Exhibit 10.2
[EXECUTION COPY]
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TOWN OF BABYLON
INDUSTRIAL DEVELOPMENT AGENCY
AND
TECHNOLOGY FLAVORS & FRAGRANCES, INC.
LEASE AGREEMENT
Dated as of January 1, 2002
$2,200,000
Town of Babylon Industrial Development Agency
Variable Rate Demand Industrial Development Revenue Bonds, Series 2002
(Technology Flavors & Fragrances, Inc. Project) (Federally Taxable)
Affecting that real property described in
the Description of Facility Realty in the appendices to
this Lease Agreement, in County of Suffolk,
Town of Babylon, Amityville, New York which is
also known as Block 2, Lot 15.001 on the
Official Tax Map of Suffolk County
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Record and Return to:
Winston & Xxxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxx, Esq.
File No.: 90053-24
TABLE OF CONTENTS
ARTICLE I Definitions and Representations..................................................................... 3
Section 1.1 Definitions.................................................................................... 3
Section 1.2 Construction................................................................................... 5
Section 1.3 Representations and Warranties by Agency....................................................... 6
Section 1.4 Findings by Agency............................................................................. 6
Section 1.5 Representations and Warranties by Lessee....................................................... 6
ARTICLE II The Project........................................................................................ 9
Section 2.1 The Project.................................................................................... 9
Section 2.2 Completion by Lessee........................................................................... 10
Section 2.3 Issuance of Series 2002 Bonds, Application of Proceeds of Series 2002 Bonds.................... 11
Section 2.4 Title Insurance................................................................................ 11
Section 2.5 Limitation on Sales Tax Exemption.............................................................. 11
ARTICLE III Lease of Facility and Rental Provisions........................................................... 15
Section 3.1 Lease of the Facility.......................................................................... 15
Section 3.2 Duration of Term............................................................................... 15
Section 3.3 Rental Provisions and Rent..................................................................... 16
Section 3.4 Obligation of Lessee Unconditional............................................................. 18
Section 3.5 Grant of Security Interest..................................................................... 18
Section 3.6 Right of Set-Off............................................................................... 18
Section 3.7 Payment of Purchase Price of Tendered Bonds.................................................... 19
Section 3.8 Letters of Credit; Fixed Rate Credit Facility.................................................. 19
ARTICLE IV Maintenance, Taxes, Payments in Lieu of Taxes and Insurance........................................ 22
Section 4.1 Maintenance, Alterations and Improvements...................................................... 22
Section 4.2 Removal of Property of the Facility............................................................ 23
Section 4.3 Payment in Lieu of Real Estate Taxes........................................................... 24
Section 4.4 Taxes, Assessments and Charges................................................................. 29
Section 4.5 Insurance...................................................................................... 29
Section 4.6 Advances by Agency or Bank..................................................................... 32
Section 4.7 Compliance with Law............................................................................ 33
ARTICLE V Damage, Destruction and Condemnation................................................................ 34
Section 5.1 Damage, Destruction and Condemnation........................................................... 34
ARTICLE VI Particular Covenants............................................................................... 37
Section 6.1 Dissolution or Merger of Lessee; Restrictions on Lessee........................................ 37
Section 6.2 Indemnity...................................................................................... 38
Section 6.3 Compensation and Expenses of Trustee, Bond Registrar, Paying Agents, Tender Agent, Remarketing
Agent, Bank, Credit Provider and Agency........................................................ 40
Section 6.4 Retention of Title to Facility; Grant of Easements; Release of Certain Land.................... 41
Section 6.5 Financial Statements; No-Default Certificates.................................................. 42
Section 6.6 Discharge of Liens............................................................................. 43
Section 6.7 Agency's Authority; Covenant of Quiet Enjoyment................................................ 44
Section 6.8 No Warranty of Condition or Suitability........................................................ 44
Section 6.9 Amounts Remaining in Funds..................................................................... 45
Section 6.10 Issuance of Additional Bonds.................................................................. 45
Section 6.11 Employment Information, Opportunities and Guidelines.......................................... 45
Section 6.12 Redemption Under Certain Circumstances; Special Covenants..................................... 47
Section 6.13 Further Assurances............................................................................ 47
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Section 6.14 Recording and Filing............................................................................ 47
Section 6.15 Right to Cure Agency Defaults................................................................... 48
Section 6.16 Reserved........................................................................................ 48
ARTICLE VII Events of Default; Remedies......................................................................... 48
Section 7.1 Events of Default................................................................................ 48
Section 7.2 Remedies on Default.............................................................................. 50
Section 7.3 Reletting of Facility............................................................................ 51
Section 7.4 Remedies Cumulative.............................................................................. 51
Section 7.5 No Additional Waiver Implied by One Waiver....................................................... 52
Section 7.6 Effect on Discontinuance of Proceedings.......................................................... 52
Section 7.7 Agreement to Pay Attorneys' Fees and Expenses.................................................... 52
Section 7.8 Rights of Bank................................................................................... 52
ARTICLE VIII Options............................................................................................ 53
Section 8.1 Options.......................................................................................... 53
Section 8.2 Conveyance on Exercise of Option to Purchase..................................................... 56
Section 8.3 Option to Purchase or Invite Tenders of Bonds.................................................... 56
Section 8.4 Termination of Agreement......................................................................... 56
Section 8.5 Recapture of Agency Benefits..................................................................... 57
ARTICLE IX Miscellaneous........................................................................................ 59
Section 9.1 Indenture; Amendment............................................................................. 59
Section 9.2 Force Majeure.................................................................................... 59
Section 9.3 Assignment or Sublease........................................................................... 59
Section 9.4 Priority of Indenture and Mortgage............................................................... 61
Section 9.5 Benefit of and Enforcement by Trustee and Bank................................................... 61
Section 9.6 Amendments....................................................................................... 61
Section 9.7 Notices.......................................................................................... 61
Section 9.8 Prior Agreements Superseded...................................................................... 62
Section 9.9 Severability..................................................................................... 62
Section 9.10 Inspection of Facility.......................................................................... 62
Section 9.11 Effective Date Counterparts..................................................................... 62
Section 9.12 Binding Effect.................................................................................. 62
Section 9.13 Net Lease....................................................................................... 62
Section 9.14 Law Governing................................................................................... 62
Section 9.15 Investment of Funds............................................................................. 62
Section 9.16 Waiver of Trial by Jury......................................................................... 63
Section 9.17 Reserved........................................................................................ 63
Section 9.18 No Recourse under this Agreement or on Bonds.................................................... 63
Section 9.19 Rights of Bank.................................................................................. 63
Section 9.20 Date of Agreement for Reference Only............................................................ 64
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LEASE AGREEMENT
THIS LEASE AGREEMENT, made and entered into as of January 1, 2002, by
and between TOWN OF BABYLON INDUSTRIAL DEVELOPMENT AGENCY, a corporate
governmental agency constituting a body corporate and politic and a public
benefit corporation of the State of New York, duly organized and existing under
the laws of the State of New York (the "Agency"), having its principal office at
00 Xxxx Xxxxxxx Xxxxxxx, Xxxxxxxxxxx, Xxx Xxxx 00000, party of the first part,
and Technology Flavors & Fragrances, Inc., a corporation organized and existing
under and by virtue of the laws of the State of Delaware, having an office at 00
Xxxxxx Xxxxxx Xxxx, Xxxxxxxxxx, Xxx Xxxx 00000, the ("Lessee") party of the
second part:
WITNESSETH:
WHEREAS, the New York State Industrial Development Agency Act,
constituting Title 1 of Article 18-A of the General Municipal Law, Chapter 24 of
the Consolidated Laws of New York, as amended (the "Enabling Act") authorizes
and provides for the creation of industrial development agencies in the several
counties, cities, villages and towns in the State of New York and empowers such
agencies, among other things, to acquire, construct, reconstruct, lease,
improve, maintain, equip and furnish land, any building or other improvement,
and all real and personal properties, including but not limited to machinery and
equipment deemed necessary in connection therewith, whether or not now in
existence or under construction, which shall be suitable for manufacturing,
warehousing, research, commercial, industrial or civic purposes and which may
include or mean an industrial pollution control facility to the end that such
agencies may be able to promote, develop, encourage, assist and advance the job
opportunities, health, general prosperity and economic welfare of the people of
the State of New York and to improve their prosperity and standard of living;
and
WHEREAS, pursuant to and in accordance with the provisions of the
Enabling Act the Agency was established by Chapter 177 of the 1973 Laws of New
York, as amended (together with the Enabling Act, the "Act") for the benefit of
the Town of Babylon and the inhabitants thereof; and
WHEREAS, the Agency is further authorized by the Act to issue its
special obligation bonds payable solely from and secured by the revenues derived
from the leasing of the land, buildings and other improvements and the machinery
and equipment so acquired; and
WHEREAS, to accomplish the purposes of the Act the Agency has entered
into negotiations with the Lessee in order to assist the Lessee with respect to
the acquisition of a manufacturing facility within the territorial boundaries of
the Town of Babylon (the "Project"), consisting of the acquisition of the
Facility Realty (as defined herein) and the expansion, equipping, renovation and
improvement of an approximately 58,684 square foot manufacturing facility to be
located at 00 Xxxxxx Xxxxxx Xxxx, Xxxxxxxxxx, Xxx Xxxx, Xxxxx 2, Lot 15.001,
within County of Suffolk, and in furtherance of said purpose on August 14, 2001
the Agency adopted a resolution (the "Inducement Resolution") authorizing the
Project, and undertaking to permit the issuance of its revenue bonds to finance
such Project and thereupon to acquire the Facility (as defined herein) from the
Lessee pursuant to a deed (the "Deed") and to lease the Facility back to the
Lessee pursuant to this Lease Agreement; and
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WHEREAS, the Agency has determined that the Project is necessary to
provide employment in, and is beneficial for the economy and prosperity of, the
inhabitants of the Town of Babylon and is reasonably necessary to induce the
Lessee to proceed with the Project; and
WHEREAS, as a result of such negotiations the Lessee has requested the
Agency to issue its Variable Rate Demand Industrial Development Revenue Bonds,
Series 2002 (Technology Flavors & Fragrances, Inc. Project) (Federally Taxable)
(the "Series 2002 Bonds") in an aggregate principal amount of $2,200,000 to
finance a portion of the costs of the Project; and
WHEREAS, the Agency on December 20, 2001 adopted a resolution
authorizing the Project and the issuance of the Series 2002 Bonds to finance a
portion of the costs of the Project (the "Bond Resolution"), the leasing of the
Facility to the Lessee; and
WHEREAS, contemporaneously with the execution of this Lease Agreement,
the Agency and the Trustee (hereinafter defined) have entered into an Indenture
of Trust of even date herewith (the "Indenture") providing for, among other
things, the issuance of the Series 2002 Bonds; and
WHEREAS, to provide funds for a portion of the costs of the Project and
for incidental and related costs and to provide funds to pay the costs and
expenses of the issuance of the Series 2002 Bonds hereinafter mentioned, the
Agency has authorized the issuance of the Series 2002 Bonds pursuant to the Act,
the Bond Resolution and the Indenture; and
WHEREAS, the Lessee initially has entered into a Reimbursement
Agreement of even date herewith (the "Reimbursement Agreement") with Xxxxx Fargo
Credit, Inc. (the "Bank") pursuant to which the Bank has caused its agent, Xxxxx
Fargo Bank, National Association (the "Issuing Agent") to issue an irrevocable,
direct pay letter of credit in favor of the Trustee for the benefit of the
Holders of the Bonds to secure the payment of the principal and Purchase Price
of, and fifty (50) days of accrued interest on, the Series 2002 Bonds at an
assumed interest rate of 10 per centum (10%) per annum; and
WHEREAS, the obligations of the Lessee to the Bank under the
Reimbursement Agreement and the other Security Documents, are to be secured by,
among other things, a fee mortgage on and security interest in the Facility to
be granted by the Agency and the Lessee to the Bank; and
WHEREAS, in order to further secure the payment of the Series 2002
Bonds, the Lessee, as Corporate Guarantor, has entered into the Guaranty
Agreement of even date herewith, by the Lessee in favor of the Trustee and the
Bank, whereunder the Lessee guarantees the payment of the principal and Purchase
Price of, and redemption premium, if any, and interest on, the Series 2002 Bonds
and any payment obligations of the Lessee to the Bank under the Reimbursement
Agreement; and
WHEREAS, the Lessee shall have the right under this Lease Agreement to
provide a substitute letter of credit for the then existing letter of credit
pursuant to a reimbursement agreement with the issuer thereof, in which event
said letter of credit shall be deemed the Letter of Credit and said
reimbursement agreement shall be deemed the Reimbursement Agreement herein;
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NOW, THEREFORE, in consideration of the premises and the respective
representations and agreements hereinafter contained, the parties hereto agree
as follows (provided that in the performance of the agreements of the Agency
herein contained, any obligation it may incur for the payment of money shall not
create a debt of the State of New York or of the Town of Babylon, and neither
the State of New York nor the Town of Babylon shall be liable on any obligation
so incurred, but any such obligation shall be payable solely out of the lease
rentals, revenues and receipts derived from or in connection with the Facility,
including moneys received under this Lease Agreement):
ARTICLE I
Definitions and Representations
Section 1.1 Definitions.
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Terms not otherwise defined herein shall have the same meanings as used
in the Indenture or the Guaranty Agreement hereinbelow defined. The following
terms shall have the following meanings in this Lease Agreement:
Agency shall mean the Town of Babylon Industrial Development Agency, a
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corporate governmental agency constituting a body corporate and politic and a
public benefit corporation of the State, duly organized and existing under the
laws of the State, and any body, board, authority, agency or other governmental
agency or instrumentality which shall hereafter succeed to the powers, duties,
obligations and functions thereof.
Agreement shall mean this Lease Agreement, dated as of January 1, 2002,
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between the Agency and the Lessee, and shall include any and all amendments and
supplements thereto.
Authorized Representative shall mean (i) in the case of the Agency, the
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Chairman, Vice Chairman, Treasurer, Assistant Treasurer, Secretary, Assistant
Secretary, Executive Director, Deputy Executive Director of the Agency or Vice
President for Legal Affairs, or any officer or employee of the Agency authorized
to perform specific acts or to discharge specific duties, and (ii) in the case
of the Lessee, its President, and any other officer of the Lessee so designated
in writing by the President to the Agency and the Trustee.
Bank shall mean Xxxxx Fargo Credit, Inc. and its successors and
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assigns hereafter appointed in the manner provided in the Indenture.
Bonds shall mean the Series 2002 Bonds and any Additional Bonds.
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Default Rate shall have the meaning ascribed thereto in the
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Reimbursement Agreement.
Eligible Materials shall mean construction materials and tangible
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personal property to be used by the Lessee to make capital improvements on the
Facility Realty.
Event of Default shall have the meaning specified in Section 7.1
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hereof.
Facility shall mean (i) the Facility Equipment described in the
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Description of Facility Equipment in Appendix E to the Indenture and (ii) the
Facility Realty described in the
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Description of Facility Realty in Appendix A to the Indenture and in the
Appendices to this Lease Agreement and the Mortgage.
Facility Realty shall mean the land described in the Description of
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Facility Realty in Appendix A to the Indenture and in the Appendices to this
Lease Agreement and the Mortgage, and all rights or interests therein or
appertaining thereto, together with all the Improvements; but excluding,
however, any real property or interest therein released pursuant to Section 6.4
hereof.
Fiscal Year of the Lessee shall mean a year of 365 or 366 days, as the
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case may be, commencing on January 1 and ending on December 31, or such other
year of similar length as to which the Lessee shall have given prior written
notice thereof to the Agency and the Trustee at least ninety (90) days prior to
the commencement thereof.
Guaranty Agreement shall mean the Guaranty Agreement of even date
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herewith from the Lessee, as Corporate Guarantor, to the Trustee and the Bank,
and shall include any and all amendments thereof and supplements thereto.
Improvements shall mean all buildings, structures, foundations, related
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facilities, fixtures and other improvements existing on the date of execution
and delivery of the Agreement or at any other time made, erected or situated on
the Land (including any improvements made as part of the Project pursuant to
Section 2.1 hereof) and all replacements, improvements, extensions,
substitutions, restorations, repairs or additions thereto.
Indenture shall mean the Indenture of Trust, dated as of January 1,
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2002, by and between the Agency and the Trustee, as from time to time amended or
supplemented by Supplemental Indentures in accordance with Article XI of the
Indenture.
Interest Payment Date shall mean (a) during the term of the Initial
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Letter of Credit, (i) with respect to Bonds bearing interest at a Monthly
Interest Rate, the first Thursday of the calendar month, provided such day is a
Business Day, and if not, on the next succeeding Business Day, commencing on
February 7, 2002, (ii) with respect to Bonds bearing interest at a Term Interest
Rate for a Term Interest Rate Period not exceeding 360 days, the first Business
Day of the calendar month after each month in which interest accrued or the
first day after the last day of such Term Interest Rate Period, if earlier, and
(iii) with respect to Bonds bearing interest at a Term Interest Rate for a Term
Interest Rate Period exceeding 360 days, semiannually, on the first calendar day
six months following conversion to semi-annual payment, or the first day after
the last day of such Term Interest Rate Period, if earlier; and (b) after the
Expiration or Termination of the Initial Letter of Credit, (i) with respect to
Bonds bearing interest at a Monthly Interest Rate, the first Thursday of the
calendar month after the first Wednesday of such month to which interest
accrued, (ii) with respect to Bonds bearing interest at a Term Interest Rate for
a Term Interest Rate Period equal to 180 days, the first day after the last day
of such Term Interest Rate Period and (iii) with respect to bonds bearing
interest at a Term Interest Rate for a Term Interest Rate Period in excess of
180 days, semiannually, on the first calendar day six months following
conversion to a Fixed Rate, or the first day after the last day of such Term
Interest Rate Period, if earlier.
Land shall mean that certain lot, piece or parcel of land generally
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known by the street address 00 Xxxxxx Xxxxxx Xxxx, Xxxxxxxxxx, Xxx Xxxx, all as
more particularly described in Appendix C - "Description of the Land" hereto,
which is made a part hereof, together with all
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easements, rights and interests now or hereafter appurtenant or beneficial
thereto; but excluding, however, any real property or interest therein released
pursuant to Section 6.4 hereof.
Lessee shall mean Technology Flavors & Fragrances, Inc. and its
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respective permitted successors and assigns pursuant to Sections 6.1 or 9.3
hereof (including any surviving, resulting or transferee corporation or limited
liability company as provided in Section 6.1 hereof).
Mortgage shall mean that Mortgage, Security Agreement, Fixture Filing
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and Assignment of Leases and Rents in the amount of $2,230,137 from the Lessee
and the Agency to the Bank (and its successors and assigns) dated the date
hereof constituting a first mortgage lien on the Facility and securing payment
due to the Bank under the Reimbursement Agreement and shall include any and all
amendments or supplements thereto hereafter made in conformity herewith and with
the Indenture.
Net Proceeds shall mean, when used with respect to any insurance
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proceeds or condemnation award, compensation or damages, the gross amount from
any such proceeds, award, compensation or damages less all expenses (including
attorneys fees and any extraordinary expenses of the Agency, the Trustee or the
Bank) incurred in the collection thereof.
Project shall mean the acquisition, renovation, improvement and
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equipping of the Facility as more particularly described in the Description of
Project in Appendix A attached hereto.
Project Supervisor shall mean Xxxxxx X. Gemmo or any other person
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designated by the Lessee upon written notice to the Agency, the Trustee and the
Bank.
Series 2002 Bonds shall mean the $2,200,000 Variable Rate Demand
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Industrial Development Revenue Bonds, Series 2002 (Technology Flavors &
Fragrances, Inc. Project) (Federally Taxable) of the Agency issued, executed,
authenticated and delivered under the Indenture.
State shall mean the State of New York.
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Town shall mean the Town of Babylon.
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Trustee shall mean The Bank of New York, New York, New York, in its
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capacity as Trustee, and its successors in such capacity and their assigns
hereafter appointed in the manner provided in the Indenture.
Section 1.2 Construction.
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In this Agreement, unless the context otherwise requires:
(a) The terms "hereby", "hereof", "hereto", "herein", "hereunder" and
any similar terms, as used in this Agreement, refer to this Agreement, and the
term "hereafter" shall mean after, and the term "heretofore" shall mean before,
the date of the execution and delivery of this Agreement.
(b) Words of the masculine gender shall mean and include correlative
words of the feminine and neuter genders and words importing the singular number
shall mean and include the plural number and vice versa.
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(c) Words importing persons shall include firms, associations,
partnerships (including limited partnerships), trusts, corporations, limited
liability companies and other legal entities, including public bodies, as well
as natural persons.
(d) Any headings preceding the texts of the several Articles and
Sections of this Agreement, and any table of contents appended to copies hereof,
shall be solely for convenience of reference and shall not constitute a part of
this Agreement, nor shall they affect its meaning, construction or effect.
Section 1.3 Representations and Warranties by Agency.
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The Agency makes the following representations and warranties:
(a) The Agency is a corporate governmental agency constituting a body
corporate and politic and a public benefit corporation duly organized and
existing under the laws of the State, and is authorized and empowered to enter
into the transactions contemplated by this Agreement and to carry out its
obligations hereunder. By proper action of its members, the Agency has duly
authorized the execution and delivery of this Agreement.
(b) In order to finance a portion of the cost of the Project, the
Agency proposes to issue the Series 2002 Bonds in the aggregate principal amount
of $2,200,000. The Series 2002 Bonds will mature, bear interest, be redeemable
and have the other terms and provisions set forth in the Indenture.
Section 1.4 Findings by Agency.
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The Agency, based upon the representations and warranties of the Lessee
contained in this Agreement and the information contained in the application and
other materials heretofore submitted by or on behalf of the Lessee to the
Agency, hereby finds and determines that the Project and the financing thereof
by the Agency pursuant to the Act will promote and is authorized by and will be
in furtherance of the policy of the State as set forth in said Act and in
furtherance of the Agency's policies for the promotion, encouragement and
development of economically sound industry for the purpose of preventing
unemployment and economic deterioration.
Section 1.5 Representations and Warranties by Lessee.
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The Lessee makes the following representations and warranties:
(a) The Lessee is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, and is in good standing
under and duly qualified to transaction business in the State of New York, is
not in violation of any provision of its certificate of incorporation or
by-laws, has corporate power and authority to own its property and assets, to
carry out its business as now being conducted by it and to execute, deliver and
perform this Agreement.
(b) The execution, delivery and performance of this Agreement, each
other Security Document to which it is or shall be a party and the Remarketing
Agreement and the consummation of the transactions herein and therein
contemplated have been duly authorized by
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all requisite corporate or company action, as appropriate, on the part of the
Lessee and will not violate any provision of law, any order of any court or
agency of government, or the organization documents or by-laws, if any, of the
Lessee, or any indenture, agreement applicable to the Lessee or other instrument
to which the Lessee is a party or by which it or any of its property is bound,
or be in conflict with or result in a breach of or constitute (with due notice
and/or lapse of time) a default by the Lessee under any such indenture,
agreement or other instrument or result in the imposition of any lien, charge or
encumbrance of any nature whatsoever other than Permitted Encumbrances.
(c) [Reserved].
(d) There is no action or proceeding pending or, to the Lessee's
knowledge, threatened by or against the Lessee by or before any court or
administrative agency that would adversely affect the ability of the Lessee to
perform its obligations under this Agreement, each other Security Document to
which it shall be a party and the Remarketing Agreement and all authorizations,
consents and approvals of governmental bodies or agencies required to be
obtained by the Lessee as of the date hereof in connection with the execution
and delivery of this Agreement, each other Security Document to which the Lessee
shall be a party and the Remarketing Agreement or in connection with the
performance of the obligations of the Lessee hereunder, under each of the
Security Documents and under the Remarketing Agreement have been obtained.
(e) The assistance of the Agency in the financing of a portion of
the costs of the Project is reasonably necessary to induce the Lessee to proceed
with the Project.
(f) The completion of the Project will not result in the removal of
an industrial, manufacturing, warehousing or commercial plant or facility of the
Lessee or any other occupant or user of the Facility from outside of the Town
(but within the State of New York) to within the Town or in the abandonment of
one or more of such plants or facilities of the Lessee or any other occupant or
user of the Facility outside of the Town.
(g) The total cost of the Project to the Lessee is in excess of
$2,200,000.
(h) No portion of the proceeds of the Series 2002 Bonds will be
applied to acquire, construct, renovate, equip, expand or install any property
which is not subject to this Agreement.
(i) The Fiscal Year of the Lessee is a year of 365 or 366 days, as
the case may be, commencing on January 1 and ending on December 31, or such
other year of similar length as to which the Lessee shall have given prior
written notice thereof to the Agency and the Trustee at least ninety (90) days
prior to the commencement thereof.
(j) No part of the proceeds of the Bonds will be used to finance
inventory or will be used for working capital.
(k) The Project is included within the definition of "project" under
the Act.
(l) This Agreement, the other Security Documents and the Remarketing
Agreement to which the Lessee is a party constitute the legal, valid and binding
obligations of the Lessee enforceable against the Lessee in accordance with
their respective terms, except to the extent that
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such enforceability may be limited by bankruptcy or insolvency or other laws
affecting creditor's rights generally or by general principles of equity.
(m) Neither the Lessee nor any Affiliate of the Lessee is a Prohibited
Person and no portion of the proceeds of the Series 2002 Bonds or any portion of
the Project will be used or occupied by a Prohibited Person.
(n) As of the execution and delivery of this Agreement, there is no
damage to any portion of the Facility from any fire or similar casualty, and to
the best of its knowledge, there exists no proceeding or threat of proceeding in
condemnation or eminent domain with respect to any portion of the Facility.
(o) All consents, approvals or authorizations, if any, of any
governmental authority required on the part of the Lessee in connection with the
execution and delivery of this Agreement, each other Security Document to which
the Lessee is or shall be a party and the Remarketing Agreement or in connection
with the conveyance of the Facility Realty by the Lessee to the Agency
concurrently with the issuance and delivery of the Series 2002 Bonds, have been
duly obtained.
(p) The Lessee is in compliance, in all material respects, and will
continue to so comply, with all Federal, State and local laws or ordinances
(including rules and regulations) relating to zoning, building, safety and
environmental quality applicable to the Project and the ownership, operation and
management of the Facility.
(q) The Project has been designed, and the operation of the Project
will be, in compliance with all applicable Federal, State and local laws or
ordinances (including rules and regulations) relating to zoning, building,
safety and environmental quality; and the Lessee intends to operate the Facility
or cause the Facility to be operated in accordance with this Agreement and as a
qualified "project" in accordance with and as defined under the Act.
(r) The Project does not constitute a project (and the proceeds of the
Bonds and the financial assistance to be provided by the Agency in connection
therewith will therefore not be used for such a Project), in which facilities or
property that are primarily used in making retail sales to customers who
personally visit such facilities comprise more than one-third of the total cost
of the Project. For purposes of this representation, "retail sales" shall mean:
(i) sales by a registered vendor under article twenty-eight of the Tax Law
primarily engaged in the retail sale of tangible personal property, as defined
in subparagraph (i) of paragraph four of subdivision (b) of section eleven
hundred one of the Tax Law; or (ii) sales of a service to such customers.
(s) The Lessee shall not use, or permit any proceeds of the Series
2002 Bonds to be used, for the purpose of preventing the establishment of an
industrial or manufacturing plant or for the purpose of advertising or
promotional materials which depict elected or appointed government officials in
either print or electronic media, nor shall any funds of the Agency be given in
connection with the Project to any group or organization which is attempting to
prevent the establishment of an industrial or manufacturing plant within the
State of New York.
(t) The square footage of the Facility (existing building) is
approximately 34,400 square feet.
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(u) The square footage of the Facility Realty is approximately 58,684
square feet.
ARTICLE II
The Project
Section 2.1 The Project.
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(a) The Lessee conveys or shall cause to be conveyed to the Agency at
the time of the delivery and payment of the Series 2002 Bonds good and
marketable title to the Facility Realty free and clear of all liens, claims,
charges, encumbrances, security interests and servitudes other than Permitted
Encumbrances, all against payment therefor by the Agency from the proceeds of
the Series 2002 Bonds deposited in the Project Fund to the extent permitted in
Section 2.2 hereof and Section 5.02 of the Indenture.
(b) As promptly as practicable after receipt of the proceeds of sale
of the Series 2002 Bonds and out of said proceeds of sale, the Agency will,
subject to the provisions of Section 2.2 hereof, cause the Lessee, on behalf of
the Agency, to acquire the Facility. A portion of the cost of the Project shall
be paid from the Project Fund established under the Indenture or as otherwise
provided in Section 2.2 hereof.
(c) In order to accomplish the purposes of the Agency, and to assure
the effectuation of the Project in conformity with the requirements of the
Lessee, the Lessee shall undertake to proceed with the Project to substantial
completion. Project work shall be supervised by the Project Supervisor.
(d) The Lessee shall pay (i) all of the costs and expenses in
connection with the preparation of any instruments of conveyance, the delivery
of any instruments and documents and their filing and recording, if required,
(ii) all taxes and charges payable in connection with the conveyance and
transfer, or attributable to periods prior to the conveyance and transfer, to
the Agency as set forth in Section 2.1(a) hereof, and (iii) all shipping and
delivery charges and other expenses or claims incurred in connection with the
Project.
(e) The Lessee covenants that it will obtain or cause to be obtained
all necessary approvals from any and all governmental agencies requisite to the
completion of the Project and the operation of the Facility, all of which will
be done in compliance with all Federal, State and local laws, ordinances and
regulations applicable thereto, including, with respect to the conditions and
requirements of all policies of insurance with respect to the Facility and this
Agreement.
(f) The Lessee will extend to the Trustee and the Bank all vendors'
warranties received by the Lessee in connection with the Project, including any
warranties given by contractors, manufacturers or service organizations who
perform work with respect to the Project.
(g) The Lessee shall take such action and institute such proceedings
as shall be necessary to cause and require all contractors and material
suppliers to complete their contracts diligently in accordance with the terms of
said contracts, including, without limitation, the correcting of any defective
work, with all expenses incurred by the Lessee or the Agency in
9
connection with the performance of their obligations under this Section to be
considered a Project Cost. Any amounts recovered with respect to the Facility
Realty or Facility Equipment by way of damages, refunds, adjustments or
otherwise in connection with the foregoing, after deduction of expenses incurred
in such recovery, if recovered prior to the date of completion of the Project,
shall be retained by the Lessee.
(h) Title to all materials, equipment, machinery and other property
intended to be incorporated or installed as part of the Facility and purchased
with proceeds of the Series 2002 Bonds shall vest in the Agency immediately upon
delivery to or installation or incorporation into the Facility Realty or payment
therefor, whichever shall occur first.
Section 2.2 Completion by Lessee.
--------------------
The Lessee unconditionally covenants and agrees that it will acquire
the Facility not later than the date of delivery of the Series 2002 Bonds, and
will complete the Project, or cause the Project to be completed, by January 15,
2005, and such completion will be effected in a first class workmanlike manner
and in accordance with this Agreement and the Indenture and under the
supervision of the Project Supervisor. In the event that moneys in the Project
Fund are not sufficient to pay the costs necessary to complete the Project in
full, the Lessee shall pay that portion of such costs of the Project as may be
in excess of the moneys therefor in said Project Fund and shall not be entitled
to any reimbursement therefor from the Agency, the Trustee, the Bank or the
Holders of any of the Bonds (except from the proceeds of Additional Bonds which
may be issued for that purpose), nor shall the Lessee be entitled to any
diminution of the rents payable or other payments to be made under this
Agreement. The Lessee shall pay all costs of acquisition of the Facility, both
direct and indirect, when due, subject to the right to contest liens set forth
in Section 6.6 hereof.
The date of completion for the Project shall be evidenced to the Agency,
the Bank and the Trustee by a certificate of an Authorized Representative of the
Lessee stating, except for any costs not then due and payable or the liability
for payment of which is being contested or disputed in good faith by the Lessee
(i) the date of completion of the Project, (ii) that all other facilities
necessary in connection with the Project have been completed and all costs and
expenses incurred in connection therewith have been paid, and (iii) that the
Agency has good and marketable title, subject only to Permitted Encumbrances, to
all property constituting part of the Facility (which certification may be
delivered in reliance upon a title insurance continuation update or title
"bringdown") and all property of the Facility is subject to this Agreement and
the lien and security interest of the Mortgage. Notwithstanding the foregoing,
such certificate shall state (x) that it is given without prejudice to any
rights of the Lessee against third parties which exist at the date of such
certificate or which may subsequently come into being, (y) that it is given only
for the purposes of this Section and Section 5.02 of the Indenture, and (z) that
no Person other than the Agency, the Trustee and the Bank may benefit therefrom.
The certificate of completion shall be accompanied by , if required, a temporary
amended certificate of occupancy (if promptly replaced with a permanent amended
certificate of occupancy prior to its expiration) or a permanent certificate of
occupancy (or its functional equivalent), and any and all permissions,
approvals, licenses or consents required of governmental authorities for the
occupancy, operation and use of the Facility for the purposes contemplated by
this Agreement.
10
Section 2.3 Issuance of Series 2002 Bonds, Application of Proceeds of
---------------------------------------------------------
Series 2002 Bonds.
-----------------
(a) Contemporaneously with the execution and delivery of this
Agreement the Agency will sell and deliver the Series 2002 Bonds in the
aggregate principal amount of $2,200,000 under and pursuant to a resolution
adopted by the Agency on December 20, 2001, authorizing the issuance of the
Bonds under and pursuant to the Indenture. The proceeds of sale of the Bonds
shall be deposited in the Project Fund and applied to the payment of Project
Costs in accordance with the provisions of the Indenture. Pending such
application, amounts in the Project Fund may be invested as provided in the
Indenture.
(b) The application of the proceeds of the sale of the Series 2002
Bonds is subject to the "trust fund" provisions of Section 13 of the Lien Law of
the State. The Lessee shall receive all advances of the proceeds of the Series
2002 Bonds hereunder or under the Indenture and will hold the right to receive
the same as a trust fund for the purpose of the cost of the improvement and
shall apply the same first to such payment before using any part thereof for any
other purpose permitted hereunder or under the Indenture.
Section 2.4 Title Insurance.
---------------
Prior to the delivery of the Bonds to the original purchaser(s)
thereof, the Lessee will obtain (a) title insurance in an amount not less than
$2,200,000 insuring the Agency's title to the Facility Realty against loss as a
result of defects in the title of the Agency, (b) mortgagee title insurance in
an amount not less than $2,200,000 insuring the Bank's interests under the
Mortgage as the holder of a mortgage lien on the Facility Realty, subject only
to Permitted Encumbrances, and (c) a current survey of the site of the Facility
Realty certified to the Agency and the Bank. Any proceeds of such title
insurance shall be paid to the Trustee for the benefit of Bondholders and the
Bank for deposit in the Renewal Fund and applied to remedy the defect in title.
If not so capable of being remedied, in the opinion of the Bank (or if no Letter
of Credit exists, the Trustee) or if any amounts remain, the amounts in the
Renewal Fund shall be deposited by the Trustee in the Reimbursement Account of
the Lease Payments Fund to be applied in connection with the redemption of Bonds
pursuant to Section 2.04 of the Indenture (or, if the Letter of Credit is no
longer in effect, and all amounts owed to the Bank under the Reimbursement
Agreement are paid in full, in the Redemption Account of the Bond Fund) for the
redemption of the Series 2002 Bonds pursuant to said section. Any proceeds of
such mortgagee title insurance insuring against loss as a result of defects
affecting the Bank's interests as holder of a mortgage lien on the Facility
Realty shall be paid to the Trustee and deposited by the Trustee in the
Reimbursement Account of the Lease Payments Fund to be applied in connection
with the redemption of Bonds pursuant to section 2.04 of the Indenture (or, if
the Letter of Credit is no longer in effect, and all amounts owed to the Bank
under the Reimbursement Agreement, are paid in full, in the Redemption Account
of the Bond Fund) for the redemption of the Series 2002 Bonds pursuant to said
section.
Section 2.5 Limitation on Sales Tax Exemption.
---------------------------------
(a) Any exemption from Sales Taxes resulting from or occasioned by
Agency's involvement with the Project shall be limited to purchases of Eligible
Materials effected in whole from Bond proceeds or funds provided by or for the
benefit of the Lessee as agent of the Agency, it being the intent of the parties
that no operating expenses of the Lessee and no purchases of
11
equipment or other personal property (other than Eligible Materials) shall be
subject to an exemption from Sales Taxes because of the Agency's involvement
with the Project. The Lessee shall be entitled to an amount of sales and use tax
exemptions pursuant to the Sales Tax Letter until the earlier of (w) the
termination of this Agreement, (x) the completion of the Project as provided in
Section 2.2 hereof, (y) January 15, 2004 or (z) receipt by the Lessee of notice
from the Agency of the termination of the Sales Tax Letter.
(b) The Lessee covenants and agrees that it shall include or cause to
be included the following language (through an attached rider or otherwise) in
and as part of each contract, invoice, xxxx or purchase order entered into by
the Lessee as agent for the Agency in connection with the Project.
"This contract is being entered into by [Technology Flavors &
Fragrances, Inc., a corporation organized under the laws of the
State of Delaware] (the "Agent"), as agent for and on behalf of
the Town of Babylon Industrial Development Agency (the "Agency")
in connection with a certain project of the Agency for the Agent,
consisting in part of the acquisition, construction and equipping
of certain industrial facilities in the business of the
manufacture, warehousing and distribution of flavors and
fragrance products located at 00 Xxxxxx Xxxxxx Xxxx in
Amityville, New York (the "Premises"). The items of personalty
and building materials to be used at the Premises which is the
subject of this [contract, agreement, invoice, xxxx or purchase
order] shall be exempt from the sales and use taxes levied by the
State of New York and any political subdivision thereof if the
acquisition thereof is effected in accordance with the terms and
conditions set forth in the attached Sales Tax Letter of the
Agency; and the Agent hereby represents that this [contract,
agreement, invoice, xxxx or purchase order] is in compliance with
the terms of the Sales Tax Letter. This [purchase order, xxxx of
sale, invoice or contract] is non-recourse to the Agency, and the
Agency shall not be directly, indirectly or contingently liable
or obligated hereunder in any manner or to any extent whatsoever.
By execution or acceptance of this [purchase order, xxxx of sale,
invoice, or contract], the [vendor or contractor] hereby
acknowledges and agrees the terms and conditions set forth in
this paragraph."
If the Lessee shall fail or shall fail to cause to be included, incorporated by
reference or otherwise cause the contract, invoice, xxxx or purchase order to
be, subject to the above applicable language in substantially the above form,
such contract, invoice, xxxx or purchase order shall not be an undertaking on
behalf of the Agency and shall not be entitled to any of the benefits able to be
conferred by the Agency, and the Lessee shall not claim any sales or use tax
benefits or exemptions with respect to any such contract, invoice, xxxx or
purchase order and the Lessee shall return to the Agency any such benefits or
exemptions so taken, together with interest on such amount at the rate of twelve
percent (12%) per annum, from the date of such taking.
12
(c) Concurrently with the execution of this Agreement, the Agency
shall make available to the Lessee the Sales Tax Letter. The Agency, at the sole
cost and expense of the Lessee, and at the Agency's sole discretion shall also
execute such other authorizations, letters and documents (and such amendments to
the Sales Tax Letter) as may reasonably be necessary to permit the Lessee to
obtain the intended benefits hereunder. Subject to the terms of this Agreement,
it is intended that the aggregate scope of the sales and use tax benefits
received by the Lessee pursuant to this Agreement and the Sales Tax Letter shall
be limited as set forth below:
(i) The Sales Tax Letter shall be dated the date of original
issuance of the Series 2002 Bonds and shall be effective for a term
commencing on its date and expiring upon the earliest of (1) the
termination of this Agreement, (2) the completion of the Project as
provided in Section 2.2 hereof, (3) January 15, 2004, or (4) the
termination of the Sales Tax Letter pursuant to Section 7.2 hereof.
(ii) The authorizations set forth in the Sales Tax Letter shall
automatically be suspended after notice to the Lessee that an event of
default shall have occurred under this Agreement until the Lessee shall
pay any amounts due, and perform all of its obligations with respect to
any such default.
(iii) The sales and use tax exemption to be provided pursuant to
the Sales Tax Letter
(A) shall not be available for payment of any costs
other than Eligible Materials for incorporation into or for use at
the Facility,
(B) shall only be utilized for Eligible Materials which
shall be purchased, completed or installed for use only by the
Lessee only at the Facility (and not with any intention to sell,
transfer or otherwise dispose of any such Eligible Materials to a
person as shall not constitute the Lessee), it being the intention
of the Agency and that the sales and use tax exemption shall not
be made available with respect to any item of Eligible Materials
unless such item is used solely by the Lessee at the Facility,
(C) shall only be available if that portion of the costs
of the Eligible Materials for which the sales and use tax
exemption is sought is paid for in whole and/or reimbursed in
whole from the proceeds of the Bonds or funds of the Lessee,
(D) [RESERVED],
(E) shall not be available for any date subsequent to
which the Sales Tax Letter shall have been suspended as provided
in Section 2.5(c)(ii) hereof, provided, however, that in the
event the Lessee shall thereafter cure any defaults under this
Agreement, or the Agency shall thereafter waive such suspension,
as applicable, the sales and use tax exemption shall again
continue from the date of such cure or such waiver,
13
(F) shall not be available for or with respect to any
tangible personal property having a useful life of less than one
year, and shall be available only if purchased by the Lessee as
agent for the Agency for use by the Lessee only at the Facility,
(G) [RESERVED],
(H) shall not be available for any cost of utilities,
cleaning service or supplies,
(I) shall not be available for any item the acquisition
or leasing of which would otherwise be exempt from Sales Taxes
absent involvement by the Agency,
(J) shall not be available subsequent to the termination
of this Agreement, and
(iv) In the event that the Lessee shall utilize the sales or use
tax exemption authorization provided pursuant to the Sales Tax Letter in
violation of the provisions of Section 2.5(c)(iii) hereof, the Lessee
shall promptly deliver notice of same to the Agency, and the Lessee
shall, upon demand by the Agency, pay to or at the direction of the
Agency a return of sales or use tax exemptions in an amount equal to all
such unauthorized sales or use tax exemptions together with interest at
the rate of twelve percent (12%) per annum from the date and with
respect to the dollar amount for which each such unauthorized sales or
use tax exemption was availed of by the Lessee.
(v) The sales and use tax exemption authorizations provided to
the Lessee under the Sales Tax Letter and this Agreement availed of by
the Lessee shall extend both to those costs of Eligible Materials the
paymentfor which shall first be made from the proceeds of the Series
2002 Bonds as well as to those costs of the Eligible Materials the
payment of which is to be reimbursed from the proceeds of the Bonds or
funds of the Lessee.
(vi) Upon request by the Agency of, and reasonable notice to the
Lessee, the Lessee shall make available at reasonable times to the
Agency and the Independent Accountant all such books and records of the
Lessee and require all appropriate officers and employees of the Lessee
to respond to reasonable inquiries by the Agency as shall be necessary
to indicate in reasonable detail those costs to which the Lessee shall
have utilized the Sales Tax Letter and the dates and amounts so
utilized.
(vii) The Lessee shall use its best efforts to obtain covenants
to the Agency from each materialman, supplier, vendor or laborer to whom
the Sales Tax Letter is presented by the Lessee to the effect that such
materialman, supplier, vendor or laborer shall not utilize the Sales
Tax Letter for any purpose other than for the acquisition of Eligible
Materials for incorporation into the Leased Premises.
(d) The Lessee shall observe and comply with the terms and conditions
of the Sales Tax Letter.
14
(e) The Lessee shall annually file a statement with the New York State
Department of Taxation and Finance, in the form of Form ST-340 attached hereto
as Schedule B or any successor form of the State and in a manner and consistent
with such regulations as is or may be prescribed by the Commissioner of the New
York State Department of Taxation and Finance, of the value of all sales and use
tax exemptions claimed by the Lessee or agents of the Lessee in connection with
the Project and the Facility as required by Section 874(8) of the New York State
General Municipal Law (as the same may be amended from time to time), including,
but not limited to, consultants or subcontractors of such agents, under the
authority granted pursuant to this Agreement. The Lessee shall furnish a copy of
such annual statement to the Agency at the time of filing with the Department of
Taxation and Finance. Should the Lessee fail to comply with the foregoing
requirement, the Lessee shall immediately cease to be the agent of the Agency in
connection with the Project (such agency relationship being deemed to be
immediately revoked) without any further action of the parties, the Lessee shall
be deemed to have automatically lost its authority as agent of the Agency to
purchase Eligible Materials on the Agency's behalf, and shall desist immediately
from all such activity, and shall immediately and without demand return to the
Agency the Sales Tax Letter issued to the Lessee by the Agency which is in the
Lessee's possession or in the possession of any agent of the Lessee. Nothing
herein shall be construed as a representation by the Agency that any property
acquired as part of the Project is or shall be exempt from sales taxes or use
taxes under the laws of the State.
(f) Simultaneous with the execution hereof, the Agency shall file form
ST-60 with the form attached hereto as Schedule C.
ARTICLE III
Lease of Facility and Rental Provisions
---------------------------------------
Section 3.1 Lease of the Facility.
---------------------
The Agency hereby leases to the Lessee, and the Lessee hereby leases
from the Agency, the Facility for and during the term herein provided and upon
and subject to the terms and conditions herein set forth. The Lessee shall at
all times during the term of this Agreement occupy, use and operate the Facility
as a manufacturing facility in accordance with the provisions of the Act and for
the general purposes specified in the recitals to this Agreement. The Lessee
shall not occupy, use or operate the Facility or allow the Facility or any part
thereof to be occupied, used or operated for any unlawful purpose or in
violation of any certificate of occupancy affecting the Facility or which may
constitute a nuisance, public or private, or make void or voidable any insurance
then in force with respect thereto.
Section 3.2 Duration of Term.
----------------
The term of this Agreement shall commence on the date of execution and
delivery of this Agreement and shall expire on December 1, 2021, or such earlier
or later date as this Agreement may be terminated as hereinafter provided. The
Agency hereby delivers to the Lessee and the Lessee hereby accepts sole and
exclusive possession of the Facility.
15
Section 3.3 Rental Provisions and Rent.
--------------------------
(a) The Lessee covenants and agrees to make rental payments in
immediately available funds, which the Agency agrees shall be, and directs to
be, paid by the Lessee directly to the Trustee for deposit into the
Reimbursement Account of the Lease Payments Fund, quarterly on the fifteenth
(15th) day of every third month (or the next succeeding Business Day if such day
is not a Business Day) with respect to Mandatory Sinking Fund Installment
payments due on the Bonds, commencing February 15, 2002, in an amount equal to
one-fourth (1/4) of the Mandatory Sinking Fund Installments of the Bonds
Outstanding next becoming due and payable pursuant to the Indenture.
(b) The Lessee covenants and agrees that, during the term of the
Initial Letter of Credit with respect to all Bonds and thereafter with respect
to Bonds bearing interest other than in a Term Interest Rate Period, the Lessee
shall make rental payments in immediately available funds, which the Agency
agrees shall be paid by the Lessee directly to the Trustee for deposit into the
Reimbursement Account of the Lease Payments Fund, on the Business Day next
preceding each Interest Payment Date in an amount equal to the interest becoming
due on such Bonds Outstanding on such Interest Payment Date, after crediting to
such amount investment income earned on the Bond Fund during the preceding month
and amounts, if any, to be transferred to the Lease Payments Fund from the
Capitalized Interest Account of the Project Fund pursuant to Section 5.02(g) of
the Indenture, which investment income or amounts so transferred are available
for the payment of such interest. The Lessee further covenants and agrees that,
after the term of the Initial Letter of Credit with respect to Bonds bearing
interest in a Term Interest Rate Period, the Lessee shall make rental payments
on the first (1st) day of each month (or the next succeeding Business Day if
such day is not a Business Day), which the Agency agrees shall be paid directly
by the Lessee to the Trustee for deposit into the Lease Payments Fund in an
amount equal to one-sixth (1/6) of the interest becoming due on such Bonds
Outstanding at a Term Interest Rate, on the next Interest Payment Date, in each
case after crediting to such amount investment income earned on the Bond Fund
during the preceding month and amounts, if any, to be transferred to the Lease
Payments Fund from the Capitalized Interest Account of the Project Fund pursuant
to Section 5.02(g) of the Indenture, which investment income or amounts so
transferred are available for the payment of such interest. On the same Business
Day as the Bank makes payment in accordance with the terms of the Letter of
Credit, and so long as the Trustee has sufficient funds in the Reimbursement
Account of the Lease Payments Fund, the Trustee shall wire, in same day, federal
funds, the amount of the draw honored with respect to draws honored by the Bank
under the Letter of Credit, at the account number and address designated by the
Bank in writing.
(c) As security for the performance of its rental payment obligations
with respect to the Series 2002 Bonds and not in limitation of its obligations
under Sections 3.3(a) and (b) above, the Lessee shall, simultaneously with the
issuance and delivery of the Series 2002 Bonds, arrange for the delivery of the
Letter of Credit to the Trustee. The Lessee hereby authorizes and directs the
Trustee to draw moneys under the Letter of Credit in accordance with the
provisions of the Indenture to the extent and at the times necessary to pay the
principal and Purchase Price of, Sinking Fund Installments for, and interest on
the Bonds when due (whether at maturity or by redemption or acceleration or
otherwise as provided in the Indenture).
16
(d) Notwithstanding anything in the foregoing to the contrary, and
without prejudicing any claims the Lessee may have, if the amount on deposit and
available in the Bond Fund is not sufficient to pay the principal of, Sinking
Fund Installments for, redemption premium, if any, and interest on the Bonds
when due (whether at maturity or by redemption or acceleration or otherwise as
provided in the Indenture), the Lessee shall forthwith pay the amount of such
deficiency in immediately available funds to the Trustee for deposit in the Bond
Fund and such payment shall constitute rental payments under this Section 3.3.
(e) In the event the Lessee should fail to make or cause to be made
any of the payments required under the foregoing provisions of this Section, the
item or installment not so paid shall continue as an obligation of the Lessee
until the amount not so paid shall have been fully paid.
(f) The Lessee shall have the option to prepay its rental obligation
with respect to the Bonds, in whole or in part at the times and in the manner
provided in Article VIII hereof as and to the extent provided in the Indenture
for redemption of the Bonds.
(g) At its option, to be exercised on or before the forty-fifth (45th)
day next preceding the date any Bonds of a Series are to be redeemed from
mandatory Sinking Fund Installments, the Lessee or an affiliate may deliver to
the Trustee Bonds of such Series which the Lessee has purchased with its own
funds or of which the Lessee or an affiliate is the registered Holder and which
are subject to mandatory Sinking Fund Installment redemption in an aggregate
principal amount not in excess of the principal amount of Bonds to be so
redeemed on such date. Each such Bond so delivered shall be credited by the
Trustee at one hundred percent (100%) of the principal amount thereof against
the obligation of the Agency on such Sinking Fund Installment payment date and
any excess over such Sinking Fund Installment shall be credited on future
Sinking Fund Installments in direct chronological order, and the principal
amount of Bonds to be redeemed by operation of the mandatory Sinking Fund
Installments shall be accordingly reduced.
(h) No further rental payments need be made to the Agency during the
term of this Agreement once the amount of cash and/or Government Obligations
deposited in the Bond Fund (which, so long as a Letter of Credit for the Bonds
is required, must be Priority Amounts) is sufficient to satisfy and discharge
the obligations of the Agency under the Indenture and pay the Bonds as provided
in Section 10.01 of the Indenture.
(i) The Lessee and the Agency acknowledge their intention to minimize
the risk that any payment made to a Bondholder, so long as a Letter of Credit is
in effect, from amounts provided by or on behalf of the Lessee may be determined
by a bankruptcy court to constitute a preference. To this end the parties agree
that, as and to the extent provided in Section 5.06(a) of the Indenture,
payments to Bondholders shall be made only from Priority Amounts, except when
and to the extent no Priority Amounts are available for the purpose, and payment
obligations of the Lessee under Sections 3.3(a), (d), (e), (f) and (h) hereof
are subject in all respects to the use of Priority Amounts for the payment of
the Bonds. Optional prepayments permitted by the Lessee as provided in Article
VIII hereof may not be made except from Priority Amounts.
(j) Pursuant to the Indenture and the Mortgage, the Agency shall xxxxx
x xxxx on and security interest in the Facility prior to the lien of this
Agreement, and pledge and assign to the Trustee on behalf of the Bondholders and
the Bank as security for the Bonds and payment of
17
amounts owed or owing to the Bank under the Reimbursement Agreement all of the
Agency's right, title and interest in this Agreement (except for the Agency's
Reserved Rights), including all rental payments hereunder and thereunder, and in
furtherance of said pledge the Agency will unconditionally assign such rental
payments to the Trustee for deposit in the Lease Payments Fund, in accordance
with the Indenture. The Lessee hereby consents to the above-described lien and
security interest, and pledge and assignment of this Agreement.
(k) The Lessee covenants and agrees that it will comply with the
provisions of the Indenture with respect to the Lessee and that the Trustee
shall have the power, authority, rights and protections provided in the
Indenture. The Lessee further covenants to use its best efforts to cause there
to be obtained for the Agency any documents or opinions required of the Agency
under the Indenture.
Section 3.4 Obligation of Lessee Unconditional.
----------------------------------
The obligation of the Lessee to pay the rent and all other payments
provided for in this Agreement and to maintain the Facility in accordance with
Section 4.1 of this Agreement, shall be absolute and unconditional, irrespective
of any defense (other than payment) or any rights of setoff, recoupment or
counterclaim or deduction and without any rights of suspension, deferment,
diminution or reduction it might otherwise have against the Agency, the Bank (or
its Issuing Agent, if any), the Trustee or the Holder of any Bond and the
obligation of the Lessee shall arise whether or not the Project has been
completed as provided in this Agreement and whether or not the Bank shall honor
its obligations under the Letter of Credit. The Lessee will not suspend or
discontinue any such payment or terminate this Agreement (other than such
termination as is provided for hereunder) for any cause whatsoever, and the
Lessee waives all rights now or hereafter conferred by statute or otherwise to
quit, terminate, cancel or surrender this Agreement or any obligation of the
Lessee under this Agreement or the Facility or any part thereof except as
provided in this Agreement or to any abatement, suspension, deferment,
diminution or reduction in the rentals or other payments hereunder.
Section 3.5 Grant of Security Interest.
--------------------------
In order to secure the payment of rentals and all the obligations of
the Lessee hereunder, the Lessee hereby grants a security interest to the Agency
in all of the Lessee's right, title, if any, and interest in and to the fixtures
constituting part of the Facility Realty.
Lessee's Property shall not be subject to this security interest.
Section 3.6 Right of Set-Off.
----------------
The Lessee hereby grants to the Agency, the Trustee for the equal and
ratable benefit of all Bondholders and the Bank a lien and right of set-off for
all the Lessee's liabilities and obligations under this Agreement and the other
Security Documents to which it is a party against all the deposits, credits and
property of the Lessee and any collateral of the Lessee now or hereinafter in
the possession, under the control of the Agency, the Trustee and the Bank, and
agrees that the same may be applied against such liabilities and obligations at
any time after an Event of Default has occurred under this Agreement provided,
however, the Lessee shall have no right of set-off as to monies due and owing to
the Bank under the Bank Documents (as such term is defined in the Reimbursement
Agreement), and neither the Trustee nor the Agency shall have
18
a right of set off against funds held by the Trustee for the benefit of the Bank
in the Reimbursement Account of the Lease Payments Fund, so long as the Bank (or
its Issuing Agent, if any) is honoring draws under the Letter of Credit in
accordance with its terms.
Section 3.7 Payment of Purchase Price of Tendered Bonds.
-------------------------------------------
(a) The Lessee agrees to cause to be paid to the Trustee, in
accordance with Section 3.7(b) hereof, on each day on which a payment of the
Purchase Price of a Series 2002 Bond becomes due, all amounts which, together
with other moneys held by the Trustee under the Indenture and available
therefor, shall be necessary for the payment of such Purchase Price when due
under the Indenture. Each such payment by the Lessee to the Tender Agent in
accordance with this Section shall be in immediately available funds and paid to
the Tender Agent at its principal office on each Purchase Date.
(b) The Lessee shall provide for the payment of the amount to be paid
pursuant to this Section 3.7 by delivery of the Letter of Credit to the Trustee,
simultaneously with the issuance and delivery of the Series 2002 Bonds. The
Lessee hereby authorizes and directs the Trustee to draw moneys under the Letter
of Credit in accordance with the provisions of the Indenture to the extent
necessary to make such payments when due. The obligation of the Lessee pursuant
to this paragraph shall be deemed satisfied and discharged to the extent of any
corresponding drawing made by the Trustee on the Letter of Credit and applied to
such payment.
(c) The Lessee shall, at its discretion, either (i) directly pay to
the Bank amounts sufficient to reimburse the Bank for any amounts drawn on the
Letter of Credit to pay the Purchase Price of any Series 2002 Bond; provided,
however, the Lessee shall notify the Trustee of any and all amounts paid
directly to the Bank pursuant to this Section 3.7(c)(i); or (ii) pay to the
Trustee for deposit into the Reimbursement Account of the Lease Payments Fund
amounts sufficient to reimburse the Bank by the close of business on a Business
Day for any amounts drawn on the Letter of Credit to pay the Purchase Price of
any Series 2002 Bond; provided, however, that the Lessee shall make such payment
in immediately available funds by no later than 12 noon, New York City time, on
such Business Day; provided, further, that if reimbursement for such amounts is
due and payable under the Reimbursement Agreement, amounts in the Reimbursement
Account of the Lease Payments Fund shall be transferred therefor upon the
written request of the Bank with a simultaneous copy to the Lessee.
(d) The Lessee hereby approves and agrees to be bound by the
provisions of the Indenture regarding the purchase, offer, sale and delivery of
Bonds tendered for purchase thereunder. The Lessee shall have all of the rights
and obligations provided in the Indenture with respect to the Lessee in
connection with such transactions and the appointment of the Tender Agent and
the Remarketing Agent thereunder. The Agency shall have no obligation or
responsibility with respect to the purchase of Bonds or any related
arrangements, except that the Agency at the expense of the Lessee shall
cooperate in the making of any such arrangements.
Section 3.8 Letters of Credit; Fixed Rate Credit Facility.
---------------------------------------------
(a) In order to secure, evidence or be otherwise in furtherance of
the obligations of the Lessee under Sections 3.3 and 3.7 hereof, the Lessee may,
but shall not be obligated to, provide, subject to the provisions of Sections
3.8(b) and (c) hereof, one or more Letters of Credit or Fixed Rate Credit
Facilities, from time to time, and, subject to the provisions of this
19
Section 3.8, may, from time to time, terminate, or cause or allow to be
terminated, any such Letter of Credit. The Lessee hereby authorizes and directs
the Trustee to draw moneys under the Letter of Credit, and to take actions under
the Letter of Credit or any Fixed Rate Credit Facility, in accordance with the
terms thereof and of the Indenture.
(b) Each Letter of Credit shall be the obligation of the Bank (or its
Issuing Agent, if any) to pay to the Trustee, in accordance with the terms
thereof, such amounts as shall be specified therein and available to be drawn
thereunder for the timely payment of the principal of and interest on the Series
2002 Bonds, and the Purchase Price of the Series 2002 Bonds, required to be made
pursuant to, and in accordance with, the provisions of the Indenture. Upon the
initial authentication and delivery of the Series 2002 Bonds, the Lessee shall
deliver to the Trustee the Initial Letter of Credit as security for the payment
of its obligations under Sections 3.3 and 3.7 hereof. The Initial Letter of
Credit shall expire upon the earlier of January 14, 2007 or the date of
occurrence of one of the events specified therein resulting in expiration
thereof.
The Lessee may, at its election, and with the prior written consent of the
Bank, provide for one or more extensions of the Letter of Credit in accordance
with its terms and the terms of the Reimbursement Agreement.
(c) Subject to the provisions of Sections 3.8(d), (e) and (f) below, the
Lessee may terminate or cause or allow a Letter of Credit to be terminated and
to replace a terminating or expiring Letter of Credit with a Substitute Letter
of Credit, only if on or prior to the fiftieth (50th) day prior to the proposed
effective date of such Termination or Expiration:
(i) the Lessee shall deliver to the Agency, the Trustee, the
Remarketing Agent and the Bank a notice which (1) states the effective date
of such termination, and (2) directs the Trustee, after taking such actions
thereunder as are required to be taken to provide moneys due under the
Indenture in respect of the Series 2002 Bonds or the purchase thereof, to
surrender any evidence of the Letter of Credit to be terminated to the
obligor thereon on the effective date of such Termination, and to thereupon
deliver any and all instruments to effect such Termination which may be
reasonably requested by such obligor; and
(ii) the Lessee shall furnish to the Agency, the Trustee and the
Remarketing Agent (1) the Substitute Letter of Credit; (2) if applicable,
an opinion of Nationally Recognized Bond Counsel to the effect that
substitution of such Substitute Letter of Credit (a) is lawful under the
Act and authorized under this Agreement and complies with the terms hereof
and of the Indenture and (b) will not adversely affect the validity of a
Series of Bonds; (3) an opinion of counsel, reasonably satisfactory to the
Trustee, for the issuer of the Substitute Letter of Credit to the effect
that such Substitute Letter of Credit is a legal, valid and binding
obligation of such issuer, enforceable in accordance with its terms; and
(4) an opinion of Nationally Recognized Bond Counsel experienced in
securities law to the effect that such Substitute Letter of Credit does not
require registration under any applicable federal securities laws.
Any such substitute Letter of Credit shall be issued by a bank acceptable
to the Agency and the Remarketing Agent, shall expire no earlier than one year
from the date of its effective date, shall provide that funds can be drawn for
the purposes and in the amounts and at the times
20
provided for in the Indenture and shall otherwise be in form and substance
reasonably acceptable to the Agency and the Trustee.
The Lessee and the Agency agree that the Series 2002 Bonds shall be subject
to mandatory tender for purchase on the Business Day immediately prior to the
substitution of a Substitute Letter of Credit unless prior to such date the
Lessee shall deliver or cause the delivery of a written confirmation from each
Rating Agency to the effect that the substitution of the Substitute Letter of
Credit will not, by itself, result in a reduction or withdrawal of its ratings
then in effect on the Bonds. The Lessee and the Agency further agree that except
during a Term Interest Rate Period ending December 1, 2021, the Series 2002
Bonds shall be subject to mandatory redemption on the fifth (5th) Business Day
immediately preceding the Termination or Expiration of the then existing Letter
of Credit in the event that a Substitute Letter of Credit is not obtained and
delivered to the Trustee at least fifty days prior to such expiration or
termination in the manner herein provided.
(d) For any Term Interest Rate Period ending December 1, 2021, the Lessee
shall maintain a Fixed Rate Credit Facility meeting the requirements of this
Section 3.8 and Section 2.12 of the Indenture, unless (i) the Agency in writing
waives such requirement and (ii) the Remarketing Agent determines that
maintenance of a Fixed Rate Credit Facility is not necessary for the remarketing
of the Bonds upon adjustment to such Term Interest Rate Period.
Each Fixed Rate Credit Facility shall be delivered to the Trustee on or
prior to the 30th day prior to the proposed effective date of any adjustment to
a Term Interest Rate Period ending December 1, 2021, and shall become effective
on or prior to such effective date; provided, however, that in accordance with
Section 2.03(b)(ii) of the Indenture, no such Fixed Rate Credit Facility shall
be required if (i) the Agency in writing waives such requirement and (ii) the
Remarketing Agent determines that maintenance of a Fixed Rate Credit Facility is
not necessary for the remarketing of the Bonds upon adjustment to such a Term
Interest Rate Period. Each Fixed Rate Credit Facility shall be in form and
substance acceptable to the Agency and the Trustee, shall be issued by a bank,
insurance company or corporation acceptable to the Agency and Trustee and shall
be accompanied upon delivery with (i) a written confirmation from each Rating
Agency to the effect that the delivery of the Fixed Rate Credit Facility will
not, by itself, result in a reduction or withdrawal of its Long-Term ratings
then in effect on the Series 2002 Bonds, (ii) an enforceability opinion relating
to such Fixed Rate Credit Facility, satisfactory to the Agency, the Trustee, the
Remarketing Agent and any Rating Agency, (iii) an opinion of Nationally
Recognized Bond Counsel that delivery of such Fixed Rate Credit Facility is
lawful under the Act and is authorized or permitted by this Indenture and (iv)
such other opinions and certificates relating to the Fixed Rate Credit Facility,
the issuer of the Fixed Rate Credit Facility and the Lessee as the Agency, the
Trustee or the Remarketing Agent may reasonably require.
(e) No Termination of a Letter of Credit described in this Section 3.8
shall take place if moneys described in Section 5.06(a)(i), (ii) or (iii) of the
Indenture shall not be available to pay the Purchase Price of the Series 2002
Bonds upon mandatory tender for purchase pursuant to Section 2.06 of the
Indenture.
(f) Anything in this Agreement or the Indenture to the contrary
notwithstanding, (1) if a Substitute Letter of Credit is to be provided, the
Substitute Letter of Credit shall become effective on or before the Termination
date of the prior Letter of Credit, if any, and (2) in the event that the
Termination of a Letter of Credit and the provision of a Substitute Letter of
Credit
21
in lieu thereof shall require a mandatory tender for purchase of Series 2002
Bonds pursuant to Section 2.06 of the Indenture, the Termination of such Letter
of Credit shall not occur until the Trustee shall have made such drawings, if
any, or taken such other actions, if any, thereunder as shall be required under
the Indenture in order to provide sufficient moneys for such mandatory tender
for purchase of Series 2002 Bonds on the date fixed for such mandatory tender
for purchase, and such moneys shall have been provided to the Trustee.
ARTICLE IV
Maintenance, Taxes, Payments in Lieu of Taxes and Insurance
-----------------------------------------------------------
Section 4.1 Maintenance, Alterations and Improvements.
-----------------------------------------
(a) During the term of this Agreement, the Lessee will keep the Facility in
good and safe operating order and condition, ordinary wear and tear excepted,
will occupy, use and operate the Facility in the manner for which it was
designed and intended and contemplated by this Agreement and in careful, prudent
and efficient manner, and will make all replacements, renewals and repairs
thereto (whether ordinary or extraordinary, structural or nonstructural,
foreseen or unforeseen) reasonably necessary to ensure that the security for the
Bonds shall not be impaired. All replacements, renewals and repairs shall be
equal in quality, class and value to the original work and be made and installed
in compliance with the requirements of all governmental bodies. The Agency shall
be under no obligation to replace, service, test, adjust, erect, maintain or
effect replacements, renewals or repairs of the Facility, to effect the
replacement of any inadequate, obsolete, worn-out or unsuitable parts of the
Facility, or to furnish any utilities or services for the Facility and the
Lessee hereby agrees to assume full responsibility therefor.
(b) Other than the initial renovations which are estimated to be completed
by January 15, 2005 and paid from the Lessee's own funds, all as set forth in
the financing application to the Agency, and subject to applicable provisions of
the Reimbursement Agreement, the Lessee shall have the privilege of making such
alterations of or additions to the Facility or any part thereof from time to
time as it in its discretion may determine to be desirable for its uses and
purposes, provided that (i) the fair market value of the Facility is not reduced
below its value immediately before such alteration or addition and the
usefulness, structural integrity or operating efficiency of the Facility is not
impaired, (ii) such additions or alterations are effected with due diligence, in
a good and efficient manner and in compliance with all applicable legal
requirements, (iii) such additions or alterations are promptly and fully paid
for by the Lessee in accordance with the terms of the applicable contract(s)
therefor, and in order that the Facility shall at all times be free of any
mortgage, lien, charge, encumbrance, security interest or claim other than
Permitted Encumbrances, (iv) such additions or alterations are made, in case the
estimated cost of such alteration or addition exceeds $500,000, under the
supervision of an Independent Engineer and in accordance with plans,
specifications and cost estimates approved by the Bank (or, if the Letter of
Credit is no longer in effect, and all amounts owed to the Bank under the
Reimbursement Agreement are paid in full, the Agency and the Trustee) and only
after the Lessee shall have furnished to the Agency and the Trustee, if
requested, a labor and materials payment bond, or other security, reasonably
satisfactory to the Agency, the Bank and the Trustee and (v) such additions or
alterations do not change the nature of the Facility so that it would not
constitute a civic facility and a qualified "project" as defined in and as
contemplated by the Act. All
22
alterations of and additions to the Facility shall constitute a part of the
Facility, subject to this Agreement, the Indenture, the Mortgage and the other
Security Documents, and the Lessee shall deliver or cause to be delivered to the
Agency appropriate documents as may be necessary to convey title to such
property to the Agency and to subject such property to this Agreement and the
lien and security interest of the Mortgage, free and clear of all liens,
charges, encumbrances, security interests or claims other than Permitted
Encumbrances.
(c) The Lessee shall have the right to install or permit to be installed at
the Facility Realty machinery, equipment and other personal property (the
"Lessee's Property") without conveying title to such property to the Agency or
subjecting such property to this Agreement and the lien and security interest of
the Mortgage, provided, that no such property has been paid for with the
proceeds of the Bonds. The Agency shall not be responsible for any loss of or
damage to the Lessee's Property. Except as may be provided expressly to the
contrary in the Reimbursement Agreement, the Lessee shall have the right to
create or permit to be created any mortgage, encumbrance, lien or charge on, or
conditional sale or other title retention agreement with respect to, the
Lessee's Property.
(d) The Lessee shall not create, permit or suffer to exist any mortgage,
encumbrance, lien, security interest, claim or charge against the Facility or
any part thereof, or the interest of the Lessee in the Facility or this
Agreement except for Permitted Encumbrances. The Lessee covenants that it shall
take or cause to be taken all action, including all filing and recording, as may
be necessary to ensure that the Mortgage shall constitute a first mortgage lien
on the Facility.
Section 4.2 Removal of Property of the Facility.
-----------------------------------
(a) The Lessee shall have the privilege from time to time of removing from
the Facility any fixture constituting part of the Facility Realty (the "Existing
Facility Property"), provided that:
(i) such Existing Facility Property is substituted or replaced by
property (A) having equal or greater fair market value, operating
efficiency and utility, and (B) being free of all mortgages, liens,
charges, encumbrances, claims and security interests other than Permitted
Encumbrances; or
(ii) if such Existing Facility Property is not to be substituted or
replaced by other property but is instead to be sold, scrapped, traded in
or otherwise disposed of in an arms' length, bona fide transaction, and the
aggregate fair market value of such items so removed for any Fiscal Year of
the Lessee exceeds $250,000, the Lessee shall pay to the Trustee for
deposit in the Reimbursement Account of the Lease Payments Fund for
application in connection with the redemption of Bonds or payment of
amounts owed or owing to the Bank under the Reimbursement Agreement (or, if
no Letter of Credit is in effect, and all amounts owed to the Bank under
the Reimbursement Agreement have been paid in full, in the Redemption
Account of the Bond Fund) the amounts derived from such sale or scrapping,
the trade-in value credit received or the proceeds received from such other
disposition;
provided, however, no such removal as set forth in paragraph (i) or (ii) above
shall be effected if (w) such removal would change the nature of the Facility as
a qualified "project" as defined in
23
and as contemplated by the Act, (x) such removal would impair the usefulness,
structural integrity or operating efficiency of the Facility, (y) such removal
would reduce the fair market value of the Facility below its value immediately
before such removal (except by the amount deposited in the Reimbursement Account
of the Lease Payments Fund or in the Redemption Account of the Bond Fund
pursuant to paragraph (ii) above), or (z) if there shall exist and be continuing
an Event of Default hereunder or under the Reimbursement Agreement.
(b) The Lessee shall deliver or cause to be delivered to the Agency, the
Bank and the Trustee appropriate documents conveying to the Agency title to any
property installed or placed upon the Facility pursuant to Section 4.2(a)(i)
hereof and subjecting such substitute or replacement property to this Agreement
and the lien and security interest of the Mortgage, and upon written request of
the Lessee, the Agency shall deliver to the Lessee appropriate documents
releasing any property removed from the Facility pursuant to Section 4.2(a)
hereof from the lien thereon and security interest therein granted under the
Mortgage. The Lessee agrees to pay all costs and expenses (including reasonable
counsel fees) incurred in subjecting to this Agreement and the lien and security
interest of the Mortgage of any property installed or placed on the Facility
Realty as part of the Facility pursuant to this Section 4.2.
(c) The removal from the Facility of any Existing Facility Property
pursuant to the provisions of Section 4.2(a) hereof shall not entitle the Lessee
to any abatement or reduction in the rentals and other amounts payable by the
Lessee under this Agreement.
(d) Within 120 days after the close of each Fiscal Year of the Lessee (i)
during which Fiscal Year action was taken by the Lessee pursuant to Section
4.1(b) or 4.2(a) hereof, the Lessee shall furnish to the Agency, the Bank and
the Trustee a written report of an Authorized Representative of the Lessee
summarizing the action taken by the Lessee during such preceding Fiscal Year and
stating that, in his opinion, such action complied with the applicable
provisions of Section 4.1(b) or 4.2(a) hereof, as the case may be; or (ii)
during which Fiscal Year of the Lessee no action was taken by the Lessee
pursuant to Section 4.1(b) or 4.2(a) hereof, the Lessee shall furnish to the
Agency, the Bank and the Trustee a certificate of an Authorized Representative
of the Lessee certifying to the fact that no such action was taken by the Lessee
pursuant to such Section 4.1(b) or 4.2(a) during such preceding Fiscal Year.
Section 4.3 Payment in Lieu of Real Estate Taxes.
------------------------------------
(a) Description and Address of Project:
----------------------------------
The Project consists of the acquisition and improvement of a manufacturing
facility consisting of the acquisition of one parcel of real property and the
renovation, equipping, and improvement of an approximately 34,400 square foot
manufacturing facility thereon, all for use in the manufacture of flavoring and
fragrance products. The Facility Realty is located at 00 Xxxxxx Xxxxxx Xxxx,
Xxxxxxxxxx, Xxx Xxxx, being Block 2 and Lot 15.001.
(b) Payments Prior to PILOT Commencement Date:
-----------------------------------------
The PILOT Commencement Date shall be as defined in subsection (d) hereof.
Until the PILOT Commencement Date, or such later date as the Facility Realty is
determined to be exempt from real estate taxes, the Lessee shall pay to the
Agency all real estate taxes with respect to the
24
Facility Realty at such times, in such manner and in such amounts as would be
applicable if the Facility Realty were owned by the Lessee and not owned by the
Agency.
(c) Payments in Lieu of Real Estate Taxes, Generally:
------------------------------------------------
It is recognized that under the provisions of the Act the Agency is
required to pay no real estate taxes upon any of the property acquired by it or
under its jurisdiction or control or supervision or upon its activities. The
Agency and the Lessee agree, however, that the Lessee shall be required to make
payments in lieu of real estate taxes with respect to the Facility Realty,
payable to the Agency, in the manner and at the time provided in subsection (d)
below or at such other times as the Agency may designate in writing.
The Agency makes no representation as to the availability of an exemption
from real estate taxes for the Facility Realty in the event that the Town
Receiver of Taxes, the Assessors' Office of the Town or any other relevant
official of the Town fails to recognize the Agency's exemption from real estate
taxes on the basis of a discrepancy existing between the Facility Realty and the
tax map of the Town of Babylon or the existence of another impediment to
implementation of the Agency's exemption contemplated hereunder.
(d) Payments in Lieu of Taxes on the Land:
-------------------------------------
For the period commencing on the PILOT Commencement Date until the earlier
of (i) February 28, 2013 (the "Abatement Termination Date"), (ii) the date on
which the Agency no longer owns the Facility, or (iii) the date that real estate
taxes with respect to Normal Tax Due shall be due and payable with respect to
the Facility Realty, the Lessee shall make payment in lieu of real estate taxes,
as follows:
Definitions
-----------
X = then current assessed value of the Land
PILOT Commencement Date = March 1, 2002
Normal Tax Due = those payments for taxes and assessments,
other than special ad valorem levies,
special assessments and service charges
against real property located in the Town
of Babylon (including any existing
incorporated village or any village which
may be incorporated after the date hereof,
within which the Facility is wholly or
partially located) which are or may be
imposed for special improvements or
special district improvements, which the
Lessee would pay without exemption.
25
Payment
-------
Tax Year (following the PILOT Commencement Date)
------------------------------------------------
1 45% Normal Tax Due on X
2 50.5% Normal Tax Due on X
3 56% Normal Tax Due on X
4 61.5% Normal Tax Due on X
5 67% Normal Tax Due on X
6 72.5% Normal Tax Due on X
7 78% Normal Tax Due on X
8 83.5% Normal Tax Due on X
9 89% Normal Tax Due on X
10 94.5% Normal Tax Due on X
11 and thereafter 100% of Normal Tax Due on X
The tax benefits provided for in this subsection 1(d) shall be deemed to
commerce on the PILOT Commencement Date. In no event shall the Lessee be
entitled to receive tax benefits relative to the increased assessment due
to the Facility under this agreement for a period longer than the period
set forth in the formula immediately above. Notwithstanding the foregoing,
the Lessee further covenants and agrees that for any period that the Agency
continues to hold title to the Facility after February 28, 2013, the Lessee
shall pay Normal Tax due on X in accordance with the provisions of this
Section 4.3.
(e) The Lessee shall pay the amounts set forth in paragraph (d) above, as
applicable, within 40 days after receipt of bills from the Agency. Failure to
receive a xxxx shall not relieve the Lessee of its obligation to make all
payments provided for hereunder, but no penalties or interest shall accrue for
any bills not received by the Lessee. Payments shall be made directly to the
Agency. Payments made after the due date(s) as set forth in the applicable bills
shall accrue interest (and penalties) at the rates applicable to late payments
of taxes for the respective Taxing Jurisdictions.
(f) The Agency may file a lien on the Facility Realty in order to secure
amounts due the Agency hereunder or, at its election, may at any time require
that the Lessee grant such lien to the Agency as a condition to any lease of the
Facility to the Lessee pursuant to the terms hereof, provided that, any such
lien shall be subject and subordinate to the lien of the Mortgage. This
Agreement may be filed in the real property records of the County of Suffolk
pertaining to the Facility Realty at the expense of the Lessee.
(g) As long as provisions of this Section 4.3 are in effect, the Agency and
the Lessee agree that (i) the Lessee shall be deemed to be the owner of the
Facility Realty for the purpose of instituting judicial review of any assessment
of the real estate with respect to the Facility Realty pursuant to the
provisions of Articles 5 and 7 of the Real Property Tax Law or any other
applicable law as the same may be amended from time to time; and (ii) the Lessee
shall have full
26
authority to file grievances, protests, and proceedings protesting any present
or future assessment on the Facility Realty; and (iii) the Lessee shall accept
as valid any and all final assessments placed on the Facility Realty by the
Assessor of the Town of Babylon after the final determination of any grievance,
protest, or judicial review contemplated under subparagraph (ii) above.
The Agency shall provide or cause to be provided to the Lessee, in the same
manner and at the same time as if the Lessee were a taxpayer (or within fifteen
calendar days thereof), notice of any proposed change in assessment of the
Facility Realty. Notwithstanding the foregoing, in the event that the assessment
of the real estate with respect to the Facility Realty, including any additions
thereto, is reduced as a result of any such grievance, protest or judicial
review so that the Lessee would be entitled to receive a refund or refunds of
taxes paid to the respective Taxing Jurisdictions as if the Lessee were the
owner of the Facility Realty, the Lessee shall not be entitled to receive a
refund or refunds of the payments in lieu of taxes paid pursuant to this
Agreement. In such event, the Lessee's sole relief and remedy shall be the
receipt of a credit against prospective payments in lieu of taxes to be paid to
the Agency pursuant to this Agreement measured from the date the credit is
granted in the amount, within the below described limits, equal to the refund or
refunds of taxes paid to the respective Taxing Jurisdictions prior to the date
of this Agreement that the Lessee would be entitled to receive if the Lessee
were the owner of the Facility Realty and any additions thereto. Provided
however, that (i) such credit shall be available and payable only to the Lessee
or any permitted sublessee hereunder only during the term of this Lease
Agreement and (ii) the amount of such credit shall not exceed aggregate payments
in lieu of taxes to be paid under this Lease Agreement measured from the date of
the settlement of such grievance or protest or the date the judgment respecting
such credit is entered. In no event shall the Lessee have any claim against
funds of the Agency with respect to credits provided for in this paragraph (g).
(h) Subject to the provision of paragraph (g) hereof, the Lessee shall have
all of the rights and remedies of a taxpayer as if and to the same extent as if
the Lessee were the Owner of the Facility Realty with respect to any proposed
assessment or change in assessment with respect to the Facility Realty by any of
the Taxing Jurisdictions and likewise shall be entitled to protest before and be
heard by the appropriate assessors, and shall be entitled to take any and all
appropriate appeals or initiate any proceedings to review the validity or amount
of any assessment or the validity or amount of any tax equivalent provided for
herein, provided, however, that the Lessee agrees that any action taken by the
Lessee to reduce an assessed value of the Facility Realty below any such
assessed value extant on the date hereof shall constitute a default hereunder.
(i) To the extent the Facility Realty is declared to be subject to taxation
or assessment by a final judgment of a court of competent jurisdiction, an
amendment to the Act, or other legislative change, or by final judgment of a
Court of competent jurisdiction, the obligations of the Lessee under this
Section 4.3 shall, to such extent, be null and void and the Lessee may
immediately exercise its option to purchase the Facility pursuant to Article XI
hereof.
To the extent permitted by law, any payments previously made shall be
credited against any taxes then due and payable and nothing herein contained
shall prohibit the Lessee from
27
contesting the validity or constitutionality of any such amendment, legislative
change or judicial decision.
(j) If the Lessee enters into any written agreement with any Taxing
Jurisdiction providing for payments in lieu of taxes by the Lessee to any or all
of them, so much of the agreements as relates to the Taxing Jurisdiction with
which the Lessee has entered into said written agreement shall be automatically
modified to reflect the terms of any such written agreement, and any such
written agreement shall be deemed to be incorporated herein by reference and
made a part hereof as an amendment or modification hereof. Should the Lessee
receive any exemption from any of the Taxing Jurisdictions, this Agreement shall
automatically be modified to reflect the extent of such exemption.
(k) Subsequent Alterations and Improvements:
---------------------------------------
If, at any time after completion of the Project, the Lessee shall make any
structural alterations of or additions to the Facility Realty the cost of which
[in the aggregate] exceed $100,000 (the "Additional Improvements"), the Company
shall deliver written notice to an Authorized Representative of the Agency of
same within thirty (30) days after the completion thereof. The Agency shall
thereupon request that the Improvements constituting a part of the Facility
Realty (including any such Additional Improvements) be reassessed by the
appropriate officer or officers of the Town and the Lessee shall make additional
payment in lieu of taxes equal to:
(1) the amount of increase in assessed valuation of the Facility Realty
when the Additional Improvements are first assessed as completed, multiplied by
(2) the Town's real property tax rate prevailing after such first
assessment and thereafter.
(l) Withdrawal of Real Estate Tax Abatement:
---------------------------------------
The Lessee understands and agrees that the Lessee is required to pay or
cause to be paid, as additional payments in lieu of real estate taxes, the
amount of taxes that the Lessee would have been required to pay as if it were
the owner of the Facility Realty and improvements constituting the Facility
Realty for that portion of the Facility Realty, if any, utilized or occupied by
any Person other than the Lessee for so long as such utilization or occupation
shall continue. The Lessee hereby represents to the Agency that no portion of
the Facility Reality is utilized or occupied or is intended to be utilized or
occupied by Persons other than the Lessee. The Lessee agrees that it shall
immediately notify in writing the Agency or cause said written notice to be
given in the event that there shall be any change in the portion of the Facility
Realty utilized or occupied by any Person other than the Lessee. The Lessee
understands and agrees that in such event, unless the Agency in its sole
discretion shall determine otherwise, the amounts payable by the Lessee as
additional payments in lieu of taxes shall be adjusted to an amount equal to the
amount of taxes that the Lessee would have been required to pay as if it were
the owner of the Facility Realty for that portion of the Facility Realty
utilized or occupied by Persons other than the Lessee for so long as such
utilization or occupation shall continue.
Commencing as of the date in which the Facility Realty is not used in
accordance with the Act and this Agreement or upon the occurrence of an Event of
Default under this
28
Agreement, the Lessee shall be required to make payments in lieu of real estate
taxes on the Facility Realty in such amounts as would result from taxes levied
on the Facility Realty if the Facility Realty were owned by the Lessee. For
purposes of the determination of such payments in lieu of real estate taxes, the
tax rate shall be the rate then in effect as shown on the records of the proper
Town department.
(m) Survival of Obligations:
-----------------------
The obligations of the Lessee under this Section 4.3 incurred prior to any
termination hereof shall survive the termination or expiration of this Agreement
for any reason whatsoever. The Agency, in its sole discretion and in furtherance
of the purposes of the Act, may waive, in whole or in part, payments in lieu of
taxes set forth in this Section 4.3, for good cause shown.
Section 4.4 Taxes, Assessments and Charges.
------------------------------
The Lessee shall pay when the same shall become due all taxes (except to
the extent that the Lessee shall have made payments in lieu in respect thereof
as provided in Section 4.3 hereof) and assessments, general and specific, if
any, levied and assessed upon or against the Facility, this Agreement, any
estate or interest of the Agency or the Lessee in the Facility, or the rentals
hereunder or during the term of this Agreement, and all water and sewer charges,
special district charges, assessments and other governmental charges and
impositions whatsoever, foreseen or unforeseen, ordinary or extraordinary, under
any present or future law, and charges for public or private utilities or other
charges incurred in the occupancy, use, operation, maintenance or upkeep of the
Facility, all of which are herein called "Impositions". The Agency shall
promptly forward to the Lessee any notice, xxxx or other statement received by
the Agency concerning any Imposition. The Lessee may pay any Imposition in
installments if so payable by law, whether or not interest accrues on the unpaid
balance. The Lessee shall not be required to pay any Imposition so long as the
validity thereof is being challenged in good faith by appropriate proceedings
and the Lessee shall have deposited with the Trustee the amount of such proposed
Imposition.
In the event the Facility is exempt from Impositions solely due to the
Agency's ownership of the Facility, the Lessee shall pay all Impositions to the
appropriate taxing authorities equivalent to the Impositions which would have
been imposed on the Facility if the Lessee were the owner of record of the
Facility.
Section 4.5 Insurance.
---------
(a) At all times throughout the term of this Agreement, including without
limitation during any period of construction of the Facility, the Lessee shall
maintain insurance, with insurance companies licensed to do business in the
State, against such risks, loss, damage and liability (including liability to
third parties) and for such amounts as are customarily insured against by other
enterprises of like size and type as that of the Lessee, including, without
limitation:
(i) To the extent not covered by the public liability insurance
referred to below, Owners & Contractors Protective Liability Insurance for
the benefit of the Lessee,
29
the Agency and the Trustee in a minimum amount of $5,000,000 aggregate
coverage for personal injury and property damage;
(ii) (A) Property Damage Insurance and (B) during any period of the
construction or reconstruction of any portion of the Facility, Builders'
All Risk Insurance written on "100% builders' risk completed value,
non-reporting form" including coverage therein for "completion and/or
premises occupancy" during any period of construction or reconstruction of
the Facility, and coverage for property damage insurance, all of which
insurance shall include coverage for removal of debris, insuring the
buildings, structures, machinery, equipment, facilities, fixtures and other
property constituting a part of the Facility against loss or damage to the
Facility by fire, lightning, vandalism, malicious mischief and other
casualties, with standard extended coverage endorsement covering perils of
windstorm, hail, explosion, aircraft, vehicles and smoke (except as limited
in the standard form of extended coverage endorsement at the time in use in
the State) at all times in an amount such that the proceeds of such
insurance shall be sufficient to prevent the Lessee, the Agency, the Bank,
or the Trustee from becoming a co-insurer of any loss under the insurance
policies but in any event in amounts equal to not less than the greater of
(A) 90% of the actual replacement value of the Facility as determined by a
qualified insurance appraiser or insurer (selected by the Lessee and
approved by the Agency, the Bank and the Trustee) not less often than once
every year, at the expense of the Lessee, and (B) the amount required to be
maintained pursuant to the Reimbursement Agreement; any such insurance may
provide that the insurer is not liable to the extent of the first $100,000
with the result that the Lessee is its own insurer to the extent of
$100,000 of such risks;
(iii) Public liability insurance in accordance with customary
insurance practices for similar operations with respect to the Facility and
the business thereby conducted in a minimum amount of $5,000,000, which
insurance (A) will also provide coverage of the Lessee's obligations of
indemnity under Section 6.2 hereof (other than under Sections 6.2(a)(i) and
(ii) and, to the extent not otherwise reasonably available, 6.2(c) hereof),
(B) may be effected under overall blanket or excess coverage policies of
the Lessee or any Affiliate thereof, provided, however, that at least
$500,000 is effected by a comprehensive liability insurance policy, and (C)
shall not contain any provisions for deductible amount greater than
$20,000;
(iv) Boiler and machine property damage insurance in respect of any
steam and pressure boilers and similar apparatus located on the Facility
Realty from risks normally insured against under boiler and machinery
policies and in amounts and with deductibles customarily obtained for
similar business enterprises and in each case approved by the Agency, or
the Bank pursuant to the Reimbursement Agreement, and the Trustee;
(v) Workers' compensation insurance, disability benefits insurance
and such other forms of insurance which the Lessee or the Agency is
required by law to provide covering loss resulting from injury, sickness,
disability or death of the employees of the Lessee or any Affiliate
thereof, or any contractor or subcontractor performing work with respect to
the Facility; the Lessee shall require that all said contractors and
subcontractors
30
shall maintain all forms or types of insurance with respect to their
employees required by laws;
(vi) Business Interruption insurance shall be secured on all
operations of the Lessee covering the loss of gross earnings of the Lessee
(and extra expense incurred) by reason of the total or partial suspension
of, or interruption in, the use or occupancy of the operating assets of the
Lessee caused by loss or damage to, or destruction of, any part of said
operating assets, covering a period of suspension or interruption of a
minimum of one year, in an amount not less than the maximum debt service on
the Bonds due in any year (Sinking Fund Installments, if any, and
principal, other than principal to be paid from Sinking Fund Installments,
plus interest), together with additional expenses of the Lessee expected to
be incurred during such period.
(vii) Such other insurance in such amounts and against such insurable
hazards as the Agency or the Trustee, or the Bank pursuant to the
Reimbursement Agreement or the Mortgage, from time to time may reasonably
require.
(b) All insurance required by Section 4.5(a) above shall be procured and
maintained in financially sound and generally recognized responsible insurance
companies authorized to write such insurance in the State.
(c) Each of the policies or binders evidencing the insurance required
above to be obtained shall:
(i) designate (except in the case of workers' compensation
insurance) the Lessee, the Trustee, the Bank and the Agency as additional
insureds as their respective interests may appear;
(ii) provide that all insurance proceeds with respect to loss or
damage to the property of the Facility in excess of $500,000 be endorsed
and made payable to the Trustee and the Bank shall name the Trustee and the
Bank as loss payees, as their interests shall appear under the standard
loss payee clause and as mortgagees under the terms of a standard mortgagee
clause, which insurance proceeds shall be paid over to the Trustee and the
Bank and deposited in the Renewal Fund to be held by the Trustee for the
benefit of the Holders of the Bonds and the Bank;
(iii) provide that there shall be no recourse against the Agency, the
Bank or the Trustee for the payment of premiums or commissions or (if such
policies or binders provide for the payment thereof) additional premiums or
assessments;
(iv) provide that in respect of the respective interests of the
Agency, the Bank and the Trustee in such policies, the insurance shall not
be invalidated by any action or inaction of the Lessee (other than
non-payment of premium) or any other Person and shall insure the Agency and
the Trustee regardless of, and any losses shall be payable notwithstanding,
any such action or inaction;
(v) provide that such insurance shall be primary insurance without
any right of contribution from any other insurance carried by the Agency,
the Bank or the Trustee to the extent that such other insurance provides
the Agency, the Bank or the Trustee, as
31
the case may be, with contingent and/or excess liability insurance with
respect to its respective interest as such in the Facility;
(vi) provide that if the insurers cancel such insurance for any
reason whatsoever, including the insured's failure to pay any accrued
premium, or the same is allowed to lapse or expire, or there be any
reduction in amount, or any material change is made in the coverage, such
cancellation, lapse, expiration, reduction or change shall not be effective
as to the Agency, the Bank or the Trustee until at least ten (10) days
after receipt by the Agency, the Bank and the Trustee, respectively, of
written notice by such insurers of such cancellation, lapse, expiration or
change;
(vii) waive any right of subrogation of the insurers thereunder
against any Person insured under such policy, and waive any right of the
insurers to any setoff or counterclaim or any other deduction, whether by
attachment or otherwise, in respect of any liability of any Person insured
under such policy; and
(viii) contain such other terms and provisions as any owner or operator
of facilities similar to the Facility would, in the prudent management of
its properties, require to be contained in policies, binders or interim
insurance contracts with respect to facilities similar to the Facility
owned or operated by it.
(d) The Net Proceeds of any insurance received with respect to any loss or
damage to the property of the Facility shall be deposited in the Renewal Fund
(unless otherwise provided herein or in the Indenture) and applied in accordance
with Section 5.1 hereof and the Indenture.
(e) Concurrently with the original issuance of the Series 2002 Bonds, the
Lessee shall deliver or cause to be delivered to the Agency, the Bank and the
Trustee duplicate copies of certificates of insurance evidencing compliance with
the insurance requirements of this Section 4.5. At least seven (7) Business Days
prior to the expiration of any such policy, the Lessee shall furnish the Agency,
the Bank and the Trustee with evidence that such policy has been renewed or
replaced or is no longer required by this Agreement.
(f) The Lessee shall, at its own cost and expense, make all proofs of loss
and take all other steps necessary or reasonably requested by the Agency, the
Bank or the Trustee to collect from insurers for any loss covered by any
insurance required to be obtained by this Section 4.5 and shall cause any
sublessee, contractor or other insuring party under this Section 4.5 to take
similar actions with respect to such party's insurance required hereunder. The
Lessee shall not do any act, or suffer or permit any act to be done, whereby any
insurance required by this Section 4.5 would or might be suspended or impaired.
(g) THE AGENCY DOES NOT IN ANY WAY REPRESENT THAT THE INSURANCE SPECIFIED
HEREIN, WHETHER IN SCOPE OR COVERAGE OR LIMITS OF COVERAGE, IS ADEQUATE OR
SUFFICIENT TO PROTECT THE BUSINESS OR INTERESTS OF THE LESSEE.
Section 4.6 Advances by Agency or Bank.
--------------------------
In the event the Lessee fails to make any payment or perform or observe any
obligation required of it under this Agreement, the Agency or the Bank, after
first notifying the Lessee of
32
any such failure on its part, may (but shall not be obligated to), and without
waiver of any of the rights of the Agency or the Bank under this Agreement, the
Indenture or any other Security Documents, make such payment or otherwise cure
any failure by the Lessee to perform and observe its other obligations
hereunder. All amounts so advanced therefor by the Agency or the Bank shall
become an additional obligation of the Lessee to the Agency or to the Bank, as
the case may be, which amounts, together with interest thereon at the rate
specified in Section 1.08 of the Reimbursement Agreement, from the date
advanced, the Lessee will pay upon demand therefor by the Agency or the Bank, as
the case may be. Any remedy herein vested in the Agency or the Bank for the
collection of the rental payments or other amounts due hereunder shall also be
available to the Agency and the Bank for the collection of all such amounts so
advanced.
Section 4.7 Compliance with Law.
-------------------
The Lessee agrees that it will, throughout the term of this Agreement and
at its sole cost and expense, promptly observe and comply with all Federal,
State and local statutes, codes, laws, acts, ordinances, orders, judgments,
decrees, rules, regulations and authorizations, whether foreseen or unforeseen,
ordinary or extraordinary, which shall now or at any time hereafter be binding
upon or applicable to the Lessee, any occupant, user or operator of the Facility
or any portion thereof (including without limitation those relating to zoning,
land use, environmental protection, air, water and land pollution, toxic wastes,
hazardous wastes, solid wastes, wetlands, health, safety, equal opportunity,
minimum wages, and employment practices) (the "Legal Requirements"), and will
observe and comply with all conditions, requirements, and schedules necessary to
preserve and extend all rights, licenses, permits (including without limitation
zoning variances, special exception and non-conforming uses), privileges,
franchises and concessions. The Lessee will not, without the prior written
consent of the Agency, the Bank and the Trustee (which consents shall not be
unreasonably withheld), initiate, join in or consent to any private restrictive
covenant, zoning ordinance, or other public or private restrictions, limiting or
defining the uses which may be made of the Facility or any part thereof. The
Lessee shall indemnify and hold harmless the Indemnified Parties (as defined in
Section 6.2 hereof) from and against all loss, cost, liability and expense (a)
in any manner arising out of or related to any violation of or failure to comply
with any Legal Requirement or (b) imposed upon the Lessee or any of the
Indemnified Parties by any Legal Requirement; in case any action or proceedings
is brought against any of the Indemnified Parties in respect to any Legal
Requirement, the Lessee, at its own expense, shall upon notice from any of the
Indemnified Parties defend such action or proceeding by counsel satisfactory to
the Indemnified Party.
The Lessee may contest in good faith the validity, existence or
applicability of any of the foregoing if (i) such contest shall not result in
the Facility or any part of any thereof or interest therein being in any danger
of being sold, forfeited or lost, (ii) such contest shall not result in the
Lessee, the Agency, the Bank or the Trustee being in any danger of any civil or
any criminal liability other than normal accrual of interest, for failure to
comply therewith, and (iii) the Lessee shall have furnished such security, if
any, as may be reasonably requested by the Agency, the Bank or the Trustee to
protect the security intended to be offered by the Security Documents.
33
ARTICLE V
Damage, Destruction and Condemnation
------------------------------------
Section 5.1 Damage, Destruction and Condemnation.
------------------------------------
(a) In the event that at any time during the term of this Agreement the
whole or any part of the Facility shall be damaged or destroyed, or taken or
condemned by a competent authority for any public use or purpose, or by
agreement between the Agency and those authorized to exercise such right (to
which agreement the Lessee shall have consented in writing), or if the temporary
use of the Facility shall be so taken by condemnation or agreement (to which
agreement the Lessee shall have consented in writing) (a "Loss Event"):
(i) the Agency shall have no obligation to rebuild, replace, repair
or restore the Facility,
(ii) there shall be no abatement, postponement or reduction in the
rent or other amounts payable by the Lessee under this Agreement, and
(iii) the Lessee will promptly give written notice of such Loss Event
to the Agency, the Bank and the Trustee, generally describing the nature
and extent thereof.
(b) Upon the occurrence of a Loss Event, the Net Proceeds in excess of
$500,000 derived therefrom shall be paid to the Trustee for the benefit of the
Bondholders and the Bank and deposited in the Renewal Fund and, subject to the
applicable provisions of the Reimbursement Agreement, the Lessee shall either:
(i) at its own cost and expense (except to the extent paid from the
Net Proceeds deposited in the Renewal Fund as provided below and in Section
5.03 of the Indenture), but subject to applicable provisions of the
Reimbursement Agreement, promptly and diligently rebuild, replace, repair
or restore the Facility to substantially its condition immediately prior to
the Loss Event, or to a condition of at least equivalent value, operating
efficiency and function (except to the extent such Loss Event is a partial
taking which prevents same), regardless of whether or not the Net Proceeds
derived from the Loss Event shall be sufficient to pay the cost thereof,
and the Lessee shall not by reason of payment of any such excess costs be
entitled to any reimbursement from the Agency, the Bank, the Trustee or any
Bondholder (other than from the proceeds of Additional Bonds as may be
issued for such purpose), nor shall the rent or other amounts payable by
the Lessee under this Agreement be abated, postponed or reduced, or
(ii) if, to the extent and upon the conditions permitted to do so
under Section 8.1 hereof and under the Indenture, exercise its option to
purchase the Facility and make advance rental payments to redeem the Bonds
in whole. Not later than ninety (90) days after the occurrence of a Loss
Event, the Lessee shall advise the Agency, the Bank and the Trustee in
writing of the action to be taken by the Lessee under this Section 5.1(b),
a failure to so timely notify being deemed an election in favor of
subdivision (i) above to be exercised in accordance with the provisions of
clause (i) above.
34
Net Proceeds in an amount less than or equal to $500,000 may be retained by the
Lessee and applied to any lawful purpose.
If the Lessee shall elect to or shall otherwise be required to rebuild,
replace, repair or restore the Facility as set forth in subdivision (i) above,
the Trustee shall disburse the Net Proceeds from the Renewal Fund in the manner
set forth in Section 5.03 of the Indenture to pay or reimburse the Lessee, at
the election of the Lessee, either as such work progresses or upon the
completion thereof, provided, however, the amounts so disbursed by the Trustee
to the Lessee shall not exceed the actual cost of such work. If, on the other
hand, the Lessee shall, if permitted under this Agreement and the Indenture,
exercise its option in subdivision (ii) above, the Trustee shall transfer the
Net Proceeds from the Renewal Fund to the Reimbursement Account of the Lease
Payments Fund for application in connection with the redemption of Bonds or
payment of amounts owed or owing to the Bank under the Reimbursement Agreement
(or, if the Letter of Credit is not in effect, and all amounts owed to the Bank
under the Reimbursement Agreement are paid in full, to the Redemption Account of
the Bond Fund to be applied to the redemption of the Bonds in accordance with
the Indenture).
(c) All such rebuilding, replacements, repairs or restorations shall
(i) automatically be deemed a part of the Facility and owned by the
Agency and be subject to this Agreement and the lien and security interest
of the Mortgage except to the extent same constitutes Lessee's Property,
(ii) be in accordance with plans and specifications and cost
estimates approved in writing by the Bank (or, if all amounts owed to the
Bank under the Reimbursement Agreement shall be paid in full and the Letter
of Credit is no longer in effect, the Agency and the Trustee) which
approval shall not be unreasonably withheld or delayed,
(iii) not change the nature of the Facility as a qualified "project"
as defined in and as contemplated by the Act,
(iv) be preceded by the furnishing by the Lessee to the Agency, the
Bank and the Trustee of either (A) a labor and materials payment bond, or
other security, reasonably satisfactory to the Agency, the Bank and the
Trustee, or (B) a fixed price contract or contracts reasonably satisfactory
to the Bank as to content and the contractor thereunder,
(v) be effected with due diligence in a good and workmanlike manner,
in compliance with all applicable legal requirements and be promptly and
fully paid for by the Lessee in accordance with the terms of the applicable
contract(s) therefor, and
(vi) if the estimated cost of such rebuilding, replacement, repair or
restoration be in excess of $450,000, be effected under the supervision of
an Independent Engineer.
(d) Pending the disbursement or transfer thereof, the Net Proceeds in the
Renewal Fund shall be applied and may be invested as provided in the Indenture.
35
(e) The Agency, the Bank, the Trustee, the Lessee shall cooperate and
consult with each other in all matters pertaining to the settlement,
compromising, arbitration or adjustment of any claim or demand on account of any
Loss Event, and the settlement, compromising, arbitration or adjustment of any
such claim or demand in excess of $500,000 shall be subject to the approval of
the Lessee, the Bank and the Trustee (or, if all amounts owed to the Bank under
the Reimbursement Agreement are paid in full and the Letter of Credit is no
longer in effect, the Lessee and the Trustee) (such approvals not to be
unreasonably withheld or delayed).
(f) If all or substantially all of the Facility shall be taken or
condemned, or if the taking or condemnation renders the Facility unsuitable for
use by the Lessee as contemplated hereby, or if the Lessee is required to direct
the Agency to redeem all Outstanding Bonds in accordance with the Reimbursement
Agreement, the Lessee shall exercise its option to purchase the Facility
pursuant to Section 8.1 hereof, and the amount of the Net Proceeds so recovered
shall be transferred from the Renewal Fund and deposited in the Reimbursement
Account of the Lease Payments Fund for application in connection with the
redemption of Bonds pursuant to Section 2.04 of the Indenture or payment of
amounts owed or owing to the Bank under the Reimbursement Agreement (or, if the
Letter of Credit is not in effect, and all amounts owed to the Bank under the
Reimbursement Agreement are paid in full, in the Redemption Account of the Bond
Fund) for the redemption of the Series 2002 Bonds pursuant to said section, and
the Lessee shall thereupon pay to the Trustee for deposit in the Reimbursement
Account of the Lease Payments Fund for application in connection with the
redemption of Bonds pursuant to Section 2.04 of the Indenture or payment of
amounts owed or owing to the Bank under the Reimbursement Agreement (or, if the
Letter of Credit is not in effect, and all amounts owed to the Bank under the
Reimbursement Agreement are paid in full, in the Redemption Account of the Bond
Fund) for the redemption of the Series 2002 Bonds pursuant to said section in an
amount which, when added to any amounts then in the Bond Fund and available for
that purpose, shall be sufficient to retire and redeem the Bonds in whole at the
earliest possible date (including, without limitation, principal and interest to
the maturity or redemption date and redemption premium, if any), and to pay the
expenses of redemption, the fees and expenses of the Agency, the Bond Registrar,
the Trustee, the Paying Agents, the Tender Agent and the Remarketing Agent
together with all other amounts due under the Indenture, this Agreement and the
other Security Documents, if any, and such amount shall be applied, together
with such other available moneys in such Bond Fund, if applicable, to such
redemption or retirement of the Bonds on said redemption or maturity date.
(g) The Lessee shall be entitled to any insurance proceeds or condemnation
award, compensation or damages attributable to improvements, machinery,
equipment or other property installed on or about the Facility Realty but which,
at the time of such damage or taking, is not part of the Facility and is owned
by the Lessee, subject to the applicable provisions of the Reimbursement
Agreement, so long as the Bank is honoring draws under the Letter of Credit in
accordance with its terms.
(h) The Lessee hereby waives the provisions of Section 227 of the New York
Real Property Law or any law of like import now or hereafter in effect.
36
ARTICLE VI
Particular Covenants
--------------------
Section 6.1 Dissolution or Merger of Lessee; Restrictions on Lessee.
-------------------------------------------------------
The Lessee covenants and agrees that at all times during the term of this
Agreement, it will (i) maintain its corporate or limited liability company
existence as a New York corporation or limited liability company, (ii) continue
to be a corporation or limited liability company subject to service of process
in the State and either organized under the laws of the State and organized
under the laws of the State, (iii) not liquidate, wind-up or dissolve or
otherwise dispose of all or substantially all of its property, business or
assets remaining after the execution and delivery of this Agreement, (iv) not
sell, transfer, pledge or otherwise encumber all of substantially all of the
assets remaining after execution of this Lease Agreement, and (v) not
consolidate with or merge into another corporation or limited liability company
or permit one or more corporations or limited liability companies to consolidate
with or merge into it. The Lessee may, however, without violating the foregoing,
with the consent of the Bank or with the consent of a majority of the Holders of
the Bonds if there is no Letter of Credit in effect, which consent will not be
unreasonably withheld or delayed, consolidate with or merge into another
corporation or limited liability company or permit one or more corporations or
limited liability companies to consolidate with or merge into it, or sell or
otherwise transfer all or substantially all of its property, business or assets
to another such corporation or limited liability company (and thereafter
liquidate, wind-up or dissolve or not, as the Lessee may elect) if (i) the
Lessee is the surviving, resulting or transferee corporation or limited
liability company, or (ii) in the event that the Lessee is not the surviving,
resulting or transferee corporation or limited liability company, such
corporation or limited liability company (A) is a solvent corporation or limited
liability company subject to service of process in the State and organized under
the laws of the State, (B) is a corporation or limited liability company in good
standing in the State, (C) assumes in writing all of the obligations of the
Lessee contained in this Agreement and all other Security Documents to which the
Lessee shall be a party, and in the Opinion of Counsel delivered to the Agency
and the Trustee (x) such corporation or limited liability company shall be bound
by all of the terms applicable to the Lessee of this Agreement and all other
Security Documents to which the predecessor Lessee corporation or limited
liability company shall have been a party, and (y) such action does not legally
impair the security for the Holders of the Bonds afforded by the Security
Documents, and (D) has a net worth (as determined in accordance with Generally
Accepted Accounting Principles) after the merger, consolidation, sale or
transfer at least equal to that of the Lessee immediately prior to such merger,
consolidation, sale or transfer.
Notwithstanding the foregoing, the Agency hereby acknowledges that the
Lessee has expressed its intention to merge with Belmay Holding Corp. subsequent
to the issuance of the Bonds. Subject to the satisfaction of the conditions
precedent to such a merger as enumerated above in this Section 6.1, the Agency
hereby consents to such merger. The Agency hereby further agrees that any public
trading of shares of the Lessee shall not be deemed to be a sale, transfer or
pledge of assets of the Lessee within the meaning and for the purpose of this
Section 6.1.
37
Section 6.2 Indemnity.
---------
(a) The Lessee shall at all times protect and hold the Agency, the Bank
(and its Issuing Agent, if any), and, except as otherwise provided in the other
Security Documents, the Credit Provider, if any, the Trustee, the Bond
Registrar, the Tender Agent, the Remarketing Agent and the Paying Agents
(collectively, the "Indemnified Parties") harmless of, from and against any and
all claims (whether in tort, contract or otherwise), demands, expenses and
liabilities for losses, damage, injury and liability of every kind and nature
and however caused, and taxes (of any kind and by whomsoever imposed), other
than, with respect to any Indemnified Party, claims, demands, expenses and
liabilities for losses, damage, injury and liability, arising from the gross
negligence or willful misconduct of such Indemnified Party, arising upon or
about the Facility or resulting from, arising out of, or in any way connected
with (i) the financing of the costs of the Facility and the marketing, issuance
and sale of the Bonds for such purpose, (ii) the remarketing of the Bonds, (iii)
the planning, design, acquisition, site preparation, construction, renovation,
equipping, installation or completion of the Project or any part thereof or the
effecting of any work done in or about the Facility, (iv) any defects (whether
latent or patent) in the Facility, (v) the maintenance, repair, replacement,
restoration, rebuilding, upkeep, use, occupancy, ownership, leasing, subletting
or operation of the Facility or any portion thereof, or (vi) this Agreement, the
Indenture, any other Security Document, the Remarketing Agreement or the
Reimbursement Agreement or other document or instrument delivered in connection
herewith or therewith or the enforcement of any of the terms or provisions
hereof or thereof or the transactions contemplated hereby or thereby. Such
indemnification set forth above shall be binding upon the Lessee for any and all
claims, demands, expenses, liabilities and taxes set forth herein and shall
survive the termination of this Agreement. No Indemnified Party shall be liable
for any damage or injury to the person or property of the Lessee or its
directors, officers, employees, agents or servants or persons under the control
or supervision of the Lessee or any other Person who may be about the Facility,
due to any act or negligence of any Person other than for the gross negligence
or willful misconduct of such Indemnified Party.
(b) The Lessee releases each Indemnified Party from, and agrees that no
Indemnified Party shall be liable for and agrees to indemnify and hold each
Indemnified Party harmless against any expense, loss, damage, injury or
liability incurred because of any lawsuit commenced as a result of action taken
by such Indemnified Party with respect to any of the matters set forth in
subdivision (i) through (vi) of Section 6.2(a) hereof or at the direction of the
Lessee and in good faith with respect to any of such matters above referred to.
An Indemnified Party shall promptly notify the Lessee in writing of any claim or
action brought against such Indemnified Party in which indemnity may be sought
against the Lessee pursuant to this Section 6.2; such notice shall be given in
sufficient time to allow the Lessee to defend or participate in such claim or
action, but the failure to give such notice in sufficient time shall not
constitute a defense hereunder nor in any way impair the obligations of the
Lessee under this Section 6.2. In case any such claim or action shall be brought
against an Indemnified Party, the Lessee shall be entitled to participate in the
defense thereof with said Indemnified Party. An Indemnified Party shall obtain
the Lessee's written consent prior to settling or compromising any claim or
action (which consent shall not be unreasonably withheld or delayed) which shall
not otherwise be the subject of an insurance settlement.
(c) In addition to and without limitation of all other representations,
warranties and covenants made by the Lessee under this Agreement, the Lessee
further represents, warrants and
38
covenants that the Lessee has not used Hazardous Materials (as defined
hereinafter) on, from, or affecting the Facility in any manner which violates
Federal, state or local laws, ordinances, rules, regulations, or policies
governing the use, storage, treatment, transportation, manufacture, refinement,
handling, production or disposal of Hazardous Materials, and that, except as set
forth in the Phase I Environmental Report prepared by Xxxxxxx Group Services,
Inc., dated November 14, 2001, a true and complete copy of which the Lessee has
delivered to the Agency and the Trustee, to the best of the Lessee's knowledge,
no prior owner of the Facility or any tenant, subtenant, prior tenant or prior
subtenant have used Hazardous Materials on, from or affecting the Facility in
any manner which violates Federal, state or local laws, ordinances, rules,
regulations or policies governing the use, storage, treatment, transportation,
manufacture, refinement, handling, production or disposal of Hazardous
Materials. The Lessee shall, to the extent required by applicable law, keep or
cause the Facility to be kept free of Hazardous Materials. Without limiting the
foregoing, the Lessee shall not cause or permit the Facility or any part thereof
to be used to generate, manufacture, refine, transport, treat, store, handle,
dispose, transfer, produce or process Hazardous Materials, except in compliance
with all applicable Federal, state and local laws or regulations, nor shall the
Lessee cause or permit, as a result of any intentional or unintentional act or
omission on the part of the Lessee or any tenant or subtenant, a release of
Hazardous Materials onto the Facility or onto any other property. The Lessee
shall comply with and use its best efforts to ensure compliance by all tenants
and subtenants (if subtenancy is permitted by the Bank) with all applicable
Federal, state and local laws, ordinances, rules and regulations, whenever and
by whomever triggered, and shall obtain and comply with, and use its best
efforts to ensure that all tenants and subtenants obtain and comply with, any
and all approvals, registrations or permits required thereunder; provided,
however, that if any such tenant or subtenant shall be an Affiliate of the
Lessee, the obligation of the Lessee with respect to such Persons shall be
absolute and not limited to best efforts. The Lessee shall (i) conduct and
complete all investigations, studies, sampling, and testing, and all remedial,
removal, and other actions necessary to clean up and remove all Hazardous
Materials, on, from, or affecting the Facility (x) in accordance with all
applicable Federal, state and local laws, ordinances, rules, regulations, and
policies, (y) to the satisfaction of the Agency, the Bank, the Credit Provider,
if any, and the Trustee, and (z) in accordance with the orders and directives of
all Federal, state and local governmental authorities, and (ii) defend,
indemnify, and hold harmless each Indemnified Party from and against any claims,
demands, penalties, fines, liabilities, settlements, damages, costs, or expenses
of whatever kind or nature, known or unknown, contingent or otherwise, arising
out of, or in any way related to, (w) the presence, disposal, release, or
threatened release of any Hazardous Materials which are on, from, or affecting
the soil, water, vegetation, buildings, personal property, persons, animals, or
otherwise; (x) any personal injury (including wrongful death) or property damage
(real or personal) arising out of or related to such Hazardous Materials; (y)
any lawsuit brought or threatened, settlement reached, or government order
relating to such Hazardous Materials; and/or (z) any violation of laws, orders,
regulations, requirements or demands of government authorities, or any policies
or requirements of the Agency and the Trustee, which are based upon or in any
way related to such Hazardous Materials including, without limitation,
reasonable attorney and consultant fees, investigation and laboratory fees,
court costs, and litigation expenses. In the event the Mortgage is foreclosed,
or a deed in lieu of foreclosure is tendered, or this Agreement is terminated,
the Lessee shall deliver the Facility free of any and all Hazardous Materials so
that the conditions of the Facility shall conform with all applicable Federal,
state and local laws, ordinances, rules or regulations affecting the Facility.
For purposes of this paragraph, "Hazardous Materials" includes, without limit,
any flammable explosives, radioactive materials, hazardous materials,
39
hazardous wastes, hazardous or toxic substances, or related materials defined in
the Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended (42 U.S.C. Sections 9601 et seq.), the Hazardous Materials
Transportation Act, as amended (49 U.S.C. Sections 1801 et seq.), the Resource
Conservation and Recovery Act, as amended (42 U.S.C. Sections 6901 et seq.), and
in the regulations adopted and publications promulgated pursuant thereto, or any
other Federal, state or local environmental law, ordinance, rule, or regulation
in such case in such amounts or conditions the presence of which shall violate
legal requirements. The provisions of this paragraph shall be in addition to any
and all other obligations and liabilities the Lessee may have to any Indemnified
Party at common law or under any of the Mortgage or the Reimbursement Agreement,
and shall survive the termination of this Agreement. The covenants set forth in
this Section 6.2(c) shall not be deemed to prohibit the use of the Facility by
gasoline-powered automobiles (and the maintenance at the Facility of necessary
ordinary cleansing products) in connection with the lawful use of the Facility
by the Lessee in the ordinary course of its business, provided, however, that
such use or maintenance shall be in compliance with applicable law.
(d) The indemnifications and protections set forth in this Section 6.2
shall be extended, with respect to each Indemnified Party, to its members,
directors, officers, employees, agents and servants and persons under its
control or supervision.
(e) To effectuate the purposes of this Section 6.2, the Lessee will provide
for and insure, to the extent available in the general insurance market (at no
significant additional cost), in the public liability policies required in
Section 4.5 hereof, not only its own liability in respect of the matters therein
mentioned but also the liability pursuant to this Section 6.2 (other than under
Sections 6.2(a)(i) and (ii) and, to the extent not reasonably available, 6.2(c)
hereof; provided, however, that any liability insurance coverage with respect to
Hazardous Materials shall be required to be obtained by the Lessee only to the
extent reasonably obtainable). Anything to the contrary in this Agreement
notwithstanding, the covenants of the Lessee contained in this Section 6.2 shall
remain in full force and effect after the termination of this Agreement until
the later of (i) the expiration of the period stated in the applicable statute
of limitations during which a claim or cause of action (which is within the
scope of this Section 6.2) may be brought and (ii) payment in full or the
satisfaction of such claim or cause of action and of all expenses and charges
incurred by the Indemnified Party relating to the enforcement of the provisions
herein specified.
(f) For the purposes of this Section 6.2, the Lessee shall not be deemed an
employee, agent or servant of the Agency or a person under the Agency's control
or supervision.
Section 6.3 Compensation and Expenses of Trustee, Bond Registrar, Paying
------------------------------------------------------------
Agents, Tender Agent, Remarketing Agent, Bank, Credit Provider and Agency.
-------------------------------------------------------------------------
The Lessee shall, to the extent not paid out of the proceeds of the Bonds
as financing expenses, pay the following annual fees, charges and expenses and
other amounts (i) the initial and annual fees of the Trustee for the ordinary
services of the Trustee rendered and its ordinary expenses incurred under the
Indenture, including fees and expenses as Bond Registrar and in connection with
preparation of new Bonds upon exchanges or transfers or making any investments
in accordance with the Indenture, (ii) the reasonable fees and charges of the
Trustee and any Paying Agents on the Bonds for acting as paying agents as
provided in the Indenture, including the reasonable fees of its counsel, (iii)
the reasonable fees and charges of the Trustee
40
for extraordinary services rendered by it and extraordinary expenses incurred by
it under the Indenture, including reasonable counsel fees, (iv) the fees, costs
and expenses of the Bond Registrar, the Tender Agent, the Remarketing Agent, the
Bank (and its Issuing Agent, if any) and the Credit Provider, if any, (v) the
fees, costs and expenses (including reasonable legal, accounting and other
administrative expenses) of the Agency, (vi) the fees and expenses of the Rating
Agencies, and (vii) except to the extent of amounts deposited in the
Reimbursement Account of the Lease Payments Fund, any such other amounts payable
by the Lessee under the Reimbursement Agreement. The Lessee shall further pay
the fees, costs and expenses of the Agency together with any fees and
disbursements incurred by the Agency's Bond Counsel and General Counsel in
performing services for the Agency in connection with this Agreement or the
Indenture or any other Security Document.
On the date of the initial sale and delivery of the Series 2002 Bonds, the
Lessee shall pay to the Agency, and the Agency acknowledges receipt of, its
administration fee of $22,000.
Section 6.4 Retention of Title to Facility; Grant of Easements; Release of
--------------------------------------------------------------
Certain Land.
------------
(a) The Agency shall not sell, assign, encumber (other than for Permitted
Encumbrances), convey or otherwise dispose of the Facility or any part thereof
or interest therein during the term of this Agreement, except as set forth in
Sections 4.2 and 7.2 hereof and subject to the applicable provisions of the
Reimbursement Agreement, without the prior written consent of the Lessee and the
Bank (or, if the Letter of Credit is no longer in effect and all amounts owed to
the Bank under the Reimbursement Agreement shall have been paid in full, the
Trustee at the written direction of Holders of all of the Outstanding Bonds) and
any purported disposition without such consent shall be void.
The Agency will, however, at the written request of the Lessee, and with
the prior written consent of the Bank and the Trustee, so long as there exists
no Event of Default hereunder, grant such rights of way or easements over,
across, or under, the Facility Realty, or grant such permits or licenses in
respect to the use thereof, free from the leasehold estate of this Agreement and
the lien of the Mortgage, as shall be necessary or convenient for the operation
or use of the Facility, provided that such leases, rights of way, easements,
permits or licenses shall not adversely affect the use or operation of the
Facility, and provided, further, that any consideration received by the Agency
or the Lessee from the granting of said leases, rights of way, easements,
permits or licenses shall be paid to the Trustee and deposited in the
Reimbursement Account of the Lease Payments Fund for application in connection
with the redemption of Bonds or payment of amounts owed to the Bank under the
Reimbursement Agreement (or, if the Letter of Credit is no longer in effect and
all amounts owed to the Bank under the Reimbursement Agreement are paid in full,
in the Redemption Account of the Bond Fund). The Agency agrees, at the sole cost
and expense of the Lessee, to execute and deliver and to cause and direct the
Trustee to execute and deliver any and all instruments necessary or appropriate
to confirm and grant any such right of way or easement or any such permit or
license and to release the same from the leasehold estate of this Agreement and
the lien of the Mortgage.
Notwithstanding any other provision of this Agreement, so long as there
exists no Event of Default hereunder, and with the prior written consent of the
Bank, the Lessee may from time to time request in writing to the Agency the
release of and removal from this Agreement and the leasehold estate created
hereby and the release from the lien of the Mortgage of any unimproved
41
part of the Facility Realty (on which none of the improvements, including the
buildings, structures, improvements, related facilities, major appurtenances,
fixtures or other property comprising the Facility are situated) provided that
such release and removal will not adversely affect the use or operation of the
Facility. Upon any such request by the Lessee, the Agency shall, at the sole
cost and expense of the Lessee, execute and deliver and cause and direct the
Trustee to execute and deliver any and all instruments necessary or appropriate
to so release and remove such portion of the Facility Realty and convey
leasehold title thereto in the Lessee or such Person as the Lessee may designate
subject to the following: (i) any liens, easements, encumbrances and
reservations to which title to said property was subject at the time of
recording of this Agreement; (ii) any liens, easements and encumbrances created
at the request of the Lessee or to the creation or suffering of which the Lessee
consented; (iii) any liens and encumbrances or reservations resulting from the
failure of the Lessee to perform or observe any of the agreements on its part
contained in this Agreement; (iv) Permitted Encumbrances (other than the lien of
this Agreement, the Mortgage and the Indenture); and (v) any liens for taxes or
assessments not then delinquent; provided, however, no such release shall be
effected unless the Bank shall have consented thereto and (1) there shall be
deposited with the Trustee and the Bank a certificate of an Independent
Engineer, dated not more than sixty (60) days prior to the date of the release,
stating that, in the opinion of the person signing such certificate, the portion
of the Facility Realty and the release so proposed to be made is not needed for
the operation of the Facility, will not adversely affect the use or operation of
the Facility and will not destroy the means of ingress thereto and egress
therefrom; and (2) there shall be deposited with the Trustee an amount of cash
for deposit in the Reimbursement Account of the Lease Payments Fund for
application in connection with the redemption of Bonds (or, if the Letter of
Credit is no longer in effect and amounts owed to the Bank under the
Reimbursement Agreement are paid in full, in the Redemption Account of the Bond
Fund) equal to the greatest of (A) the original cost of such portion of the
Facility Realty so released, such cost to be determined by the appraisal of an
independent real estate brokerage firm of recognized standing within the Town,
(B) the fair market value of such portion, such value to be determined by the
appraisal of an independent real estate brokerage firm of recognized standing
within the Town, and (C) if such portion is released in connection with the sale
of such portion, the amount received by the Lessee upon such sale.
(b) No conveyance or release effected under the provisions of this Section
6.4 shall entitle the Lessee to any abatement or diminution of the rents payable
under Section 3.3 hereof or the other payments required to be made by the Lessee
under this Agreement. The consent of the Bank to any release contemplated hereby
shall be solely in the Bank's discretion, and the Bank may impose such
conditions in addition to those conditions stated herein as it deems desirable
prior to consenting to any release contemplated hereby.
Section 6.5 Financial Statements; No-Default Certificates.
---------------------------------------------
(a) The Lessee agrees to furnish to the Agency (at the request of the
Agency) and to the Trustee all those financial statements required to be
furnished to the Bank under the Loan and Security Agreement, dated as of June
29, 1999, by and between the Lessee and the Bank at the times and in the form
and manner prescribed therein.
(b) The Lessee shall deliver to the Agency (at the request of the Agency),
the Bank and the Trustee with each delivery of annual financial statements
required by Section 6.5(a) hereof, (i) a certificate of an Authorized
Representative of the Lessee as to whether or not to its
42
knowledge after due inquiry, as of the close of such preceding Fiscal Year of
the Lessee, and at all times during such Fiscal Year, the Lessee was in
compliance with all the provisions which relate to the Lessee in this Agreement
and in any other Security Document to which it shall be a party, and if such
Authorized Representative shall have obtained knowledge of any default in such
compliance, such Authorized Representative shall disclose in such certificate
such default or defaults or notice thereof and the nature thereof, whether or
not the same shall constitute an Event of Default hereunder, and any action
proposed to be taken by the Lessee to its knowledge after due inquiry, with
respect thereto, and (ii) a certificate of an Authorized Representative of the
Lessee that, to its knowledge after due inquiry, the insurance it maintains
complies with the provisions of Section 4.5 of this Agreement, that such
insurance has been in full force and effect at all times during the preceding
Fiscal Year of the Lessee, and that duplicate copies of all policies or
certificates thereof have been filed with the Agency and the Trustee and are in
full force and effect. In addition, upon twenty (20) days' prior request by the
Agency, the Bank or the Trustee, the Lessee will execute, acknowledge and
deliver to the Agency and the Trustee a certificate of an Authorized
Representative of the Lessee either stating that to the knowledge of such
Authorized Representative no default or breach exists hereunder or specifying
each such default or breach of which such Authorized Representative has
knowledge.
(c) The Lessee shall immediately notify the Agency, the Bank and the
Trustee of the occurrence of any Event of Default or any event which with notice
and/or lapse of time would constitute an Event of Default under any Security
Document of which it has knowledge. Any notice required to be given pursuant to
this subsection shall be signed by an Authorized Representative of the Lessee
and set forth a description of the default and the steps, if any, being taken to
cure said default. If no steps have been taken, the Lessee shall state this fact
on the notice.
Section 6.6 Discharge of Liens.
------------------
(a) If any lien, encumbrance or charge is filed or asserted, or any
judgment, decree, order, levy or process of any court or governmental body is
entered, made or issued or any claim (such liens, encumbrances, charges,
judgments, decrees, orders, levies, processes and claims being herein
collectively called "Liens"), whether or not valid, is made against the Facility
or any part of any thereof or the interest therein of the Agency, the Bank, the
Lessee or the Trustee or against any of the rentals or other amounts payable
under this Agreement or the interest of the Agency, Lessee under this Agreement
other than Liens for Impositions (as defined in Section 4.4) not yet payable, or
payable without the addition of any fine, penalty, interest or cost for
non-payment, Permitted Encumbrances, or Liens being contested as permitted by
Section 6.6(b), the Lessee forthwith upon receipt of notice of the filing,
assertion, entry or issuance of such Lien (regardless of the source of such
notice) shall give written notice thereof to the Agency, the Bank and the
Trustee and take all action (including the payment of money and/or the securing
of a bond) at its own cost and expense (subject to the provisions of Section
2.1(g) hereof) as may be necessary or appropriate to obtain the discharge in
full thereof and to remove or nullify the basis therefor. Nothing contained in
this Agreement shall be construed as constituting the express or implied consent
to or permission of the Agency for the performance of any labor or services or
the furnishing of any materials that would give rise to any Lien against the
Agency's or the Lessee's interest in the Facility.
43
(b) The Lessee may, at its sole expense and subject to applicable
provisions of the Reimbursement Agreement (including, without limitation,
Section 4.01 thereof), contest (after prior written notice to the Agency, the
Bank and the Trustee), by appropriate action conducted in good faith and with
due diligence, the amount or validity or application, in whole or in part, of
any Lien, if (1) such proceeding shall suspend the execution or enforcement of
such Lien against the Facility, or any part of any thereof or interest therein,
or in this Agreement, of the Agency, the Bank, the Lessee or the Trustee or
against any of the rentals or other amounts payable under this Agreement, (2)
neither the Facility nor any part thereof or interest therein would be in any
danger of being sold, forfeited or lost, (3) neither the Lessee, the Agency, the
Bank nor the Trustee would be in any danger of any civil or any criminal
liability, other than normal accrual of interest or penalties, for failure to
comply therewith, and (4) the Lessee shall have furnished such security, if any,
as may be required in such proceedings or as may be reasonably requested by the
Trustee or the Bank to protect the security intended to be offered by the
Indenture and the Mortgage.
Section 6.7 Agency's Authority; Covenant of Quiet Enjoyment.
-----------------------------------------------
The Agency covenants and agrees that it has full right and lawful authority
to enter into this Agreement for the full term hereof, including the right to
grant the options to purchase herein contained, and that, subject to the terms
and provisions of the Mortgage and the Indenture, so long as the Lessee shall
pay the rent and all other sums payable by it under this Agreement and shall
duly observe all the covenants, stipulations and agreements herein contained
obligatory upon it and an Event of Default shall not exist hereunder, the Lessee
shall have, hold and enjoy, during the term hereof, peaceful, quiet and
undisputed possession of the Facility, and the Agency (at the sole cost and
expense of the Lessee) shall from time to time take all necessary action to that
end, subject to Permitted Encumbrances.
Section 6.8 No Warranty of Condition or Suitability.
---------------------------------------
THE AGENCY HAS MADE AND MAKES NO REPRESENTATION OR WARRANTY WHATSOEVER,
EITHER EXPRESS OR IMPLIED, WITH RESPECT TO THE MERCHANTABILITY, CONDITION,
FITNESS, DESIGN, OPERATION OR WORKMANSHIP OF ANY PART OF THE FACILITY, ITS
FITNESS FOR ANY PARTICULAR PURPOSE, THE QUALITY OR CAPACITY OF THE MATERIALS IN
THE FACILITY, OR THE SUITABILITY OF THE FACILITY FOR THE PURPOSES OR NEEDS OF
THE LESSEE OR THE EXTENT TO WHICH PROCEEDS DERIVED FROM THE SALE OF THE BONDS
WILL BE SUFFICIENT TO PAY THE COST OF COMPLETION OF THE PROJECT. THE LESSEE IS
SATISFIED THAT THE FACILITY IS SUITABLE AND FIT FOR ITS PURPOSES. THE AGENCY
SHALL NOT BE LIABLE IN ANY MANNER WHATSOEVER TO THE LESSEE OR ANY OTHER PERSON
FOR ANY LOSS, DAMAGE OR EXPENSE OF ANY KIND OR NATURE CAUSED, DIRECTLY OR
INDIRECTLY, BY THE PROPERTY OF THE FACILITY OR THE USE OR MAINTENANCE THEREOF OR
THE FAILURE OF OPERATION THEREOF, OR THE REPAIR, SERVICE OR ADJUSTMENT THEREOF,
OR BY ANY DELAY OR FAILURE TO PROVIDE ANY SUCH MAINTENANCE, REPAIRS, SERVICE OR
ADJUSTMENT, OR BY ANY INTERRUPTION OF SERVICE OR LOSS OF USE THEREOF OR FOR ANY
LOSS OF BUSINESS HOWSOEVER CAUSED.
44
Section 6.9 Amounts Remaining in Funds.
--------------------------
It is agreed by the parties hereto that any amounts remaining in the Lease
Payment Fund, the Bond Fund, the Project Fund, the Renewal Fund or otherwise,
upon the expiration or sooner or later termination of the term of this Agreement
as provided in this Agreement, after payment in full of the Bonds (in accordance
with Section 10.01 of the Indenture), the fees, charges and expenses of the
Trustee, the Bond Registrar, the Paying Agents, the Remarketing Agent, the
Tender Agent, the Bank, the Credit Provider, if any, and the Agency in
accordance with the Indenture and after all rents and all other amounts payable
hereunder and under the Reimbursement Agreement shall have been paid in full
shall belong to and be promptly paid to the Lessee by the Trustee as overpayment
of rents.
Section 6.10 Issuance of Additional Bonds.
----------------------------
The Agency and the Lessee recognize that under the provisions of and
subject to the conditions set forth in the Indenture, the Agency is authorized,
with the consent of the Bank (for so long as the Letter of Credit is in effect
or any amounts are owed under the Reimbursement Agreement), to enter into a
Supplemental Indenture and issue one or more series of Additional Bonds on a
parity with the Series 2002 Bonds for the purpose of (i) completing the Project,
(ii) providing funds in excess of the Net Proceeds for insurance or eminent
domain to repair, relocate, replace, rebuild or restore the Facility in the
event of damage, destruction or taking by eminent domain, (iii) providing
extensions, additions or improvements to the Facility or (iv) refunding
Outstanding Bonds. If the Lessee is not in default hereunder, the Agency will
consider the issuance of Additional Bonds in a principal amount as is specified
in a written request in accordance with the applicable provisions set forth in
the Indenture. If Additional Bonds are to be issued pursuant to the Indenture,
the Agency and the Lessee shall enter into an amendment to this Agreement
providing, among other things, for the payment by the Lessee of such additional
rentals as are necessary in order to amortize in full the principal of and
interest on such Additional Bonds and any other costs in connection therewith.
Any such completion, repair, relocation, replacement, rebuilding,
restoration, additions, extensions or improvements paid for with the proceeds of
Additional Bonds shall become a part of the Facility and shall be included under
this Agreement to the same extent as if originally included hereunder.
Section 6.11 Employment Information, Opportunities and Guidelines.
----------------------------------------------------
(a) The Lessee shall ensure that all employees and applicants for
employment at the Facility are afforded equal employment opportunity without
discrimination.
(b) At all times during the construction, maintenance and operation of the
Facility, the Lessee shall not discriminate against any employee or applicant
for employment because of race, color, creed, age, sex or national origin. The
Lessee shall use its best efforts to ensure that employees and applicants for
employment with the Lessee or any subtenant of the Facility are treated without
regard to their race, color, creed, age, sex or national origin. As used herein,
the term "treated" shall mean and include, without limitation, the following:
recruited, whether by advertising or other means; compensated, whether in the
form of rates or other forms of compensation; selected for training, including
apprenticeship; promoted; upgraded; downgraded; demoted; transferred; laid off;
and terminated.
45
(c) The Lessee shall, in all solicitations or advertisements for employees
placed by or on behalf of the Lessee, state that all qualified applicants will
be considered for employment without regard to race, color, creed or national
origin, age or sex.
(d) The Lessee shall furnish to the Agency all information reasonably
required by the Agency pursuant to this Section and will cooperate with the
Agency for the purposes of investigation to ascertain compliance with this
Section.
(e) The Agency and the Lessee shall, from time to time, mutually agree upon
goals for the employment, training, or employment and training of members of
minority groups in connection with performing work with respect to the Facility;
provided however, if the Agency and the Lessee are unable to reach such mutual
agreement, the Agency and the Lessee shall cooperate to ensure compliance with
this Section 6.11.
(f) Except as is otherwise provided by collective bargaining contracts or
agreements to which the Lessee is a party, the Lessee shall cause new employment
opportunities created as a result of the Project to be listed with the New York
State Department of Labor, Community Services Division, and with the
administrative entity of the service delivery area created by the Federal Job
Training Partnership Act (P.L. 97-300) in which the Project is located. Except
as is otherwise provided by collective bargaining contracts or agreements to
which the Lessee is a party, the Lessee covenants and agrees, where practicable,
to first consider persons eligible to participate in programs under the Federal
Job Training Partnership Act (P.L. No. 97-300) who shall be referred to
administrative entities or service delivery areas created pursuant to such
Federal Job Training Partnership Act or by the Community Services Division of
the New York State Department of Labor for such new employment opportunities.
(g) The Lessee hereby authorizes any private or governmental entity,
including but not limited to the New York State Department of Labor ("DOL"), to
release to the Agency, and/or to the successors and assigns thereof
(collectively, the "Information Recipients"), any and all employment information
under its control and pertinent to Lessee and its respective employees. In
addition, upon the Agency's request, the Lessee shall provide to the Agency any
employment information in the Lessee's possession which is pertinent to the
Lessee and its respective employees. Information released or provided to
Information Recipients by DOL, or by any other governmental entity, or by any
private entity, or by the Lessee itself, or any information previously released
as provided by all or any of the foregoing parties (collectively, "Employment
Information") may be disclosed by the Information Recipients in connection with
the administration of the programs of the Agency, and/or the successors and
assigns thereof, and/or the Town of Babylon, and/or as may be necessary to
comply with law; and, without limiting the foregoing, the Employment Information
may be included in (x) reports prepared by the Information Recipients, (y) other
reports required of the Agency, and (z) any other reports required by law. This
authorization shall remain in effect throughout the term of this Agreement.
(h) Annually, by August 1 of each year until termination of this Agreement
the Lessee shall submit to the Agency an employment report relating to the
period commencing July 1 of the previous year and ending June 30 of the year of
the obligation of the filing of such report, substantially in the form of
Schedule A hereto, certified as to accuracy by the chief financial or accounting
officer of the Lessee.
46
Section 6.12 Redemption Under Certain Circumstances; Special Covenants.
---------------------------------------------------------
(a) Upon the determination by resolution of the members of the Agency that
the Lessee is operating the Facility or any portion thereof, or is allowing the
Facility or any portion thereof to be operated, (i) in violation of applicable
material law or (ii) not as a qualified "project" in accordance with the Act, or
(iii) that the Lessee is not in compliance with the provisions of Sections 4.3,
4.5(a)(iii), 6.2(c) and 8.5 hereof, and the failure of the Lessee within sixty
(60) days, with respect to clause (i) or (ii), and thirty (30) days with respect
to clause (iii) (or such longer period as may be established pursuant to the
proviso to this sentence) of the receipt by the Lessee of written notice of such
noncompliance from the Agency to cure such noncompliance together with a copy of
such resolution (a copy of which notice shall be sent to the Trustee), the
Lessee covenants and agrees that it shall, on the immediately succeeding
Interest Payment Date following the termination of such sixty (60) day or thirty
(30) day (or longer) period, as the case may be, pay to the Trustee advance
rentals in immediately available funds in an amount sufficient to redeem the
Bonds Outstanding in whole at the Redemption Price otherwise available and if
not available at a Redemption Price of 102% the aggregate principal amount of
the Outstanding Bonds together with interest accrued thereon to such Interest
Payment Date, provided, however, that if such noncompliance cannot be cured
within such period of sixty (60) days or thirty (30) days, as the case may be,
with diligence (and is capable of being cured) and the Lessee promptly commences
the curing of such non-compliance and thereafter prosecutes the curing thereof
with diligence and to the Agency's reasonable satisfaction, such period of time
within which the Lessee may cure such failure shall be extended for such
additional period of time as may be necessary to cure the same with diligence
and the Agency shall notify the Trustee and the Bondholders of any such
extension.
The Agency shall give prior written notice of the meeting at which the
members of the Agency are to consider such resolution to the Lessee and the
Trustee, which notice shall be no less than sixty (60) days prior to a meeting
called to consider matters set forth in clauses (a)(i) and (a)(ii) of this
Section and no less than thirty (30) days prior to a meeting called to consider
matters set forth in clause (a)(iii) of this Section.
(b) Upon the circumstances set forth in Sections 2.04 (c), (d) and (f) of
the Indenture, the Lessee shall pay or cause the prepayment of its lease rental
obligation upon the circumstances and in the manner set forth in the Indenture.
Section 6.13 Further Assurances.
------------------
The Lessee will do, execute, acknowledge and deliver or cause to be done,
executed, acknowledged and delivered such further acts, instruments,
conveyances, transfers and assurances, including the preparation and filing of
financing statements and extensions thereof under the Uniform Commercial Code,
at the sole cost and expense of the Lessee, as the Agency, the Bank or the
Trustee deems necessary or advisable for the implementation, effectuation,
correction, confirmation or perfection of this Agreement and any rights of the
Agency, the Bank or the Trustee hereunder, under the Indenture or under any
other Security Document.
Section 6.14 Recording and Filing.
--------------------
This Agreement as originally executed or a memorandum thereof shall be
recorded by the Lessee subsequent to the recordation of the Mortgage and the
Indenture, in the appropriate office
47
of the County Clerk of the County of Suffolk, or in such other office as may at
the time be provided by law as the proper place for the recordation thereof. The
security interests of the Agency created herein and the assignment of such
security interests to the Trustee shall be perfected by the filing of financing
statements by the Lessee which fully comply with the New York State Uniform
Commercial Code - Secured Transactions in the office of the Secretary of State
of the State and the State of Delaware and in the appropriate office of the
County Clerk of the County of Suffolk. The Lessee shall file or cause to be
filed all necessary continuation statements (and additional financing
statements) within the time prescribed by the New York State Uniform Commercial
Code-Secured Transactions in order to continue (or attach and perfect) the
security interests created by this Agreement, to the end that the rights of the
Agency, the Bank, the Holders of the Bonds and the Trustee in the Facility shall
be fully preserved as against creditors or purchasers for value from the Agency,
the Lessee. The Agency, the Bank and the Trustee are authorized, if permitted by
applicable law, to file one or more Uniform Commercial Code financing statements
disclosing any security interest in the Facility, this Agreement and the sums
due under this Agreement, without the signature of the Lessee or signed by the
Agency or the Trustee as attorney-in-fact for the Lessee. The Lessee agrees to
furnish the Agency, the Bank and the Trustee with the Opinion of Counsel
addressed to the Agency and the Trustee to the extent that such Opinion of
Counsel may be requested pursuant to Section 7.08 of the Indenture and shall
perform all other acts (including the payment of all costs) necessary in order
to enable the Agency to comply with Section 7.08 of the Indenture. If requested
by the Lessee, the Trustee shall acknowledge in writing that particular
equipment constitutes Lessee's Property and is not covered by such UCC
statements or the underlying security interest created by the Indenture or the
Mortgage provided the Lessee has certified to the Trustee that such equipment
does not constitute Facility Realty or Facility Equipment and further provided
that the Lessee has agreed to provide indemnity in form and substance
satisfactory to the Trustee.
Section 6.15 Right to Cure Agency Defaults.
-----------------------------
The Agency hereby grants the Lessee full authority for account of the
Agency to perform any covenant or obligation the non-performance of which is
alleged to constitute a default in any notice received by the Lessee, in the
name and stead of the Agency, with full power of substitution.
Section 6.16 Reserved.
--------
ARTICLE VII
Events of Default; Remedies
---------------------------
Section 7.1 Events of Default.
-----------------
Any one or more of the following events shall constitute an "Event of
Default" hereunder:
(a) Failure of the Lessee (i) to make any rental payment for deposit in the
Reimbursement Account of the Lease Payments Fund that has become due and payable
by the terms of Section 3.3(a) or (b) hereof; or (ii) to provide sufficient
moneys for the purchase of any Bonds pursuant to Section 3.7 hereof;
48
(b) Failure of the Lessee to pay any amount (except the obligation to pay
rent under Sections 3.3 and 3.7 hereof) that has become due and payable or to
observe and perform any covenant, condition or agreement on its part to be
performed under Sections 4.3, 4.4 or 4.5 hereof and continuance of such failure
for a period of thirty (30) days after receipt by the Lessee of written notice
specifying the nature of such default from the Agency, the Trustee or the
Holders of more than twenty-five per centrum (25%) in aggregate principal amount
of the Bonds Outstanding;
(c) Failure of the Lessee to observe and perform any covenant, condition or
agreement hereunder on its part to be performed (except as set forth in Section
7.1(a) or (b) above) and, if such failure can be remedied, (1) continuance of
such failure for a period of thirty (30) days after receipt by the Lessee of
written notice specifying the nature of such default from the Agency, the
Trustee or the Holders of more than twenty-five per centrum (25%) in aggregate
principal amount of the Bonds Outstanding, or (2) if by reason of the nature of
such default the same can be remedied, but not within the said thirty (30) days,
the Lessee fails to proceed with reasonable diligence after receipt of said
notice to cure the same or fails to continue with reasonable diligence its
efforts to cure the same; provided, however, in any event such failure shall be
remedied within sixty (60) days after receipt by the Lessee of the notice
referred to above (unless the Agency shall have approved in writing a longer
period);
(d) The Lessee shall (i) apply for or consent to the appointment of or the
taking of possession by a receiver, liquidator, custodian or trustee of itself
or of all or a substantial part of its property, (ii) admit in writing its
inability, or be generally unable, to pay its debts as such debts generally
become due, (iii) make a general assignment for the benefit of its creditors,
(iv) commence a voluntary case under the Federal Bankruptcy Code (as now or
hereafter in effect), (v) file a petition seeking to take advantage of any other
law relating to bankruptcy, insolvency, reorganization, winding-up, or
composition or adjustment of debts, (vi) fail to controvert in a timely or
appropriate manner, or acquiesce in writing to, any petition filed against
itself in an involuntary case under such Bankruptcy Code, (vii) take any action
for the purpose of effecting any of the foregoing, or (viii) be adjudicated a
bankrupt or insolvent by any court;
(e) A proceeding or case shall be commenced, without the application or
consent of any principal of the Lessee, in any court of competent jurisdiction,
seeking, (i) liquidation, reorganization, dissolution, winding-up or composition
or adjustment of debts, (ii) the appointment of a trustee, receiver, liquidator,
custodian or the like of any principal of the Lessee or of all or any
substantial part of its assets, or (iii) similar relief under any law relating
to bankruptcy, insolvency, reorganization, winding-up or composition or
adjustment of debts, and such proceeding or case shall continue undismissed, or
an order, judgment or decree approving or ordering any of the foregoing shall be
entered and continue unstayed and in effect, for a period of ninety (90) days;
or any order for relief against the Lessee shall be entered in an involuntary
case under such Bankruptcy Code; the terms "dissolution" or "liquidation" of the
Lessee as used above shall not be construed to prohibit any action otherwise
permitted by Section 6.1 hereof;
(f) Any representation or warranty made by the Lessee (i) in the
application, commitment letter and related materials submitted to the Agency or
the initial purchaser(s) of the Bonds for approval of the Project or its
financing, or (ii) by the Lessee in this Agreement or in any of the other
Security Documents or (iii) in the Contract of Purchase among the Agency, the
Lessee and the original purchaser(s) of the Bonds, or (iv) in any report,
certificate, financial
49
statement or other instrument furnished pursuant hereto or any of the foregoing
shall prove to be false, materially misleading or incorrect in any material
respect as of the date made; or
(g) An "Event of Default" under the Indenture or under any other Security
Document shall occur and be continuing.
(h) Receipt by the Trustee of written notice from the Bank that an Event of
Default occurred under the Reimbursement Agreement and directing the Trustee to
accelerate payment of the Bonds.
Section 7.2 Remedies on Default.
-------------------
Whenever any Event of Default referred to in Section 7.1 hereof shall have
occurred and be continuing, the Agency, or the Trustee where so provided, may,
subject to Section 7.8 hereof and Article VIII of the Indenture, take any one or
more of the following remedial steps:
(a) The Trustee, as and to the extent provided in Article VIII of the
Indenture, may cause all principal installments of rent payable under Section
3.3 hereof for the remainder of the term of this Agreement to be immediately due
and payable, whereupon the same, together with the accrued interest thereon,
shall become immediately due and payable; provided, however, that upon the
occurrence of an Event of Default under Section 7.1(d) or (e) hereof, all
principal installments of rent payable under Section 3.3 hereof for the
remainder of the term of this Agreement, together with the accrued interest
thereon, shall immediately become due and payable without any declaration,
notice or other action of the Agency, the Bank, the Trustee, the Holders of the
Bonds or any other Person being a condition to such acceleration;
(b) The Agency (with the prior written consent of the Bank) or the Trustee
(with the prior written consent of the Bank), may re-enter and take possession
of the Facility without terminating this Agreement, and sublease the Facility
for the account of the Lessee, holding the Lessee liable for the difference in
the rent and other amounts payable by the sublessee in such subletting, and the
rents and other amounts payable by the Lessee hereunder;
(c) The Agency or the Trustee, with the prior written consent of the Bank,
may terminate this Agreement, and exclude the Lessee from possession of the
Facility, in which case this Agreement and all of the estate, right, title and
interest herein granted or vested in the Lessee shall cease and terminate. No
such termination of this Agreement shall relieve the Lessee of its liability and
obligations hereunder and such liability and obligations shall survive any such
termination;
(d) The Agency, the Bank or the Trustee may take whatever action at law or
in equity as may appear necessary or desirable to collect the rent then due and
thereafter to become due, or to enforce performance or observance of any
obligations, agreements or covenants of the Lessee under this Agreement;
(e) The Trustee may take any action permitted under the Indenture with
respect to an Event of Default thereunder;
(f) The Agency may suspend or terminate the Sales Tax Letter or require the
Lessee to surrender the Sales Tax Letter to the Agency for cancellation; and
50
(g) The Agency, without the consent of the Trustee or any Bondholder, may
proceed to enforce the Agency's Reserved Rights by (i) an action for damages,
injunction or specific performance, and/or (ii) conveying all of the Agency's
right, title and interest in the Facility to the Lessee, subject to the lien of
the Mortgage and any other Security Documents.
In the event that the Lessee fails to make any rental payment required in
Section 3.3 hereof, the installment so in default shall continue as an
obligation of the Lessee until the amount in default shall have been fully paid.
No action taken pursuant to this Section 7.2 (including repossession of the
Facility or termination of this Agreement pursuant to this Section 7.2 or by
operation of law or otherwise) shall, except as expressly provided herein,
relieve the Lessee from the Lessee's obligations hereunder, all of which shall
survive any such action.
Notwithstanding any provision of this Agreement to the contrary, the
Trustee shall not take any action to accelerate the Bonds or dispose of any
collateral pledged under the Security Documents except as provided in Article
VIII of the Indenture.
Section 7.3 Reletting of Facility.
---------------------
If the right of the Lessee to the occupancy, use and possession of the
Facility shall be terminated in any way, the Agency may relet the same or any
part thereof for the account and benefit of the Lessee for such rental terms to
such Persons and for such period or periods as may be fixed and determined by
the Agency after notice to and approval by the Trustee and the Bank, but the
Agency shall not unreasonably refuse to accept or receive any suitable occupant
or tenant offered by the Lessee. Notwithstanding the foregoing, any reletting of
the Facility or any part thereof shall be permitted under this Section 7.3 only
if, in the opinion of Nationally Recognized Bond Counsel, such reletting does
not adversely affect the validity of the Bonds. The Agency, the Bank and the
Trustee shall not otherwise be required to do any act whatsoever or exercise any
diligence whatsoever to mitigate the damages to the Lessee, and if a sufficient
sum shall not be received from any reletting to satisfy the rental payments
hereby agreed to be made by the Lessee, after paying the expenses of reletting
and collection, then the Lessee hereby agrees to pay and satisfy any such
deficiency if, as and when the same exists; provided, however, any excess
rentals from any such reletting shall be credited to any rental due or to become
due by the Lessee.
Section 7.4 Remedies Cumulative.
-------------------
The rights and remedies of the Agency, the Bank or the Trustee under this
Agreement shall be cumulative and shall not exclude any other rights and
remedies of the Agency, the Bank or the Trustee allowed by law with respect to
any default under this Agreement. Failure by the Agency, the Bank or the Trustee
to insist upon the strict performance of any of the covenants and agreements
herein set forth or to exercise any rights or remedies upon default by the
Lessee hereunder shall not be considered or taken as a waiver or relinquishment
for the future of the right to insist upon and to enforce by mandatory
injunction, specific performance or other appropriate legal remedy a strict
compliance by the Lessee with all of the covenants and conditions hereof, or of
the rights to exercise any such rights or remedies, if such default by the
Lessee be continued or repeated, or of the right to recover possession of the
Facility by reason thereof.
51
Section 7.5 No Additional Waiver Implied by One Waiver.
------------------------------------------
In the event any covenant or agreement contained in this Agreement should
be breached by either party and thereafter waived by the other party, such
waiver shall be limited to the particular breach so waived and shall not be
deemed to waive any other breach hereunder. No waiver shall be binding unless it
is in writing and signed by the party making such waiver. No course of dealing
between the Agency, the Bank and/or the Trustee and the Lessee or any delay or
omission on the part of the Agency, the Bank and/or the Trustee in exercising
any rights hereunder or under the Indenture or under any other Security Document
shall operate as a waiver. To the extent permitted by applicable law, the Lessee
hereby waives the benefit and advantage of, and covenants not to assert against
the Agency, the Bank or the Trustee, any valuation, inquisition, stay,
appraisement extension or redemption laws now existing or which may hereafter
exist which, but for this provision, might be applicable to any sale or
reletting made under the judgment, order or decree of any court or under the
powers of sale and reletting conferred by this Agreement or otherwise.
Section 7.6 Effect on Discontinuance of Proceedings.
---------------------------------------
In case any proceeding taken by the Trustee under the Indenture or this
Agreement or under any other Security Document on account of any Event of
Default hereunder or under the Indenture shall have been discontinued or
abandoned for any reason or shall have been determined adversely to the Trustee,
then, and in every such case, the Agency, the Bank, the Trustee and the Holders
of the Bonds shall be restored, respectively, to their former positions and
rights hereunder and thereunder, and all rights, remedies, powers and duties of
the Trustee shall continue as in effect prior to the commencement of such
proceedings.
Section 7.7 Agreement to Pay Attorneys' Fees and Expenses.
---------------------------------------------
In the event the Lessee should default under any of the provisions of this
Agreement and the Agency, the Bank (or its Issuing Agent, if any) or the Trustee
should employ attorneys or incur other expenses for the collection of rentals or
other amounts payable hereunder or the enforcement of performance or observance
of any obligation or agreement on the part of the Lessee herein contained, the
Lessee agrees that it will on demand therefor pay to the Agency, the Bank (or
its Issuing Agent, if any) or the Trustee the reasonable fees and disbursements
of such attorneys and such other reasonable expenses so incurred.
Section 7.8 Rights of Bank.
--------------
Notwithstanding anything to the contrary contained herein, and subject to
the provisions and limitations of Section 7.10 of the Indenture, neither the
Trustee nor the Agency shall (i) take any actions to accelerate the Bonds
(except to the extent of a redemption of the Series 2002 Bonds pursuant to
Section 2.04(f) of the Indenture), nor (ii) foreclose, release, take possession
of or otherwise dispose of any collateral covered by the Security Documents,
except with the prior written consent of the Bank; provided, however, the
Agency's Reserved Rights and its ability to enforce those rights under Section
7.2(f) hereof shall not be subject to the consent of the Bank.
52
ARTICLE VIII
Options
Section 8.1 Options.
-------
(a) The Lessee has the option to make advance rental payments for deposit
in the Reimbursement Account of the Lease Payments Fund for application in
connection with the redemption of Bonds or payment of amounts owed to the Bank
under the Reimbursement Agreement (or, if the Letter of Credit is no longer in
effect and amounts owed to the Bank under the Reimbursement Agreement are paid
in full, in the Redemption Account of the Bond Fund) to effect the retirement of
the Bonds in whole or the redemption in whole or in part of the Bonds, all in
accordance with the terms of the Indenture; provided, however, that no partial
redemption of the Bonds may be effected through advance rental payments
hereunder if there shall exist and be continuing an Event of Default hereunder
other than Events of Default under Sections 7.1(c) or (f) hereof. The Lessee
shall exercise its option to make such advance rental payments by delivering a
written notice of an Authorized Representative of the Lessee to the Trustee, the
Agency and the Bank not less than forty-five days prior to the date on which the
Bonds are to be redeemed, setting forth (i) the amount of the advance rental
payment, (ii) the principal amount of Bonds Outstanding requested to be redeemed
with such advance rental payment (which principal amount shall be in such
minimum amount or integral multiple of such amount as shall be permitted in the
Indenture), and (iii) the date on which such principal amount of Bonds are to be
redeemed. Such advance rental payment shall be delivered to the Trustee not less
than the forty-fifth day preceding the date set for redemption of the Bonds and
shall be paid to the Trustee in legal tender on or before the redemption date
and shall be an amount which, when added to the amount on deposit in the
Reimbursement Account of the Lease Payments Fund for application in connection
with the redemption of Bonds or payment of amounts owed to the Bank under the
Reimbursement Agreement (or, if the Letter of Credit is no longer in effect and
all amounts owed to the Bank under the Reimbursement Agreement are paid in full,
in the Redemption Account of the Bond Fund) and available therefor, will be
sufficient to pay the Redemption Price of the Bonds to be redeemed, together
with interest to accrue to the date of redemption and all expenses of the
Agency, the Bond Registrar, the Trustee and the Paying Agents in connection with
such redemption. In the event the Bonds are to be redeemed in whole or otherwise
retired, the Lessee shall further pay on or before such redemption date, in
legal tender, to the Agency, the Trustee, the Bond Registrar, the Tender Agent,
the Remarketing Agent, the Bank and the Paying Agents, as the case may be, all
fees and expenses owed such party or any other party entitled thereto under this
Agreement or the Indenture together with all other amounts due and payable under
this Agreement, the other Security Documents, the Remarketing Agreement and the
Reimbursement Agreement.
(b) The Lessee shall have the option to purchase the Facility commencing on
that date upon which the Bonds may first optionally be redeemed in whole and on
any date thereafter permitted therefor as provided in the Indenture.
(c) The Lessee shall also have the option to purchase the Facility on any
date during the term of this Agreement within ninety (90) days of the occurrence
of any of the following events (and the Lessee shall notify the Bank (and its
Issuing Agent, if any) in writing of its
53
election to purchase the Facility pursuant to this Section 8.1(c) at least sixty
(60) days prior to the exercise of such option):
(1) The Facility shall have been damaged or destroyed to such extent
that as evidenced by a certificate of an Independent Engineer filed with
the Agency, the Bank and the Trustee (A) the Facility cannot be reasonably
restored within a period of one year from the date of such damage or
destruction to the condition thereof immediately preceding such damage or
destruction, (B) the Lessee is thereby prevented or likely to be prevented
from carrying on its normal operation of the Facility for a period of one
year from the date of such damage or destruction, or (C) the restoration
cost of the Facility would exceed the total amount of all insurance
proceeds, including any deductible amount, in respect of such damage or
destruction; or
(2) title to, or the temporary use of, all or substantially all of the
Facility shall have been taken or condemned by a competent authority which
taking or condemnation, results, or is likely to result, in the Lessee
being thereby prevented or likely to be prevented from carrying on its
normal operation of the Facility for a period of one year from the date of
such taking or condemnation, as evidenced by a certificate of an
Independent Engineer filed with the Agency, the Bank and the Trustee; or
(3) as a result of changes in the Constitution of the United States of
America or of the State or of legislative or executive action of the State
or any political subdivision thereof or of the United States of America or
by final decree or judgment of any court after the contest thereof by the
Lessee, this Agreement becomes void or unenforceable or impossible of
performance in accordance with the intent and purpose of the parties as
expressed herein or unreasonable burdens or excessive liabilities are
Imposed upon the Lessee by reason of the operation of the Facility; or
(4) The rating of the Bank (or, in the event that the Letter of Credit
has been issued by an Issuing Agent, the rating of the Issuing Agent) has
been reduced below AA-/A-1+ by the Rating Agency.
(d) The Lessee, in purchasing the Facility pursuant to Section 8.1(c)
hereof, shall file with the Agency, the Bank (and its Issuing Agent, if any) and
the Trustee the certificate prescribed by Section 8.1(c)(1) or (2) hereof
together with a resolution of the board of directors or executive committee of
the Lessee (certified as true and correct by an Authorized Representative of the
Lessee) to the effect that, as a result of the occurrence of the event giving
rise to the exercise of such option to purchase, the Lessee has discontinued, or
at the earliest practicable date will discontinue, the operation of the Facility
for its intended purposes, and in the case of Section 8.1(b) or 8.1(c) hereof,
the Lessee shall pay to the Trustee as the purchase price, in legal tender,
advance rental payments, for deposit in the Reimbursement Account of the Lease
Payments Fund for reimbursement of amounts owed to the Bank under the
Reimbursement Agreement in connection with the redemption of Bonds or payment of
other amounts owed to the Bank under the Reimbursement Agreement (or, if the
Letter of Credit is no longer in effect and all amounts owed to the Bank under
the Reimbursement Agreement are paid in full, in the Redemption Account of the
Bond Fund) (if payment in full of the principal of or the Redemption Price, if
any, as the case may be, of, and interest on, all the Outstanding Bonds at
maturity or upon earlier redemption has not yet been made) equal to the sum of
the following:
54
(1) An amount which, when added to the amount on deposit in the
Reimbursement Account of the Lease Payments Fund for reimbursement of
amounts owed to the Bank under the Reimbursement Agreement in connection
with the redemption of Bonds or payment of other amounts owed to the Bank
under the Reimbursement Agreement (or, if the Letter of Credit is no longer
in effect and all amounts owed to the Bank under the Reimbursement
Agreement are paid in full, in the Redemption Account of the Bond Fund) and
available therefor, will be sufficient to pay, retire and redeem the
Outstanding Bonds in accordance with the provisions of the Indenture,
including, without limitation, the principal of or the Redemption Price (as
the case may be) of, together with interest to maturity or redemption date
(as the case may be) on, the Outstanding Bonds or to reimburse the Bank for
amounts owed to the Bank under the Reimbursement Agreement in connection
therewith;
(2) expenses of redemption, the fees and expenses of the Agency, the
Trustee, the Bank (and its Issuing Agent, if any), the Bond Registrar, the
Remarketing Agent, the Tender Agent and the Paying Agents and all other
amounts due and payable under this Agreement, the Reimbursement Agreement,
the Remarketing Agreement and the Indenture; and
(3) one dollar (U.S. $1).
Notwithstanding any provision of this Agreement to the contrary, any sale
by the Agency, and purchase by the Lessee, of the Facility pursuant to Sections
8.1(b) or (c) shall be subject to the lien of the Mortgage until all amounts
owed under the Reimbursement Agreement have been paid in full and the Letter of
Credit or other Security Documents then in effect shall have been returned to
the Bank for cancellation.
(e) Upon the payment in full of the principal of and interest on the
Outstanding Bonds (whether at maturity or earlier redemption), the Lessee shall
have the option to purchase the Agency's interest in the Facility and shall
exercise such option by (1) delivering to the Agency and the Bank prior written
notice of an Authorized Representative of the Lessee no more than thirty (30)
days after the payment in full of the Bonds of the exercise of such option to
purchase, which notice shall set forth a requested closing date for the purchase
of the Agency's interest in the Facility which shall be not later than sixty
(60) days after the payment in full of the Bonds, and (2) paying on such closing
date a purchase price equal to the sum of one dollar (U.S. $1), the fees and
expenses of the Agency, the Trustee, the Bank, the Bond Registrar, the
Remarketing Agent, the Tender Agent and the Paying Agents and all other amounts
due and payable under this Agreement, the Reimbursement Agreement, the
Remarketing Agreement or the Indenture, together with any amounts required to be
paid to the United States government pursuant to the Indenture. Upon the written
request of the Lessee, the Agency may approve the extension or waiver of any of
the time periods set forth in this paragraph.
(f) The Lessee shall not, at any time, assign or transfer its option to
purchase the Facility as contained in this Section 8.1 separate and apart from a
permitted assignment of this Agreement pursuant to Section 9.3 hereof without
the prior written consent of the Agency and the Trustee.
55
Section 8.2 Conveyance on Exercise of Option to Purchase.
--------------------------------------------
At the closing of any purchase of the Facility pursuant to Section 8.1
hereof, the Agency will, upon receipt of payment of the Purchase Price, request
the Bank to deliver to the Lessee (i) a release, satisfaction or termination of
the mortgage lien and security interest of the Mortgage on the Facility and (ii)
shall deliver or cause to be delivered other documents (including, without
limitation, all documents necessary to pass title in recordable form) conveying
to the Lessee by bargain and sale deed, good and marketable title in fee simple
to the Facility Realty, as all such property then exists, and all rights,
alleys, ways, waters, privileges, appurtenances and advantages to the same
belonging or anyway appertaining, subject to the following: (1) the nature,
quality and extent to which title to said property shall have been vested in the
Agency; (2) any Permitted Encumbrances to which title to said property was
subject when conveyed to the Agency; (3) any liens, easements, security
interests, claims, charges and encumbrances created at the request of the Lessee
or to the creation or suffering of which the Lessee consented; (4) any liens,
security interests, claims, charges and encumbrances resulting from the failure
of the Lessee to perform or observe any of the agreements on its part contained
in this Agreement; (5) any liens for taxes or assessments not then delinquent;
(6) the rights, if any, of any condemning authority; and (ii) documents
releasing and conveying to the Lessee all of the Agency's rights and interests
in and to any rights of action, or any insurance proceeds or condemnation award,
with respect to the Facility. Concurrently with the delivery of such title
documents, there shall be delivered by the Agency to the Trustee any
instructions or other instruments required by Section 10.01 of the Indenture to
defease and pay the Bonds.
Upon conveyance of the Facility pursuant to this Section 8.2, this
Agreement and all obligations of the Lessee hereunder shall be terminated except
the obligations of the Lessee under Sections 3.1, 4.3 (until such time as the
Lessee shall again pay taxes as the record owner of the Facility Realty), 6.2,
8.5 and 9.16 and any other section hereof which, by its express terms, states it
shall survive the termination of this Agreement, shall survive such termination.
Section 8.3 Option to Purchase or Invite Tenders of Bonds.
---------------------------------------------
The Lessee shall have the option, at any time during the term of this
Agreement, to purchase Bonds for its own account, whether by direct negotiation,
through a broker or dealer, or by making a tender offer to the Holders thereof.
The Bonds so purchased by the Lessee or by any Affiliate thereof shall be
delivered to the Trustee for cancellation within fifteen (15) days of the date
of purchase. The Agency shall at all times make available or cause to be made
available to the Lessee its registration books (maintained at the principal
corporate trust office of the Trustee) containing the names and addresses of the
Bondholders if known.
Section 8.4 Termination of Agreement.
------------------------
After full payment of the Bonds or provision for the payment in full
thereof having been made in accordance with Section 10.01 of the Indenture and
the return of the Letter of Credit, if any, then in effect to the Bank for
cancellation, the Lessee may terminate this Agreement by paying the fees and
expenses of the Agency, the Bank (and its Issuing Agent, if any), the Credit
Provider, if any, the Trustee, the Bond Registrar, the Tender Agent, the
Remarketing Agent and the Paying Agents and all other amounts due and payable
under this Agreement, the other Security Documents, the Remarketing Agreement
and the Reimbursement Agreement and by giving the Agency notice in writing of
such termination and thereupon such termination shall
56
forthwith become effective, subject, however, to the survival of the obligations
of the Lessee under Sections 3.1, 4.3 (until such time as the Lessee shall again
pay taxes as the record owner of the Facility Realty), 6.2, 8.5 and 9.16 and any
other section hereof which, by its express terms, states it shall survive the
termination of this Agreement.
Section 8.5 Recapture of Agency Benefits.
----------------------------
(a) It is understood and agreed by the parties to this Agreement that the
Agency is issuing the Bonds to finance the Project and is entering into this
Agreement in order to accomplish the public purposes of the Act. In
consideration therefor, the Lessee hereby agrees as follows:
(b) If there shall occur a Recapture Event (as defined below) prior to the
completion of the Project and occupancy of the Facility for its intended
purposes by the Lessee, the Lessee shall pay to the Agency as a return of public
benefits conferred by the Agency, all Benefits (as defined below).
(c) If there shall occur a Recapture Event after the Substantial Completion
Date (as defined below), the Lessee shall pay to the Agency as a return of
public benefits conferred by the Agency, the following amounts:
(i) one hundred per cent (100%) of the Benefits, if the
Recapture Event occurs within the first (6) years after the Substantial
Completion Date;
(ii) eighty per cent (80%) of the Benefits, if the Recapture
Event occurs during the seventh (7th) year after the Substantial
Completion Date;
(iii) sixty per cent (60%) of the Benefits, if the Recapture
Event occurs during the eighth (8th) year after the Substantial
Completion Date;
(iv) forty per cent (40%) of the Benefits, if the Recapture
Event occurs during the ninth (9th) year after the Substantial
Completion Date; or
(v) twenty per cent (20%) of the Benefits, if the Recapture
Event occurs during the tenth (10th) year after the Substantial
Completion Date.
The term "Benefits" shall mean, collectively:
1. all real estate tax benefits which have accrued to the benefit
of the Lessee during such time as the Agency was the owner of the Facility
Realty by reason of the Agency's ownership, such tax benefits to be
computed by subtracting the payments in lieu of taxes paid under Section
4.3 hereof from those payments which the Lessee would have been required to
pay during the lease term had the Town determined the amount of such real
estate taxes as would be due if the Lessee had been the owner of the
Facility Realty during such lease term; and
2. all miscellaneous benefits derived from the Agency's
participation in the financing of the costs or assistance to the Project,
including, but not limited to, any
57
exemption from mortgage recording tax, commercial rent and occupancy tax,
sales or use taxes and filing and recording fees.
The term "Recapture Event" shall mean any of the following events:
(1) The Lessee shall have liquidated its operations and/or assets or
shall have ceased all or substantially all of its operations at the
Facility (whether by relocation to another facility or otherwise, or
whether to another facility outside of the Town);
(2) The Lessee shall have leased all or any portion of the Facility
in violation of the limitations imposed by Section 6.18 hereof, without the
prior written consent of the Agency;
(3) The Lessee shall have effected substantial changes in the scope
and nature of the Lessee's operations at the Facility such that the
Facility or any portion thereof is not being operated as a qualified
"project" under the Act;
(4) The Lessee shall have transferred all or substantially all of its
employees to a location outside of the Town; or
(5) The Lessee shall have sold, leased, transferred or otherwise
disposed of all or substantially all of its interest in the Facility except
as provided in Section 6.1.
The term "Substantial Completion Date" shall mean the date stated in a
certificate of an Authorized Representative of the Lessee delivered pursuant to
Section 2.1(h) hereof, after the Project has been substantially completed in
accordance with such Section, and upon which date the Facility shall have
commenced operations at substantially the level intended; provided, however,
that the "Substantial Completion Date", as defined herein, shall be in any event
deemed to occur no later than January 15, 2005, regardless of whether or not the
Authorized Representative of the Lessee has delivered such certificate to the
Agency.
Notwithstanding the foregoing, a Recapture Event shall not be deemed to
have occurred if the Recapture Event shall have arisen as a direct, immediate
result of (i) a taking or condemnation by governmental authority of all or
substantially all of the Facility, or (ii) the inability at law of the Lessee to
rebuild, repair, restore or replace the Facility after the destruction or damage
of loss to substantially its condition prior to such destruction or damage of
loss, which inability shall have risen in good faith through no fault on the
part of the Lessee.
(b) The Lessee covenants and agrees to furnish the Agency with written
notification upon any Recapture Event occurring within ten (10) years of the
Substantial Completion Date hereof, which notification shall set forth the terms
thereof.
(c) The provisions of this Section 8.5 shall survive the termination of
this Agreement for any reason whatsoever, notwithstanding any provision of this
Agreement to the contrary.
58
ARTICLE IX
Miscellaneous
-------------
Section 9.1 Indenture; Amendment.
--------------------
The Lessee shall have and may exercise all the rights, powers and authority
stated to be in the Lessee in the Indenture and in the Bonds, and the Indenture
and the Bonds shall not be modified, altered or amended in any manner which
adversely affects such rights, powers and authority so stated to be in the
Lessee or otherwise adversely affects the Lessee without the written consent of
the Lessee.
Section 9.2 Force Majeure.
-------------
In case by reason of force majeure either party hereto shall be rendered
unable wholly or in part to carry out its obligations under this Agreement, then
except as otherwise expressly provided in this Agreement, if such party shall
give notice and full particulars of such force majeure in writing to the other
party within a reasonable time after occurrence of the event or cause relied on,
the obligations of the party giving such notice (other than the obligations of
the Lessee to make the rental payments or other payments required under the
terms hereof, or to comply with Sections 4.5 or 6.2 hereof), so far as they are
affected by such force majeure, shall be suspended during the continuance of the
inability then claimed which shall include a reasonable time for the removal of
the effect thereof, but for no longer period, and such party shall endeavor to
remove or overcome such inability with all reasonable dispatch. The term "force
majeure", as employed herein, shall mean acts of God, strikes, lockouts or other
industrial disturbances, acts of a public enemy, orders of any kind of the
Government of the United States of America or of the State or any civil or
military authority, insurrections, riots, epidemics, landslides, lightning,
earthquakes, fires, hurricanes, storms, floods, washouts, droughts, arrest,
restraining of government and people, civil disturbances, explosions, partial or
entire failure of utilities, shortages of labor, material, supplies or
transportation, or any other similar or different cause not reasonably within
the control of the party claiming such inability. It is understood and agreed
that the settlement of existing or impending strikes, lockouts or other
industrial disturbances shall be entirely within the discretion of the party
having the difficulty and that the above requirements that any force majeure
shall be reasonably beyond the control of the party and shall be remedied with
all reasonable dispatch shall be deemed to be fulfilled even though such
existing or impending strikes, lockouts and other industrial disturbances may
not be settled but could have been settled by acceding to the demands of the
opposing person or persons.
Section 9.3 Assignment or Sublease.
----------------------
The Lessee may not at any time (i) subject to Section 6.1 hereof, assign or
transfer this Agreement, or (ii) sublet the whole or any part of the Facility to
any party without the prior written consent of the Agency and the Trustee (which
consent of the Trustee shall not be unreasonably withheld or delayed), and the
Bank (or, if all amounts owed to the Bank under the Reimbursement Agreement have
been paid in full and the Letter of Credit shall no longer be in effect as
permitted hereunder and under the Indenture, the Agency); provided, that if the
Agency, the Trustee and the Bank consent to any such assignment, transfer or
subletting, (1) the Lessee, shall nevertheless remain liable to the Agency for
the payment of all rent and for the full performance of all of the terms,
covenants and conditions of this Agreement and of any other
59
Security Document to which it shall be a party, (2) any sublessee in whole of
the Facility shall have assumed in writing and have agreed to keep and perform
all of the terms of this Agreement on the part of the Lessee to be kept and
performed, shall be jointly and severally liable with the Lessee for the
performance thereof, shall be subject to service of process in the State, and,
if a corporation, shall be qualified to do business in the State, (3) in the
Opinion of Counsel, such sublease shall not legally impair in any respect the
obligations of the Lessee for the payment of all rents nor for the full
performance of all of the terms, covenants and conditions of this Agreement or
of any other Security Document to which the Lessee shall be a party, nor impair
or limit in any respect the obligations of any obligor under any other Security
Document, (4) any sublessee shall be a corporation and shall utilize the
Facility as a qualified "project" within the meaning of the Act, (5) such
sublease shall not violate any provision of this Agreement, the Indenture, any
other Security Document or the Reimbursement Agreement, (6) with respect to any
subletting in part, the term of each such sublease does not exceed five (5)
years and at any given date, no more than an aggregate of twenty-five percent
(25%) of such space would be sub-leased by the Lessee, (7) sublease shall in no
way diminish or impair the Lessee's obligation to carry the insurance required
under Section 4.5 of this Agreement and the Lessee shall furnish written
evidence satisfactory to the Agency, the Trustee and the Bank (or, if all
amounts owed to the Bank under the Reimbursement Agreement have been paid in
full and the Letter of Credit shall no longer be in effect as permitted
hereunder and under the Indenture, the Agency and the Trustee) that such
insurance coverage shall in no manner be limited by reason of such sublease, (8)
each such sublease contains such other provisions as the Agency, the Trustee or
the Bank (or, if amounts owed to the Bank under the Reimbursement Agreement have
been paid in full and the Letter of Credit shall no longer be in effect as
permitted hereunder and under the Indenture, the Agency or the Trustee) may
reasonably require and (9) in the opinion of Nationally Recognized Bond Counsel,
such assignment, transfer or sublease shall not cause the interest on the Bonds
to be includable in gross income for Federal income tax purposes. The Lessee
shall furnish or cause to be furnished to the Agency, the Bank and the Trustee a
copy of any such sublease in substantially final form at least thirty (30) days
prior to the date of execution thereof.
Any consent by the Agency, the Bank or the Trustee to any act of sublease
shall be held to apply only to the specific transaction thereby authorized. Such
consent shall not be construed as a waiver of the duty of the Lessee, or the
successors or assigns of the Lessee, to obtain from the Agency, the Bank and the
Trustee consent to any other or subsequent sublease, or as modifying or limiting
the rights of the Agency, the Bank or the Trustee under the foregoing covenant
by the Lessee.
If the Facility or any part thereof shall be sublet or occupied by any
Person other than the Lessee, the Agency, in the event of the Lessee's default
in the payment of rent may, and is hereby empowered to, collect rent from the
undertenant or occupant during the continuance of any such default. In either of
such events, the Agency may apply the net amount received by it to the rent
herein provided, and no such collection shall be deemed a waiver of the covenant
herein against assignment, transfer or sublease of this Agreement, or constitute
the acceptance of the under-tenant or occupant as tenant, or a release of the
Lessee from the further performance of the covenants herein contained on the
part of the Lessee.
The Lessee covenants and agrees not to amend, modify, terminate or assign,
or to suffer any amendment, modification, termination or assignment of, any
previously consented to sublease, without the prior written consent of the
Agency.
60
The existing or contemplated subtenants, if any, listed on Schedule C
hereof are hereby approved by the Agency pursuant to the terms of this Section
9.3.
Section 9.4 Priority of Indenture and Mortgage.
----------------------------------
Pursuant to the Mortgage, the Agency will grant a mortgage lien on and a
security interest in the Facility to the Bank, and pursuant to the Indenture,
the Agency will pledge and assign the rentals and certain other moneys
receivable under this Agreement to the Trustee, for the benefit of the
Bondholders and the Bank (and its Issuing Agent, if any), as security for
payment of the principal or Redemption Price, if applicable, of and interest on
the Bonds and amounts owed or owing to the Bank (and its issuing Agent, if any)
under the Reimbursement Agreement, and this Agreement shall be subject and
subordinate to the Mortgage and the Indenture and such mortgage lien, security
interest, pledge and assignment thereunder.
Section 9.5 Benefit of and Enforcement by Trustee and Bank.
----------------------------------------------
The Agency and the Lessee agree that this Agreement is executed in part to
induce the purchase by others of the Bonds, for the further securing of the
Bonds and to induce the Bank (or its Issuing Agent, if any) to issue the Letter
of Credit, and accordingly all covenants and agreements on the part of the
Agency and the Lessee as set forth in this Agreement are hereby declared to be
for the benefit of the Holders from time to time of the Bonds and the Bank (and
its Issuing Agent, if any) and may be enforced as provided in Article VIII of
the Indenture by the Trustee on behalf of the Bondholders or by the Bank (and
its Issuing Agent, if any) to the extent provided herein or in Article VIII of
the Indenture.
Section 9.6 Amendments.
----------
This Agreement may be amended only with the concurring written consent of
the Trustee and the Bank given in accordance with the provisions of the
Indenture and only if the Lessee shall assume in writing the obligations of such
amended Agreement.
Section 9.7 Notices.
-------
All notices, certificates or other communications hereunder shall be
sufficient if sent by registered or certified United States mail, postage
prepaid, addressed, if to the Agency, to the Executive Director, Town of Babylon
Industrial Development Agency, 00 Xxxx Xxxxxxx Xxxxxxx, Xxxxxxxxxxx, Xxx Xxxx;
if to the Lessee, Technology Flavors & Fragrances, Inc., 00 Xxxxxx Xxxxxx Xxxx,
Xxxxxxxxxx, Xxx Xxxx 00000 Attention: Xxxxxx X. Gemmo, with a copy to Stadtmauer
Bailkin LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxx X.
Xxxxxx, Esq.; if to the Trustee, to Xxx Xxxx xx Xxx Xxxx, x/x Xxxxxx Xxxxxx
Trust Company of New York, Corporate Trust Administration, 000 Xxxx 00xx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000; and if to the Bank, to Xxxxx Fargo Credit, Inc.,
Attention: Xxxxxxx Xxx, with a copy to Wolf, Block, Xxxxxx and Xxxxx-Xxxxx LLP,
000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxx Xxxxx, Esq. The
Agency, the Lessee, the Trustee and the Bank may, by like notice, designate any
further or different addresses to which subsequent notices, certificates or
other communications shall be sent. Any notice, certificate or other
communication hereunder shall, except as may expressly be provided herein, be
deemed to have been delivered or given as of the date it shall have been mailed.
61
Section 9.8 Prior Agreements Superseded.
---------------------------
This Agreement shall completely and fully supersede all other prior
understandings or agreements, both written and oral, between the Agency and the
Lessee relating to the Facility.
Section 9.9 Severability.
------------
If any clause, provision or section of this Agreement be ruled invalid by
any court of competent jurisdiction, the invalidity of such clause, provision or
section shall not affect any of the remaining provisions hereof.
Section 9.10 Inspection of Facility.
----------------------
The Lessee will permit the Trustee or the Bank or their respective duly
authorized agents, at all reasonable times during regular business hours and
upon reasonable notice to enter upon the Facility and to examine and inspect the
Facility and exercise its rights hereunder, under the Indenture and under the
other Security Documents with respect to the Facility. The Lessee will further
permit the Agency, or its duly authorized agent, at all reasonable times to
enter upon the Facility but solely for the purpose of assuring that the Lessee
is operating the Facility, or is causing the Facility to be operated, as a
qualified "project" under the Act consistent with the purposes set forth in the
recitals to this Agreement and with the public purposes of the Agency, and not
for any purpose of assuring the proper maintenance or repair of the Facility as
such latter obligation is and shall remain solely the obligation of the Lessee.
Section 9.11 Effective Date Counterparts.
---------------------------
This Agreement shall become effective upon its delivery. It may be
simultaneously executed in several counterparts, each of which shall be an
original and all of which shall constitute but one and the same instrument.
Section 9.12 Binding Effect.
--------------
This Agreement shall inure to the benefit of, and shall be binding upon,
the Agency, the Lessee and their respective successors and assigns.
Section 9.13 Net Lease.
---------
It is the intention of the parties hereto that this Agreement be a "net
lease" and that all of the rent be available for debt service on the Bonds, and
this Agreement shall be construed to effect such intent.
Section 9.14 Law Governing.
-------------
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE.
Section 9.15 Investment of Funds.
-------------------
Any moneys held as part of the Revenue Fund, the Lease Payments Fund, the
Project Fund, the Bond Fund or the Renewal Fund or in any special fund provided
for in this Agreement
62
or in the Indenture to be invested in the same manner as in any said Fund shall,
at the written request of an Authorized Representative of the Lessee, be
invested and reinvested by the Trustee as provided in the Indenture. Neither the
Trustee (except for its own gross negligence or willful misconduct) nor the
Agency nor any of their members, directors, officers, agents, servants or
employees shall be liable for any depreciation in the value of any such
investments or for any loss arising therefrom.
Interest and profit derived from such investments shall be credited and
applied as provided in the Indenture, and any loss resulting from such
investments shall be similarly charged.
Section 9.16 Waiver of Trial by Jury.
-----------------------
The parties hereby expressly waive all rights to trial by jury on any cause
of action directly or indirectly involving the terms, covenants or conditions of
this Agreement or the Facility or any matters whatsoever arising out of or in
any way connected with this Agreement.
The provision of this Agreement relating to waiver of a jury trial and the
right of reentry or repossession shall survive the termination or expiration of
this Agreement.
Section 9.17 Reserved.
--------
Section 9.18 No Recourse under this Agreement or on Bonds.
--------------------------------------------
All covenants, stipulations, promises, agreements and obligations of the
Agency contained in this Agreement shall be deemed to be the covenants,
stipulations, promises, agreements and obligations of the Agency, and not of any
member, director, officer, employee or agent of the Agency in his individual
capacity, and no recourse shall be had for the payment of the principal of,
redemption premium, if any, or interest on the Bonds or for any claim based
thereon or hereunder against any member, director, officer, employee or agent of
the Agency or any natural person executing the Bonds.
All covenants, stipulations, promises, agreements and obligations of the
Lessee contained in this Agreement shall be deemed to be the covenants,
stipulations, promises, agreements and obligations of the Lessee, and not of any
director, officer, employee or agent of the Lessee in his individual capacity,
and no recourse shall be had for the payment of the principal of, redemption
premium, if any, or interest on the Bonds or for any claim based thereon or
hereunder against any director, officer, employee or agent of the Lessee.
Section 9.19 Rights of Bank.
--------------
As between the Bank hereunder and the Lessee, any rights or benefits
granted to the Bank are in addition to those contained in any agreements
executed by the Lessee with or in favor of the Bank, and in the event of a
conflict between this Agreement and such other agreements, such other agreements
shall control with respect to the rights and obligations between the Bank and
the Lessee, but shall in no way diminish the rights of the Agency and the
Trustee set forth in this Agreement. In addition, any obligations of the Lessee
hereunder shall be in addition to those contained in any agreement between the
Lessee and the Bank. Notwithstanding any other
63
provision herein to the contrary, the rights of the Bank hereunder shall be
subject to Section 7.10 of the Indenture.
Section 9.20 Date of Agreement for Reference Only.
------------------------------------
The date of this agreement shall be for reference purposes only and shall
not be construed to imply that this Agreement was executed on the date first
above written. This Agreement was executed and delivered on January 15, 2002.
64
IN WITNESS WHEREOF, the Agency has caused its corporate name to be
hereunto subscribed by its duly authorized Chairman, Vice Chairman, General
Counsel, Executive Director or Deputy Executive Director and attested under the
seal of the Agency and the Lessee has caused its corporate name to be subscribed
hereto by its Vice President pursuant to a unanimous written consent of its
Board of Directors, all being done as of the year and day first above written.
TOWN OF BABYLON
INDUSTRIAL DEVELOPMENT AGENCY
(SEAL)
By:___________________________________
Name: Xxxxxx Xxxxxxx
Title: Executive Director
Attest:
By:__________________________
Name:
Title:
TECHNOLOGY FLAVORS & FRAGRANCES, INC.,
as Lessee
Witness:
By:__________________________
By____________________________________
Name: Xxxxxx X. Gemmo
Title: Vice President
00
XXXXX XX XXX XXXX )
: ss.:
COUNTY OF SUFFOLK )
On the ___th day of January in the year two thousand and two, before
me, the undersigned, a Notary Public in and for said State, personally appeared
Xxxxxx Xxxxxxx, personally known to me or proved to me on the basis of
satisfactory evidence to be the individual whose name is subscribed to the
within instrument and acknowledged to me that she executed the same in her
capacity, and that by her signature on the instrument, the individual, or the
person upon behalf of which the individual acted, executed the instrument.
____________________________
Notary Public
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the ___th day of January in the year two thousand and two, before
me, the undersigned, a Notary Public in and for said State, personally appeared
Xxxxxx X. Gemmo, personally known to me or proved to me on the basis of
satisfactory evidence to be the individual whose name is subscribed to the
within instrument and acknowledged to me that he executed the same in his
capacity, and that by his signature on the instrument, the individual, or the
person upon behalf of which the individual acted, executed the instrument.
____________________________
Notary Public
66
APPENDIX A
DESCRIPTION OF THE PROJECT
The Series 2002 Bonds are being issued by the Agency to assist the Company
to acquire and operate a manufacturing facility within the Town of Babylon by
the acquisition of real property located at 00 Xxxxxx Xxxxxx Xxxx, Xxxxxxxxxx,
Xxx Xxxx 00000, Block 2, Lot 15.001, (the "Facility Realty") and the renovation
and improvement of an approximately 34,400 square foot flavors and fragrances
products manufacturing facility thereon (the "Facility"), including the
acquisition and installation of furniture and fixtures and other equipment in
connection therewith (the "Project").
APPENDIX B
DESCRIPTION OF FACILITY EQUIPMENT
Facility Equipment shall mean all fixtures, machinery, equipment,
chattels and articles of personal property and all appurtenances and additions
thereto and substitutions and replacements thereof, now or hereafter attached to
or contained in or located on the Facility Realty and/or the buildings and
improvements located thereon or placed on any part thereof, though not attached
thereto, which are used or usable in connection with the present or future
operation thereof or the activities at any time conducted therein and all other
property used in connection with the production of income from the Facility
Realty and/or the buildings and improvements located thereon or adapted for use
therein, including, without limitation, any machinery, equipment and other
tangible personal property acquired and installed as part of the Project
pursuant to Section 2.1 of the Lease Agreement, together with all repairs,
replacements, improvements, substitutions and renewals thereof or therefor and
all parts, additions and accessories incorporated therein or affixed thereto,
but excluding (i) the equipment described in the following paragraph, (ii)
Lessee's Property within the meaning of Section 4.1(c) of the Lease Agreement or
(iii) Existing Facility Property released pursuant to Section 4.2 of the Lease
Agreement.
Facility Equipment shall expressly exclude any and all equipment and
machinery owned by the Lessee or any other party which may be located upon the
Project but which is not necessary for the operation of the improvements made to
the Facility Realty. For example, equipment and machinery located upon the
Project whether or not used in connection with the operation of the Lessee's
business at the Project, is excluded from the definition of Facility Equipment
so long as it is not necessary for the operation of such improvements.
APPENDIX C
DESCRIPTION OF THE FACILITY REALTY
SCHEDULE A
Annual Employment Report
For the Year Ending _________, ____
In order to comply with Local and State employment reporting requirements, the
Town of Babylon Industrial Development Agency must require all of its project
companies to fill out and return the Report to the Agency no later than
_________ 1, ____.
Project Company
Telephone # __________________________________________
Tax ID # __________________________________________
Please provide information as of _________ of jobs at Project Location(s) listed
above. Do not include any subcontractors and consultants. Include only employees
and owners/principals on your payroll at the Project Location.
Number of existing FULL TIME JOBS ___________________
Number of existing PART TIME JOBS ___________________
Certification: I, the undersigned, hereby certify to the best of my knowledge
and belief, that all information contained in this report is true and complete,
and that I understand it is submitted pursuant to agreement. The Company hereby
authorizes any private or governmental entity, including but not limited to The
New York State Department of Labor ("DOL"), to release to the Town of Babylon
Industrial Development Agency (the "Agency") and/or to the successors and
assigns of either (collectively, the "Information Recipients"), any and all
employment information under DOL's control which is pertinent to the Company and
the Company's employees. In addition, upon the Agency's request, the Company
shall provide to the Agency any employment information in the Company's
possession which is pertinent to the Company and the Company's employees.
Information released or provided to Information Recipients by DOL, or by any
other governmental entity, or by any private entity, or by the Company itself,
or any information previously released as provided by all or any of the
foregoing parties (collectively, "Employment Information") may be disclosed by
the Information Recipients in connection with the administration of the programs
of the Agency, and/or the successors and assigns of either, and/or the Town of
Babylon, and/or as may be necessary to comply with law; and, without limiting
the foregoing, the Employment Information may be included in (x) other reports
required of the Agency, and (y) any other reports required by law. This
authorization shall remain in effect throughout the term of this Lease.
Name of Company
Principal/Owner/Chief Financial Officer ________________________ (Please Print)
Signature Date
SCHEDULE B
[FORM ST-340]
SCHEDULE C
[FORM ST-60]
