEDNESS SECURED
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BY THIS INSTRUMENT FOR TENNESSEE RECORDING TAX PURPOSES IS $18,000,000.
THIS INSTRUMENT SECURES OBLIGATORY ADVANCES AND IS FOR COMMERCIAL PURPOSES.
TABLE OF CONTENTS
Page
Section 1. Defined Terms............................................. 2
Section 2. Lease of Facility......................................... 2
Section 3. Payments.................................................. 4
Section 4. [INTENTIONALLY OMITTED.].................................. 9
Section 5. Investment Agreement; Agency Agreement.................... 9
Section 6. Title to Remain in the Lessor............................. 10
Section 7. Maintenance of the Facility; Operations................... 10
Section 8. Modifications............................................. 12
Section 9. Further Assurances........................................ 13
Section 10. Compliance with Governmental Requirements and
Insurance Requirements: Related Contracts................. 14
Section 11. Condition and Use of Facility; Quiet Enjoyment............ 14
Section 12. Liens..................................................... 16
Section 13. Permitted Contests........................................ 17
Section 14. Insurance, etc............................................ 18
Section 15. Termination; Cancellation; Purchase Option................ 20
Section 16. Transfer of Title on Removal of Facility; Expenses
of Transfer............................................... 24
Section 17. Events of Default and Remedies............................ 27
Section 18. Change in the Lessee's Name or Structure.................. 30
Section 19. Inspection; Right to Enter Premises of the Lessee......... 30
Section 20. Right to Perform the Lessee's Covenants................... 31
Section 21. Participation by Co-Lessees or Sublessees................. 31
Section 22. Notices................................................... 33
Section 23. Amendments and Waivers.................................... 33
Section 24. Severability.............................................. 34
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Section 25. Federal Income Tax Considerations......................... 34
Section 26. Other Provisions.......................................... 34
Section 27. Miscellaneous............................................. 39
Exhibit A Description of Site
Schedule 14 Insurance Requirements
ii
LEASE AGREEMENT
This Lease Agreement dated as of February 29, 1998 (as the same may be
amended, modified or supplemented from time to time, this "Lease") is between
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WACHOVIA CAPITAL MARKETS, INC., a Georgia corporation (together with its
successors and permitted assigns, the "Lessor"), and U.S. XPRESS ENTERPRISES,
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INC., a Nevada corporation (together with its successors and permitted assigns,
the "Lessee").
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RECITALS
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WHEREAS, Lessor has acquired certain real property in Xxxxxxxx County,
Tennessee, described in greater detail on Exhibit A (the "Site"), and all
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appurtenances thereto and has entered into certain agreements described in
greater detail in that certain Investment and Participation Agreement bearing
even date herewith (the "Investment Agreement") entered into by and among
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Lessor, Lessee and the Lease Participants parties thereto from time to time to
construct certain Improvements on the Site in accordance with the Facility Plan
in order to create a corporate headquarters facility, together with related
enhancements and improvements in accordance with the Facility Plan; and
WHEREAS, subject to the terms and conditions of this Lease, the Lessee
desires to lease from the Lessor the Site and such enhancements and Improvements
beginning on the Lease Commencement Date for the purpose of occupying and using
the Site and such enhancements and Improvements as a corporate headquarters
facility in accordance with the terms and conditions set forth in this Lease;
and
WHEREAS, from time to time certain Additional Facilities may be added
to this Lease pursuant to Section 11.22 of the Investment Agreement by the
execution and delivery with respect to each such Additional Facility of a Lease
Supplement (and in connection therewith, a memorandum of lease will be prepared
and recorded in the appropriate filing office in the relevant state and county
in which the Additional Facility is located); and
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein contained, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Lessor and the
Lessee agree as follows:
Section 1. Defined Terms.
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(i) In this Lease, the terms "Lease," "Lessee," and "Lessor"
shall have the meanings indicated above.
(ii) As used in this Lease, all capitalized terms used in this
Lease, and not otherwise defined herein shall have the
meanings assigned such terms in Schedule 1.02 to the Investment Agreement, a
copy of which schedule is attached hereto.
Section 2. Lease of Facility.
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(a) During the term of and subject to the terms and conditions of
this Lease, the Lessor hereby leases to the Lessee, and the Lessee hereby leases
from the Lessor, the Facility for the Lease Term to be occupied and used (i) to
cause Completion of the Facility during the portion of the Lease Term consisting
of the Construction Term in accordance with the Agency Agreement and (ii) for
and only for the Permitted Use with respect to the Basic Term. The entire
Facility shall become subject to this Lease as of the effective date hereof (or,
as to any Additional Facility, as of the date of the Lease Supplement pertaining
thereto); provided that the Lessor will deliver possession of the Facility to
Lessee for occupancy and operation in accordance with the Permitted Use in
conjunction with and to the extent permitted by certificates of occupancy issued
by the applicable Governmental Authority.
(b) Unless earlier terminated in accordance with the other provisions
hereof, including without limitation, Sections 15 and 17, this Lease shall
terminate on the Scheduled Lease Termination Date. If, but only if, (i) the
Maturity Date shall have been extended pursuant to Section 2.09 of the
Investment Agreement to the extended Scheduled Lease Termination Date proposed
by the Lessee as provided herein, and (ii) the Lessee, on any day that is not
less than 12 months and no more than 18 months prior to the then current
Scheduled Lease Termination Date shall have requested in writing to the Lessor
up to 3 additional extensions of the Scheduled Lease Termination Date, in each
case for up to 3 additional years expiring on or before the 3rd year anniversary
of the then current Scheduled Lease Termination Date, then the Lessor shall
consent to such extension in writing and the then current Scheduled Lease
Termination Date shall be so extended. Any such extension shall be effective
upon the execution of documentation evidencing the same (which the Lessor agrees
to execute promptly upon request of the Lessee if the Lessor's consent to such
extension is to be given pursuant hereto), and containing such additional terms
as the Lessor, acting in its sole discretion, may require; provided that no such
documentation or additional terms shall impose any additional liability on the
Lessor.
In the event it is determined at any time that the term of this Lease will
not be extended beyond the original Scheduled Lease Termination Date, or if a
Non-Completion Event occurs, the Lessee shall give to the Lessor written notice
as provided below specifying its election as to which of the options under
Section 15(a)(ii) of this Lease the Lessee intends to exercise upon the
applicable Lease Termination Date:
(x) if the Scheduled Lease Termination Date is not to be extended
because of a refusal to extend the Maturity Date pursuant to Section 2.09
of the Investment Agreement, then the Lessee shall give the Lessor notice
of such election within 30
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days of the earlier to occur of (A) the date the Lessee receives written
notice of refusal or (B) the date of such deemed refusal pursuant to
Section 2.09 of the Investment Agreement;
(y) if the Scheduled Lease Termination Date is not to be extended
because the Lessee chooses not to request such extension, the Lessee shall
give the Lessor notice of such election on any date that is not less than
12 months and no more than 18 months prior to the then current Scheduled
Lease Termination Date; and
(z) if the Lessor declares a Non-Completion Event, the Lessee shall
give the Lessor notice of such election within 5 Business Days of the date
the Lessee receives written notice of the Lessor's declaration of a Non-
Completion Event.
In the event the Lessee fails to give timely written notice of such
election to the Lessor on or before the dates herein provided, the Lessee shall
be deemed to have elected to purchase the Facility on the Lease Termination Date
for the Purchase Price.
Section 3. Payments.
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(a) Basic Rent. The Lessee shall pay to the Lessor on the Rent
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Payment Date for each Rental Period the amount of Basic Rent due for such Rental
Period.
(b) Interim Special Rent. On the date of any extension pursuant to
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Section 2.09 of the Investment Agreement, any part of the unrecovered amount of
the Lessor Investment required by the Funding Parties to be paid to the Lessor
on such date as a condition of such extension ("Interim Special Rent") (and the
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Lessor shall distribute to the Lease Participants their respective A Percentage
Share or B Percentage Share, as applicable, thereof).
(c) Final Rent Payment or Completion Costs Payment. On the earlier to
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occur of the Lease Termination Date, the Cancellation Date or the Option Date,
Lessee shall pay to Lessor the Final Rent Payment or, if a Non-Completion Event
has occurred, the Completion Costs Payment.
(d) Supplemental Rent. In addition to Basic Rent, Interim Special
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Rent and the Final Rent Payment, the Lessee will also pay to the Lessor, from
time to time, upon demand by the Lessor, as additional rent ("Supplemental
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Rent") the following (but without duplication of any amounts included in the
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calculation of Rent):
(i) all out-of-pocket costs and expenses reasonably incurred by the
Lessor in connection with the preparation, negotiation, execution,
delivery, performance and administration of this Lease and the other
Operative Documents, including, but not limited to, the following: (A) fees
and expenses of the Lessor, including, without
3
limitation, reasonable attorneys' fees and expenses and the fees and
expenses for the Approved Appraisal, the Related Contracts, and the
Surveys, the Environmental Assessment, the Soil Test Reports, the title
policy referred to in Section 28(a)(xi); (B) all other amounts owing to the
Lessor and the Lease Participants pursuant hereto or any other Operative
Documents, including, without limitation, fees, indemnities, expenses,
compensation in respect of increased costs of any kind or description
payable under the Investment Agreement or any other Operative Document; (C)
all yield maintenance, capital adequacy and other costs contemplated under
Article V of the Investment Agreement, and (D) all out-of-pocket costs and
expenses incurred by the Lessor (and, in the case of clause (3) below, any
Lease Participant) after the date of this Lease (including, without
limitation, reasonable attorneys' fees and expenses and other expenses and
disbursements reasonably incurred) associated with (1) negotiating and
entering into, or the giving or withholding of, any future amendments,
supplements, waivers or consents with respect to this Lease; (2) any Loss
Event, Casualty Occurrence or termination of this Lease; and (3) any
Default or Event of Default and the enforcement and preservation of the
rights or remedies of the Lessor under this Lease and the other Operative
Documents and all reasonable costs and expenses incurred by the Lessor or
any of its affiliates in initially syndicating to Lease Participants all or
any part of its interests under the Operative Documents, including, without
limitation, the related reasonable fees and out-of-pocket expenses of
counsel for the Lessor or its affiliates, travel expenses, duplication and
printing costs and courier and postage fees, and excluding any fees paid to
the Lessor or any Lease Participant purchasing such an interest;
(ii) the amount, for each Funding Party, that such Funding Party
determines, in the exercise of its sole good faith discretion, to be its
total losses and costs incurred in connection with (1) the Fixed Funding
Rate as a result of the termination of this Lease prior to the end of the
Basic Term, or (2) the giving of a Fixed Funding Rate Termination Notice
prior to the end of the Basic Term, such losses and costs to include,
without limitation, any loss of bargain, cost of funding, or, at the
election of such Funding Party (but without duplication) losses or costs
incurred as a result of such Funding Party's terminating, liquidating,
obtaining or re-establishing any hedge, interest rate swap, or similar or
related trade position obtained by such Funding Party with respect to its
Lessor Advances or Lease Participant Advances; and
(iii) all other amounts that the Lessee agrees herein to pay other
than Basic Rent, Interim Special Rent, the Final Rent Payment, the
Completion Costs Payment and amounts described in clause (i) above.
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(e) Computations. All computations of Basic Rent shall be made by the
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Lessor on the basis of a year of 360 days (or, in the case of computations based
on the Base Rate, 365/366 days), in each case for the actual number of days
(including the first day but excluding the last day) occurring in the Rental
Period for which such Basic Rent payments are payable. Whenever any payment
hereunder shall be stated to be due on a day other than a Business Day, such
payment shall be made on the next succeeding Business Day, and such extension of
time shall in such case be included in the computation of payment of Rent;
provided, however, that if such extension would cause payment of Basic Rent to
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be made in the next following calendar month, such payment shall be made on the
next preceding Business Day.
(f) No Offsets. This Lease is an absolute net lease, and Rent and all
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other sums payable by the Lessee hereunder shall be paid without notice except
as otherwise expressly provided herein, and the Lessee shall not be entitled to
any abatement, reduction, setoff, counterclaim, defense or deduction with
respect to any Rent or other sums payable hereunder. The obligations of the
Lessee to pay Rent and all other sums payable hereunder shall not be affected by
reason of: (i) any damage to, or destruction of, the Facility or any part
thereof by any cause whatsoever (including, without limitation, fire, casualty
or act of God or enemy or any other force majeure event); (ii) any condemnation,
including, without limitation, a temporary condemnation of the Facility or any
part thereof; (iii) any prohibition, limitation, restriction or prevention of
the Lessee's use, occupancy or enjoyment of the Facility or any part thereof by
any Person (other than by the Lessor in violation of this Lease); (iv) any
matter affecting title to the Facility or any part thereof; (v) any eviction of
the Lessee from, or loss of possession by the Lessee of, the Facility or any
part thereof, by reason of title paramount or otherwise (other than by the
Lessor in violation of this Lease); (vi) any default by the Lessor hereunder or
under any other Operative Document; (vii) the invalidity or unenforceability of
any provision hereof 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 Loss Event, Casualty Occurrence or other cause or occurrence
whatsoever, whether similar or dissimilar to the foregoing. The Lessee shall
remain obliged under this Lease in accordance with its terms and shall not take
any action to terminate, rescind or avoid this Lease, except as expressly
provided in Section 15, 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. The Lessee waives all rights
to terminate or surrender this Lease, except as expressly provided in Section
15, or to any abatement or deferment of Rent or other sums payable hereunder.
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 the Lessor hereunder as required hereby shall
be final and irrevocable, and the Lessee shall not seek to recover any
5
such payment or any part thereof for any reason whatsoever, absent manifest
error.
(h) Taxes. Subject to the Lessee's contest rights under Section 13,
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all payments of Rent, fees and all other amounts to be paid by the Lessee
hereunder to the Lessor shall be made without deduction for, and free from, any
taxes, imposts, levies, duties, deductions or withholdings of any nature now or
at any time hereafter imposed by any Governmental Authority or by any taxing
authority thereof or therein imposed or levied upon, assessed against or
measured by any Rent, fees or other sums payable hereunder excluding taxes
imposed on or measured by the net income of the Lessor or any Lease Participant
and franchise taxes imposed on the Lessor or any Lease Participant by the
jurisdiction under the laws of which the Lessor or any Lease Participant is
organized or any political subdivision thereof, and taxes imposed on or measured
by its income, and franchise taxes imposed on it, by the jurisdiction of the
Lessor or any Lease Participant or any political subdivision thereof and other
than any tax arising by reason of a connection between the Lessor or any Lease
Participant or the jurisdiction of the Lessor or any Lease Participant or the
Applicable Funding Office of the Lessor or any Lease Participant and the
jurisdiction imposing such tax other than the making and performance by the
Lessor of this Lease (all such non-excluded taxes, imposts, levies, duties,
deductions or withholdings of any nature being "Taxes"). In the event that the
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Lessee is required by applicable law to make any such withholding or deduction
of Taxes with respect to any Rent, fees or other amount, the Lessee shall pay
such deduction or withholding to the applicable taxing authority, shall promptly
furnish to the Lessor or such Lease Participant in respect of which such
deduction or withholding is made all receipts and other documents evidencing
such payment and shall pay to the Lessor or such Lease Participant additional
amounts as may be necessary in order that the amount received by the Lessor or
such Lease Participant after the required deduction or withholding shall equal
the amount the Lessor or such Lease Participant would have received had no such
deduction or withholding been made. In addition, the Lessee agrees that it will
promptly pay all other Impositions imposed upon or levied or assessed against
the Facility or any part thereof, or against the Lessor or any Lease Participant
in connection with the transactions contemplated by this Lease and the other
Operative Documents, or any sums levied in connection with the execution,
delivery or recording of the Operative Documents, and will furnish to the Lessor
or any Lease Participant upon request copies of official receipts or other proof
evidencing such payment; provided, however, that the Lessee shall not be
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obligated to pay (i) any Impositions that are excluded from the definition of
Taxes; or (ii) any Impositions attributable to the gross negligence or willful
misconduct of the Lessor or any Lease Participant. The Lessee further agrees
that, subject to its contest rights under Section 13, it will, at its expense,
do all things required to be done by the Lessor in connection with the levy,
assessment, billing or payment of any Impositions that it is required to pay
pursuant to the preceding sentence, and is hereby authorized by the Lessor or
6
any Lease Participant to act for and on its behalf in any and all such respects
and to prepare and file, on behalf of the Lessor or any Lease Participant all
tax returns and reports required to be filed by the Lessor or any Lease
Participant (other than federal income tax returns and documents related
thereto, subject to Section 25) concerning the Facility. The Lessee's payment
obligations under this Section 3(g) shall survive the termination of this Lease.
In the event that any withholding or deduction from any payment to be made by
the Lessee hereunder is required in respect of any Imposition pursuant to any
Governmental Requirement, then the Lessee will:
(1) pay directly to the relevant Governmental Authority the full
amount required to be so withheld or deducted;
(2) promptly forward to the Lessor, if available, an official receipt
or other documentation satisfactory to the Lessor evidencing such payment
to such Governmental Authority; and
(3) pay to the Lessor or any Lease Participant, as applicable such
additional amount or amounts as is necessary to ensure that the net amount
actually received by the Lessor or such Lease Participant will equal the
full amount the Lessor or such Lease Participant would have received had no
such withholding or deduction been required.
(h) Payments to the Lessor. All payments by the Lessee pursuant to
----------------------
this Lease shall be made by the Lessee to the Lessor. All such payments required
to be made to the Lessor shall be made not later than 12:00 noon, Atlanta,
Georgia time, on the date due, in immediately available funds, to such account
as the Lessor shall specify from time to time by notice to the Lessee. Whenever
any payment to be made shall otherwise be due on a day which is not a Business
Day, except as otherwise expressly provided herein or in the Investment
Agreement, such payment shall be made on the next succeeding Business Day and
such extension shall be included in computing Rent, interest, yield and fees, if
any, in connection with such payment.
(i) Default Rate. The Lessee shall pay on demand to the Lessor
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interest at the Default Rate on all amounts payable by the Lessee to the Lessor
hereunder or under the Credit Agreement in respect of overdue principal of,
Yield on, and fees in respect of all Rent and the Completion Costs Payment, if
applicable, and all other amounts payable under this Lease, the Investment
Agreement or any of the other Operative Documents, from the due date thereof
until paid in full.
Section 4. [INTENTIONALLY OMITTED.]
Section 5. Investment Agreement; Agency Agreement. The Lessee and
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the Lessor are entering into the Investment Agreement with the Lease
Participants pursuant and subject to which the Lessor will fund Lessor Advances
for the account of the Lessee
7
the Funded Amount as therein provided up to but not exceeding, for the entire
Facility, and the Lease Participants will fund to the Lessor A Percentage Lease
Participation Advances and B Percentage Lease Participation Advances as therein
provided, up to but not exceeding their respective A Percentage Lease
Participant Commitments and B Percentage Lease Participant Commitments. In
addition, the Lessee is entering into the Agency Agreement with the Lessor
pursuant to which the Lessee will act as the Acquisition/Construction Agent for
the Lessor in causing the completion of certain enhancements and improvements
to, and the purchase, manufacture, construction, improvement, renovation,
assembly and installation of, the Facility, including negotiation and
performance of all Related Contracts, obtaining all Applicable Permits and
complying with all Governmental Requirements (including all Environmental
Requirements) relating to the Facility. Upon funding pursuant to the Investment
Agreement, title to all components of the Facility purchase with such funding
shall be and remain in the Lessor, and such components shall be subject to the
terms and conditions of this Lease. The Facility and all components thereof
shall be purchased, manufactured, constructed, improved, renovated, assembled or
installed, as applicable, in accordance with the Related Contracts entered into
by the Lessee pursuant to the Agency Agreement.
Section 6. Title to Remain in the Lessor. The Lessor shall own
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100% of the legal and beneficial interest in the Facility. All accessories,
equipment, parts, fixtures and devices affixed or placed on the Facility from
time to time by the Lessee and all modifications, alterations, renovations or
improvements to the Facility made by the Lessee shall be and become part of the
Facility for the purposes of this Lease and shall be Property of the Lessor
subject to the terms of this Lease; provided that the Lessor's interest in any
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part of the Facility that is replaced by the Lessee pursuant to and as permitted
by the terms of this Lease shall be deemed released from this Lease (and the
Collateral) and thereupon become the Property of the Lessee automatically,
without further action by the Lessor, and the Lessor shall perform all acts and
execute all documents that the Lessee reasonably requests to give effect to the
foregoing at the expense of the Lessee, including the execution and delivery of
bills of sale and other documents of transfer. This Lease shall not give or
grant to the Lessee any right, title or interest in or to the Facility, except
the rights expressly conferred by this Lease.
Section 7. Maintenance of the Facility; Operations.
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(a) The Lessee shall, and it shall require and cause any and all
employees, contractors, subcontractors, agents, representatives, affiliates,
consultants and occupants at the Lessee's own cost and expense to: (i) cause the
Facility to be maintained in all material respects in good operating order,
repair and condition, in accordance with prudent industry practice and any
applicable manufacturer's or supplier's manuals or warranties, subject to normal
wear and tear, and take all action, and make all changes and repairs, structural
and non-structural, foreseen and
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unforeseen, ordinary and extraordinary, which are required pursuant to any
Governmental Requirement or Insurance Requirement at any time in effect to
assure full compliance therewith in all material respects; and (ii) do all
things necessary to prevent the incurrence of any Environmental Damages or
Environmental Liabilities relating to the Facility or any business conducted in
or relating to the Facility or the Site, and cause the Facility to continue to
have at all times, in all material respects, and in compliance with all
applicable Governmental Requirements and Insurance Requirements, the capacity
and functional ability to perform, on a continuing basis (subject to normal
interruption in the ordinary course of business for maintenance, inspection,
service, repair and testing) and in commercial operation, the functions for
which it was designed as specified in the Facility Plan and to be utilized
commercially for the Permitted Use.
(b) The Lessee shall, and it shall require and cause any and all
employees, contractors, subcontractors, agents, representatives, affiliates,
consultants and occupants at the Lessee's own cost and expense to, promptly
replace, or cause to be replaced, any part of the Facility which may from time
to time be incorporated or installed in or attached to the Facility, and which
may from time to time become worn out, lost, stolen, destroyed, seized,
confiscated, damaged beyond repair, obsolete or permanently rendered unfit for
use for any reason whatsoever. All replacement parts shall be free and clear of
all Liens other than Permitted Liens, and, except for temporary accessions and
replacement parts utilized pending installation of permanent replacement parts,
shall be of a type customarily used in the industry at such time for such
purpose, shall be in as good operating condition as, and shall have a utility
and useful life 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) and shall have a value 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).
(c) Notwithstanding the provisions of Section 8 and the foregoing
provisions of this Section 7, the Lessee shall not (except as may be required by
any Governmental Requirement) remove, replace or alter any part of the Facility
or affix or place any accessory, equipment, part or device on any part of the
Facility, if such removal, replacement, alteration or addition would impair the
originally intended function or use of the Facility so as to materially reduce
the value of the Facility taken as a whole, or materially decrease the estimated
useful life of the Facility.
(d) The Lessor shall not be required in any way to maintain, repair
or rebuild the Facility or any part thereof and the Lessee waives any right it
may now or hereafter have to make any repairs at the expense of the Lessor
pursuant to any Governmental Requirement at any time in effect or otherwise.
(e) The Lessee shall, and it shall require and cause any and all
employees, contractors, subcontractors, agents,
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representatives, affiliates, consultants and occupants at the Lessee's own cost
and expense to: (i) comply with all applicable Environmental Requirements with
regard to the Facility and all parts thereof; and (ii) use, employ, process,
emit, generate, store, handle, transport, dispose of and/or arrange for the
disposal of, any and all Hazardous Materials in, on or, directly or indirectly,
related to or in connection with the Facility or any part thereof in a manner
consistent with prudent industry practice and in compliance with any applicable
Environmental Requirement. The Lessor and the Lessee hereby acknowledge and
agree that the Lessee's obligations hereunder with respect to Environmental
Requirements are intended to bind the Lessee with respect to matters and
conditions involving the Facility or any part thereof.
Section 8. Modifications.
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(a) The Lessee shall make no modifications, alterations, renovations
or improvements to the Facility without the prior written consent of the Lessor,
provided however, that subject to the terms of Section 8(b), the Lessee shall
have the right to make modifications, alterations, renovations or improvements
to the Facility so long as such modifications, alterations, renovations or
improvements do not (except as may be required by any Governmental Requirement)
(i) materially reduce the value of the Facility as a whole; (ii) materially and
adversely affect the capacity and performance of the Facility on a continuing
basis in commercial operation of the function for which the Facility was
designed as specified in the Facility Plan; (iii) materially deviate from the
Facility Plan; or (iv) materially and adversely affect the estimated useful life
of the Facility. Within 10 Business Days of the end of each calendar quarter,
an Authorized Officer of the Lessee shall deliver to the Lessor a schedule
certifying to the Lessor's satisfaction: (x) the nature of the repairs,
replacements, modifications, alterations, renovations or improvements to the
Facility made during such quarter having a cost of at least $10,000.00 at the
time made, and (y) that the Facility continues to have, in all material
respects, the capacity and functional ability to perform on a continuing basis
(subject to normal interruption in the ordinary course of business for
maintenance, inspection, service, repair and testing) and in commercial
operation, the functions for which it was designed as specified in the Facility
Plan or, if not, specifying the reason for any such deficiency, including,
without limitation, the occurrence and nature of any Loss Event or Casualty
Occurrence with respect to the Facility.
(b) If the Lessee determines that any part of the Facility is no
longer necessary for the performance of the Facility on a continuing basis in
commercial operation of the function for which the Facility was designed as
specified in the Facility Plan, then the Lessee (except when such action or
removal may be required by any applicable Governmental Requirement, in which
event, the Lessee shall promptly give the Lessor notice of such action or
removal) shall give the Lessor at least 30 days' notice prior to taking any
action as the result of such determination and shall not remove any such part
unless and until the Lessor has determined
10
that (i) such part is no longer necessary for the performance of the Facility on
a continuing basis in commercial operation of the function for which the
Facility was designed in all material respects as specified in the Facility
Plan, (ii) removal of such part does not materially reduce the value of the
Facility as a whole, and (iii) removal of such part does not materially decrease
the estimated useful life of the Facility. This Section 8(b) shall not apply to
worn out or obsolete Property or damaged Property (to the extent such damage
does not constitute a Casualty Occurrence or Loss Event) removed and replaced by
the Lessee in accordance with Section 7(b).
Section 9. Further Assurances. The Lessee, at its expense, shall
------------------
execute, acknowledge and deliver from time to time such further counterparts of
this Lease or a memorandum of this Lease acceptable to the Lessor or such
affidavits, certificates, certificates of title, bills of sale, financing and
continuation statements, consents and other instruments as may be required by
applicable law or reasonably requested by the Lessor in order to evidence the
Lessor's title to the Facility and the Lessor's interests in this Lease, and
shall, at the Lessee's expense, cause such documents to be recorded, filed or
registered in such places as the Lessor may request and to be re-recorded,
refiled or re-registered in such places as may be required by applicable law or
at such times as may be required by applicable law in order to maintain and
continue in effect the recordation, filing or registration thereof. The Lessor
shall not grant or create any Lien on the Facility to any Person except
Permitted Liens, Liens in favor of the Lessor (for itself and in trust for the
Lease Participants) and Liens pursuant to this Lease, the Security Instruments
and the other Operative Documents.
Section 10. Compliance with Governmental Requirements and Insurance
-------------------------------------------------------
Requirements: Related Contracts. The Lessee, at its expense, will comply with
-------------------------------
all Governmental Requirements applicable to the Facility or any part thereof or
the ownership, construction, operation, mortgaging, occupancy, possession, use,
non-use or condition of the Facility or any part thereof, all Insurance
Requirements, and all instruments, contracts or agreements affecting title to
ownership of the Facility or any part thereof. In addition, the Lessee, so long
as no Event of Default has occurred and is continuing, is hereby authorized by
the Lessor to, and shall, fully and promptly keep, observe, perform and satisfy
on behalf of the Lessor any and all obligations, conditions, covenants and
restrictions of or on the Lessor or the Lessee under any and all Related
Contracts so that there will be no default thereunder and so that the other
parties thereunder shall be, and remain at all times, obliged to perform their
obligations thereunder, and the Lessee, to the extent within its control, shall
not permit to exist any condition, event or fact that could allow or serve as a
basis or justification for any such Person to avoid such performance.
Section 11. Condition and Use of Facility; Quiet Enjoyment.
----------------------------------------------
11
(a) THE FACILITY IS LEASED AND THE LESSEE ACCEPTS AND TAKES POSSESSION
OF THE FACILITY AS IS, WHERE IS, AND WITH ALL FAULTS AND IN THE CONDITION
THEREOF AND SUBJECT TO THE RIGHTS OF ANY PARTIES IN POSSESSION THEREOF, THE
STATE OF THE TITLE THERETO, THE RIGHTS OF OWNERSHIP THEREIN AND SUBJECT TO ALL
GOVERNMENTAL REQUIREMENTS NOW IN EFFECT OR HEREAFTER ADOPTED, IN EACH CASE AS IN
EXISTENCE WHEN THE SAME FIRST BECOMES SUBJECT TO THIS LEASE, WITHOUT
REPRESENTATIONS AND WARRANTIES OF ANY KIND AS TO TITLE BY THE LESSOR, ANY LEASE
PARTICIPANT OR ANY PERSON ACTING ON BEHALF OF ANY OF THEM. THE LESSEE
ACKNOWLEDGES AND AGREES THAT THE FACILITY HAS NOT BEEN SELECTED BY THE LESSOR OR
ANY LEASE PARTICIPANT, THAT NONE OF THE LESSOR OR ANY LEASE PARTICIPANT HAS
SUPPLIED ANY SPECIFICATIONS WITH RESPECT TO THE FACILITY AND THAT NONE OF THE
LESSOR OR ANY LEASE PARTICIPANT (I) IS A VENDOR OF, OR MERCHANT OR SUPPLIER WITH
RESPECT TO, ANY OF THE PROPERTY COMPRISING THE FACILITY OR ANY PROPERTY OF SUCH
KIND, (II) HAS MADE ANY RECOMMENDATION, GIVEN ANY ADVICE OR TAKEN ANY OTHER
ACTION WITH RESPECT TO THE CHOICE OF ANY MANUFACTURER, SUPPLIER OR TRANSPORTER
OF, OR ANY VENDOR OF OR OTHER CONTRACTOR, INCLUDING, WITHOUT LIMITATION, WITH
RESPECT TO PROPERTY COMPRISING THE FACILITY, (III) HAS AT ANY TIME HAD PHYSICAL
POSSESSION OF ANY SUCH PROPERTY, (IV) HAS MADE OR IS MAKING ANY WARRANTY,
EXPRESS OR IMPLIED, RELATING TO THE FACILITY, INCLUDING WITHOUT LIMITATION, WITH
RESPECT TO TITLE, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR
OTHERWISE, THE DESIGN, CONDITION, QUALITY OF MATERIAL OR WORKMANSHIP, CONFORMITY
TO SPECIFICATIONS, FREEDOM FROM PATENT OR TRADEMARK INFRINGEMENT, ABSENCE OF ANY
LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, WHETHER ARISING PURSUANT
TO THE UCC OR ANY OTHER PRESENT OR FUTURE LAW OR OTHERWISE, OR COMPLIANCE WITH
APPLICABLE PERMITS OR OTHER GOVERNMENTAL REQUIREMENTS, OR (V) SHALL BE LIABLE
FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING LIABILITY IN TORT, STRICT OR
OTHERWISE). IN THE EVENT OF ANY DEFECT OR DEFICIENCY OF ANY NATURE IN THE
FACILITY OR ANY PROPERTY OR OTHER ITEM CONSTITUTING A PART THEREOF, WHETHER
PATENT OR LATENT, NONE OF THE LESSOR OR ANY LEASE PARTICIPANT SHALL HAVE ANY
RESPONSIBILITY OR LIABILITY WITH RESPECT THERETO. THE PROVISIONS OF THIS
SECTION 11 HAVE BEEN NEGOTIATED AND ARE INTENDED TO BE A COMPLETE EXCLUSION AND
NEGATION OF ANY AND ALL WARRANTIES, EXPRESS OR IMPLIED, BY THE LESSOR AND THE
LEASE PARTICIPANTS WITH RESPECT TO THE FACILITY OR ANY PROPERTY OR OTHER ITEM
CONSTITUTING A PART THEREOF, WHETHER ARISING PURSUANT TO THE UCC OR ANY OTHER
LAW NOW OR HEREAFTER IN EFFECT.
(b) The Lessor hereby assigns to the Lessee, until the occurrence of a
Cancellation Event or Termination Event hereunder, the benefits in respect of
any Vendor's warranties or undertakings, express or implied, relating to the
Facility (including any labor, equipment or parts supplied therewith), and, to
the extent assignment of the same is prohibited or precludes enforcement of any
such warranty or undertaking, the Lessor hereby subrogates the Lessee to its
rights in respect thereof. The Lessor hereby authorizes the Lessee, at the
Lessee's expense, to assert any and all claims and to prosecute any and all
suits, actions and proceedings, in its own name or in the name of the Lessor, in
respect of any such warranty or undertaking and, except during the continuance
of an Event of Default, or after the occurrence of a Cancellation Event or
Termination Event hereunder, to retain the proceeds received, and after the
termination of this Lease or after the occurrence of a Cancellation Event or
Termination Event, to pay the same in the form received (with any necessary
endorsement) to the Lessor.
12
(c) The Lessee may use the Facility for the Permitted Use provided
that the value of the Facility is not diminished by any such use other than as a
result of normal wear and tear in the ordinary course of business. During the
term of this Lease, the Lessor covenants that unless a Cancellation Event or a
Termination Event has occurred and is continuing and except as may arise under a
Permitted Lien or as may otherwise by contemplated under the Operative
Documents, the Lessor will not, and will not permit any party claiming by,
through or under the Lessor to, interfere with the peaceful and quiet possession
and enjoyment of the Facility by the Lessee; provided, however, that the Lessor
-------- -------
and the Lease Participants and their respective successors, assigns,
representatives and agents may, upon reasonable notice to the Lessee, enter upon
and examine the Facility or any part thereof at reasonable times, subject to the
provisions of Section 19; and provided further, however, that the Lessor is not
---------------- -------
hereby warranting the state or quality of the title to any part of the Facility.
Any failure by the Lessor to comply with the foregoing provisions of this
Section 11(c) shall not give the Lessee any right to cancel or terminate this
Lease, or to xxxxx, reduce or make reduction from or offset against any Rent or
other sum payable under this Lease or any other Operative Document, or to fail
to perform or observe any other covenant, agreement or obligation hereunder or
thereunder. The Lessee will not do, or fail to do, or permit or suffer to exist
any act or thing, which action or thing or failure might impair the value, use
or usefulness of the Facility for the Permitted Use in accordance with the
design of the Facility, ordinary wear and tear excepted.
Section 12. Liens.
-----
(a) The Lessee will not directly or indirectly create, or permit to
be created or to remain, and at the Lessee's expense will discharge within 10
days of notice of the filing or assertion thereof, by bond, deposit or
otherwise, any Lien upon the Lease or the Facility except (i) any Lien being
contested as permitted by and in accordance with Section 13, or (ii) Permitted
Liens. The Lessor agrees that the Lessee shall have during the term of this
Lease the exclusive right (so long as no Default has occurred and is continuing)
to grant, create or suffer to exist Permitted Liens in the ordinary course of
business and in accordance with prudent industry practices, provided that the
fair market value or use of the Facility or the applicable part thereof for the
Permitted Use is not materially lessened thereby. The Lessor agrees to execute
such documents and take all other actions as shall be reasonably necessary, and
otherwise to cooperate with the Lessee in connection with the matters described
above, provided that all reasonable out-of-pocket costs and expenses (including,
without limitation, reasonable attorneys' fees and expenses) incurred by the
Lessor in connection therewith shall be borne by the Lessee, and the Lessor
shall not be required to execute any document that would, in the opinion of the
Lessor, materially and adversely affect the value or use of the Facility or any
part thereof for the Permitted Use or otherwise materially and adversely affect
the transactions contemplated by the Operative Documents or the interests of the
13
Lessor or the Lease Participants in the Facility or under the Operative
Documents or otherwise.
(b) The Lessor will not directly or indirectly create, or permit to
be created or to remain, and will discharge, any Lien of any nature whatsoever
on, in or with respect to, its interest in the Facility arising by or through it
or its actions, except Permitted Liens.
(c) The Lessee will not directly or indirectly sell, transfer, or
otherwise dispose of its interest in the Facility.
Section 13. Permitted Contests. Notwithstanding any other provision
------------------
of this Lease to the contrary, after prior written notice to the Lessor and
provided there is no material risk of sale, forfeiture or loss of the Facility
or any material part thereof, the Lessee may at its expense contest any
Imposition which it is required to pay hereunder, by appropriate proceedings
conducted in good faith and with due diligence, so long as such proceedings are
effective to prevent the collection of such Imposition from the Lessor or the
Lease Participants or against the Facility or any part thereof; provided,
--------
however, that the actions of the Lessee, as authorized by this Section 13, shall
-------
be subject to the express written consent of the Lessor if such actions would
subject the Lessor or any such Lease Participant or the Facility or any part
thereof to any liability or loss not indemnified in full by the Lessee hereunder
or any sanction, criminal or otherwise, for failure to pay any such Imposition.
The Lessee will pay, and save the Lessor and each such Lease Participant
harmless against, all losses, Judgments and reasonable costs, including
attorneys' fees and expenses, in connection with any such contest and will,
promptly after the final determination of such contest, pay and discharge the
amounts which shall be imposed or determined to be payable therein, together
with all penalties, costs and expenses incurred in connection therewith. The
Lessee shall prevent any foreclosure, judicial sale, taking, loss or forfeiture
of the Facility or any part thereof, or any interference with or deductions from
any Rent or any other sum required to be paid by the Lessee hereunder by reason
of such nonpayment or nondischarge of an Imposition. The Lessor shall cooperate
with the Lessee in any contest and shall allow the Lessee to conduct such
contest (in the name of the Lessor, if necessary) at the Lessee's sole cost and
expense; and the Lessee shall indemnify and hold the Lessor harmless from and
against all liabilities, costs and expenses in connection with such contest.
The Lessee shall notify the Lessor of each such proceeding within 10 days after
the commencement thereof, which notice shall describe such proceeding in
reasonable detail.
Section 14. Insurance, etc.
---------------
(a) The Lessee will, at its own expense, purchase and maintain, or
cause to be purchased and maintained, throughout the term of this Lease,
insurance with respect to its business and the Facility in accordance with the
requirements of Schedule 14.
14
(b) The Lessee shall bear all risk of loss (including any Loss Event
or Casualty Occurrence), whether by casualty, theft, taking, confiscation or
otherwise, with respect to the Facility or any part thereof, at all times during
the term of this Lease until possession of the Facility has been accepted by the
Lessor pursuant to Section 17.
(c) So long as no Termination Event or Cancellation Event shall have
occurred, any payments, whether constituting insurance proceeds, amounts paid by
any Governmental Authority or otherwise, received by the Lessee or the Lessor
upon the occurrence of any loss with respect to the Facility or part thereof
(other than a Casualty Occurrence), whether as a result of casualty, theft,
taking or other confiscation, shall be applied in payment for necessary repairs
and replacement to the Facility in accordance with Section 7 or, to the extent
the costs of such repairs and replacement shall have been paid by the Lessee, to
reimburse the Lessee. The Lessee shall be entitled to retain any excess funds
remaining after necessary repairs and replacements have been completed and all
costs therefor paid in full. Upon the occurrence of any Termination Event or
Cancellation Event, the Lessor shall be entitled to receive and retain any such
payments for application to the obligations of the Lessee hereunder.
(d) Upon a Casualty Occurrence, the Lessee shall give prompt notice
thereof to the Lessor and shall within 30 days of the date of such Casualty
Occurrence either (i) offer to purchase the whole of the Facility for the
Purchase Price as provided in Section 15(c) or (ii) provide the Lessor with a
replacement plan acceptable to the Lessor setting forth how the Lessee shall
replace, or cause to be replaced, at the Lessee's own cost and expense, within 6
months after the date of such Casualty Occurrence (but (x) in no event later
than the Scheduled Lease Termination Date, and (ii) if the Casualty Occurrence
occurs during the Construction Term, in no event later than the last day of the
Construction Term), such part of the Facility that is the subject of a Casualty
Occurrence in accordance with this Section 14(d) and Section 7. If the Lessee
chooses the option set forth in clause (ii) of the preceding sentence, within
the later to occur of (x) 60 days after the date of the Casualty Occurrence and
(y) satisfaction of all applicable Governmental Requirements, and obtaining all
authorizations of Governmental Authorities, required therefor (but in no event
later than 90 days after the date of the Casualty Occurrence), the Lessee shall
have commenced repairs or replacements as specified in the replacement plan and
shall thereafter proceed diligently with such repairs and replacements to
completion. After completion of the repairs and replacements, the Lessee shall
demonstrate to the satisfaction of the Lessor that operations, capacity and
production from the Facility have been restored to the standards required for
Completion.
(e) All replacement Property of the Facility (other than temporary
replacement parts and equipment installed pending installation of permanent
replacement Property) installed pursuant to Section 14(d) shall be free and
clear of all Liens except
15
Permitted Liens, and shall be in as good operating condition as, and shall have
a value and utility at least equal to, the Property replaced immediately prior
to the Casualty Occurrence to which such Property was subject. For purposes of
this Lease (including without limitation Section 14(d) and Section 7), the
Funded Amount and book value of the replacement Property shall be deemed to
equal the Funded Amount and book value of the part(s) replaced thereby. All
Property of the Facility at any time removed from this Lease pursuant to Section
14(d) and Section 7 shall remain the property of the Lessor, no matter where
located, until such time as insurance proceeds have been received by the Lessor
at least equal to the book value of such part of the Facility or such part shall
be replaced by suitable items that have been incorporated or installed on or
attached to the Facility and that meet the requirements specified above.
Immediately upon any permanent replacement Property becoming incorporated or
installed on or attached to the Facility as provided above, without further act,
such permanent replacements shall become subject to this Lease and be deemed
part of the Facility for all purposes hereof to the same extent as any other
parts of the Facility. All amounts of insurance proceeds for Property losses and
all other proceeds (whether resulting from damage or destruction or from
condemnation, confiscation or seizure) relating to the Facility shall be
deposited into the Restoration Account and held and released, together with
accrued interest thereon, as hereinafter provided. So long as a Cancellation
Event or Termination Event shall not have occurred, and provided that the Lessor
shall have received a written application of the Lessee accompanied by a
certificate of an Authorized Officer of the Lessee showing in reasonable detail
the nature of any necessary repair, rebuilding and restoration, the actual cash
expenditures necessary for such repair, rebuilding and restoration, the expected
total expenditures required to complete such work and evidence that sufficient
funds are or will be available to complete such work on a timely basis (such
certificate to be acceptable to the Lessor in all respects), then the amounts
available in the Restoration Account, together with accrued interest thereon,
shall be released by the Lessor immediately upon receipt of such certification
or, if applicable, from time to time on the last Business Day of each month
during the period of repair, rebuilding and restoration in payment therefor
against presentation to the Lessor of a certificate executed by an Authorized
Officer of the Lessee to the effect that expenditures have been made, or costs
incurred, by or for the account of the Lessee or are reasonably anticipated to
be made during the immediately following one month period in a specified amount
for the purposes of making repairs, rebuilding and restoration in the amounts
specified, that no Event of Default, Cancellation Event or Termination Event
exists and all conditions precedent herein provided relating to such withdrawal
and payment have been satisfied. Upon the occurrence of any Termination Event or
Cancellation Event, the Lessor shall be entitled to retain all amounts in the
Restoration Account for application to the obligations of the Lessee hereunder.
16
(f) If any Loss Event or Casualty Occurrence shall occur, the Lessee
shall promptly notify the Lessor of such event in writing.
Section 15. Termination; Cancellation; Purchase Option.
------------------------------------------
(a) (i) The termination of this Lease (A) in accordance with Section
2(b) (whether upon the scheduled expiration hereof or by the refusal or
deemed refusal to agree to extend the Maturity Date pursuant to Section
2.09 of the Investment Agreement) or (B) as a result of a Non-Completion
Event, shall be a "Termination Event," the effect of which shall be to
-----------------
cause this Lease to terminate on the applicable Lease Termination Date (in
the event any Additional Facility or Additional Facilities have been added,
this Section 15 shall apply to all Facilities, except that if the
Termination Event is as a result of a Non-Completion Event with respect
only to one Facility, this Lease shall be terminated only as to such
Facility by reason thereof, and the provisions of this Section 15 and
Section 16 will apply only with respect to such Facility as a result of
such Termination Event).
(ii) If a Termination Event occurs, the Lessee, on the Lease
Termination Date, shall, in accordance with the terms of Section 2(b),
without further notice or demand to the Lessee, either
(A) purchase the Facility from the Lessor for the Purchase Price; or
(B) so long as no Cancellation Event has occurred:
(1) pay to the Lessor the Final Rent Payment or, if the
Termination Event is a Non-Completion Event, the Completion Costs Payment and
provide to the Lessor a satisfactory update of the Environmental Report; and
(2) attempt to sell (until such time as the Lessor shall have
terminated, in accordance with the Agency Agreement, the Lessee's
obligation to so attempt to sell the Facility), subject to the Lessor's
prior written approval, the Facility, as agent for the Lessor, without
recourse or warranty by the Lessor, for a net cash purchase price not less
than, and remit to the Lessor the net cash sales proceeds equal to, the
Termination Value less any amount paid pursuant to Section 15(a)(ii)(B)(1).
The Lessor shall also have the right (but not the obligation) to sell the
Facility and/or solicit bids, each in its sole and absolute discretion.
(b) (i) Each of the following events shall be a "Cancellation
------------
Event", the effect of which shall be to cause this Lease to be terminated
-----
in accordance with the following provisions on the "Cancellation Date"
-----------------
specified (in the event any Additional Facility or Additional Facilities
have been
17
added, this Section 15 shall apply to all Facilities, except that if the
Cancellation Event is as a result of a Loss Event or Casualty Occurrence
with respect only to one Facility, this Lease shall be terminated only as
to such Facility by reason thereof, and the provisions of this Section 15
and Section 16 will apply only with respect to such Facility as a result of
such Loss Event or Casualty Occurrence):
(A) the occurrence of (1) an Event of Default (other than an Event of
Default under Section 17(a)(iv) hereof or Section 9.01(h) or (i) of the
Investment Agreement) and the delivery by the Lessor to the Lessee of a
notice stating that the Lessor (at the direction of the Majority Funding
Parties) elects to terminate this Lease by reason of the existence of such
Event of Default, in which case the Cancellation Date will be the 5th
Business Day after the date of delivery of said notice to the Lessee, or
(2) an Event of Default under Section 17(a)(iv) hereof or Section 9.01(h)
or (i) of the Investment Agreement in which case the Cancellation Date
shall occur immediately upon the occurrence of such Event of Default; or
(B) the occurrence of a Loss Event, in which case the Cancellation
Date shall be the 5th Business Day after such event occurs; or
(C) the occurrence of a Casualty Occurrence in respect of the Facility
and the failure of the Lessee to purchase the Facility or to replace or
repair the Facility or such part thereof in accordance with, and within the
time required by, Section 14(d), including, without limitation, subsections
(i) and (ii) thereof, and the delivery by the Lessor (acting at the
direction of the Majority Funding Parties) to the Lessee of a notice after
the expiration of such time stating that the Lessor elects to terminate
this Lease by reason of the existence of such Casualty Occurrence, in which
case the Cancellation Date shall be the 5th Business Day after the date of
delivery of said notice; or
(D) the occurrence of Change of Control and the delivery by the Lessor
(acting at the direction of the Majority Funding Parties) to the Lessee of
a notice stating that the Lessor elects to terminate this Lease by reason
of the occurrence of such Change of Control, in which case the Cancellation
Date will be the 5th Business Day after the date of delivery of said notice
to the Lessee.
(ii) If a Cancellation Event occurs, the Lessee, on the
Cancellation Date, shall, without further notice or demand to the Lessee,
either (A) purchase the Facility from the Lessor for the Purchase Price, or
(B) pay to Lessor the Termination Value.
(c) The Lessee may, from time to time and at any time following the
3rd anniversary of the Lease Commencement Date (or
18
prior thereto, under the circumstances described in the last sentence of Section
25), deliver to the Lessor notice of its intent to terminate this Lease, in
which case the Lessee shall purchase the Facility from the Lessor for the
Purchase Price on any Rent Payment Date that is not less than 30 nor more than
60 days after such notice (the "Option Date")(in the event any Additional
-----------
Facility or Additional Facilities have been added, the foregoing election may be
exercised with respect to any one, or more, or all of the Facilities, as elected
by the Lessee, in which event this Section 15 and Section 16 shall apply only to
the Facility or Facilities as to which such election has been made). Upon
payment in full of the Purchase Price, this Lease shall terminate.
(d) This Lease shall cease and terminate on the Lease Termination
Date, Cancellation Date or Option Date, as applicable, and payment of all
amounts payable by the Lessee on such date, except with respect to (i)
obligations and liabilities of the Lessee, actual or contingent, which arose
under this Lease, or by reason of events or circumstances occurring or existing,
on or prior to its termination, and which have not been satisfied (which
obligations shall continue until satisfied and which include, but are not
limited to, obligations for Rent and the Termination Value, the Purchase Price
and amounts owing pursuant to Section 16), and (ii) obligations of the Lessee
which by the terms of this Lease expressly survive termination, and (iii) if an
Additional Facility or Additional Facilities have been added and this Lease has
been terminated only as to one or more, but less than all, of the Facilities
pursuant to this Section 15, this Lease shall continue as to the remaining
Facility or Facilities, as the case may be. Promptly after either the Lessee or
the Lessor shall learn of the happening of any Termination Event or Cancellation
Event, such party shall give notice thereof to the other party hereto.
(e) In the event the Lessee elects to purchase the Facility upon the
occurrence of a Termination Event (other than the expiration of this Lease on a
Scheduled Lease Termination Date) or a Cancellation Event, Lessee in its sole
discretion in order to ensure the orderly conveyance of the Facility may
postpone the closing date for such conveyance (whether or not extended, the
"Purchase Closing Date") to a reasonable date within 60 days following the Lease
Termination Date or Cancellation Date, as applicable; provided however, that
notwithstanding any such postponement the Lessee shall nonetheless be required
to deposit on or before the Lease Termination Date or Cancellation Date, as
applicable, the Purchase Price (estimated at the time of the deposit) with the
nationally recognized title insurance company which insured Lessor's leasehold
interest in the Facility (or if such title company is unable or unwilling to
serve in such capacity, a replacement nationally recognized title insurance
company designated by the Lessor) to be held in escrow pending consummation of
the closing on or before the extended Purchase Closing Date. The Lessor shall
notify the Lessee of any such postponement and the proposed extended Purchase
Closing Date in writing on or before the Lease Termination Date or Cancellation
Date, as applicable. Provided that the Lessee deposits the
19
estimated Purchase Price on or before the applicable Lease Termination Date or
Cancellation Date, as appropriate, the Lessee shall be deemed to have been
granted a temporary license by the Lessor entitling the Lessee to retain
possession of the Facility through the Purchase Closing Date provided that the
Lessee complies with all obligations of the Lessee under this Lease as though
this Lease were still in full force and effect (including without limitation,
compliance with permitted use, maintenance and insurance coverage requirements).
In the event of an extension of the Purchase Closing Date as herein
contemplated, the Purchase Price will be calculated as of such extended Purchase
Closing Date. This Section 15(e) shall survive the termination of this Lease.
Section 16. Transfer of Title on Removal of Facility; Expenses of
-----------------------------------------------------
Transfer.
--------
(a) Upon any sale or purchase of the Facility permitted by Section 15,
the Lessor will transfer to the Lessee or the appropriate Third Party all of its
title to and legal and beneficial ownership interest in the Facility (i) free
and clear of any Lien created by, through or under the Lessor other than
Permitted Liens or Liens created at the request of or as a result of the actions
of the Lessee or anyone acting by, through or under Lessee, or a result of the
failure of the Lessee to carry out any of its obligations under this Lease or
the other Operative Documents, and (ii) without recourse, representation or
warranty of any nature whatsoever (except as to the absence of such Liens as
aforesaid).
(b) Whenever the Lessee has the right to purchase or transfer to
itself the Facility pursuant to any provision of this Lease, the Lessee may
cause such purchase to be effected by, or such transfer to be effected to, any
other Person specified by the Lessee, but in no event shall the Lessee be
relieved from any of its obligations hereunder as a result thereof.
(c) Upon any sale or transfer of the Facility pursuant to any
provision of this Lease, the Lessee shall pay the expenses of the Lessor,
including, without limitation, reasonable attorneys' fees and expenses, in
connection with such sale or transfer.
(d) If, on the Lease Termination Date or on the Cancellation Date, as
applicable, the Lessee or any of its Affiliates has not elected to acquire the
Facility, the Lessee shall surrender the Facility to the Lessor free from all
Liens except Permitted Liens (other than those described in clause (ii)(b) of
the definition of Permitted Liens), in the same operating condition (except for
ordinary wear and tear) with the remaining original estimated useful life
contemplated by the Facility Plan intact and having the same capacity and
efficiency as the Facility had on the Lease Commencement Date, and in compliance
in all material respects with all Governmental Requirements and Insurance
Requirements, and free of all Environmental Damages and Environmental
Liabilities. To evidence the foregoing and accomplish the surrender of the
Facility, the Lessee shall provide
20
the following items (x) in the event of a Termination Event under Section
15(a)(i)(A) within 9 months prior to the then current Lease Termination Date,
with final confirmation of the same at least 30 days but not more than 60 days
prior thereto and (y) in the event of a Termination Event under Section
15(a)(i)(B), as soon as practicable but in any event at least 3 Business Days
prior to the Lease Termination Date or Cancellation Date, as applicable:
(i) evidence satisfactory to the Lessor that all Applicable
Permits, Related Contracts, patents, trademarks and copyrights, and all
other rights and services reasonably required to operate the Facility have
been, or on or prior to the Lease Termination Date shall be, transferred to
the Lessor (or the Lessor has been, or on or prior to the Lease Termination
Date or Cancellation Date, as applicable, shall be, given the right to use
each such item) and can be transferred to (or used by) any successor or
assignee of the Lessor without further consent or approval by any Person
(subject only to normal Governmental Requirements);
(ii) conveyancing, assignment, transfer, termination and other
documents that, in the sole discretion of the Lessor and the Lease
Participants, are sufficient to (A) vest in the Lessor (which it holds for
itself and in trust for the Lease Participants) good and marketable title
to the Facility, free and clear of all Liens except Permitted Liens (other
than those described in clause (ii)(b) of the definition of Permitted
Liens) and (B) terminate the rights of the Lessee and all other Persons in
and to the Facility;
(iii) evidence satisfactory to the Lessor that the Facility has been
operated and maintained in accordance with the requirements of the
Operative Documents, all Governmental Requirements, all Applicable Permits
and prudent industry practices;
(iv) evidence satisfactory to the Lessor that the Facility is being
used solely for the Permitted Use and is operating in accordance with the
requirements set forth in the Facility Plan, meets or exceeds the original
design specifications and is capable of operating and being used for the
Permitted Use as set forth in the Facility Plan, and has the remaining
original estimated useful life contemplated by the Facility Plan;
(v) evidence satisfactory to the Lessor, in its sole discretion,
that (A) no default exists under the Agency Agreement, (B) all agreements
and arrangements to provide the services and rights contemplated by the
Agency Agreement are in place, executed by the parties thereto, and are
valid, enforceable and in full force and effect on or before the Lease
Termination Date or Cancellation Date, as applicable and (C) such
agreements and arrangements adequately provide for the services and other
rights contemplated by the Agency Agreement;
21
(vi) a Phase 1 Environmental Assessment; and
(vii) such other documents, instruments, assessments, investigations,
legal opinions, surveys and other items as the Lessor may reasonably
request to evidence to the satisfaction of each of the Lessor and the Lease
Participants (in each case, in their sole discretion) that (A) the Lessor
has all Property, services, Permits, assets and rights necessary to own,
operate and maintain the Facility from and after the Lease Termination Date
or Cancellation Date, as applicable, substantially in the manner as the
Lessee operated it in accordance with the Lease and the other Operative
Documents, and (B) no Default, Loss Event or Casualty Occurrence then
exists.
To the extent the Facility is not in the condition required by this Section
16(d), the Lessee will pay to the Lessor such additional amounts as are
reasonably required to place it in compliance. The Lessee shall also pay
all costs and expenses relating to the surrender and clean-up in connection
with the surrender of the Facility as may be required by Governmental
Requirements or Insurance Requirements or which are otherwise necessary to
prevent or remedy any Environmental Damages or Environmental Liabilities or
to consummate the delivery of possession of the Facility to the Lessor
hereunder.
Section 17. Events of Default and Remedies.
------------------------------
(a) Each of the following acts or occurrences shall constitute an
"Event of Default" hereunder:
----------------
(i) default in the payment of the Purchase Price on the Option Date,
or in the payment of the Purchase Price or in the Termination Value on the
Cancellation Date or the Purchase Closing Date, as applicable, or in the
payment of the Purchase Price or the Final Rent Payment or Completion Costs
Payment, as applicable, on the Lease Termination Date or the Purchase
Closing Date, as applicable; or the default in the payment when due of any
Basic Rent or Interim Special Rent and the continuance of such default for
5 Business Days thereafter; or the default in the payment when due of any
Supplemental Rent, the amount of any Indemnified Risk or any other amount
due hereunder or under any other Operative Document and the continuance of
such default for 30 days thereafter; or
(ii) any representation or warranty made or deemed made by the Lessee
herein or in any other Operative Document or otherwise in writing in
connection with or pursuant to this Lease or any other Operative Document,
shall be false or misleading in any material respect on the date made or
deemed made; or
(iii) an Event of Default under the Investment Agreement;
22
(iv) The Lessee shall fail to observe or perform any covenant or
agreement contained in Sections 12, 14 and 26 of this Lease; or
(iv) The Lessee shall fail to observe or perform any covenant or
agreement contained or incorporated by reference in this Lease (other than
those covered by subsections (i) or (v) above), and such failure shall not
have been cured within 30 days after the earlier to occur of (A) written
notice thereof has been given to the Lessee by the Lessor at the request of
the Majority Funding Parties or (B) the chief financial, chief operating,
chief legal or chief accounting officer of the Lessee otherwise becomes
aware of any such failure; or
(v) Lessee shall abandon the Facility; provided however that for
purposes of this Section 17(a)(vii), the term "abandon" shall not include
the mere failure of Lessee to occupy the Facility so long as Lessee
continues to perform its obligations hereunder and other Operative
Documents including without limitation maintenance of the Facility,
maintenance of required insurance, compliance with Governmental
Requirements and Insurance Requirements and payment of all Rent.
(b) Upon the occurrence and during the continuance of any Event of
Default, as determined by the Lessor, the Lessor (acting at the direction of the
Majority Funding Parties) may do any one or more of the following (without
prejudice to the obligations of the Lessee under Section 15(b)(ii)):
(i) proceed by appropriate judicial proceedings, either at law, in
equity or in bankruptcy, to enforce performance or observance by the Lessee
of the applicable provisions of this Lease, or to recover damages for the
breach of any such provisions, or any other equitable or legal remedy, all
as the Lessor shall deem necessary or advisable; and/or
(ii) by notice to the Lessee, either (x) terminate this Lease in
accordance with Section 15(and in the event an Additional Facility or
Additional Facilities have been added, such termination shall be as to all
Facilities), whereupon the Lessee's interest and all rights of the Lessee
to the use of the Facility shall forthwith terminate subject to the
Lessee's rights under such Section 15 to acquire the Facility on the
Purchase Closing Date as provided herein, but the Lessee shall remain
liable with respect to its obligations and liabilities hereunder; or (y)
terminate the Lessee's right to possession of the Facility or any part
thereof; and/or
(iii) exercise any and all other remedies available under applicable
law or at equity.
(c) After the occurrence and during the continuance of a
Cancellation Event or Termination Event, in the event the Lessor elects not to
terminate this Lease and the Lessee has not exercised
23
its option under Section 15(c), this Lease shall continue in effect and the
Lessor may enforce all of the Lessor's rights and remedies under this Lease,
including, without limitation, the right to recover the Basic Rent, Interim
Special Rent, and Supplemental Rent, and any Completion Costs and all other
yield protection payments and other amounts with respect thereto, as it becomes
due under this Lease or any other Operative Documents. For the purposes hereof,
the following do not constitute a cancellation or termination of this Lease: (i)
acts of maintenance or preservation of the Facility or any part thereof, (ii)
efforts by the Lessor to relet the Facility or any part thereof, including,
without limitation, termination of any sublease of the Facility and removal of
any tenant from the Site, (iii) or the appointment of a receiver upon the
initiative of the Lessor to protect the Lessor's interest under this Lease.
(d) If (i) on the Lease Termination Date, the Facility is not acquired
by the Lessee or its designee by payment of the Purchase Price, or (ii) on the
Cancellation Date or Option Date, the Lessee or its designee has defaulted in
its obligation to acquire the Facility and pay the Purchase Price, or if
applicable, the Termination Value, in accordance with Lessee's election under
Section 15(b)(ii), then the Lessor shall have the immediate right of possession
of the Facility and the right to enter onto the Site and to remove any and all
of the Property comprising the Facility, and the Lessor may thenceforth hold,
possess and enjoy the Facility free from any rights of the Lessee and any Person
claiming by, through or under the Lessee. The Lessor shall be under no
liability by reason of any such repossession or the Facility or entry onto the
Site.
(e) Should the Lessor elect to repossess the Facility or any part
thereof upon cancellation or termination of this Lease or otherwise in the
exercise of the Lessor's remedies, the Lessee shall peaceably quit and surrender
the Facility or any such part thereof to the Lessor and either (i) deliver
possession of the Facility to the Lessor or (ii) allow Lessor or its agents or
assigns to enter onto the Facility and the Site to remove any and all of the
Property comprising the Facility at the expense of the Lessee, and neither the
Lessee nor any Person claiming through or under the Lessee shall thereafter be
entitled to possession or to remain in possession of the Facility or any part
thereof but shall forthwith peaceably quit and surrender the Facility to the
Lessor.
(f) At any time after the repossession of the Facility or any part
thereof, whether or not this Lease shall have been canceled or terminated, the
Lessor may (but shall be under no obligation to) relet the Facility or the
applicable part thereof without notice to the Lessee, for such term or terms and
on such conditions and for such usage as the Lessor in its sole and absolute
discretion may determine. The Lessor may collect and receive any rents payable
by reason of such reletting, and the Lessor shall not be liable for any failure
to relet the Facility or for any failure to collect any rent due upon any such
reletting.
24
(g) The remedies herein provided in case of an Event of Default are in
addition to, and without prejudice to, the Lessee's continuing obligations under
Section 15(b)(ii), and shall not be deemed to be exclusive, but shall be
cumulative and shall be in addition to all other remedies existing at law, in
equity or in bankruptcy. The Lessor may exercise any remedy without waiving its
right to exercise any other remedy hereunder or existing at law, in equity or in
bankruptcy.
(h) No waiver by the Lessor hereunder of any Default or Event of
Default shall constitute a waiver of any other or subsequent Default or Event of
Default. To the extent permitted by applicable law, the Lessee waives any right
it may have at any time to require the Lessor to mitigate the Lessor's damages
upon the occurrence of a Default or Event of Default by taking any action or
exercising any remedy that may be available to the Lessor, the exercise of
remedies hereunder being at the discretion of the Lessor.
Section 18. Change in the Lessee's Name or Structure. The Lessee
----------------------------------------
will not change its name, identity or corporate structure (including, without
limitation, by any merger, consolidation or sale of substantially all of its
assets) without notifying the Lessor of such change in writing at least 60 days
prior to the effective date of such change.
Section 19. Inspection; Right to Enter Premises of the Lessee. The
-------------------------------------------------
Lessee shall permit, and cause each of its Subsidiaries to permit, the Lessor,
any Lease Participant or their respective authorized representatives may (but
without any obligation to do so) (i) enter upon the Facility or any premises of
the Lessee at reasonable times upon reasonable advance notice in order to
inspect the Facility (subject to compliance with applicable safety requirements
of the Lessee and applicable Governmental Requirements) and to examine, audit
and make abstracts from any of their respective books and records and to discuss
the condition, compliance with Governmental Requirements, performance of the
Facility and the respective affairs, finances and accounts of the Lessee and its
Subsidiaries with their respective officers, employees and independent
accountants. The Lessee agrees to coordinate and assist in such visits and
inspections, in each case at such reasonable times and as often as may be
reasonable be desired.
Section 20. Right to Perform the Lessee's Covenants. Subject to
---------------------------------------
Section 13, if the Lessee shall fail to make any payment or perform any act
required to be made or performed by it hereunder, the Lessor, upon notice to or
demand upon the Lessee but without waiving or releasing any obligation or
Default or Event of Default, may (but shall be under no obligation to) at any
time thereafter make such payment or perform such act for the account and at the
expense of the Lessee as, at the Lessor's sole discretion, may be necessary or
appropriate therefor and, upon the occurrence and during the continuance of a
Cancellation Event or Termination Event, may enter upon the Facility for such
purpose and
25
take all such action thereon as, at the Lessor's sole discretion, may be
necessary or appropriate therefor. No such entry shall be deemed an eviction of
the Lessee. All sums so paid by the Lessor and all costs and expenses
(including, without limitation, reasonable attorneys' fees and expenses so
incurred) shall be paid by the Lessee to the Lessor on demand as Supplemental
Rent.
Section 21. Participation by Co-Lessees or Sublessees.
-----------------------------------------
(a) Except as otherwise permitted in this Section 21 or (with respect
to the Lessor) Section 11.06(b)(i) of the Investment Agreement, neither the
Lessor nor the Lessee may assign its rights or obligations under this Lease
without the prior consent of all of the Lease Participants. The Lessor holds
the Lien under this Lease for itself and in trust for the Lease Participants.
The Lessor, acting on behalf of itself and the Lease Participants, shall be
entitled to exercise all of the rights, remedies, powers and privileges herein
conferred upon Lessor (including, without limitation, in any bankruptcy
proceeding), to give or withhold all consents required to be obtained from the
Lessor hereunder, to give all notices on behalf of the Lessor including notices
regarding Rent, Interim Special Rent, the Final Rent Payment or Completion Costs
Payment, as applicable, and Supplemental Rent due hereunder, to receive all
payments to be made to the Lessor hereunder and to approve any sale of the
Facility pursuant to Section 15 to a Person other than the Lessee or any
designee of the Lessee or for a price less than the Termination Value;
provided, however, that nothing herein shall be deemed to be a waiver or
-------- -------
relinquishment of the right of the Lessor to receive Supplemental Rent for its
out of pocket costs and expenses as described in Section 3(d)(i) or to be
indemnified for any matter for which Lessor is entitled to indemnification
hereunder.
(b) The Lessor and the Lessee may from time to time, so long as no
Cancellation Event or Termination Event shall have occurred and be continuing,
enter into documentation amending this Lease and, as necessary, the other
Operative Documents, to evidence the undertaking of a Person (a "Co-Lessee") to
---------
be responsible for all or certain obligations of the Lessee and the attendant
reduction in the obligations of the Lessee hereunder, subject in every case to
(i) the prior written approval of the Lessor and each Lease Participant, each
acting in its sole discretion in approving said Co-Lessee and the documentation
amending this Lease and the Operative Documents, it being understood that any of
the Lessor or the Lease Participants may for any reason whatsoever elect not to
grant such approval, in which case this Lease shall not be amended; (ii) such
documentation shall expressly state that such assignment is subject and
subordinate to the terms of this Lease and the Liens created by the Security
Instruments; and (iii) the Lessee remaining primarily liable for all obligations
of the tenant of the Facility under this Lease. Any assignment made otherwise
than as expressly permitted by this Section 21(b) shall be null and void and of
no force and effect.
26
(c) The Lessee may, from time to time, so long as no Default, Event of
Default, Cancellation Event or Termination Event shall have occurred and be
continuing, enter into a sublease as to the Facility and such other
documentation as may be necessary with one or more Persons (each a "Sublessee").
---------
In any event, any documentation executed by the Lessee in connection with the
subletting of the Facility (i) shall expressly state that such sublease is
subject and subordinate to the terms of this Lease and the Liens created by the
Security Instruments and (ii) shall not provide for a sublease term ending after
the then current Scheduled Lease Termination Date. The Lessee will furnish
promptly to the Lessor copies of all subleases and related documentation entered
into by the Lessee from time to time. No sublease permitted by the terms hereof
will reduce in any respect the obligations of the Lessee hereunder, it being the
intent of the Lessee and the Lessor that the Lessee be and remain directly and
primarily liable as a principal for its obligations hereunder. Any sublease
made otherwise than as expressly permitted by this Section 21(c) shall be null
and void and of no force or effect.
Section 22. Notices. Except as otherwise provided herein, all
-------
notices, requests and other communications provided for hereunder shall be in
writing (including telecopier and other readable communication) and mailed by
certified mail, return receipt requested, telecopied or otherwise transmitted or
delivered, if to the Lessee, at 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx
00000, Attention: Xxxx Xxxxxxxxx, Director of Treasury and Finance, Telecopier:
000-000-0000, Telephone: 000-000-0000; if to the Lessor, at 000 Xxxxxxxxx
Xxxxxx, X.X., Xxxxxxx, Xxxxxxx 00000-0000, Attention: Syndication Services,
Telecopier: 000-000-0000, Telephone: 000-000-0000; or, as to each party, at such
other address as shall be designated by such party in a written notice to the
other parties. All such notices and communications shall, if so mailed,
telecopied or otherwise transmitted, be effective when received, if mailed, or
when the appropriate answer back or other evidence of receipt is given, if
telecopied or otherwise transmitted, respectively. Each such notice, request or
other communication shall be effective (i) if given by telecopier, when such
telecopy is transmitted to the telecopier number specified in this Section and
the confirmation is received, (ii) if given by mail, 72 hours after such
communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid or (iii) if given by any other means, when delivered at
the address specified in this Section; provided that notices to the Lessor under
--------
Sections 3 and 28 shall not be effective until received. A notice received by
the Lessor by telephone shall be effective if the Lessor believes in good faith
that it was given by an authorized representative of the Lessee (as Lessee or as
the Acquisition/Construction Agent) and acts pursuant thereto, notwithstanding
the absence of written confirmation or any contradictory provision thereof.
Section 23. Amendments and Waivers. The provisions of this Lease
----------------------
may from time to time be amended, modified or waived only if such amendment,
modification or waiver is in writing and
27
consented to by the Lessee and the Lessor and, if applicable, in accordance with
Section 22.
Section 24. Severability. Any provision of this Lease which is
------------
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.
Section 25. Federal Income Tax Considerations. It is the
---------------------------------
understanding of the parties that for income tax purposes this transaction will
be treated as a financing and the Lessee will be treated as the owner of the
Facility; and the Lessee and the Lessor agree not to take any action
inconsistent with such treatment, subject to the following sentence.
Notwithstanding anything in this Section to the contrary, the Lessor retains the
right to assert that it is the owner of the Facility subject to this Lease for
income tax purposes in the event that there is a determination (within the
meaning of Section 1313 of the Internal Revenue Code of 1986, as amended, or
with respect to state or local income tax, a comparable determination under
state or local law) that the Lessee is not to be treated as the owner of the
Facility, and in such event the Lessee may purchase the Facility pursuant to the
provisions of Section 15(c).
Section 26. Other Provisions. In order to protect the rights and
----------------
remedies of the Lessor and the Lessee both during the term of this Lease and
following a Default, an Event of Default, a Termination Event or a Cancellation
Event, and for the purposes of Federal, state and local income and taxes, ad
valorem taxes, state and local sales taxes, documentary stamp and intangible
taxes and other taxes relating to or assessable as a result of the execution,
delivery or recording of any of the Operative Documents and for purposes of
Title 11 of the United States Code (or any other applicable Federal, state or
local insolvency, reorganization, moratorium, fraudulent conveyance or similar
law now or hereafter in effect for the relief of debtors), the parties hereto
intend that (a) this Lease be treated as the repayment and security provisions
of a loan by the Lessor to the Lessee in the aggregate amount of the Facility
Cost funded by Lessor Advances, (b) all payments of Rent, the Purchase Price and
the Termination Value be treated as payments of principal, interest and other
amounts owing with respect to such loan, respectively, (c) the Lessee should be
treated as entitled to all benefits of ownership of the Facility or any part
thereof, (d) this Lease be treated as a deed of trust and security agreement or
other similar instrument (this Lease, as so treated, is the "Mortgage") from
--------
Lessee, as grantor, to Xxxxxxxx-Xxxxxxxx Guaranty Title Agency, Inc., trustee
(the "Trustee") for the Lessor (for itself and in trust for the Lease
Participants), as grantee, passing title to], on that part of the Facility
constituting real property and does hereby grant, bargain, sell, convey,
warrant, assign, transfer, remise, hypothecate, pledge, grant a security
interest in, set over and confirm unto the
28
Trustee, the heirs, successors and assigns of the Trustee, in trust, with power
of sale, for the benefit of the Lessor (for itself and in trust for the Lease
Participants), together with, subject to the provisions of Section 3.07.01
hereof, the Lessee's right, title and interest in and to any real property of
any kind or character comprising the Facility and all proceeds therefrom,, to
have and to hold in fee simple forever and the Lessee covenants that the Lessee
is lawfully seized and possessed of the aforesaid real property and has good
right to convey the same, that the same is unencumbered except for the Permitted
Liens and that Lessee does warrant and will forever defend title thereto against
the claims of all persons whomsoever; and (ii) as a security agreement from the
Lessee, as debtor, to the Lessor, as secured party, encumbering the Facility and
all personal property comprising the Facility, and that the Lessee, as debtor,
hereby grants to the Trustee, for the use and benefit of the Lessor (for itself
and in trust for the Lease Participants), as beneficiary, as secured party
(collectively, the "Secured Party") a first and prior Lien on and security
-------------
interest in the equipment, fixtures, and any and all other personal property of
any kind or character comprising the Facility and all proceeds therefrom, in
each case being effective as of the date of this Lease. In such event, the
Trustee shall have all of the rights, powers and remedies of a grantee and a
secured party available under applicable law, including, without limitation,
judicial or nonjudicial foreclosure or power of sale, as and to the extent
available under applicable law, and the amounts secured by the Liens and
security interests shall be the collective amount of the aggregate unpaid Lessor
Advances and unpaid Yield, plus any other amounts owing to the Lessor or the
Lease Participants under the Operative Documents (including, without limitation,
Supplemental Rent, the Final Rent Payment, the Completion Costs Payment, if
applicable, the Make-Whole Adjustment, if applicable, and all indemnification
amounts) (collectively, the "Secured Amount"). The filing of this Lease (or a
memorandum hereof) shall be deemed to constitute the filing of a deed of trust]
and the filing of any financing statement in connection with this Lease shall be
deemed to constitute the filing of a financing statement to perfect the deed of
trust security title and security interests in the Facility as aforesaid to
secure the payment of all amounts due from time to time from the Lessee to the
Lessor under this Lease and the other Operative Documents. If this transaction
is treated as a financing, the obligation arising hereunder shall be with full
recourse to the Lessee and shall not be treated as recourse only to the
Facility. To the fullest extent permitted by applicable law, the Lessor and the
Lessee intend that the Facility (other than the real property constituting the
Site) be and remain at all times personal property regardless of the manner or
extent to which any of the Facility (other than the real property constituting
the Site) may be attached or affixed to any real property. Except as required by
applicable law, the Lessee shall not under any circumstances take any action or
make any filing or recording which would cause the Facility (other than the real
property constituting the Site) to be deemed to be real property or permit any
Person to obtain any interest in the Facility (other than the real property
constituting the Site) as a result of the
29
Facility (other than the real property constituting the Site) being deemed to be
in whole or in part real property.
This Mortgage secures and shall be security for any and all future
advances made by Secured Party to Lessee. Nothing contained herein shall be
deemed an obligation on the part of the Secured Party to make any further
advances.
In order to preserve the security interest Lien provided for herein,
each of the Lessor and the Lessee agrees to abide by the following provisions
with regard to the Facility (for purposes of this Section, hereinafter referred
to as "Collateral"):
----------
(a) Change in Location of Collateral or the Lessee. The Lessee (i)
----------------------------------------------
will notify the Secured Party on or before the date of any change in (A) the
location of the Collateral (B) the location of Lessee's chief executive office
or address, (C) the name of the Lessee and (D) the corporate structure of the
Lessee, and (ii) will, on or before the date of any such change, prepare and
file new or amended financing statements as necessary so that the Secured Party
shall continue to have a first and prior perfected Lien (subject only to
Permitted Liens) in the Collateral after any such change.
(b) Documents; Collateral in Possession of Third Parties. If
----------------------------------------------------
certificates of title or other documents evidencing ownership or possession of
the Collateral are issued or outstanding, the Lessee will cause the interest of
the Secured Party to be properly noted thereon and will, forthwith upon receipt,
deliver same to the Secured Party. If any Collateral is at any time in the
possession or control of any warehouseman, bailee, agent or independent
contractor, the Lessee shall notify such Person of the Secured Party's security
interest in such Collateral. Upon the Secured Party's request, the Lessee shall
instruct any such Person to hold all such Collateral for the Secured Party's
account subject to the Lessee's instructions, or, if an Event of Default shall
have occurred and be continuing, subject to the Secured Party's instructions.
(c) Sale, Disposition or Encumbrance of Collateral. Except for
----------------------------------------------
Permitted Liens, as permitted by any of the Operative Documents or with the
Secured Party's prior written consent, the Lessee will not in any way encumber
any of the Collateral (or permit or suffer any of the Collateral to be
encumbered) or sell, assign, lend, rent, lease or otherwise dispose of or
transfer any of the Collateral to or in favor of any Person other than the
Secured Party.
(d) Proceeds of Collateral. Except as permitted by any of the
----------------------
Operative Documents, the Lessee will deliver to the Secured Party promptly upon
receipt all proceeds delivered to the Lessee from the sale or disposition of any
Collateral. This Section shall not be construed to permit sales or dispositions
of the Collateral except as may be elsewhere expressly permitted by this Lease
or the other Operative Documents.
30
(e) Further Assurances. Upon the request of the Secured Party, the
------------------
Lessee shall (at the Lessee's expense) execute and deliver all such mortgages,
deeds of trust, deeds to secure debts, assignments, certificates, financing
statements or other documents and give further assurances and do all other acts
and things as the Secured Party may reasonably request to perfect the Trustee's
interest in the Collateral, for the benefit of the Secured Party or to protect,
enforce or otherwise effect the Secured Party's rights and remedies hereunder,
all in form and substance satisfactory to the Secured Party.
(f) Collateral Attached to Other Property. In the event that any of
-------------------------------------
the Collateral is removed from the Facility and is to be attached or affixed to
any real property, the Lessee hereby agrees that a financing statement which is
a fixture filing may be filed for record in any appropriate real estate records.
If the Lessee is not the record owner of such real property, it will provide the
Secured Party with any additional security documents or financing statements
necessary for the perfection of the Secured Party's Lien in the Collateral, as
requested by the Secured Party.
(g) Secured Amount. Should the Secured Amount be paid according to
--------------
the tenor and effect thereof when the same becomes due and payable hereunder,
and should Lessee perform all covenants contained in the Operative Documents in
a timely manner, then the Mortgage shall be cancelled and surrendered.
(h) Lease. The Lease will not be amended, supplemented or modified
-----
without the written consent of the Secured Party. All payments under the Lease
shall be made only to such account as specified by the Secured Party.
(i) Mortgage Remedies. If an Event of Default shall have occurred,
-----------------
the Trustee, or the agent or successor of Trustee, at the request of the
Secured Party (acting at the direction of the Majority Funding Parties), shall
sell the part of the Facility constituting real property (the "Real Property")
-------------
or any part of the Real Property at one or more public sales before the main
door of the courthouse in the county in which the Tennessee Premises are
located, to the highest bidder for cash, and in bar of the equity of redemption,
the statutory right of redemption at any time codified in T.C.A. (S) 66-8-101 et
--
seq., or elsewhere, homestead, dower, and all other statutory rights of
----
redemption and any and all other rights and exemptions of every kind, all of
which are hereby waived, in order to pay the Secured Amount, and all expenses of
sale and of all proceedings in connection therewith, including reasonable
attorneys' fees, after advertising the time, place, and terms of sale at least 3
different times in some newspaper published in the county in which the Tennessee
Premises are located, the first of which publications shall be at least 20 days
previous to said sale. At any such public sale, Trustee may execute a Real
Property or any part of the Real Property in fee simple. In the event of any
sale under this Mortgage by virtue of the exercise of the powers herein granted,
or pursuant to any order in any judicial proceeding or otherwise, the Real
Property may be
31
sold in its entirety or in separate parcels and in such manner or order as the
Secured Party in its sole discretion may elect, and if the Secured Party so
elects, the Trustee may sell the personal property covered by this Mortgage at
one or more separate sales in any manner permitted by the Uniform Commercial
Code of the State of Tennessee, and one or more exercises of the powers herein
granted shall not extinguish or exhaust such powers, until the entire Facility
is sold or the Secured Amount is paid in full. If the Secured Amount is now or
hereafter further secured by any chattel mortgages, pledges, contracts of
guaranty, assignments of lease, or other security instruments, the Secured Party
at its option may exhaust the remedies granted under any of said security
instruments either concurrently or independently, and in such order as the
Secured Party may determine. Any sale may be adjourned by the Trustee, or its
agent or successors, and reset at a later day without additional publication,
provided that an announcement to that effect be made at the scheduled place of
sale at the time and on the date the sale is originally set. If any Additional
Facility is added and is located in a state other than the State of Tennessee,
the memorandum of Lease pertaining thereto shall include the relevant state law
mortgage requirements in lieu of those contained in this Section 26, to the
extent they are different.
Section 27. Miscellaneous.
-------------
(a) ENTIRE AGREEMENT. THIS LEASE AND THE OTHER OPERATIVE DOCUMENTS
----------------
EMBODY THE ENTIRE AGREEMENT AND UNDERSTANDING BETWEEN THE LESSEE AND THE LESSOR
AND SUPERSEDE ALL OTHER AGREEMENTS AND UNDERSTANDINGS BETWEEN SUCH PARTIES
RELATING TO THE SUBJECT MATTER HEREOF. THIS WRITTEN LEASE AND THE OTHER
OPERATIVE DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
(b) Interpretation. Captions and section headings appearing herein are
--------------
included solely for convenience of reference and are not intended to affect the
interpretation of any provision of this Agreement.
(c) GOVERNING LAW; SUBMISSION TO JURISDICTION. THIS LEASE AND THE
-----------------------------------------
RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO RELATING TO THE FACILITY SHALL BE
GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK, INCLUDING SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW (OR ANY
SIMILAR SUCCESSOR PROVISION THERETO) BUT EXCLUDING ALL OTHER CONFLICT-OF-LAWS
RULES; EXCEPT THAT, TO THE EXTENT REQUIRED BY THE LAWS OF THE STATE IN WHICH THE
-----------
FACILITY IS LOCATED, THE LAWS OF THE STATE OF IN WHICH THE FACILITY IS LOCATED
SHALL GOVERN (I) THE CREATION AND EXISTENCE OF THIS LEASE, (II) SECTION 26 OF
THIS LEASE, AND (III) THE ENFORCEMENT OF THE RIGHTS OF LESSOR TO REPOSSESS THE
FACILITY FROM LESSEE AFTER THE EARLIER OF THE TERMINATION OF THIS LEASE OR THE
TERMINATION OF LESSEE'S RIGHT TO POSSESSION OF THE FACILITY.
(d) No Third Party Beneficiaries. Nothing in this Lease, express or
----------------------------
implied, shall give to any Person, other than the parties hereto and the Lease
Participants and their respective successors and permitted assigns, any benefit
or any legal or equitable right, remedy or claim under this Lease including,
32
without limitation, under any provision of this Lease regarding the priority or
application of any amounts payable hereunder.
(e) Counterparts. This Lease may be executed in any number of
------------
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.
(f) WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO WAIVES, TO THE
--------------------
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT TO A TRIAL BY JURY IN ANY
ACTION OR PROCEEDING TO ENFORCE OR TO DEFEND ANY RIGHTS UNDER THIS LEASE OR
UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN
THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY
RELATIONSHIP EXISTING IN CONNECTION WITH THIS LEASE, AND AGREES THAT ANY SUCH
ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
(g) Invalidity. In the event that any one or more of the provisions
----------
contained in this Lease shall, for any reason, be held invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of the Lease.
(h) Usury. Notwithstanding anything to the contrary contained in this
-----
Lease or any of the Operative Documents, the amounts which the Lessee is obliged
to pay pursuant to this Lease and the other Operative Documents, and the amounts
which the Lessor and the Lease Participants are entitled to receive pursuant to
this Lease and the other Operative Documents, are subject to the limitations set
forth in Section 11.15 of the Investment Agreement.
(i) Time is of the Essence. Time is of the essence in connection with
----------------------
the payment of Rent and all other amounts payable hereunder and the performance
of the Lessee's other obligations hereunder.
(j) Lessor Recourse. No recourse shall be had against the Lessor or
---------------
its successors and assigns and their directors, officers, shareholders,
employees or agents for any claim based on any failure by the Lessor in the
performance or observance of any of the agreements, covenants or provisions
contained in this Lease or any other Operative Documents; and in the event of
any such failure, recourse shall be had solely against the rights and interests
of the Lessor in the Facility; provided, that the foregoing shall not relieve
--------
any such director, officer or employee of personal liability for his or her
fraud or intentional misconduct.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
33
IN WITNESS WHEREOF, the parties have caused this Lease to be executed by
their respective officers thereunto duly authorized as of the date first above
written.
LESSEE:
Signed, sealed and delivered U.S. XPRESS ENTERPRISES, INC.,
in the presence of: a Nevada corporation
______________________________ By: ______________________________________
Witness Title:
______________________________ Attest: __________________________________
Witness Title:
[CORPORATE SEAL]
34
LESSOR:
Signed, sealed and delivered WACHOVIA CAPITAL MARKETS, INC.,
in the presence of: a Georgia corporation
______________________________ By: _____________________________________
Witness Title:
______________________________ Attest: _________________________________
Witness Title:
[CORPORATE SEAL]
00
XXXXX XX XXXXXXXXX
XXXXXX XX XXXXXXXX
Personally appeared before me, _____________________, Notary Public,
_______________________ and ______________________, with whom I am personally
acquainted, and who acknowledged that they executed the within instrument for
the purposes therein contained, and who further acknowledged that they are the
__________________ and _________________ of the Lessee, U.S. Xpress Enterprises,
Inc., and are authorized by the Lessee to execute this instrument on behalf of
the Lessee.
WITNESS my hand, at office, this ___ day of March, 1998.
______________________
Notary Public
My Commission Expires: _______
36
STATE OF GEORGIA
COUNTY OF XXXXXX
Personally appeared before me, _____________________, Notary Public,
_______________________ and ______________________, with whom I am personally
acquainted, and who acknowledged that they executed the within instrument for
the purposes therein contained, and who further acknowledged that they are the
__________________ and _________________ of the Lessor, Wachovia Capital
Markets, Inc., and are authorized by the Lessor to execute this instrument on
behalf of the Lessor.
WITNESS my hand, at office, this ___ day of March, 1998.
_______________________
Notary Public
My Commission Expires: _______
37
EXHIBIT A
[Description of Site]
38
SCHEDULE 14
Insurance Requirements
The Lessee will provide, or cause to be provided, insurance in accordance
with the terms of this Schedule, which insurance shall be placed and maintained
with Permitted Insurers.
(a) Insurance Coverages and Limits
At all times subsequent to the Lease Commencement Date, the Lessee shall
provide, or cause to be provided, the following property and liability coverages
with respect to the Facility:
(i) all-risk property coverage, with limits of coverage at least equal
to the replacement cost (which limits shall be not less than $17,000,000
for the Facility), which insurance coverage may, at the Lessee's option, be
included under any "blanket" policy maintained by the Lessee so long as
such "blanket" policy provides for all-risk property coverage with respect
to the Facility and any other Property covered thereby, with limits of
coverage at least equal to the aggregate replacement cost of the Facility
(provided, however, that such insurance, in either case, shall provide for
re placement cost coverage, provided that the insured property is
replaced, and, provided further, that the insurance shall not have the
effect of causing the Lessee or any of its Affiliates to be deemed a co-
insurer), with respect to the Lessee and any Affiliate of the Lessee
providing services with respect to the Facility, or if the Lessee elects to
effect the coverage required by this Paragraph under a "blanket" policy,
the Lessee and its Affiliates insured thereby, such insurance to include,
coverage for (x) floods, windstorms, hurricanes, tornados, earthquakes,
collapse and other perils (including debris removal and cleanup) and such
insurance to cover equipment separated from the Facility, transit of
equipment and consumables to and from the Site, labor claims, in each case
with respect to the Facility, and such insurance to include coverage for
all other risks and occurrences customarily included under all-risk
policies available with respect to Property similar in installation,
location and operation to the Facility (or the Facility and all other
Property insured thereby if all are covered under a "blanket" policy), and
(y) "boiler and machinery" property damage insurance on a comprehensive
basis with respect to damage to the machinery, plants, equipment or similar
apparatus (including production machinery) included in the Facility (or the
Facility and all other Property insured thereby if all are covered under a
"blanket" policy), from risks and in amounts normally insured against under
machinery policies.
(ii)
39
(1) statutory workers' compensation and occupational disease
insurance in accordance with applicable state and federal law, and
employer's liability insurance with unlimited primary and excess
coverage;
(2) commercial general liability insurance covering operations of
the Lessee, contractual liability coverage, contingent liability
coverage arising out of the operations of the Facility, cross-
liabilities coverage, sudden and accidental seepage and pollution
coverage, and other coverage for hazards customarily insured with
respect to Property similar in construction, location, occupancy and
operation to the Facility, with limits complying with the underlying
requirements of the excess liability policy described in Paragraph
(a)(ii)(3);
(3) excess commercial liability insurance in excess of the
liability policies described in Paragraphs (a)(ii)(1) and (2) to bring
to limits of not less than $2,000,000 for each occurrence and in the
aggregate per year with respect to the Lessee and its Affiliates.
(iii) The policy or policies providing the coverage required by
paragraphs (a)(i) and (a)(ii)(2) and (a)(ii)(3) may include deductible
amounts for the account of the Lessee or its Affiliates, as the case may
be, not to exceed $3,000,000 in the aggregate for all such coverages.
(b) Insurance Endorsements - Any insurance carried in accordance herewith
shall, except as hereinafter permitted, provide or be endorsed to provide that:
(i) the Lessor, as its interests may appear, shall be included as an
additional insured or named as loss payee but only with respects coverages
required by Paragraphs (a)(i), with the understanding that any obligation
imposed upon the insured (including, without limitation, the liability to
pay premiums) under any policy required by this Schedule shall be the
obligation of the Lessee and its Affiliates) and not that of the Lessor;
(ii) except with respect to the coverage required by Paragraphs (a)(i)
and (a)(ii), there shall be a cross-liability and severability of interest
endorsement providing that to the extent the policy is written to cover
more than one insured, all terms, conditions, insuring agreements and
endorsements, with the exception of limits of liability and deductibles
shall operate in the same manner as if there were a separate policy
covering each insured;
(iii) the insurer thereunder waives all rights of subrogation against
the Lessor;
40
(iv) such insurance shall be primary without right of contribution of
any other insurance carried by or on behalf of the Lessor with respect to
its interests in the Facility; and
(v) if such insurance is canceled for any reason whatsoever
(including, without limitation, nonpayment of premium) or any material
change is made in the coverage that affects the interests of the Lessor,
such cancellation or change shall not be effective as to the Lessor for 10
days for nonpayment of premiums and otherwise for 45 days, in both cases
after receipt by the Lessor (at the address provided pursuant to Section 22
of the Lease) of written notice sent by certified mail from such insurer of
such cancellation or change.
(c) Adjustment of Property Losses - After the occurrence and during the
continuation of a Cancellation Event or Termination Event, the loss, if any,
under any property insurance covering the Facility required to be carried by
this Schedule shall be adjusted with the insurance companies or otherwise
collected, including, without limitation, the filing of appropriate proceedings,
by the Lessee in consultation with the Lessor.
(d) Reinstatement of Limits - The Lessee shall, or shall cause its
insurance broker to, notify promptly the Lessor at any time when the limits of
the excess commercial liability insurance required by Paragraph (a)(ii)(3) shall
have been reduced, either by reason of payments of, or the establishment of
reserves for the ultimate payment of, claims which have been asserted during the
term of such insurance, by an aggregate amount in excess of $5,000,000. At such
time, the Lessee shall, if so requested by the Lessor, use its best efforts to
reinstate such insurance so as to comply with the requisite limits prescribed
herein.
(e) Upon request, the Lessee will furnish the Lessor evidence of such
insurance relating to the Facility.
(f) Additional Insurance by the Lessor or the Lessee -Nothing in this
Schedule shall prohibit the Lessor or the Lessee, as their respective interests
may appear, from maintaining for their own account, at the expense of the Person
purchasing such insurance, additional insurance on or with respect to the
Facility, or any part thereof, with coverage exceeding that otherwise required
under this Schedule, unless such insurance would conflict with or limit the
insurance otherwise required under this Schedule.
41
