Exhibit 10(ii)27
AGREEMENT AND LEASE
between
KEYSTONE RECOVERY, INC.
as Lessee
and
ABB ENERGY CAPITAL L.L.C.
as Lessor
for
KEYSTONE LANDFILL
GAS TO ENERGY PROJECT
AT
DUNMORE, PENNSYLVANIA
December __, 2000
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS............................................................ 2
ARTICLE 2 ACQUISITION AND LEASE OF EQUIPMENT..................................... 2
ARTICLE 3 DELIVERY AND ACCEPTANCE................................................ 2
ARTICLE 4 TERM AND RENT.......................................................... 3
4.1. Term.................................................................. 3
4.2. Basic Rent and Interim Rent........................................... 3
4.3. Additional Rent....................................................... 3
4.4. Project Control Account............................................... 3
4.4.1. Establishment................................................. 3
4.4.2. Deposits to Project Control Account........................... 3
4.4.3. Payment of Rent; Withdrawals from Project Control Account..... 4
4.4.4 Reserve Accounts.............................................. 6
4.5. Optional Prepayments of Rent.......................................... 7
4.6. Mandatory Prepayment of Rent.......................................... 7
4.7. Changed Circumstances................................................. 8
4.8. Taxes................................................................. 9
ARTICLE 5 CONDITIONS OF TRANSACTION.............................................. 9
5.1. Conditions Precedent.................................................. 9
5.1.1. Documents..................................................... 9
5.1.2. Authorization................................................. 9
5.1.3. Collateral and Equipment...................................... 9
5.1.4. Validity of Liens............................................. 10
5.1.5. Closing Fee; Other Expenses................................... 10
5.1.6. Taxes, Fees and Charges....................................... 10
5.1.7. Performance; No Default....................................... 10
5.1.8. Representations and Warranties................................ 10
5.1.9. Proceedings and Documents..................................... 10
5.1.10. No Legal Action............................................... 10
5.1.11. No Legal Impediments to Projects.............................. 11
5.1.12. Approvals Obtained and Maintained............................. 11
5.1.13. Eminent Domain................................................ 11
5.1.14. No Damage..................................................... 11
5.1.15. No Material Adverse Effect.................................... 11
5.1.16. Deliveries.................................................... 11
5.1.17. Notices....................................................... 14
5.1.18. Bankruptcy Remoteness......................................... 14
5.1.19. Waiver........................................................ 14
5.1.20. Lessor Satisfaction........................................... 14
ARTICLE 6 GENERAL PROVISIONS..................................................... 14
6.1. Closing Fee........................................................... 14
6.2. Authorization......................................................... 15
6.2.1. Authorized Representatives.................................... 15
6.2.2. Project Control Account....................................... 15
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6.3. Indemnification....................................................... 15
ARTICLE 7 REPRESENTATIONS AND WARRANTIES OF LESSEE............................... 17
7.1. Organization and Qualification........................................ 17
7.2. Corporate Authority................................................... 18
7.3. Valid Obligations..................................................... 18
7.4. Approvals............................................................. 18
7.5. Title to Properties; Absence of Encumbrances.......................... 18
7.6. Insurance............................................................. 19
7.7. Financial Statements.................................................. 19
7.8. No Material Adverse Change; No Event of Default; No Payments.......... 19
7.9. Taxes................................................................. 20
7.10. No Litigation......................................................... 20
7.11. Compliance with Other Instruments, Laws, Etc.......................... 20
7.12. Perfection of Liens................................................... 20
7.13. Work; Plans and Specifications; Facility.............................. 20
7.14. Facility Approvals Obtained........................................... 21
7.15. Environmental Matters................................................. 21
7.16. Disclosure............................................................ 22
7.17. Solvency.............................................................. 22
7.18. No Broker............................................................. 23
7.19. Project Contractors Paid To Date...................................... 23
7.20. Labor Relations....................................................... 23
7.21. Certain Transactions.................................................. 23
7.22. Restrictions on Lessee................................................ 24
7.23. Products Liability.................................................... 24
7.24. Year 2000............................................................. 25
7.25 Project Contracts..................................................... 25
7.26 Equipment............................................................. 25
7.27 Prior LFG Sales Agreement............................................. 25
ARTICLE 8 REPRESENTATIONS AND WARRANTIES OF LESSOR................................ 26
8.1. Title.................................................................. 26
8.2. Corporate Authority.................................................... 26
8.3. Warranties............................................................. 26
ARTICLE 9 AFFIRMATIVE COVENANTS................................................... 27
9.1. Financial Statements and Other Reporting Requirements.................. 27
9.2. Conduct of Business.................................................... 29
9.3. Maintenance............................................................ 30
9.4. Insurance.............................................................. 30
9.5. Taxes.................................................................. 31
9.6. Inspection by Lessor................................................... 32
9.7. Use of Proceeds........................................................ 32
9.8. Performance of Obligations............................................. 32
9.9. Project Approvals...................................................... 33
9.10. Environmental Compliance............................................... 33
9.11 Damage to Property..................................................... 33
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9.12 Accidents.............................................................. 34
9.13. Further Assurances..................................................... 35
ARTICLE 10 NEGATIVE COVENANTS..................................................... 35
10.1. Indebtedness........................................................... 35
10.2. Liens.................................................................. 35
10.3. Transfers of Assets, Property and Ownership Interests.................. 36
10.4. Merger; Consolidation; Acquisitions.................................... 37
10.5. Distributions.......................................................... 37
10.6. Agreements Relating to Facility........................................ 37
10.7. Other New Agreements................................................... 37
10.8. Replacement of Project Contractors..................................... 38
10.9 Equipment.............................................................. 38
10.10 Change of Control...................................................... 39
ARTICLE 11 RETURN OF PROPERTY..................................................... 39
ARTICLE 12 EVENTS OF DEFAULT AND REMEDIES......................................... 40
12.1. Events of Default...................................................... 40
12.2. Remedies............................................................... 43
12.3. Operation of Facility.................................................. 44
12.4. Other Remedies......................................................... 46
12.5. Power of Attorney...................................................... 46
12.6. Waivers................................................................ 46
ARTICLE 13 SECURITY INTEREST AND SET-OFF.......................................... 47
13.1. Security Interest...................................................... 47
13.2. Set-Off................................................................ 47
ARTICLE 14 MISCELLANEOUS PROVISIONS............................................... 47
14.1. Notices............................................................... 47
14.2. Expenses.............................................................. 48
14.3. Rights and Remedies Cumulative........................................ 49
14.4. Applicable Law........................................................ 49
14.5. Successors and Assigns................................................ 49
14.6. Headings.............................................................. 49
14.7. Waiver and Compliance................................................. 49
14.8. Entire Agreement...................................................... 50
14.9. Certain Rules of Construction......................................... 50
14.10. Consent to Jurisdiction............................................... 51
14.11. Waiver of Jury Trial.................................................. 51
14.12. Conditions Solely for Benefit of Lessor............................... 51
14.13 Advance Notice of Lessee Litigation................................... 52
14.14. Lessor's Rights Not Conferred to Third Parties........................ 52
14.15. Severability.......................................................... 52
14.16. Counterparts.......................................................... 52
14.17. Foreign Persons....................................................... 52
14.18. Estoppel Certificates................................................. 53
14.19 Miscellaneous......................................................... 53
14.20 Limited Recourse Provisions........................................... 53
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14.20.1 Lessee Fully Liable.......................................... 53
14.20.2 Certain Limited Recourse..................................... 53
SCHEDULES AND EXHIBITS
Schedule 1 Definitions
Schedule 6.2.1 Authorized Representatives
Schedule 7.5 Existing Liens
Schedule 7.10 Litigation
Schedule 7.15 Environmental Matters
Schedule 7.20 Labor Matters
Schedule 7.21 Certain Transactions
Schedule 7.23 Products Liability
Schedule 9.4 Insurance
Schedule 10.1 Existing Indebtedness
Schedule 10.7 Certain New Agreements
Exhibit A Lease Schedule
Exhibit B Xxxx of Sale
Exhibit C Lease Supplement
Exhibit D Plans and Specifications
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AGREEMENT AND LEASE
This Agreement and Lease (the "Agreement") is made as of the 29th day of
December, 2000, between Keystone Recovery, Inc., a corporation organized and
existing under the laws of the State of Ohio and having its principal place of
business and chief executive office at 0000 Xxxxxxx Xxxxxxxxx, Xxxxxxxxxxx,
Xxxxxxxxxxxx 00000 (the "Lessee"), and ABB Energy Capital L.L.C. ("Lessor"), a
limited liability company organized and existing under the laws of the State of
Delaware having its principal place of business at Xxx Xxxxxxxx Xxxxx,
Xxxxxxxxxxx, Xxxxxxxxxxxxx 00000.
WHEREAS, the Lessee proposes to enter into a Landfill Gas Lease and
Easement Agreement with Keystone Sanitary Landfill, Inc. (the "Host") subject to
the prior approval of Lessor (such Agreement, as approved by Lessor and/or as
the same may be amended or restated from time to time, with the Lessor's
consent, herein called the "Easement Agreement"), pursuant to which, among other
things, Lessee has leased from the Host the Project Site (as defined herein) and
the system located thereat for the collection[, control and recovery of landfill
gas (the "LFG") produced at the Keystone Landfill, owned and operated by the
Host and located at __________, Xxxxxxx, Xxxxxxxxxxxx 00000 (the "Host Site");
WHEREAS, the Lessee has entered into the Landfill Gas Sales Agreement,
dated December 18, 1995, with the Host (such Agreement, as the same may be
amended or restated from time to time, with the Lessor's consent, herein called
the "Sales Agreement"), pursuant to which, among other things, the Lessee has
agreed to purchase from the Host the LFG produced at the Keystone and Xxxxx
sites;
WHEREAS, the Lessee has constructed at the Project Site, and owns and
operates, a landfill gas processing and 5.250 kw gas-fired electric generating
installation (together with all related equipment, including the Equipment, [but
excluding blowers and other excluded equipment identified on the Lease Schedule]
the "Facility");
WHEREAS, the Lessee has entered into the Power Purchase Agreement, dated
February 3, 1994, as amended as of February 9, 1995, with Pennsylvania Power &
Light Company (the "Utility") (said Agreement, as the same may be amended or
restated from time to time, with the Lessor's consent, herein called, together
with the Joint Stipulation referred to therein, the "Utility Agreement),
pursuant to which the Lessee has contracted to sell the electric energy
generated at the Facility;
WHEREAS, in consideration for its delivery of electric energy to the
Utility, the Lessee is entitled to receive certain payments as contemplated by
the Utility Agreement;
WHEREAS, in order to provide long term financing for the Facility, the
Lessee has requested that the Lessor purchase from the Lessee and simultaneously
therewith lease to the Lessee the personal property described in the Lease
Schedule (attached hereto
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as Exhibit A), and the Lessor is willing to do so upon
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the terms and subject to the conditions hereinafter set forth; and
WHEREAS, this Agreement contains general terms and conditions applying to
the Lease Schedule hereunder between the Lessor and the Lessee that incorporates
this Agreement by reference, and the Lease Schedule, together with this
Agreement incorporated therein, constitutes a separate lease on the terms and
conditions set forth therein and herein:
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein and other valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE 1
DEFINITIONS
This Agreement and its Schedules and Exhibits and the other Lease Documents
utilize various defined terms which shall have the meanings set forth in
Schedule 1 attached to this Agreement or, if separately defined elsewhere herein
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or in any other Lease Document, as set forth in such separate definitions.
ARTICLE 2
ACQUISITION AND LEASE OF EQUIPMENT
The Lessee, in accordance with this Agreement and the Xxxx of Sale
(attached hereto as Exhibit B), is selling, assigning and transferring to the
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Lessor all of its right, title and interest in and to the Equipment and each
Unit thereof described in the Xxxx of Sale for the purchase price set forth in
the Lease Schedule, free and clear of all Liens except for Permitted Liens, and
the Equipment will immediately upon transfer of title thereto become subject to
this Agreement. Simultaneously with the transfer of title to the Equipment, the
Lessor hereby leases to the Lessee, and the Lessee hereby leases from the
Lessor, the Equipment and each Unit thereof, all in consideration of the
representations, warranties and covenants and upon the terms and conditions set
forth in this Agreement, the Xxxx of Sale, the Lease Schedule, the Lease
Supplement, and any exhibits or annexes to any thereof.
ARTICLE 3
DELIVERY AND ACCEPTANCE
The Equipment and each Unit thereof shall be deemed to have been delivered
by the Lessee to the Lessor and leased and redelivered by the Lessor to the
Lessee on the Closing Date, notwithstanding that the Lessee is and remains in
possession thereof.
The Lessee hereby acknowledges and represents and warrants to the Lessor
with respect to each Unit that (i) such Unit is of a size, design, capacity and
manufacture
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selected by the Lessee, (ii) such Unit confirms to the applicable
description set forth in the Lease Schedule, and (iii) the Lessee is satisfied
that such Unit is suitable for its purposes; provided, however, that nothing
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contained in this Agreement shall in any way diminish or otherwise affect any
rights which the Lessor or the Lessee may have against any vendor or
manufacturer of any Unit or any subcontractor of such vendor or manufacturer.
ARTICLE 4
TERM AND RENT
4.1 Term. The Term shall commence on the Closing Date. Unless earlier
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terminated or extended in accordance with the express provisions hereof, the
Term shall expire on the date determined in accordance with the Lease Schedule.
4.2 Basic Rent and Interim Rent. The Lessee shall pay to the Lessor the
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Interim Rent and Basic Rent for each Unit, in the aggregate amount and in the
installments and on the Rental Payment Dates as specified in the Lease Schedule.
4.3 Additional Rent. The lease created pursuant to this Agreement is a "net"
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lease. Lessee shall pay as Additional Rent all amounts (in addition to Basic
Rent and Interim Rent) required to be paid under this Agreement or any other
Lease Document and all costs, taxes, assessments and other expenses of every
character (whether foreseen or unforeseen and whether or not expressly provided
for herein) relating to or arising in connection with the use, ownership,
maintenance, repair, replacement or reconstruction of any Unit during the Term
and, to the extent expressly provided herein, thereafter. The Lessee shall also
pay to the Lessor, on demand, as Additional Rent (a) interest at the Default
Interest Rate on each overdue installment of Interim Rent and Basic Rent, on
each overdue payment of Additional Rent, and on all other overdue amounts
payable under this Agreement or under any of the other Lease Documents and (b) a
late payment charge equal to five percent (5%) of each such overdue installment,
payment or amount.
4.4. Project Control Account.
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4.4.1. Establishment. The Lessor has established a demand interest-
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bearing checking account at Fleet National Bank, designated as "ABB Energy
Capital L.L.C. (Keystone Recovery, Inc. Loan), X.X. Xxx 0000, Xxxxxx, XX 00000-
3718" (the "Project Control Account").
4.4.2. Deposits to Project Control Account.
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(a) The Lessee shall deposit upon receipt (or shall cause to be deposited)
all Cash Revenues in the Project Control Account. The Lessee shall not permit
any revenues or proceeds of Lessee to be deposited in any other account.
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(b) All payments to be made by the Lessee hereunder or under any of the
other Lease Documents shall be made in United States Dollars in immediately
available funds to the Project Control Account without setoff or counterclaim
and without any withholding or deduction whatsoever. If any payment hereunder
is required to be made on a day which is not a Business Day, it shall be made on
the immediately succeeding Business Day, with interest and any applicable fees
adjusted accordingly.
(c) The Lessee shall not be entitled to any abatement of Rent, reduction
thereof or setoff, counterclaim, recoupment or defense against Rent, including,
but not limited to, abatements, reductions, setoffs, counterclaims, recoupments
or defenses due or alleged to be due by reason of any past, present or future
claims of the Lessee against the Lessor or any other person for any reason
whatsoever, nor, except as otherwise expressly provided herein, shall this Lease
terminate or the obligations of Lessee be otherwise affected by reason of any
defect in the title, condition, design, operation or fitness for use of any Unit
or damage to or loss of possession or loss of use or destruction of all or any
of such Units from whatsoever cause and of whatever duration or any presently
existing or hereafter created Liens or rights of others with respect to any Unit
or the prohibition of or other restriction against the Lessee's use of all or
any of such Unit or the interference with such use by any Person or the
invalidity or unenforceability or lack of due authorization of any separable
provision of this Agreement or any insolvency of or the bankruptcy,
reorganization or similar proceeding against the Lessee, or for any combination
of such cause or any other causes whether similar or dissimilar to the
foregoing, it being the intention of the parties hereto that the Rent payable by
the Lessee hereunder shall continue to be payable in all events in the manner
and at the times herein provided unless the obligation to pay the same shall be
terminated pursuant to the express provisions of this Agreement. To the extent
permitted by applicable law, the Lessee hereby waives any and all rights which
it may now have or which at any time hereafter may be conferred upon it, by
statute or otherwise, to terminate, cancel, quit or surrender the lease of any
of the Units except in accordance with the express terms hereof. Each payment
of Rent made by the Lessee hereunder shall be final, and the Lessee shall not
seek to recover all or any part of such payment from the Lessor for any reason
whatsoever.
4.4.3. Payment of Rent; Withdrawals from Project Control Account.
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(a) Funds deposited into the Project Control Account shall be withdrawn by
the Lessor on the fifteenth (15th) day of each month (the "Withdrawal Date").
Except as otherwise provided herein, on each Withdrawal Date, all funds
available in the Project Control Account as of the end of the immediately
preceding Business Day shall be withdrawn by the Lessor. The respective
entitlement of the Lessor and the Lessee to receive the funds so withdrawn shall
be governed by the provisions of (S)4.4.3(b).
(b) The Lessor shall disburse the funds withdrawn from the Project Control
Account on each Withdrawal Date in the following priority:
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first, to the Lessee to pay operating expenses relating to the
Facility in an amount not to exceed in any given month the amount of
such expenses reflected on the Annual Facility Budget, unless
otherwise approved in writing by the Lessor;
second, to the Lessor for deposit into the Major Maintenance Reserve
Account in accordance with (S)4.4.4(b)(ii);
third, to the Lessor to pay any overdue Rent which was required to be
paid on or before any prior Withdrawal Date;
fourth, to the Lessor to pay any fees, reimbursements, premiums or
penalties due to the Lessor under any of the Lease Documents;
fifth, to the Lessor to pay any Basic Rent or Interim Rent for the
period commencing on the day after the immediately preceding
Withdrawal Date to and including the then current Withdrawal Date;
sixth, to the Lessor to pay any mandatory prepayment of Rent which is
required to be paid to the Lessor pursuant to this Agreement;
seventh, to the Lessor for deposit in the Retained Revenue Reserve
Account in an amount equal to the amount, if any, by which the
Retained Reserve Amount exceeds the amount then on deposit in the
Retained Revenue Reserve Account;
eighth, to the Lessor to pay any other payment which is required to be
paid to the Lessor pursuant to any of the Lease Documents;
ninth, as to any funds remaining after the application of subsections
first through eighth above, if the Debt Service Coverage is less than
120%, to the Lessor as prepayment of Basic Rent; and
tenth, as to any funds remaining after the application of subsections
first through eighth above, if (a) the Debt Service Coverage is equal
to or greater than 120%, and (b) provided further no Default or Event
of Default shall have occurred and be continuing, to the Lessee.
Notwithstanding anything to the contrary contained herein, (i) the Lessor
need not disburse funds in the Project Control Account if an Event of Default
shall have occurred and be continuing and (b) the Lessor need not disburse funds
in the Project Control Account as contemplated by (S)4.4.3(b) (tenth) if a
Default exists. All moneys and/or investments constituting the Project Control
Account and/or interest earned thereon shall serve as Collateral for the Lessee
Obligations, and the Lessee hereby grants to the Lessee, to secure the payment
and performance in full of all Lessee Obligations, a continuing
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security interest in and lien upon and with respect to, and so pledges and
assigns to the Lessor, such Account and all moneys and other assets contained
therein or constituting such Account.
4.4.4. Reserve Accounts.
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(a) Notwithstanding anything to the contrary stated herein, the Lessor and
the Lessee desire to, and do hereby, create within the Project Control Account
(or at the option of the Lessor in segregated interest-bearing accounts for
which the Lessee will pay any applicable administrative fees and expenses) (i) a
debt service reserve account (the "Retained Revenue Reserve Account") in an
amount equal at all times to the aggregate of the payments of Basic Rent due
from the Lessee on the next six (6) succeeding Rental Payment Dates (the
"Retained Revenue Amount") and (ii) a maintenance reserve account (the "Major
Maintenance Reserve Amount") in an amount as determined pursuant to (S)4.4.4
(b)(ii) below (the "Major Maintenance Account"). All moneys and/or investments
constituting the Retained Revenue Reserve Account and the Major Maintenance
Reserve Account and/or interest earned thereon (whether held in the Project
Control Account, any such segregated account or in any Permitted Investment)
shall serve as Collateral for the Lessee Obligations, and the Lessee hereby
grants to the Lessee, to secure the payment and performance in full of all
Lessee Obligations, a continuing security interest in and lien upon and with
respect to, and so pledges and assigns to the Lessor, such Accounts and all
moneys and other assets contained therein or constituting such Accounts.
(b) (i) On the Closing Date, the Lessee shall deposit $660,000 in the
Retained Revenue Reserve Account.
(ii) On the Closing Date and by [January 15] of each year thereafter,
commencing [January 15, 2002], the Lessee shall deliver to the Lessor a
certificate of its Chief Financial Officer, together with appropriate supporting
information (which certificate and supporting information shall be satisfactory
to the Lessor), documenting all amounts expended by the Lessee on maintenance of
the Equipment during the preceding calendar year. On each Withdrawal Date, the
Lessor will deposit in the Major Maintenance Reserve Account an amount equal to
one-twelfth (1/12) of the amount allocated for major maintenance activities in
the Annual Facility Budget.
(c) (i) To the extent that funds (other than the Retained Revenue Amount)
are insufficient to make the applications required by subsections first through
eighth of (S)4.4.3(b), the Lessor may in its sole and absolute discretion, and
in no event shall be obligated to, disburse funds from the Retained Revenue
Reserve Account in order to make such applications.
(ii) Upon written request of the Lessee subject to the remainder of
this subsection (c)(ii), the Lessor shall disburse funds from the Major
Maintenance Reserve Account as necessary for the Lessee to maintain properly the
Equipment. If Lessor disputes the reasonableness or necessity of any amount so
requested by Lessee, the
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Independent Engineer shall review Lessee's request together with such other
information as the Independent Engineer deems necessary or desirable, and shall
determine the amount that should be disbursed from the Major Maintenance Reserve
Account for the purposes requested by Lessee. In reviewing Lessee's request as
aforesaid, the Independent Engineer will review, but shall not be bound to
follow, Lessee's prior maintenance practices at the Facility. The Independent
Engineer's written determination as aforesaid will be binding on Lessor and
Lessee. No such disbursement shall be made without certification and other
relevant documentation from the Lessee, in form and substance reasonably
satisfactory to the Lessor, that such maintenance is so necessary and has been
performed or will be performed in a timely manner and as contemplated.
(iii) Upon the occurrence and during the continuance of a Default or
an Event of Default, the Lessor need not disburse any funds in the Retained
Revenue Reserve Account to the Lessee or to any Person for or on behalf of the
Lessee. Upon the occurrence and during the continuance of an Event of Default,
the Lessor need not disburse any funds in the Major Maintenance Reserve Account.
(iv) If funds from the Retained Revenue Account have been disbursed
pursuant to (S)4.4.4(c)(i) for two (2) consecutive months, then the Lessor may,
but shall not be obligated to, apply any amounts then remaining in the Retained
Revenue Reserve Account and/or the Major Maintenance Reserve Account as a
prepayment of Basic Rent.
(v) Upon the payment in cash in full of the Rent and satisfaction in
full of all other Lessee Obligations, the Lessor will deliver to the Lessee any
funds remaining in the Retained Revenue Reserve Account or the Major Maintenance
Reserve Account.
4.5 Optional Prepayments of Rent. The Lessee shall have the right to prepay,
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in whole or in part, upon not fewer than five (5) Business Days irrevocable
written notice to the Lessor, Basic Rent. Any such prepayment of Basic Rent
shall be in a minimum amount of $_________ or in integral multiples thereof.
Simultaneously with such prepayment, the Lessee shall pay to the Lessor, in
cash, the Prepayment Fee, all other amounts accrued and owing hereunder and all
costs and expenses incurred by the Lessor due to such prepayment, including,
without limitation, costs for breakage of funding and any xxxxxx related
thereto. All amounts to be prepaid with respect to the Transaction pursuant to
this (S)4.5 shall be applied to scheduled installments of Basic Rent in inverse
chronological order.
4.6. Mandatory Prepayment of Rent.
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4.6.1. Upon the termination or expiration of the Easement Agreement, the
Sales Agreement, the Utility Agreement, the Operations and Maintenance Agreement
or any other Project Document prior to _________, 2013 or upon the occurrence of
any event which, but for the passage of time or the giving of notice or both,
would permit such termination or expiration, all Basic Rent, together with all
other amounts accrued and owning hereunder, immediately shall be prepaid in
full. Simultaneously with such
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prepayment, the Lessee shall pay to the Lessor, in cash, all costs and expenses
incurred by the Lessor due to such prepayment, including, without limitation,
costs for breakage of funding and any xxxxxx related thereto.
4.6.2. Upon the occurrence of an Event of Loss with respect to all or
substantially all of the Facility (including the Equipment), the Project Site,
the Host Site and/or the Landfill Project, all Basic Rent, together with other
amounts accrued and owning hereunder, immediately shall be prepaid in full.
Simultaneously with such prepayment, the Lessee shall pay to the Lessor, in
cash, all costs and expenses incurred by the Lessor due to such prepayment,
including, without limitation, costs for breakage of funding and any xxxxxx
related thereto. No Prepayment Fee shall be required of the Lessee in the event
of a mandatory prepayment of the Transaction pursuant to this (S)4.6.2.
However, the Lessee shall be fully liable for any and all premiums and fees
payable under any of the Project Documents as a result of such Event of Loss.
4.6.3. The Lessee shall prepay Basic Rent, without premium, penalty or
prepayment fee, to the extent such payment may be required under subsection
ninth of (S)4.4.3(b).
4.7. Changed Circumstances. In case any law, regulation, treaty or official
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directive or the interpretation or application thereof by any court or by any
governmental authority charged with the administration thereof or the compliance
with any guideline or request of any central bank or other governmental
authority (whether or not having the force of law) or any other significant
change in the marketplace for financings similar to the Transaction:
(i) subjects the Lessor to any tax with respect to payments of Rent or
any other amounts payable hereunder by the Borrower or otherwise with
respect to the transactions contemplated hereby (except for taxes on
the overall net income of the Lessor imposed by the United States of
America or any political subdivision thereof), or
(ii) imposes, modifies or deems applicable any deposit insurance, reserve,
special deposit or similar requirement against assets held by, or
deposits in or for the account of, or loans or leases by, the Lessor,
or
(iii) imposes upon the Lessor any other condition with respect to its
performance under this Agreement or any other Lease Document,
and the result of any of the foregoing is to increase the cost to the Lessor,
reduce the income receivable by the Lessor or impose any expense upon the Lessor
with respect to providing or maintaining the financing contemplated by this
Agreement and the other Lease Documents, the Lessor shall notify the Lessee
thereof. The Lessee agrees to pay to the Lessor the amount of such increase in
cost, reduction in income or additional expense as Additional Rent as and when
such cost, reduction or expense is incurred or determined,
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upon presentation by the Lessor of a statement in the amount and setting forth
the Lessor's calculation thereof, which statement shall be deemed true and
correct absent manifest error.
4.8 Taxes. The Lessor shall make all payments of Rent and other amounts
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required under this Agreement or any other Lease Document without any deduction
or withholding for any taxes or duties, unless and to the extent any such
deduction or withholding is required by applicable law, in which case the Lessee
shall, unless otherwise requested by the Lessor, gross up the payment to the
extent necessary to insure that the Lessor receives the full amount it would
have received had such deduction or withholding not been effected.
ARTICLE 5
CONDITIONS OF TRANSACTION
5.1. Conditions Precedent. The obligation of the Lessor to effect the
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Transaction shall be subject to the satisfaction of the following conditions
precedent:
5.1.1. Documents.
---------
(a) Each of the Lease Documents shall have been duly authorized,
executed and delivered by the respective parties or party thereto, shall be in
full force and effect and shall be in form and substance satisfactory to the
Lessor.
(b) Each of the Project Documents shall have been duly authorized,
executed (to the extent requiring execution) and delivered by the respective
parties or party thereto, shall be in full force and effect and shall be in form
and substance satisfactory to the Lessor.
5.1.2. Authorization. All action necessary, in the Lessor's sole
-------------
judgment, for the valid execution, delivery and performance by the Lessee of
this Agreement and by the Lessee, the Parent and/or ITG of the other Lease
Documents and the Project Documents to which the Lessee, the Parent and/or ITG
is or is to become a party shall have been duly and effectively taken.
5.1.3. Collateral and Equipment. The Collateral shall be
------------------------
unconditionally owned by the Lessee. None of the Collateral (including, without
limitation, the Equipment) shall be subject to any Liens, whether inferior or
superior to the Lease Documents or the Security Documents, except as may be
permitted pursuant to (S)10.2. All real estate taxes, personal property taxes
and other municipal charges relating to any of the Collateral (including,
without limitation, Equipment) shall be current. All real estate and tangible
personal property constituting or intended to constitute Collateral (including,
without limitation, Equipment) shall comply with all Legal Requirements and the
provisions of all Approvals. No third party (other than the Host with respect
to the Easement Agreement and the Sales Agreement or the Utility with respect to
the Utility Agreement) shall have any right, whether superior, subordinate or
otherwise, that the Lessor determines, in its sole and absolute discretion,
might conflict, compete or interfere with
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any interest of the Lessee in, to, under or with respect to any Project
Agreement, the Facility, the Project Site, the Landfill Project or the Host
Site.
5.1.4. Validity of Liens. The Security Documents shall be effective to
-----------------
create in favor of the Lessor a legal, valid and enforceable first lien and
security interest in the Collateral. All filings, recordings, deliveries of
instruments and other actions necessary or desirable in the opinion of the
Lessor to protect and preserve such lien and security interest shall have been
duly effected. The Lessor shall have received evidence thereof in form and
substance satisfactory to the Lessor.
5.1.5. Closing Fee; Other Expenses. The Lessee shall have paid to the
---------------------------
Lessor all of the Closing Fee contemplated by (S)6.1 and, all fees and expenses
of the Lessor's counsel, the Independent Engineer, and the other consultants, if
any, billed and owing as of the Closing Date or anticipated to be billed and
owing incident to services rendered or expenses incurred, or to be rendered or
incurred, in connection with any post-closing matters, in each case to the
extent then invoiced by the Lessor to the Lessee.
5.1.6. Taxes, Fees and Charges. All taxes, fees and other charges in
-----------------------
connection with the execution, delivery, recording, filing and registration of
the Lease Documents or Project Documents shall have been paid or provisions for
such payment shall have been made to the satisfaction of the Lessor.
5.1.7. Performance; No Default. The Lessee, the Parent and/or ITG, as
-----------------------
the case may be, shall have performed and complied with all terms and conditions
required to be performed or complied with by it herein, or under any of the
other Lease Documents or any of the Project Documents, on or prior to the
Closing Date. On the Closing Date, there shall exist no Default or Event of
Default under the Lease Documents, or default or event of default under the
Project Documents.
5.1.8. Representations and Warranties. Each of the representations and
------------------------------
warranties made by the Lessee, the Parent and/or ITG, as the case may be, in the
Lease Documents or otherwise made by or on behalf of the Lessee, the Parent
and/or ITG in connection therewith or after the date thereof shall have been
true and correct in all respects when made and shall be true and correct in all
respects on the Closing Date.
5.1.9. Proceedings and Documents. All proceedings in connection with
-------------------------
the transactions contemplated by this Agreement and the other Lease Documents
shall be satisfactory to the Lessor in form and substance, and the Lessor shall
have received all information and such counterpart originals or certified copies
of such documents and such other certificates, opinions or documents as the
Lessor may reasonably require.
5.1.10. No Legal Action. No action or proceeding shall have been
---------------
instituted, nor shall any governmental action be threatened, before any court or
governmental agency, nor shall any order, judgment or decree have been issued or
proposed to be issued by any
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court or governmental agency, to set aside, restrain, enjoin or prevent the
performance of any Project Document or any Lease Document or any transaction
contemplated thereby.
5.1.11. No Legal Impediments to Projects. There shall be no Legal
--------------------------------
Requirements or Approvals which shall prohibit or adversely limit any portion of
the Facility or, to Lessees' knowledge, the Landfill Project for their
respective intended purposes, nor shall there be outstanding, (a) with respect
to the Facility and/or the Project Site, any uncured violation of any Legal
Requirement, Approval or requirement of any current insurer of all or any part
of the Facility or the Project Site or (b) to Lessees' knowledge, with respect
to the Landfill Project and/or the Host Site, any uncured violation of any Legal
Requirement, Approval or requirement of any current insurer of all or any part
of the Landfill Project or the Host Site.
5.1.12. Approvals Obtained and Maintained. All Approvals of every
---------------------------------
nature whatsoever which shall be reasonably necessary in order to allow the
Facility and the ownership, use, operation and maintenance of the Facility (and
which are necessary in order to comply with any Project Document and all other
contracts currently in existence in respect of the Facility) or the Landfill
Project shall have been duly and finally received with all appeal periods
therefrom having elapsed and with no appeal having been taken therefrom. No
violations shall exist under the terms of any such Approval, nor shall any
public official or agency asserted any such violation.
5.1.13. Eminent Domain. Neither the Facility, the Landfill Project, the
--------------
Host Site, the Utility Substation, nor the Project Site, nor any portion of any
thereof, shall have been taken by eminent domain, and there shall exist no
threat of such a taking.
5.1.14. No Damage. Neither the Facility, the Landfill Project, the Host
---------
Site the Project Site, nor the Utility Substation, any portion thereof, shall
have been injured or damaged in any material respect by fire, explosion,
accident, flood or other casualty.
5.1.15. No Material Adverse Effect. There shall not have occurred, at
--------------------------
any time from the date of the Initial Financial Statement to and including the
Closing Date, (a) any event having a Material Adverse Effect or (b) any material
adverse effect on the business, financial condition, assets or operations of the
Parent, ITG, the Host or the Utility, or on the ability of the Parent, ITG, the
Host or the Utility, as the case may be, to perform its respective obligations
under or consummate the transactions contemplated by any of the Lease Documents
or the Project Documents.
5.1.16. Deliveries. The following items or documents, in form and
----------
substance satisfactory to the Lessor, shall have been delivered by the Lessee to
the Lessor:
(a) copies, certified by the Secretary of State of the Ohio, of the
Lessee's and the Parent's Charter Documents and copies, certified by the
Secretary of State of Delaware, of ITG's Charter Documents;
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(b) true copies of the resolutions of the Directors (and, if
applicable, shareholders) of each of the Lessee, the Parent and ITG authorizing
the transactions described herein and the documents to which such entity is a
party;
(c) fully executed originals of all Lease Documents;
(d) true copies of fully executed originals of all Project Documents;
(e) copies of all Approvals and private approvals required in
connection with (i) the ownership, construction, leasing, operation and
maintenance of the Facility (with all appeal periods therefrom having elapsed
with no appeals having been taken or, if taken, finally resolved in favor of the
Lessee, and with no violations of the terms thereof existing);
(f) copies of the Financial Statements described in (S)7.7;
(g) evidence of no prior Liens, except as otherwise permitted by
(S)10.2;
(h) certificates of insurance which comply in all respects with the
requirements set forth in (S)9.4;
(i) favorable legal opinions from the Lessee's, Parent's and ITG's
counsel, addressed to the Lessor;
(j) evidence that the Facility (including the Equipment), the Project
Site and the Project Documents are in material compliance with all Legal
Requirements and Approvals;
(k) evidence that all filings, recordings, deliveries of instruments
and other actions necessary or desirable in the opinion of the Lessor to effect,
protect and preserve a legal, valid and enforceable first lien and security
interest in the Collateral have been duly effected, that the construction and
installation of the Facility (including the Equipment) have been completed in
full compliance with and as contemplated by the Plans and Specifications, and
that the Facility (including, without limitation, the Equipment) is functioning
in full compliance with and as contemplated by the Plans and Specifications;
(l) the results of a UCC-11 search (or similar search satisfactory to
the Lessor) conducted by the Lessee (or on its behalf) listing each of the
Lessee, the Parent, ITG, the Host and other relevant Persons as debtor;
(m) a certificate dated the Closing Date and signed by the Chief
Executive Officer of the Lessee stating, among other things, that as of the
Closing Date (i) no Default or Event of Default has occurred and is continuing,
(ii) each of the Lessee, the Parent and ITG has taken all actions required of
it under the Lease Documents, (iii)
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all representations and warranties made by or on behalf of the Lessee, the
Parent and/or ITG in connection with the transactions contemplated by the Lease
Documents are true and accurate and (iv) all conditions precedent to the
Transaction are fully satisfied on the Closing Date;
(n) a certificate signed by the Chief Executive Officer of the Lessee,
the Parent or ITG, as applicable, dated as of the date hereof, (i) giving the
name and title and bearing a specimen signature of each individual who shall be
authorized (x) to sign, in the Lessee's and/or the Parent's and/or ITG's name
and on its respective behalf, each of the Lease Documents to which the Lessee or
the Lessor, as the case may be, is or is to become a party and (y) to give
notices and to take other action on the Lessee's and/or the Parent's and/or
ITG's behalf under the Lease Documents, (ii) stating that the Charter Documents
delivered to the Lessor in accordance with Section 5.1.16(a), copies of which
shall be attached as an exhibit to said certificate, are then in full force and
effect, (iii) stating that the Project Documents delivered to the Lessor in
accordance with Section 5.1.16(d), copies of which shall be attached as an
exhibit to said certificate, are true and complete copies of the original
thereof and are then in full force and effect and (iv) stating that the copy of
each resolution delivered to the Lessor in accordance with Section 5.1.16(b),
which copies shall be attached as an exhibit to said certificate, is true and
complete and that there exist no other resolutions dealing with the subject
matter thereof;
(o) a report of the Independent Engineer to the effect that the
Facility (including the Equipment) is functioning properly and has been
adequately maintained;
(p) such other documents, agreements, opinions, certificates
(including, without limitation, customary certificates of the Lessee with
respect to the truth and accuracy of the representations and warranties made
herein by the Lessee) relating to the Facility, the Landfill Project and/or the
Lease Documents as may be required by the Lessor, including, without limitation,
all items set forth on the so-called "Closing Checklist";
(q) if required by the Lessor, reports from qualified professionals
acceptable to the Lessor, addressed to the Lessor prepared in accordance with
the Lessor's protocols, indicating the acceptability of the environmental risk
associated with the Landfill, the Host Site, the Facility and the Project Site,
addressing the existence of any Hazardous Materials at, or which may affect, the
Landfill, the Host Site, the Facility and/or the Project Site, and the
compliance of the Landfill, the Host Site, the Facility and the Project Site
with Legal Requirements and Approvals;
(r) a title policy or policies (collectively, the "Title Policy") from
a title insurance company approved by the Lessor (the "Title Company"), insuring
the priority of the lien of the Leasehold Mortgage, to the extent of the
aggregate amount of all Basic Rent, as being in accordance with applicable
requirements of this Agreement, together with such affirmative coverages as the
Lessor may require;
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(s) a budget with respect to the Facility for the calendar years
ending December 31, 2001 and December 31, 2002 (including an operating expense
budget with appropriate provisions made for maintenance of the Equipment), which
budgets shall be satisfactory in form and substance to the Lessor in its sole
and absolute discretion, taking into consideration, but not being bound by, the
Lessee's prior operating budgets for the Facility;
(t) a true and correct copy of the most recent budget for the
Facility;
(u) a true and correct copy of the notice from the Utility evidencing
that the Buy Date (as defined in the Utility Agreement) has occurred and the
date thereof;
(v) a true and correct copy of the Host's notice of acceptance of the
Facility (including, without limitation the Equipment), which notice shall be
reasonably satisfactory in form and substance to the Lessor;
(w) a waiver from each mortgagee or other Person with an interest in
the Landfill Project, the Host Site, Project Site and the Host Facility, which
waiver shall be reasonably satisfactory in form and substance to the Lessor; and
(x) any other items required by the Lessor in connection with the
Landfill, the Host Site, the Facility, the Project Site or the Lessor.
5.1.17. Notices. All notices required by any Government Authority under
-------
applicable Legal Requirements to be filed with respect to the Facility shall
have been filed.
5.1.18. Bankruptcy Remoteness. The Charter Documents, governance and
---------------------
control of the Lessee shall have been amended to accomplish so-called
"bankruptcy remote" status satisfactory to the Lessor in the exercise of its
sole and absolute discretion.
5.1.19. Waiver. Any waiver by the Lessor of any of the conditions
------
precedent contained herein for the Transaction shall not be deemed to be a
waiver by the Lessor of any other obligation of the Lessee hereunder.
5.1.20. Lessor Satisfaction. Lessor shall be satisfied, in Lessor's sole
-------------------
discretion, with the results of its investigation and review of all matters
related to the Landfill, the Host Site, the Facility, the Project Site or the
Lessor.
ARTICLE 6
GENERAL PROVISIONS
6.1. Closing Fee. On the date of execution of this Agreement, the Lessee
-----------
shall pay to the Lessor a closing fee in an amount equal to one and one-half
percent (1.5%) of the Purchase Price (the "Closing Fee").
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6.2. Authorization.
-------------
6.2.1. Authorized Representatives. The Lessee authorizes the Lessor to
--------------------------
rely upon the continuing authority of the persons, officers, signatories or
agents hereafter designated ("Authorized Representatives") to bind the Lessee
with respect to all matters pertaining to the Transaction, including, but not
limited to, (a) the execution, in the Lessee's name and on its behalf, of each
of the Lease Documents and Project Documents to the extent such signature is
required and (b) the giving of notice or the taking of other action on the
Lessee's behalf. Such authorizations may be changed only upon written notice to
the Lessor accompanied by reasonable evidence of the authority of the person
giving such notice and such notice shall be effective not sooner than five (5)
Business Days following receipt thereof by the Lessor. The present Authorized
Representatives are listed on Schedule 6.2.1.
--------------
6.2.2. Project Control Account. The Lessee authorizes the Lessor to
-----------------------
deduct from the Project Control Account the amount of any payment due from the
Lessee, the Parent and/or ITG to the Lessor under this Agreement or the other
Lease Documents. The failure of the Lessor to deduct any such payment from the
Project Control Account shall not affect or limit the Lessee's and/or the
Parent's and/or ITG's obligation to make such payment.
6.3. Indemnification. The Lessee shall, at all times, both before and after
---------------
full payment and satisfaction of all Lessee Obligations, at its sole cost and
expense, assume liability for and defend, indemnify, exonerate and save harmless
the Lessor, its members and its managers, and its and their respective
shareholders, partners, members, managers, officers, directors, agents,
servants, and employees, and all others claiming by, through or under any of
them, and the successors and assigns of any of them (each such Person,
including, without limitation, the Lessor and its members and managers, an
"Indemnified Party") from and against, and does hereby agree to pay, when due,
as Additional Rent, any and all claims, expenses, damages, losses or liabilities
incurred by the Indemnified Party, including, without limitation, attorneys' and
experts' fees and disbursements, including, without limitation, appraisal fees,
court costs and fees of architects and engineers, of whatever nature, whether
foreseen or unforeseen, which may at any time (including, without limitation,
before or after discharge or foreclosure of any of the Lease Documents) be
imposed upon, incurred by or asserted or awarded against any Unit or any
Indemnified Party and in any way relating to or arising from or out of:
(a) environmental matters to the extent set forth in either Environmental
Indemnity Agreement (it being expressly acknowledged by the Lessee that
each Environmental Indemnity Agreement provides that certain provisions
thereof shall survive any foreclosure or any modification, release or
discharge of any or all of the Security Documents or the payment of all
Basic Rent and shall inure to the benefit of the Lessor and its successors
and assigns);
-15-
(b) any liability for damage to person or property arising out of any
violation of any Legal Requirement, any Approval and/or any Project
Document;
(c) any act, omission, negligence or conduct (i) occurring on or related to
any portion of the Host Site, the Project Site, the Landfill Project or the
Facility (including the Equipment), or (ii) arising, or claimed to have
arisen, out of any act, omission, negligence or conduct of the Lessee or
any representative, lenders, agent, or contractor of the Lessee, occupant
of the Host Site or the Project Site (including the Equipment) or invitee
thereof, or (iii) which otherwise is in any way related to all or any
portion of the Landfill Project or the Facility;
(d) any liability asserted against, imposed or incurred by the Lessor in
connection with or as a result of (i) the Assignment of Contracts, the
Collateral Assignment of Project Contracts or the Leasehold Mortgage, (ii)
the exercise of any rights and remedies under any of the leases or other
agreements referred to in the Assignment of Contracts, the Collateral
Assignment of Project Contracts or the Leasehold Mortgage or (iii) by
reason of any alleged obligations or undertakings of the Lessor to perform
or discharge any of the terms, covenants or agreements contained in any of
such leases or other agreements;
(e) without limitation the generality of the foregoing, the manufacture,
purchase, acceptance or rejection, ownership, delivery, lease, use,
possession, operation, condition, repair, replacement, reconstruction,
return or other disposition of any Unit, including without limitation those
in any way relating to or arising out of or alleged to arise out of (i) any
latent or other defects whether or not discoverable by the Lessor or the
Lessee, (ii) any claim for patent, trademark or copyright infringement,
(iii) any claim based on strict liability in tort and (iv) any and all
license fees, assessments and sales, use, rent, property and other taxes
now or hereafter imposed by any federal, state or local government upon any
Unit or its use or payment hereunder, or upon this Agreement (excluding,
however, taxes, fees and other charges based upon or measured by any
Indemnified Party's net income), whether the same shall be payable by or
billed or assessed to such Indemnified Party or the Lessee, together with
any penalties or interest in connection therewith; or
(f) (i) the preparation for, commencement and the continuation of the
Lessor's rights relating to any Event of Default, whether or not the Lessor
pursues such enforcement, (ii) reasonable expenses incurred by the Lessor
if made a party to any action by a third party or in participating in any
other legal proceeding relating to the Equipment, the Collateral or the
Lease Documents, (iii) reasonable expenses incurred by the Lessor in
exercising any right of self help pursuant to the Assignment of Contracts,
the Collateral Assignment of Project Contracts, the Leasehold Mortgage or
any other Security Document, (iv) any reasonable expenses incurred by the
Lessor in administering the disposition of insurance proceeds or eminent
domain proceeds or in considering matters for which the
-16-
Lessee requests the Lessor's approval pursuant to, or which would otherwise
be a violation of, the Lease Documents, and (v) all other reasonable
expenses incurred by the Lessor in connection with the Lessee Obligations.
In addition, the Lessee will defend with counsel of the Lessor's selection
(but with the approval of Lessee, which approval shall not be unreasonably
withheld, and at the Lessee's expense), indemnify, exonerate and save harmless
each Indemnified Party from and against any and all claims, expenses, damages,
losses or liabilities relating to any personal injury (including death) or
property damage asserted against any Indemnified Party on account of any act
performed or omitted to be performed in any way related to the Equipment and/or
the Collateral or on account of any transaction under any Lease Document. The
Lessee shall be obligated under this section irrespective of whether any
Indemnified Party shall also be indemnified with respect to the same matter
under any other agreement by any other Person. In the event the Lessee is
required to make any payment under this section, the Lessee shall pay to each
Indemnified Party any amount which after deduction of all taxes required to be
paid by such Party in respect of the receipt of such payment (after giving
credit for any savings in respect of any such taxes by reason of deductions,
credits or allowances available to the Indemnified Party in respect of the
payment of the expense indemnified against and of such other taxes) shall be
equal to the amount of such payment. The Lessee and the Lessor shall each give
the other promptly upon obtaining knowledge thereof written notice of any matter
hereunder indemnified against; provided, however, that the failure to give such
-------- -------
notice shall not in any way affect, impair or diminish the Lessee's obligations
hereunder. The obligation of indemnity contained in this Agreement shall
survive satisfaction of all or any portion of the Lessee Obligations, discharge
and/or release of any Lease Document or foreclosure thereunder.
Notwithstanding the foregoing provisions of this section, an Indemnified
Party shall not be entitled to indemnification in respect of claims, expenses,
damages, losses or liabilities arising from acts of its, his or her own gross
negligence or willful misconduct to the extent that such gross negligence or
willful misconduct is determined by the final judgment of a court of competent
jurisdiction, not subject to further appeal, in proceedings to which such
Indemnified Party is a proper party. The obligations under this section shall
constitute "Lessee Obligations" for all purposes of the Security Documents.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF LESSEE
The Lessee represents and warrants to the Lessor on the date hereof (except
as specifically noted below) and on the Closing Date that:
7.1. Organization and Qualification. Each of the Lessee, the Parent and ITG
------------------------------
(a) is a corporation duly organized, validly existing, and in good standing
under the laws of the jurisdiction of its formation; (b) has all requisite power
to own its property and conduct its business as now conducted and as presently
contemplated; and (c) is duly qualified
-17-
and in good standing as a foreign corporation and is duly authorized to conduct
business in each jurisdiction where the nature of its business requires such
qualification.
7.2. Corporate Authority. The execution, delivery and performance of each of
-------------------
the Lease Documents and the Project Documents to which the Lessee, the Parent or
ITG is or is to become a party and the transactions contemplated hereby and
thereby are within the power and authority of the Lessee, the Parent or ITG
have been authorized by all necessary proceedings, and do not and will not (a)
contravene any provision of the Charter Documents of the Lessee, the Parent
and/or ITG, as the case may be, or any Legal Requirements applicable to the
Lessee, the Parent or ITG, (b) contravene any resolution of the stockholders or
of the Directors of the Lessee, the Parent or ITG, (c) contravene any provision
of, or constitute an event of default or event that, but for the requirement
that time elapse or notice be given, or both, would constitute an event of
default under, any other agreement, instrument, order or undertaking binding on
the Lessee, the Parent or ITG, or (d) result in or require the imposition of any
Lien on any of the properties, assets or rights of the Lessee, the Parent or
ITG, other than in favor of the Lessor or otherwise permitted under this
Agreement. All consents of any nature necessary for the execution of the
Easement Agreement and the Sales Agreement by the Host and the other Project
Documents by the parties thereto (other than the Lessee) will be obtained on or
prior to the Closing Date.
7.3. Valid Obligations. Each of the Lease Documents and the Project Documents
-----------------
to which the Lessee, the Parent and/or ITG is or is to become a party and all of
its respective terms and provisions are the legal, valid and binding obligations
of the Lessee, the Parent or ITG, as the case may be, enforceable in accordance
with its respective terms, except as limited by bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the enforcement of creditors'
rights generally, and except as the remedy of specific performance or of
injunctive relief is subject to the discretion of the court before which any
proceeding therefor may be brought.
7.4. Approvals. The execution, delivery and performance of each of the Lease
---------
Documents and the Project Documents to which the Lessee, the Parent and/or ITG
is or is to become a party and the transactions contemplated herein and therein
do not require (a) any Approval (except filings under the UCC in connection with
the Collateral) or (b) the consent or approval of any creditors or trustees for
creditors of the Lessee, the Parent and/or ITG, or of any other Person, except
for such Approvals.
7.5. Title to Properties; Absence of Encumbrances. Lessee has good and
--------------------------------------------
marketable title to all of the properties, assets and rights of every name and
nature now purported to be owned by it, including, without limitation, such
properties, assets and rights as are reflected in the Initial Financial
Statement (except such properties, assets or rights as have been disposed of in
the ordinary course of business since the date thereof), free from all Liens
except Permitted Liens, and, except as so disclosed, free from all defects of
title that might materially adversely affect any of such properties, assets or
rights. All such properties and assets and all properties which are leaseholds
are free and clear of all title defects or objections and Liens of any nature
whatsoever, and are not, in the case of real property,
-18-
subject to any rights of way, building, use or other restrictions, easements,
exceptions, variances, reservations or limitations of any nature whatsoever
except, with respect to all such properties and assets, (i) provisions of
existing building and zoning laws, provided, that, such restrictions do not
-------- ----
prohibit or materially impair the use of the premises or the conduct of the
Lessee's business, (ii) Liens for current taxes, assessments and other
governmental charges not yet due, (iii) easements and restrictions of record
which do not, individually or in the aggregate, prohibit or materially impair
the use of the premises or the conduct of the Lessee's business, and (iv) as
otherwise disclosed on Schedule 7.5. The rights, properties and other assets
------------
presently owned, leased or licensed by the Lessee and described elsewhere in
this Agreement include all rights, properties and other assets necessary to
permit the Lessee to conduct its business in all material respects in the same
manner as its business has been conducted prior to the date hereof. At the time
the Lessee pledges, sells, assigns or transfers to the Lessor any instrument,
document of title, security, chattel paper or other property or any proceeds or
products thereof, or any interest therein, the Lessee shall be the lawful owner
thereof and shall have good right to pledge, sell, assign or transfer the same;
none of such properties shall at that time be pledged, sold, assigned or
transferred to any Person other than the Lessor or in any way encumbered (other
than with respect to Permitted Liens); and the Lessee shall defend the same
against the claims and demands of all Persons.
7.6. Insurance. The Lessee maintains insurance with financially responsible
---------
insurers which complies with the requirements of 9.4. True and accurate copies
of the policies evidencing such insurance have been previously delivered to the
Lessor.
7.7. Financial Statements. The Lessee has provided to the Lessor (a) a
--------------------
balance sheet of each of the Lessee and the Parent as of December 31, 1999, and
the statements of income, changes in stockholder's equity and cash flow of each
thereof for the fiscal year then ended, and related footnotes, internally
compiled by Lessor or the Parent, as the case may be, and (b) an unaudited
balance sheet of each of the Lessee and the Parent as of September 29, 2000, and
the statements of income, changes in stockholder's equity and cash flow of each
thereof for the fiscal period then ended (collectively, the "Initial Financial
Statement"). All such financial statements were prepared in accordance with
GAAP, consistently applied, and present fairly the financial position of the
Lessee and of the Parent, as the case may be, as of such dates and the results
of the operations of the Lessee and the Parent, respectively, for such periods.
There are no liabilities, contingent or otherwise, not disclosed in any of such
financial statements that involve a material amount.
7.8. No Material Adverse Change; No Event of Default; No Payments. Since the
------------------------------------------------------------
date of the Initial Financial Statement, which the Lessor has used to underwrite
the Transaction, there have been no changes in the assets, liabilities,
financial condition or business of the Lessee which could have a Material
Adverse Effect. No Default or Event of Default under any Lease Document, or
default or event of default under any Project Document, has occurred and is
continuing.
-19-
7.9. Taxes. The Lessee has filed all federal, state and other tax and
-----
information returns required to be filed, and has fully paid all taxes,
assessments and other governmental charges and levies, including interest and
penalties, due from the Lessee except any tax, assessment, charge or levy that
is being contested in good faith by appropriate proceedings and with respect to
which adequate reserves have been established and are being maintained in
accordance with GAAP and as to which no Lien has been filed to secure such tax,
assessment, charge or levy. The Lessee has not executed any waiver of
limitations in respect of tax liabilities. The Lessee has established on its
books reserves adequate for the payment of all federal, state and other tax
liabilities of which it has (or reasonably should have) knowledge. The Lessee
has relied exclusively on the advice of its own advisers with respect to the tax
and accounting treatment of this Agreement and the other Lease Documents and
acknowledges that the Lessor has made no representation or warranty with respect
thereto.
7.10. No Litigation. Except as set forth on Schedule 7.10, there is no
------------- -------------
litigation, arbitration, proceeding or investigation pending or, to the Lessee's
knowledge, threatened against the Lessee that, if adversely determined, could
result in a material judgment not fully covered by insurance, could result in a
forfeiture of all or any substantial part of the property of the Lessee, or
could otherwise have a Material Adverse Effect.
7.11. Compliance with Other Instruments, Laws, Etc. None of the Lessee, the
--------------------------------------------
Parent nor ITG is in violation of (a) any Charter Document or resolution, (b)
any instrument or agreement binding on Lessee or affecting Lessee's property or
the Parent's interests in the Lessee which have been or will be pledged to
Lessor pursuant to the Pledge Agreement (c) any Legal Requirement or Approval,
in a manner which could reasonably expected to have a Material Adverse Effect;
nor has the Lessee, the Parent nor ITG received any notice of the violation of
any Legal Requirement or Approval from any government or regulatory authority
(including, without limitation, all applicable federal and state tax laws, ERISA
and Environmental Laws), the consequences of which could have a Material Adverse
Effect.
7.12. Perfection of Liens. Upon execution and delivery of the Security
-------------------
Documents and the filing of documents thereby required, the Lessor shall have
first-priority perfected liens on the Collateral, subject only to Permitted
Liens and entitled to priority under applicable law, with no financing
statements, chattel mortgages, real estate mortgages or similar filings on
record anywhere which conflict with such first-priority liens of the Lessor.
7.13. Work; Plans and Specifications; Facility. All of the Facility Work
----------------------------------------
which has been performed and which is to be performed complies in all material
respects with all applicable Legal Requirements and Approvals, including,
without limitation, zoning, building and fire codes and health, safety and
Environmental Laws, rules and regulations. To the best of Lessee's knowledge,
the Landfill Work which has been performed complies in all material respects
with all applicable Legal Requirements and Approvals, including, without
limitation, zoning, building and fire codes and health, safety and
-20-
Environmental Laws, rules and regulations. The Plans and Specifications attached
hereto as Exhibit D are a true, correct and complete copy of all plans and
---------
specifications, as amended, that relate to the Facility (including the
Equipment). The Facility (including the Equipment) has been completed in
compliance in all material respects with and as contemplated by the Plans and
Specifications, the Facility (including the Equipment) is functioning in
compliance in all material respects with and as contemplated by the Plan and
Specifications and has, if and to the extent required by any Project Document,
been accepted unconditionally and irrevocably by the Host and the Utility
pursuant to the Project Documents in accordance with all applicable requirements
of the Project Documents.
7.14. Facility Approvals Obtained. All Approvals necessary for the
---------------------------
construction, installation, operation and maintenance of the Facility (including
the Equipment) have been obtained so as to comply with all Legal Requirements in
all material respects, and the Facility complies in all material respects with
all such Approvals. Without limiting the generality of the foregoing, the
Facility has been certified and remains, and will after the Transaction is
effected remain, a qualifying facility or a qualifying small power facility as
defined under PURPA and FERC regulations and practices. No violation exists of
any Legal Requirement as it pertains to the Lessee or the Facility. To the best
of the Lessee's knowledge, the Landfill Project has all Approvals for the
construction, operation and maintenance of the Landfill Project (including the
Host Site) in compliance with all Legal Requirements, the Landfill Project
complies in all material respects with all such Approvals and no violation
exists of any Legal Requirement as it pertains to the Host or the Landfill
Project.
7.15. Environmental Matters. Except as set forth on Schedule 7.15:
--------------------- -------------
7.15.1. All Approvals which are required under all Environmental Laws in
connection with the Facility and the operation of Lessee's business have been
obtained, except to the extent failure to have any such Approvals would not have
a Material Adverse Effect. The Lessee and Facility are in compliance with the
terms and conditions of all such Approvals, and is also in compliance with all
other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in any applicable
Environmental Law or in any regulation, code, plan, order, decree, judgment or
injunction issued, entered, promulgated or approved thereunder, except to the
extent failure so to comply would not, individually or in the aggregate, have a
Material Adverse Effect.
7.15.2. No notice, notification, demand, request for information,
citation, summons or order has been received by Lessee or, to the best of
Lessee's knowledge, has been issued, no complaint has been filed, no penalty has
been assessed and no investigation or review is pending or, to the best of
Lessee's knowledge, threatened by any governmental or other entity with respect
to any alleged failure by the Lessee to have any Approval required in connection
with the operation of the Facility or the conduct of its business or with
respect to any Environmental Laws, including, without limitation, Environmental
-21-
Laws relating to the generation, treatment, storage, recycling, transportation,
disposal or release of any Hazardous Materials. The Lessee has not been
identified as a potentially responsible party (as that term has been construed
pursuant to CERCLA, or any similar state or local laws) at any site.
7.15.3. No material oral or written notification of a release of a
Hazardous Material has been filed by or on behalf of the Lessee and no property
now or previously owned, leased or used by the Lessee is listed or proposed for
listing on the National Priorities List under CERCLA, as amended, or, to the
best of Lessee's knowledge, on any similar state list of sites requiring
investigation or clean-up.
7.15.4. There are no Liens arising under or pursuant to any
Environmental Laws on any of the real property or properties owned, leased or
used by the Lessee and no governmental actions have been taken or are in process
which could subject any of such properties to such Liens or, as a result of
which the Lessee would be required to place any notice or restriction relating
to the presence of Hazardous Materials at any property owned by it in any deed
to such property.
7.15.5. Neither the Lessee nor, to the Lessee's knowledge, any previous
owner, tenant, occupant or user of any property owned, leased or used by the
Lessee has (i) engaged in or permitted any operations or activities upon or any
use or occupancy of such property, or any portion thereof, for the purpose of or
in any way involving the handling, manufacture, treatment, storage, use,
generation, release, discharge, refining, dumping or disposal (whether legal or
illegal, accidental or intentional) of any Hazardous Materials on, under, in or
about such property, except in compliance with all Environmental Laws, or (ii)
transported any Hazardous Materials to, from or across such property except in
compliance with all Environmental Laws; nor to the Lessee's knowledge have any
Hazardous Materials migrated from other properties upon, about or beneath such
property nor, to the Lessee's knowledge, are any Hazardous Materials presently
constructed, deposited, stored or otherwise located on, under, in or about such
property except in compliance with all Environmental Laws.
7.16. Disclosure. No representations and warranties made by the Lessee, the
----------
Parent and/or ITG in any Lease Document or Project Document or in any other
agreement, instrument, document, certificate, statement or letter furnished to
the Lessor by or on behalf of the Lessee, the Parent and/or ITG, and no other
factual information heretofore or contemporaneously furnished by or on behalf of
the Lessee, the Parent and/or ITG to the Lessor, in connection with any of the
transactions contemplated by any of the Lease Documents or Project Documents
contains any untrue statement of fact or omits to state a fact necessary in
order to make the statements contained therein not misleading in light of the
circumstances in which they are made. Except as disclosed herein, there is no
fact which has resulted in, or which could in the future result in, a Material
Adverse Effect.
7.17. Solvency. Both before and after giving effect to the transactions
--------
contemplated by the Lease Documents and the Project Documents, neither the
Lessee nor ITG or, to Lessee's
-22-
knowledge, the Host or the Utility (i) is insolvent or will be rendered
insolvent by the Indebtedness incurred in connection therewith, (ii) has or will
be left with unreasonably small capital with which to engage in its business,
(iii) has incurred or will incur Indebtedness beyond its ability to pay such
Indebtedness as it matures, and (iv) has or will fail to have assets (both
tangible and intangible) having a present fair salable value in excess of the
amount required to pay the probable liability on its then existing debts
(whether matured or unmatured, liquidated or unliquidated, absolute fixed or
contingent).
7.18. No Broker. None of the Lessee, the Parent, ITG, nor anyone acting on
---------
its behalf, has dealt with any broker, finder or other person or entity who or
which may be entitled to a broker's or finder's fee, or other compensation,
payable by the Lessor in connection with any transaction contemplated by the
Lease Documents or the Project Documents. To Lessees' knowledge, no broker's or
finder's fees (or the like) has or may be incurred by or on behalf of the
Lessee, the Parent and/or ITG in connection with any transaction contemplated by
the Lease Documents or the Project Documents. The Lessee agrees to defend, save
harmless and indemnify the Lessor from any and all such claims on account
thereof. This provision shall survive the payment of the Rent and payment and
performance of all other Lessee Obligations, and shall continue in full force
and effect so long as the possibility of any such claim exists.
7.19. Project Contractors Paid To Date. No Project Contractor has performed
--------------------------------
any Facility Work which remains unpaid other than in the ordinary course of
business for no more than thirty (30) days.
7.20. Labor Relations. The Lessee is not engaged in any unfair labor
---------------
practice. Except as disclosed on Schedule 7.20, there is not pending nor
-------------
threatened against the Lessee (i) any unfair labor practice complaint before the
National Labor Relations Board, (ii) any grievance or arbitration proceeding
arising out of or under any collective bargaining agreement, and (iii) any labor
dispute, slowdown or stoppage. To the Lessees' knowledge, no union
representation question exists with respect to any employees of the Lessee and
no union organizing activities are taking place with respect to any employees of
the Lessee.
7.21. Certain Transactions. Except as disclosed on Schedule 7.21, Lessee is
-------------------- -------------
not a party to any agreement:
(a) with any officer, partner, member, manager, stockholder, director or
employee of the Lessee (other than agreements relating to services rendered as
employees, officers and directors) requiring payments to or from any such
officer, partner, member, manager, stockholder, director or employee of the
Lessee; or
(b) requiring payments to or from any corporation, partnership, trust or
other entity in which
(i) any officer, partner, member, manager, stockholder, director or
employee of the Lessee,
-23-
(ii) any natural person related to such officer, partner, member, manager,
stockholder, director or employee, or
(iii) any other Person in which such officer, partner, member, manager,
stockholder, director or employee has a direct or indirect beneficial
interest,
has a substantial direct or indirect beneficial interest or is an officer,
director, member, manager, stockholder, trustee or partner. The agreements that
are the subject of this section include, but are not limited to, any contract,
agreement or other arrangement for the furnishing of services or the rental of
real or personal property.
7.22. Restrictions on Lessee. None of the Lessee, the Parent nor ITG is a
----------------------
party to or bound by any contract, agreement or instrument, or subject to any
charter or other corporate restriction, having a Material Adverse Effect.
7.23. Products Liability. Except as disclosed on Schedule 7.23, there
------------------ -------------
(a) is no claim which has not been settled prior to the date hereof by or
before any governmental agency or authority against or involving the Lessee
concerning any product designed, manufactured, shipped, sold, delivered or
installed by or on behalf of the Lessee which is pending or, to the Lessee's
knowledge, threatened, relating to or resulting from an alleged defect in
design, manufacture, materials or workmanship of any such product, an alleged
failure to warn as to the condition or use of any such product, or an alleged
breach of implied warranties or representations made with respect to any such
product, nor is there any valid basis for any such claim;
(b) has not been any Occurrence involving claims or threatened claims in
writing against the Lessee in excess of $25,000 which has not heretofore been
settled;
(c) has not been any product recall, rework or post-sale warning or similar
action (collectively, "Recalls") conducted with respect to any products
designed, manufactured, shipped, sold, delivered or installed by or of the
Lessee, or any investigation, to the Lessee's knowledge, or consideration of or
decision made by the Lessee concerning whether to undertake or not undertake,
any Recalls; and
(d) to the Lessee's knowledge, are no material defects in design,
manufacturing and materials or workmanship, including any failure to warn, or
any breach of express or implied warranties or representations, which involve
any product designed, manufactured, shipped, sold, delivered or installed by or
on behalf of the Lessee.
For the purposes of this section, the term "Occurrence" means any accident,
happening or event which occurs or has occurred at any time within five (5)
years prior to the effective date of this Agreement which is caused by hazard or
defect in manufacture, design,
-24-
materials or workmanship, including any failure to warn or any breach of express
or implied warranties or representations with respect to a product designed,
manufactured, shipped, sold, delivered or installed by or on behalf of the
Lessee which results in injury or death to any person or damage to or
destruction of property (including damage to or destruction of the product
itself, except for products returned, repaired or replaced in the ordinary
course of business).
7.24. Year 2000. All hardware and software products used by the Lessee in
---------
the administration and the business operations of the Lessee are able to
accurately process date data (including, but not limited to calculating,
comparing and sequencing) from, into and between the twentieth century (through
year 1999), the year 2000 and the twenty-first century, including leap year
calculations, when used in accordance with the product documentation
accompanying such hardware and software products.
7.25. Project Contracts. The Lessee has delivered to the Lessor true,
-----------------
correct and complete copies of all Project Contracts.
7.26. Equipment.
---------
(a) The Lessee, at its own cost and expense, shall service or cause to be
serviced and, unless an Event of Loss has occurred, repair, maintain and
overhaul each Unit so as to keep it (i) in as good operating condition as it was
when delivered to the Lessee hereunder, ordinary wear and tear excepted, and
(ii) in such condition as shall meet all applicable federal, state or local laws
or regulations.
(b) The Lessee has placed and shall maintain in a prominent place on each
Unit (except as otherwise specifically noted on the Lease Schedule) an insignia,
plate or other identification of reasonable size in relation to the size of the
Unit bearing the inscription "LEASED FROM ABB ENERGY CAPITAL L.L.C." or such
other inscription as may from time to time be reasonably requested by the
Lessor.
(c) All of the Equipment is located, and shall remain located, at the
Project Site.
7.27. Prior LFG Sales Agreement Equipment. To the best of the Lessee's
-----------------------------------
knowledge, each of the Landfill Gas Sales Agreement, dated July 22, 1993, among
the Host, the Lessee Regenco Corporation and certain other parties and the Gas
Purchase and Lease Agreement, dated December 15, 1981, as amended April 2, 1986,
between F and L Realty and American Gas Recovery Corporation and the related
assignment to American Alternate Energy, Ltd. and American Biosource Partners,
LP-1, has been completely terminated, is null and void and of no further force
or effect and neither the Host nor the Lessee has any outstanding obligations
thereunder to the other. As a condition to closing hereunder, the Host will
confirm the foregoing in writing in a manner satisfactory to the Lessor.
-25-
ARTICLE 8
REPRESENTATIONS AND WARRANTIES OF LESSOR
The Lessor represents and warrants to the Lessee as the date hereof and as
the Closing Date that:
8.1. Title. The Lessor has received whatever title to the Equipment was
-----
conveyed to it by the Lessee and that the Equipment is free of Liens which may
result from any claims against the Lessor, except to the extent that such Liens
arise from the failure of the Lessee to perform any of the Lessee's obligations
hereunder.
8.2. Corporate Authority. The Lessor has full power and authority to lease
-------------------
the Equipment to the Lessee in accordance with the terms hereof.
8.3. Warranties. THE WARRANTIES OF THE LESSOR SET FORTH IN THIS ARTICLE 8 ARE
----------
EXCLUSIVE AND IN LIEU OF ALL OTHER REPRESENTATIONS OR WARRANTIES OF THE LESSOR
WHETHER STATUTORY, WRITTEN, ORAL OR IMPLIED, AND THE LESSOR HAS NOT MADE AND
DOES NOT HEREBY MAKE, NOR SHALL IT BE DEEMED BY VIRTUE OF HAVING LEASED THE
EQUIPMENT PURSUANT TO THIS AGREEMENT TO HAVE MADE, ANY REPRESENTATION OR
WARRANTY AS TO THE MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, DESIGN OR
CONDITION OF, OR AS TO THE QUALITY OF THE WORKMANSHIP IN, THE EQUIPMENT, but the
Lessor authorizes the Lessee, at the Lessee's expense, to assert during the
Term, so long as no Default or Event of Default shall have occurred and be
continuing, all of the Lessor's rights under any previous manufacturer's,
vendor's or dealer's warranty with respect to the Equipment, and the Lessor
agrees to cooperate with the Lessee in asserting such rights in order to obtain
the benefit thereof; provided, however, that the Lessee shall not attempt to
-------- -------
enforce such rights unless (i) the Lessee shall first notify the Lessor of the
Lessee's intention to enforce such rights and shall furnish to the Lessor such
information with respect thereto as the Lessor may reasonably request and (ii)
the enforcement of the rights does not, in the Lessor's reasonable judgment,
involve any danger of sale, forfeiture or loss of any Unit or create the danger
of the Lessor's incurring criminal liability or other liability for which
indemnification by the Lessee, satisfactory to the Lessor, of the Lessor and all
other Indemnified Parties is not provided. Any amount received by the Lessee as
payment under any warranty pursuant to the above authorization shall be applied
to restore the Equipment to as good a condition as it was or should have been
(but for defects giving rise to such payment under warranty) when delivered by
the Lessee to the Lessor hereunder, ordinary wear and tear excepted, with the
balance of such amount, if any, to be paid over to the Lessor unless such
balance was paid or awarded to the Lessee as compensation for any interruption
in the use of the Equipment or other damage suffered by the Lessee during the
Term in which case such balance shall be deposited in the Project Control
Account. The provisions of this section have been negotiated and agreed to by
the parties hereto and, except to the extent otherwise expressly provided in
this
-26-
section, are intended to be a complete negation and exclusion of any
representations or warranties by the Lessor, express or implied, whether arising
pursuant to the UCC or any similar law now or hereafter in effect, or otherwise.
ARTICLE 9
AFFIRMATIVE COVENANTS
Until the payment, performance and other satisfaction in full of all of the
Lessee Obligations, the Lessee covenants as follows:
9.1. Financial Statements and Other Reporting Requirements. The Lessee shall
-----------------------------------------------------
furnish to the Lessor:
(a) as soon as available, but in any event within ninety (90) days after
the end of each fiscal year of the Lessee, a balance sheet as of the end of, and
a related statement of income, changes in equity and cash flow for, such fiscal
year, complied internally and prepared in accordance with GAAP and certified by
the Controller of the Parent;
(b) as soon as available, but in any event within forty-five (45) days
after the end of each fiscal quarter of the Lessee, a balance sheet as of the
end of, and a related statement of income, changes in equity and cash flow for,
the portion of the fiscal year then ended and for the fiscal quarter then ended,
prepared in accordance with GAAP and certified by the Controller of the Parent,
but subject, however, to normal, recurring year-end adjustments that shall not
in the aggregate be material in amount;
(c) concurrently with the delivery of each financial statement pursuant to
subsections (a) and (b) of this section, a report signed on behalf of the Lessee
by the Controller of the Parent which shall include (i) computations in
reasonable detail evidencing compliance with the financial covenants contained
herein, (ii) a certification that the signer of such certificate has made, or
caused to be made by individuals under has authority and direction, a reasonable
investigation concerning the Equipment and the Lessee's compliance with its
obligations under this Agreement and the other Lease Documents and that no
Default or Event of Default has occurred or, if it has, a statement of the
actions taken by the Lessee with respect thereto, (iii) the make, model and
manufacturer's serial number of each Unit; (iv) the manufacturer's serial number
of any Unit that has become lost, destroyed, irreparably damaged or otherwise
permanently rendered unfit or unavailable for use since the date of the previous
report delivered pursuant to this subsection (c) (or since the commencement of
the Term in the case of the first such report); (v) that the Equipment has been
kept in good order and repair or is then being repaired in accordance with (S)
9.3; and (vi) that the location and identification requirements of (S)(S) 7.26
and 10.9 have been complied with in the case of each Unit;
(d) at least thirty (30) days prior to the end of each calendar year, a
budget with respect to the Facility for the next succeeding calendar year
(including an operating expense budget with appropriate provision made for major
maintenance showing an
-27-
estimate of operating expenses expected to be incurred by the Lessee), which
budget shall be satisfactory in form and substance to the Lessor in its sole and
absolute discretion, taking into consideration, but not being bound by the
Lessee's prior operating budgets for the Facility (any such budget, including
the budget referred to in (S)5.1.16(s), the "Annual Facility Budget");
(e) promptly after the receipt thereof by the Lessee, copies of any
reports submitted to the Lessee by independent public accountants in connection
with any interim review of the accounts of the Lessee made by such accountants;
(f) within fifteen (15) days after the end of each calendar month, (i) all
material information provided by the Lessee to the Host or the Utility during
the preceding calendar month in respect of the Facility (including without
limitation invoices) and (ii) any correspondence which the Lessee has received
from the Host or the Utility during the preceding calendar month that indicates
that the Lessee, the Landfill Project or the Facility may be subject to a
Material Adverse Event;
(g) immediately upon obtaining knowledge of the existence of any
conditions or events (i) constituting a Default or Event of Default under any
Lease Document, (ii) constituting a default or event of default under the any
Project Document or (iii) which reasonably could be expected to have a Material
Adverse Effect, and in any event within five (5) days after obtaining such
knowledge, written notice of such condition or event specifying the nature and
duration thereof and the action being or proposed to be taken with respect
thereto (and including a copy of any notice of such condition or event received
by the Lessee);
(h) immediately upon obtaining knowledge of the existence of any (i)
material breach, cancellation or termination of any Project Document, (ii) claim
(including, without limitation, tax Liens) against any assets or property of the
Lessee encumbered in favor of the Lessor or the Equipment, and (iii) default
claimed by any Person under any note, indenture or other obligation evidencing
Indebtedness as to which the Lessee is a party or obligor, whether as principal
or surety, and in any event within five (5) days after obtaining such knowledge,
written notice of such event specifying the nature and duration thereof and the
action being or proposed to be taken with respect thereto (and including a copy
of any notice of such event received by the Lessee);
(i) within the time period specified in (S)9.2(e), written notice of any
change of the address of the Lessee's chief executive office;
(j) immediately upon obtaining notice (whether formal or informal) of any
cancellation or material change in any insurance of the Lessee, and in any event
within five (5) days of obtaining such knowledge, written notice of such
cancellation or change;
(k) immediately upon obtaining knowledge of (i) the existence of any
actual or threatened litigation against the Lessee, (ii) any investigative
proceeding by a governmental
-28-
agency or authority commenced or threatened against the Lessee, or (iii) a
change in any such existing litigation or proceeding, the outcome of which would
or might to have a Material Adverse Effect, and in any event within five (5)
days of obtaining such knowledge, written notice thereof and the action being or
proposed to be taken with respect thereto (and including a copy of any notice of
such event received by the Lessee);
(l) immediately upon obtaining knowledge of any non-compliance by the
Lessee with ERISA or any Environmental Law, or of any investigative proceeding
by a governmental agency or authority commenced or threatened against the Lessee
regarding any potential violation of ERISA or any Environmental Law, or any
spill, release, discharge or disposal of any Hazardous Material, and in any
event within five (5) days of obtaining such knowledge, written notice thereof
and the action being or proposed to be taken with respect thereto (and including
a copy of any notice of such event received by the Lessee);
(m) from time to time, with reasonable promptness, such other financial
data and other information (including, without limitation, information
concerning the location, condition, use and operation of the Equipment) or
documents about the Lessee as the Lessor may reasonably request;
(n) concurrently with the giving thereof, and within five (5) Business Days
of receipt thereof, copies of all notices asserting a default under, or
requesting a waiver, modification or amendment of, any Approval;
(o) prompt written notice of any fire, explosion, accident, flood, storm,
earthquake or other casualty, or strike, lockout, bankruptcy, abandonment, or
act of God affecting the Landfill Project, the Facility or the operation of all
or any part of the Landfill Project or the Facility or the bankruptcy or
insolvency of the Host or the Utility; and
(p) upon the written request of the Lessor at reasonable intervals from
time to time, within fifteen (15) days of such request, a certificate executed
on behalf of the Lessee by a duly authorized officer containing the information,
as of a date not earlier than the date of such request, called for by subsection
(c)(ii) of this section.
9.2. Conduct of Business. The Lessee shall:
-------------------
(a) duly observe and comply in all material respects with all applicable
Legal Requirements relative to its existence, rights and franchises, to the
conduct of its business and to its property and assets (including without
limitation all Environmental Laws, FIRREA, FDICIA, CERCLA and ERISA), and shall
maintain and keep in full force and effect all Approvals necessary in any
material respect to the proper conduct of its business;
(b) maintain its existence;
-29-
(c) remain engaged substantially in the same fields of business as those in
which it is now engaged, except that the Lessee may withdraw from any business
activity other than that related to the Facility which its Parent reasonably
deems to be unprofitable or unsound, provided, that, promptly after such
--------- ----
withdrawal, the Lessee shall provide the Lessor with written notice thereof;
(d) maintain its current fiscal year and keep adequate books and records of
account, in which true and complete entries will be made reflecting all of its
business and financial transactions, and such entries will be made in accordance
with GAAP and applicable Legal Requirements;
(e) maintain its chief executive office at 0000 Xxxxxxx Xxxxxxxxx,
Xxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000, or at such other place in the United
States of America as the Lessee shall designate upon thirty (30) days prior
written notice to the Lessor; and
(f) maintain a fully executed original of each Project Document and provide
same to the Lessor upon request for any purpose related to any of the Lease
Documents.
9.3. Maintenance.
-----------
(a) The Lessee shall: (i) maintain its properties in good repair, working
order and condition as required for the normal conduct of its business; (ii)
from time to time make or cause to be made all necessary and proper repairs,
renewals, replacements, additions and improvements thereto so that the business
of the Lessee, in its reasonable business judgment, may properly and
advantageously be conducted at all times; and (iii) maintain or cause to be
maintained all leases as may be required for the conduct of the Lessee's
business.
(b) The Lessee, at its own cost and expense, shall service and, unless an
Event of Loss has occurred, repair, maintain and overhaul each Unit so as to
keep it (i) in as good operating condition as it was when delivered to the
Lessee hereunder, ordinary wear and tear excepted, and (ii) in such condition as
shall meet all applicable federal, state or local laws or regulations.
9.4. Insurance. The Lessee shall:
---------
(a) maintain with financially sound and reputable insurers all insurance
coverage required to be maintained by the Lessee under the Project Documents;
(b) maintain or cause to be maintained with financially sound and reputable
insurers insurance coverage with respect to the Facility (including, without
limitation, the Equipment) and the Collateral as set forth in Schedule 9.4 and
------------
such additional insurance as the Lessor may from time to time reasonably
require;
-30-
(c) with respect to the insurance policies maintained in accordance with
Schedule 9.4, cause the Lessor (i) to be named as mortgagee, loss payee and
------------
additional insured and (ii) to be given thirty (30) days prior written notice of
any cancellation or modification of such insurance;
(d) pay or cause to be paid all premiums with respect to each insurance
policy required under this Agreement annually, in advance, and provide the
Lessor with evidence satisfactory to the Lessor of such prepayment of premiums
prior to the Closing Date and thereafter, with respect to each such insurance
policy, on the sooner to occur of (i) at least thirty (30) days prior to annual
renewal date of such policy, (ii) the replacement date of such policy or (iii)
the date any premium installment is due;
(e) comply with the requirements of insurance companies providing insurance
under any policy required by this Agreement, or otherwise, with respect to the
Facility (including, without limitation, the Equipment) and of the Board of Fire
Underwriters or other insurance underwriters or similar body;
(f) upon the renewal or replacement of any insurance policy, furnish to the
Lessor XXXXX certificates or other evidence satisfactory to the Lessor
establishing that the Lessee has obtained the insurance coverage required by
this Agreement; and
(g) shall cause all such policies to contain an endorsement providing that
such policies shall be primary in all instances without regard to like
coverages, if any, maintained by the Lessor.
If the Lessee fails to obtain and maintain, or cause to be obtained and
maintained, the insurance required by this Agreement, the Lessor, in its sole
and absolute discretion, may provide such insurance and charge the cost thereof
to the Project Control Account as Additional Rent. Any payment for such
insurance coverage not recovered from the Lessee shall bear interest at the
Default Interest Rate. The Lessor shall not by the fact of approving,
disapproving, accepting, obtaining or failing to obtain any such insurance,
incur liability for the form or legal sufficiency of insurance contracts,
solvency of insurance companies or payment of claims, and the Lessee hereby
expressly assumes full responsibility therefor. The requirements of this
section shall be deemed to be supplemental to, but not duplicative of, the
provisions of any of the Security Documents that require the maintenance of
insurance.
9.5. Taxes. The Lessee shall pay or cause to be paid all taxes, assessments
-----
or governmental charges on or against it or its properties on or prior to the
time when they become due; provided, that, this covenant shall not apply to any
--------- ----
tax, assessment or charge that is being contested in good faith by appropriate
proceedings and with respect to which adequate reserves have been established
and are being maintained in accordance with GAAP if no Lien shall have been
filed to secure such tax, assessment or charge and no Default or Event of
Default shall exist.
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9.6. Inspection by Lessor. The Lessee shall:
--------------------
(a) obtain all necessary Approvals to allow the Lessor and its
representatives and agents to enter upon the Project Site in furtherance of any
right of the Lessor under this Agreement;
(b) permit the Lessor and its representatives and agents, upon reasonable
notice from Lessor and during normal business hours, to visit and inspect the
Equipment and the records maintained in connection therewith and examine the
books of account of the Lessee and the credit files of the Lessee (and to make
copies thereof and extracts therefrom), and to discuss the affairs, finances and
accounts of the Lessee with, and to be advised as to the same by, its officers,
all at such reasonable times and intervals as the Lessor may reasonably request
upon reasonable advance notice; and
(c) cooperate and cause the applicable Project Contractors to cooperate
with the Lessor and its representatives and agents during inspections of the
Project Site (including making available to the Lessor working copies of the
Plans and Specifications together with all related supplementary materials);
provided, however, that nothing in this section shall be deemed to impose upon
-------- -------
the Lessor any obligation to undertake such inspections.
9.7. Use of Proceeds. The Lessee shall use the proceeds of the sale of the
---------------
Equipment to the Lessor solely and exclusively to refinance costs relating to
developing, constructing, financing and operating the Project Site, fund reserve
accounts and pay transaction expenses incurred in connection with this Agreement
and the transactions contemplated hereunder. No such proceeds shall be used in
any way that would violate Regulations T, U or X of the Board of Governors of
the Federal Reserve System.
9.8. Performance of Obligations. The Lessee shall:
--------------------------
(a) duly and punctually pay or cause to be paid all Rent and all fees and
other amounts provided for in this Agreement and the other Lease Documents, all
in accordance with the terms of this Agreement and such other Lease Documents;
(b) faithfully perform all of its obligations under each of the Project
Documents before, during and after completion of construction, installation and
operation of the Equipment, including, without limitation, (i) its obligation to
make such changes or corrections in construction, installation and operation as
may be reasonably required under or in connection with the applicable Project
Documents and (ii) maintenance and repair of the Equipment;
(c) cause all Cash Revenues to be deposited directly (or forthwith upon the
Lessee's receiving the same) into the Project Control Account; the Lessee shall
insure that Cash Revenues are not deposited in any other account;
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(d) comply with all Approvals relating to the Facility, including, without
limitation, construction, use or operation of the Facility; and
(e) take or cause to be taken all reasonable steps within the power of the
Lessee to obtain any Approval necessary or required in order for the Lessee to
fulfill any of its obligations under any of the Lease Documents or the Project
Documents and furnish the Lessor with evidence thereof in form and substance
satisfactory to the Lessor.
9.9. Project Approvals. The Lessee shall obtain and maintain all material
-----------------
Approvals necessary for the construction, installation, operation and
maintenance of the Facility (including, without limitation, the Facility) and
the Facility's use for its intended purpose, in compliance with all Legal
Requirements and shall insure that the Facility (including, without limitation,
the Equipment) fully complies with all material Approvals issued by any
government authority.
9.10. Environmental Compliance. The Lessee shall (i) comply with all
------------------------
Environmental Laws in connection with the generation, management, handling,
labeling, containing, treatment, storage, transportation or disposal of, or
reporting or notification in connection with, Hazardous Materials under the
control of the Lessee or which are used in connection with the Facility,
including, without limitation, proper and complete preparation of any required
manifests, maintenance of material safety data sheets, preparation of a
hazardous materials business plan if required by any Environmental Law, and
maintenance of safe working conditions, (ii) establish a regular schedule for
the transfer of all Hazardous Materials under the control of the Lessee off the
Project Site as soon as practicable after their generation (except for hazardous
Materials used by Lessee in the ordinary operation of the Facility in compliance
with clause 9.10(i) above), (iii) in any event, not allow any Hazardous
Materials under the control of the Lessee to be maintained at the Project Site
for a period exceeding that permitted by any Environmental Law, and (iv) monitor
the disposition of all Hazardous Materials from the Project Site by contractors
engaged by or on behalf of the Lessee in connection with the storage,
transportation and disposal thereof.
9.11 Damage to Property.
------------------
(a) If an Event of Loss shall occur with respect to any Unit, the Lessee
shall promptly notify the Lessor as to the circumstances and time of such event.
(b) Effective upon the happening of an Event of Loss with respect to any
Unit, the Lessee shall become obligated, without demand or notice, to the pay to
the Lessor on the Rental Payment Date next following such Event of Loss an
amount equal to the Stipulated Loss Value for such Unit as of such Rental
Payment Date next preceding such Event of Loss an amount equal to the Stipulated
Loss Value for such Unit as of such Rental Payment Date, together with all Basic
Rent due on such Rental Payment Date and all such Additional Rent and other
amounts under the Agreement and the other Lease Documents as may then be due.
The obligation of the Lessee to pay Basic Rent for such Unit shall cease
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when such Stipulated Loss Value, Basic Rent and other payments have been made
and such Unit shall cease to be part of the Equipment leased hereunder effective
as of such payment. Upon request for the Lessee, the Lessor will execute an
deliver an appropriate document canceling or amending the Lease Schedule
relating to such Unit, but the Lessor's failure so to do shall not affect the
Lessee's obligations under this Agreement, and the Lessor will transfer to the
Lessee, without recourse or warranty, all of the Lessor's right, title an
interest, if any, in and to such Unit.
(c) Any and all insurance or other payments received by the Lessor or the
Lessee as a result of any Event of Loss of a Unit shall be paid to or retained
by the Lessor and applied against the Lessee's obligation to pay the Stipulated
Loss Value except that any such payments in excess of Stipulated Loss Value
shall be deposited in the Project Control Account (if not previously so
deposited) and shall be payable to the Lessee, subject to the provisions of (S)
4.4.3, to the extent such excess represents compensation for the loss of use of
the Equipment or other damage suffered by the Lessee during the Term.
(d) The Lessee shall deposit, or cause to be deposited, in the Project
Control Account, all insurance proceeds and/or condemnation or other requisition
awards received by it or payable to it or on its behalf in connection with any
condemnation, damage or destruction of all or any portion of the Facility
(including, without limitation, the Project Site and the Equipment) or any
requisitioning of any thereof by any governmental authority, which in either
case does not constitute an Event of Loss, for application as the Lessor may
determine in its sole and absolute discretion to (a) the timely repair of the
Facility (including, without limitation, the Project Site and the Equipment) in
the case of such damage or destruction or (b) the timely payment of expenses of
the Facility (including, without limitation, the Project Site and Equipment) in
the case of such condemnation or requisition awards.
(e) Notwithstanding anything to the contrary contained herein (including
this section and (S)4.6.2), the Lessor may direct, in its sole and absolute
discretion, that in the event of any damage or other loss (whether or not
constituting an Event of Loss) to all or a portion of the Project Site and/or
the Facility (including, without limitation, any Equipment or Unit) and in lieu
of any prepayment of Rent, payment of Stipulated Loss Value and/or payment of
insurance proceeds to the Lessor, the Lessee to repair or replace such damaged
or lost property.
9.12 Accidents. In the event of an accident arising out of alleged or
---------
apparent defective design or manufacture or out of the use or operation of any
Unit, the Lessee shall promptly file with the appropriate governmental authority
all notices required by law and shall promptly deliver to its insurance carriers
all notices called for under each policy of insurance relating to such Unit.
Concurrently with such filing or delivery, the Lessee shall deliver to the
Lessor a copy of the notice so filed or delivered. As the Lessor may reasonably
request, the Lessee shall also deliver to the Lessor any additional information
with respect to such accident and shall promptly make available to the Lessor
copies of all
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correspondence, papers, notices and documents whatsoever received by the Lessee
in connection with any claim or demand involving or relating to any such
accident.
9.13. Further Assurances. At any time, and from time to time, the Lessee
------------------
shall execute and deliver such further instruments and take such further action
as may reasonably be requested by the Lessor to effect the transactions
contemplated by and the purposes of the Lease Documents and the Project
Documents.
ARTICLE 10
NEGATIVE COVENANTS
Until the payment, performance and other satisfaction in full of all of the
Lessee Obligations, the Lessee covenants as follows:
10.1. Indebtedness. The Lessee shall not create, incur, assume, guarantee or
------------
be or remain liable with respect to any Indebtedness other than the following
(the "Permitted Indebtedness"):
(a) Indebtedness of the Lessee to the Lessor under this Agreement and the
other Lease Documents;
(b) Indebtedness in respect of Current Liabilities of the Lessee not
incurred through the borrowing of money or the obtaining of credit (except
credit on an open account customarily extended and which is payable without
interest no later than sixty (60) days after billing) incurred in the ordinary
course of business and of a type and magnitude consistent with past practices;
(c) Indebtedness in respect of taxes, assessments or other governmental
charges contested in good faith and by appropriate proceedings and for which
adequate reserves have been established in accordance with GAAP and as to which
no Lien has been filed to secure such tax, assessment or charge or, as to any
such lien, the Lessee shall have removed the same by the posting of a bond or
the provision of other security acceptable to the Lessor within thirty (30) days
after the entry thereof; or
(d) Indebtedness not included in subsections (a) through (c) above and
listed on Schedule 10.1 hereto.
-------------
10.2. Liens. The Lessee shall not create, incur, assume or suffer to exist
-----
any mortgage, pledge, deposit, hypothecation, security interest, lien or other
charge or encumbrance, including the lien or retained security title of a
conditional vendor (each a "Lien"), upon or with respect to any of the Lessee's
property or assets of any character, including, without limitation, the
Equipment or any Project Document, whether now owned or hereafter acquired, or
upon the proceeds or products thereof, or transfer any such property or assets
or the income or profit therefrom, or suffer to exist for a period of more than
thirty (30) days after the same shall have been incurred any indebtedness or
claim or
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demand against it which if unpaid might by law or upon bankruptcy or insolvency,
or otherwise, be given any priority whatsoever over its general creditors; or
sell, assign, pledge or otherwise transfer any accounts, contract rights,
general intangibles or chattel paper, with or without recourse, other than
(except with respect to any Equipment, as to which the provisions of (S)10.9(g)
shall control) the following (the "Permitted Liens"):
(a) Liens securing the Lessee Obligations;
(b) Liens securing taxes, fees, assessments and other governmental charges
to the extent that payment of the same is not yet due, may be postponed, or is
not required in accordance with (S)10.1(c);
(c) Liens in respect of pledges or deposits under worker's compensation,
unemployment insurance, social security laws, or similar legislation (other than
ERISA) or in connection with appeal and similar bonds incidental to litigation;
mechanics', laborers', materialmens' and similar Liens, if the obligations
secured thereby are not then delinquent; Liens securing the performance of bids,
tenders or contracts (other than for the payment of money); and statutory
obligations incidental to the conduct of the Lessee's business that do not in
the aggregate materially detract from the value of the Lessee's property or
materially impair the use thereof in the operation of its business;
(d) easements, rights-of-way, zoning restrictions and similar minor Liens
which individually and in the aggregate do not have a Material Adverse Effect;
and
(e) other Liens existing on the Closing Date and listed on Schedule 7.5.
------------
Notwithstanding the foregoing, with respect to Equipment, "Permitted Liens"
shall mean only those liens permitted under (S)10.9(g).
10.3. Transfers of Assets, Property and Ownership Interests. The Lessee
-----------------------------------------------------
shall not directly or indirectly permit any sale, transfer, exchange,
assignment, pledge of, or grant of any security interest in, any of its assets
or property (the Lessee agreeing and acknowledging that upon the Closing it will
have sold all right, title and interest in and to the Equipment to the Lessor
and accordingly the Lessee shall have no further right to and will not attempt
to, Transfer, any of the Equipment) or any ownership interest in the Lessee (a
"Transfer"), except for the following ("Permitted Transfers"):
(a) Transfers allowed by any of the Lease Documents and other Transfers in
favor of the Lessor in connection with the transactions contemplated by this
Agreement or as contemplated by the Project Documents;
(b) Transfers, whether outright or as security, for which the Lessor's
prior written consent has been obtained, which consent may be withheld by the
Lessor in its sole and absolute discretion, or may be granted either
unconditionally or upon such
-36-
protective and other conditions as the Lessor may require in its sole and
absolute discretion; and
(c) Transfers in the ordinary course of business of worn, obsolete or
damaged items of personal property or fixtures that require replacement, in the
reasonable business judgment of the Lessee, and are suitably replaced.
10.4. Merger; Consolidation; Acquisitions. Neither the Lessee nor the Parent
-----------------------------------
(i) liquidate or enter into or undertake any plan or agreement of liquidation,
(ii) merge or consolidate into or with any other Person or enter into or
undertake any plan or agreement of merger or consolidation with any other Person
or (iii) acquire all or substantially all of the assets or capital stock of any
other Person.
10.5. Distributions. The Lessee shall not, directly or indirectly, pay any
-------------
dividends or make any other distribution in cash or in kind, to or on account of
the direct or indirect equity ownership interests in the Lessee, including,
without limitation, make any payment with respect to or repurchase or redeem any
Indebtedness subordinate in right of payment or otherwise to any Rent, at any
time when (i) a Default or an Event of Default exists, (ii) Debt Service
Coverage of at least 120% as of the last day of the most recent calendar quarter
was not maintained and the Lessee does not reasonably believe that Debt Service
Coverage of at least 120% exists as of the date of such contemplated dividend or
distribution, (iii) the Debt Service Reserve Account and the Major Maintenance
Reserve Account are not fully funded, (iv) the first regularly scheduled payment
of Basic Rent has not yet occurred or (v) any mandatory prepayment of Rent
required to be made pursuant to (S)4.6 has not been made in compliance with such
section.
10.6. Agreements Relating to Facility. The Lessee shall not amend,
-------------------------------
supplement or modify, or cause or suffer any amendment, supplement or
modification of, any of the Project Documents or the Lease Documents without the
Lessor's prior written consent, which consent shall not be unreasonably withheld
but which consent may be conditioned upon a demonstration by the Lessee to the
Lessor's satisfaction that such amendment, supplement or modification is
reasonable and that the Lessee has adequate resources to pay and perform the
Lessee Obligations and its obligations under the Project Document or Lease
Document as so amended, supplemented or modified. Notwithstanding the
immediately preceding sentence, the Lessee shall not terminate, or cause or
suffer the termination of, any Lease Document or any Project Document without
the Lessor's prior written consent, which consent shall be granted or denied in
the sole and absolute discretion of the Lessor.
10.7. Other New Agreements. The Lessee shall not enter into any other
--------------------
contracts, agreements or purchase orders which would involve the expenditure of
more than $20,000 in any single instance, or $100,000 in the aggregate, except
for (i) those contracts, agreements or purchase orders listed in Schedule 10.7,
-------------
(ii) those contracts, agreements or purchase orders otherwise complying with
this Agreement and covered by the most recently approved Annual Facility Budget,
or (iii) those contracts, agreements
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and purchase orders entered into with the Lessor's prior written consent, which
consent shall not be unreasonably withheld or delayed, but which consent may be
conditioned upon a demonstration by the Lessee to the Lessor's reasonable
satisfaction that the contract, agreement or purchase order is reasonable and
that the Lessee has adequate resources to pay and perform the same.
10.8. Replacement of Project Contractors. The Lessee shall not replace the
----------------------------------
Parent as the Operator under the Operations and Maintenance Agreement or any
other Project Contractor whose contract is for more than $50,000 per year
without the Lessor's prior written consent, which consent shall not be
unreasonably withheld or delayed, but which consent shall be conditioned,
without limitation, upon the Lessor's approval of the new Project Contract, the
financial position of the proposed Project Contractor and such other
documentation, including, without limitation, a Project Contractor's certificate
(including appropriate lien waivers of such Project Contractor and any
subcontractor), in form and substance satisfactory to the Lessor.
10.9 Equipment.
---------
(a) The Lessee shall not change the location of any Unit without the prior
written consent of the Lessor.
(b) Lessee shall not use, operate or store any Unit in violation of this
Agreement, of any instructions therefor furnished by the manufacturer or vendor
thereof or of any applicable federal, state or local law or regulation; nor use
or operate any Unit other than in a manner and for the use contemplated by the
manufacturer thereof.
(c) Except as provided in (S)7.26(b), the Lessee shall not allow the name
of any Person to be placed on any part of any Unit as a designation that might
reasonably be interpreted as a claim of ownership.
(d) The Lessee shall not, without the prior written consent of the Lessor,
affix or install any accessory, equipment or device on any Unit if such addition
will impair the value or the originally intended function or use of such Unit.
All repairs, parts, supplies, accessories, equipment and devices furnished or
affixed to the Equipment shall thereupon become the property of the Lessor
(except such as may be removed without in any way materially affecting or
impairing the value or the originally intended function or use of the
Equipment). Immediately upon any replacement part becoming incorporated or
installed in or attached to the Equipment, without further act, title to the
removed part shall thereupon vest in the Lessee, free and clear of all rights of
the Lessor.
(e) The Lessee shall not, without the prior written consent of the Lessor
and subject to such conditions as the Lessor may impose for its protection,
affix or install any Unit to or in any real property, it being the mutual
intention of the parties that the Equipment at all times shall be and remain
personal property of the Lessor; and the Lessee shall take such steps as may be
necessary to prevent any Person from acquiring
-38-
any rights in any Unit by reason of such Unit being claimed or deemed to be real
property.
(f) The Lessee shall not, without the prior written consent of the Lessor
(it being understood that written consent in one instance shall apply only in
the given instance and shall not constitute a waiver of any of the terms of this
Agreement), (i) assign this Agreement or sublease or let any Unit or (ii) permit
any Unit to be operated by anyone other than the Lessee.
(g) Without limiting the generality of (S)10.2 and notwithstanding anything
to the contrary contained in this Agreement or any other Lease Document, the
Lessee will not permit any Unit to be subject to any Lien whatsoever except (i)
the respective rights of the Lessor and the Lessee as herein provided, (ii)
Liens asserted by any Person claiming by, through or under the Lessor and
resulting from acts or omissions of the Lessor, except to the extent that such
Liens arise from the failure of the Lessee to perform any of the Lessee's
obligations hereunder, (iii) Liens for taxes either not yet due or which are
subject to Lessee's Right to Contest, and (iv) inchoate, materialmen's,
mechanics', workmen's, repairmen's, employees' or other like Liens (expressly
excluding, however, landlord's Liens) arising in the ordinary course of business
and not delinquent.
10.10 Change of Control. Notwithstanding anything herein to the contrary,
-----------------
the Lessee will not permit any event to occur as a result of which the existing
stockholders of the Lessee or the existing stockholders of the Parent will own
or control less than 51% of the voting power of the Lessee, the Parent, or ITG
as the case may be.
ARTICLE 11
RETURN OF PROPERTY
At the expiration or sooner termination of the Term, the Lessee shall
return the respective Units to the Lessor, free of all advertising or insignia
placed thereon by the Lessee, and as maintained in accordance with this
Agreement. The Lessee shall pay or reimburse the Lessor for the cost of all
repairs necessary to restore such Unit to such condition. The Lessee shall
return each Unit to Lessor at the location designated by the Lessor, or if the
Unit is of a nature that so permits and if the Lessor shall so request, the
Lessee shall load the same at Lessee's expense on such carrier as the Lessor
shall designate and ship the same, freight prepaid, as directed by the Lessor.
If the Lessor so requests, the Lessee will defer such return of any of the Units
and will, without expense to the Lessor, store same at premises of the Lessee
used by Lessee for the storage of similar property and approved by the Lessor,
for a period not to exceed one hundred eighty (180) days from the date of the
expiration or sooner termination of the Term, the obligations of the Lessee
during such interval in respect to the Units being only that of reasonable care
under all the circumstances; provided, however, that the foregoing shall not
-------- -------
impose upon the Lessee any responsibility for maintenance, overhaul, or any
expense other than free storage. If the Lessor so requests, the Lessee shall
continue to maintain
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insurance upon such Units in accordance with (S)9.4, and the Lessor shall
reimburse the Lessee for the cost of such insurance allocable to such Equipment.
ARTICLE 12
EVENTS OF DEFAULT AND REMEDIES
12.1. Events of Default. The occurrence of any one or more of the following
-----------------
conditions or events shall constitute an "Event of Default":
(a) any failure to pay when due and payable any Rent; or
(b) any failure by the Lessee to pay as and when due and payable any other sums
to be paid by the Lessee to the Lessor under this Agreement and the
continuance of such failure for a period of two (2) Business Days after the
date on which the same shall first have become due and payable to the
Lessor; or
(c) the Lessee shall attempt to remove, sell, transfer, encumber or sublet any
Unit; or
(d) title to any of the Equipment or the Collateral is or becomes
unsatisfactory to the Lessor by reason of any Lien, title condition or
exception and such matter causing title to be or become unsatisfactory is
not cured to the Lessor's satisfaction or removed within twenty (20) days
after notice thereof from the Lessor to the Lessee; or
(e) if a default beyond applicable notice or grace period, if any, occurs under
any mortgage with respect to the Host Site, or if the Lessee or the Lessor
shall be made a party in any action or proceeding in connection with any
such mortgage, including, without limitation, a foreclosure or similar
proceeding, unless the holder of such mortgage has agreed not to disturb
the rights of the under the Lease;
(f) all or any portion of the Landfill Project, the Host Site, the Facility,
the Project Site (including Equipment) or the Utility Substation shall be
destroyed, condemned, taken by eminent domain, or in the opinion of the
Lessor, after consultation with the Independent Engineer and the Lessee,
irreparably damaged or if all or any portion of the Landfill Project, the
Host Site, the Facility or the Project Site (including Equipment) is
requisitioned for use by a governmental authority for an indefinite period
or for a period in excess of one year and such requisition in the
reasonable opinion of the Lessor could be expected to have a Material
Adverse Effect; or
(g) any failure by the Lessee to duly observe or perform any term, covenant,
condition or agreement contained in (S)(S)9.2(b), 9.4, 9.6, 9.7, 9.10,
9.11, and/or 10.1 through 10.9 inclusive; or
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(h) (x) except as provided in clause (y) below, any failure by the Lessee to
duly observe or perform any other term, covenant, condition or agreement
under this Agreement, any other Lease Document or any Project Document and
continuance of such failure for a period of thirty (30) days after notice
thereof from the Lessor; or (y) any failure by the Lessee to duly observe
or perform any term, covenant, condition or agreement contained in (S)9.2
and the continuance of such failure is not cured to the Lessor's
satisfaction within ten (10) days after notice thereof from the Lessor to
the Lessee (provided, however, if the failure other than a failure under
(S)9.2(b) cannot reasonably be cured within ten (10) days, provided Lessee
promptly commences and diligently pursues the cure of such failure, the
Lessee shall have an additional twenty (20) days after notice thereof to
cure the same); or
(i) any representation or warranty made or deemed to be made by or on behalf of
the Lessee in this Agreement, in any of the other Lease Documents or any
Project Document, or in any written report, certificate, financial
statement, document or other instrument delivered pursuant to or in
connection with this Agreement, any of the other Lease Documents or any
Project Document, shall prove to have been false or incorrect in any
material respect upon the date when made or deemed to have been made or
separated; or
(j) any dissolution, termination, partial or complete liquidation, merger or
consolidation of the Lessee or ITG, or any sale, transfer or other
disposition of all or substantially all of the assets of the Lessee or ITG;
or
(k) any suit as proceeding shall be filed against the Lessee, the Host, the
Utility, the Landfill Project, the Facility or the Project Site (including
the Equipment) which, if adversely determined would have a Material Adverse
Effect and which is not dismissed with prejudice within sixty (60) days of
the filing thereof; or
(l) any failure by the Lessee to obtain any Approvals or to comply with any
material condition thereof, or the revocation, termination, expiration or
other invalidation of any Approvals previously obtained; or
(m) any failure by the Lessee to pay at maturity, or within any applicable
period of grace, any obligation for borrowed money or credit received in
excess of $20,000, including, without limitation, the Lessee Obligations
and any Permitted Indebtedness, or in respect of any Capitalized Lease but
not including inter-company indebtedness to any entity affiliated with the
Lessee, or any failure to observe or perform any material term, covenant or
agreement contained in any agreement by which it is bound, evidencing or
securing borrowed money or credit received, or in respect of any
Capitalized Lease, for such period of time as would permit (assuming the
giving of appropriate notice
-41-
if required) the holder or holders thereof or of any obligations issued
thereunder to accelerate the maturity thereof; or
(n) the Lessee, the Parent, ITG, Utility or the Host shall (i) file a voluntary
petition in bankruptcy under Title 11 of the United States Code, or (ii)
file any petition or answer seeking or acquiescing in any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief for itself under any present or future federal, state or other law
or regulation relating to bankruptcy, insolvency or other relief of
debtors, or (iii) seek or consent to or acquiesce in the appointment of any
custodian, trustee, receiver, conservator or liquidator for itself, or of
all or any substantial part of its property, or (iv) make an assignment for
the benefit of creditors, or (v) give notice to any governmental authority
or body of insolvency or pending insolvency or suspension of operation; or
(o) an involuntary petition in bankruptcy under Title 11 of the United States
Code shall be filed against the Lessee, the Parent, ITG, Utility or the
Host and such petition shall not be dismissed within sixty (60) days of the
filing thereof; or
(p) an order for relief shall be issued against the Lessee, the Parent or the
Host in connection with any involuntary petition in bankruptcy under Title
11 of the United States Code; or
(q) a court of competent jurisdiction shall enter any order, judgment or decree
approving a petition filed against the Lessee, the Parent, ITG, Utility or
the Host seeking any reorganization, arrangement, composition,
readjustment, liquidation or similar relief under any present or future
federal, state or other law or regulation relating to bankruptcy,
insolvency or other relief for debtors, or appointing any custodian,
trustee, receiver, conservator or liquidator of all or any substantial part
of its property; or
(r) any uninsured final judgment in excess of $200,000 shall be rendered
against the Lessee and shall remain in force, undischarged, unsatisfied and
unstayed, for more than thirty (30) days, whether or not consecutive,
unless such judgment is fully bonded; or
(s) any of the Lease Documents or the Project Documents shall be canceled,
terminated, revoked or rescinded prior to the scheduled expiration thereof
without the express prior approval of the Lessor, or any action at law,
suit in equity or other legal proceeding to cancel, revoke or rescind any
such Documents shall be commenced by or on behalf of the Lessee or any of
its members, managers or partners, or any court or any other governmental
or regulatory authority or agency of competent jurisdiction shall make a
determination that, or issue a judgment, order, decree or ruling to the
effect that,
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any one or more of such Documents is illegal, invalid or unenforceable in
accordance with the terms thereof; or
(t) any default shall occur under the terms of any of the Lease Documents or
the Project Documents which gives rise to a right on the part of any party
thereto (other than the Lessee) to terminate such Document or to materially
delay such party's performance under such Document, and such default shall
not have been cured within the earlier to occur of (i) thirty (30) days
after written notice of such default has been given by the Lessor to the
Lessee and (ii) expiration of the applicable cure period, if any, for such
default under the relevant Document; or
(u) any Lessee or any officer, director, member, or manager of any Lessee shall
be indicted for a federal or state crime, a punishment for which could
include the forfeiture of any of its/his assets or imprisonment; or
(v) any consent necessary for the execution of the Easement Agreement and the
Sales Agreement by the Host and the other Project Documents by the parties
thereto (other than the Lessee) has not been obtained, the Landfill Work
has not been performed in compliance with all material applicable Legal
Requirements and Approvals, including, without limitation, zoning,
buildings and fire codes and health, safety and Environmental Laws, rules
and regulations, the Landfill Project does not have all material Approvals
for the construction, operation and maintenance of the Landfill Project
(including the Host Site) in compliance with all material Legal
Requirements, the Landfill Project does not fully comply with all such
Approvals or any violation exists of any Legal Requirement as it pertains
to the Host or the Landfill Project, and such failure or violation is
likely, in the reasonable opinion of the Lessor, to have a Material Adverse
Effect; or
(w) any "event of default", as defined or otherwise set forth in any of the
other Lease Documents or Project Documents, shall occur.
12.2. Remedies. If any one or more Events of Default shall occur the
--------
Lessor at its option may exercise any one or more of the following remedies in
order to protect the interests and reasonably expected profits and bargains of
the Lessor:
(a) the Lessor may terminate this Agreement with respect to all or any
part of the Equipment;
(b) the Lessor may recover from the Lessee all Rent and other amounts
then due and as they shall thereafter become due under this Agreement with
respect to all or any part of the Equipment;
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(c) the Lessor may take possession of any or all Units of Equipment,
wherever the same may be located, without demand or notice, without any court
order or other process of law and without liability to the Lessee for any
damages occasioned by such taking of possession, and any such taking of
possession shall not constitute a termination of this Agreement;
(d) The Lessor may recover from the Lessee, with respect to any and
all Units of Equipment, and with or without repossessing the Equipment, as
damages for loss of the bargain and not as a penalty and as reasonable rent for
the use of the Equipment and for depreciation thereof, the sum of (1) the total
amount due and owing to the Lessor at the time of such default, plus (2) an
amount equal to the Stipulated Loss Value of the Equipment determined as of the
Rental Payment Date occurring immediately prior to the time of such default; and
upon the payment of all amounts described in clauses (1) and (2) above, together
with (i) an amount equal to any accrued taxes or other amounts payable hereunder
by the Lessee with respect to the Equipment, (ii) all other costs, expenses,
losses and any damages incurred or sustained by the Lessor (including reasonable
attorney's fees) by reason of such Event of Default and (iii) interest at the
Default Interest Rate from the time of such default on the amounts described in
clauses (1) and (2) above, the Lessee will become entitled to the Equipment, as-
is, where-is and with all faults, and without recourse, representation or
warranty, express or implied, provided, however, that if the Lessor has
-------- -------
repossessed or accepted the surrender of the Equipment and either does not
exercise its rights under (S)12.3 or permanently discontinues the exercise of
its rights under (S)12.3, the Lessor shall sell, lease or otherwise dispose of
the Equipment in a commercially reasonable manner, with or without notice and on
public or private bid, and apply the net proceeds thereof (after deducting all
expenses, including attorneys' fees incurred in connection therewith), to the
sum of (1) and (2) above; and
(e) the Lessor may pursue any other remedy available at law or in
equity, including but not limited to seeking damages or specific performance
and/or obtaining an injunction and exercising all rights and remedies of a
secured party under the Uniform Commercial Code.
No right or remedy herein conferred upon or reserved to the Lessor
under this Article 12 is exclusive of any right or remedy herein or by law or
equity provided or permitted; but each shall be cumulative of every other right
or remedy given hereunder or now or hereafter existing at law or in equity or by
statute or otherwise, and may be enforced concurrently therewith or from time to
time.
12.3. Operation of Facility. If any one or more of the Events of Default
---------------------
shall have occurred and without derogating from the generality of (S)12.2, but
in supplement of the rights set forth therein, the Lessor may enter upon any of
the Host Site and Project Site for the purposes of operating and maintaining the
Equipment and the Facility in such manner as the Lessor deems appropriate. In
connection with any operation and maintenance of the Equipment and the Facility
undertaken by the Lessor or other action
-44-
taken by the Lessor in connection with the Equipment and/or the Collateral, the
Lessor may:
(a) use any funds of the Lessee, including any balance which may be held by the
Lessor as security or in escrow, and funds, if any, remaining unadvanced
under the Transaction;
(b) employ existing contractors, subcontractors, lenders, architects,
engineers, managers, leasing agents and brokers and the like, or terminate
the same and employ others;
(c) employ security watchmen to protect the Facility;
(d) make such additions, changes and corrections in the Plans and
Specifications as shall, in the judgment of the Lessor, be necessary or
desirable;
(e) take over and use any and all Personal Property contracted for or purchased
by the Lessee, if appropriate, or dispose of the same as the Lessor sees
fit;
(f) execute all applications and certificates on behalf of the Lessee which may
be required by any governmental authority, Legal Requirements, Approvals,
or contract documents or agreements;
(g) pay, settle or compromise all existing or future bills and claims which are
or may be Liens against the Equipment and/or the Facility, or may be
necessary for the completion, operation and/or maintenance of the Equipment
and/or the Facility or the clearance of title to the Equipment and/or the
Facility;
(h) prosecute and defend all actions and proceedings in connection with the
operation and/or maintenance of the Equipment and/or the Facility or in any
other way affecting the Project Site, the Equipment and/or the Facility;
(i) take such steps as the Lessor may elect to identify and remediate any non-
compliance of the Equipment and/or the Facility with Legal Requirements or
Approvals applicable to it, including, Environmental Laws; and
(j) take such action hereunder, or refrain from acting hereunder, as the Lessor
may, in its sole and absolute discretion, from time to time determine, and
without any limitation whatsoever, to carry out the intent of this section.
The Lessee shall be liable to the Lessor for all costs paid or incurred for the
equipping, completion, operation and maintenance of all or any part of the
Equipment and/or the Facility, whether the same shall be paid or incurred
pursuant to the provisions of this section or otherwise, and all payments made
or liabilities incurred by the Lessor
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hereunder of any kind whatsoever shall be deemed Lessee Obligations under this
Agreement and shall be secured by the Security Documents. Any costs so paid or
incurred by the Lessor shall be paid by the Lessee to the Lessor upon demand
with interest at the Default Interest Rate from the date of payment by the
Lessor to the date of payment to the Lessor. In the event the Lessor takes
possession of all or any portion of the Equipment and/or the Facility and
assumes control of such operation and/or maintenance as aforesaid, it shall not
be obligated to continue such operation and/or maintenance longer than it shall
see fit and may thereafter, at any time, change any course of action undertaken
by it or abandon such operation and/or maintenance and decline to make further
payments for the account of the Lessee whether or not the Facility shall require
continued operation. For the purpose of this section, the operation and/or
maintenance of the Equipment and/or the Facility shall be deemed to include any
action necessary to cure any Event of Default by the Lessee under any of the
terms and provisions of any of the Lease Documents.
12.4. Other Remedies. If any one or more of the Events of Default shall have
--------------
occurred and whether or not the Lessor shall have taken action pursuant to
(S)(S)12.2 or 12.3, the Lessor may proceed to protect and enforce its rights and
remedies under this Agreement or any of the other Lease Documents, including, by
foreclosure, exercise of set-off or pledge rights and/or by suit in equity,
action at law or other appropriate proceeding, whether for the specific
performance of any covenant or agreement contained in this Agreement and the
other Lease Documents or any instrument pursuant to which the Lessee Obligations
are evidenced, including as permitted by applicable law the obtaining of the ex
--
parte appointment of a receiver, and, if any amount owed to the Lessor shall
-----
have become due, by declaration or otherwise, proceed to enforce the payment
thereof or any other legal or equitable right of the Lessor.
12.5. Power of Attorney. For the purposes of carrying out the provisions and
-----------------
exercising the rights, remedies, powers and privileges granted by or referred to
in this Article, the Lessee hereby irrevocably constitutes and appoints the
Lessor its true and lawful attorney-in-fact, with full power of substitution, to
execute, acknowledge and deliver any instruments and do and perform any acts
which are referred to in this Article, in the name and on behalf of the Lessee.
The power vested in such attorney-in-fact is, and shall be deemed to be, coupled
with an interest and irrevocable.
12.6. Waivers. THE LESSEE HEREBY WAIVES TO THE EXTENT NOT PROHIBITED BY
-------
APPLICABLE LAW (A) ALL PRESENTMENTS, DEMANDS FOR PERFORMANCE, NOTICES OF
NONPERFORMANCE (EXCEPT TO THE EXTENT REQUIRED BY THE PROVISIONS HEREOF OR OF ANY
OF THE OTHER LEASE DOCUMENTS), PROTESTS AND NOTICES OF DISHONOR, (B) ANY
REQUIREMENT OF DILIGENCE OR PROMPTNESS ON THE LESSOR'S PART IN THE ENFORCEMENT
OF ITS RIGHTS (BUT NOT FULFILLMENT OF ITS OBLIGATIONS) UNDER THE PROVISIONS OF
THIS AGREEMENT OR ANY OF THE OTHER LEASE DOCUMENTS, AND (C) ANY AND ALL NOTICES
OF EVERY KIND AND DESCRIPTION WHICH MAY BE REQUIRED TO BE GIVEN
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BY ANY STATUTE OR RULE OF LAW, AND NOTICE OR HEARING PRIOR TO THE REPOSSESSION
AND SALE OR LEASING OF ANY UNIT, AND ANY DEFENSE OF ANY KIND WHICH THE LESSEE
MAY NOW OR HEREAFTER HAVE WITH RESPECT TO ITS LIABILITY UNDER THIS AGREEMENT
OR UNDER ANY OF THE OTHER LEASE DOCUMENTS.
ARTICLE 13
SECURITY INTEREST AND SET-OFF
13.1. Security Interest. The lease under this Agreement is a lease creating
-----------------
a security interest as further evidenced and contemplated by the Security
Agreement. In addition, the Lessee grants to the Lessor a direct and continuing
Lien and security interest, as security for all of the Lessee Obligations, in
and upon all deposits, balances and other sums credited by or due from the
Lessor, or from any Affiliate of the Lessor, to the Lessee including, but not
limited to, any and all Collateral granted or pledged to the Lessor pursuant to
any provision of the Lease Documents.
13.2. Set-Off. If any payment is not made when due under any of the Lease
-------
Documents, after giving regard to applicable grace periods, if any, or if any
Event of Default or other event which would entitle the Lessor to exercise any
of its rights under (S)(S)12.2 and/or 12.4 occurs, and at all times whether or
not any Default or Event of Default exists, any such deposits, balances or other
sums credited by or due from the Lessor, or from any Affiliate of the Lessor, to
the Lessee may to the fullest extent permitted by law at any time or from time
to time, without notice or compliance with any other condition precedent now or
hereafter imposed by statute, rule of law or otherwise all of which are hereby
waived, be set off, appropriated and applied by the Lessor against any or all of
the Lessee Obligations irrespective of whether demand shall have been made and
although the Lessee Obligations may be unmatured, in such manner as the Lessor
in its sole and absolute discretion may determine. Within five (5) Business
Days of making any such set off, appropriation or application, the Lessor shall
notify the Lessee thereof, provided the failure to give such notice shall not
affect the validity of such set off or appropriation or application.
ARTICLE 14
MISCELLANEOUS PROVISIONS
14.1. Notices. Any notice or other communication in connection with any of
-------
Lease Documents, shall be in writing, addressed as provided below and (i)
deposited in the United States mail, postage prepaid, by registered or certified
mail, or (ii) hand delivered by any nationally recognized commercial courier or
overnight delivery service (such as Federal Express or United Parcel Service)
addressed:
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If to the Lessee:
0000 Xxxxxxx Xxxxxxxxx
Xxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Attention: Xxxxxxx Xxxxx
with copies by regular mail or such hand delivery to:
0000 Xxxxxxx Xxxxxxxxx
Xxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Attention: Xxxxx Xxxxxxx, Esq.
If to the Lessor:
ABB Energy Capital L.L.C.
Xxx Xxxxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxx
Senior Vice President and Chief Underwriter
with copies by regular mail or such hand delivery to:
Goulston & Storrs, P.C.
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxxxxxx
Any party may change its address for such notices to such other address in the
United States as the addressee shall have specified by written notice given as
set forth above. All periods of notice shall be measured from the deemed date
of delivery. A notice shall be deemed to have been given, delivered and
received upon the earlier of: (i) if sent by such certified or registered mail,
on the third Business Day following the date of postmark, or (ii) if delivered
by hand by such courier or overnight delivery service, when so delivered or
tendered for delivery during usual business hours on a Business Day.
14.2 Expenses. The Lessee will pay on demand all expenses of the Lessor in
--------
connection with the preparation, waiver or amendment of this Agreement, the
Security Documents or other documents executed in connection therewith, or the
administration or interpretation of Rent or other Lessee Obligations and will
pay all expenses of the Lessor in connection with an Event of Default or the
collection of the Transaction or other Lessee Obligations or the administration,
default or collection in connection with the Lessor's exercise, preservation or
enforcement of any of its rights, remedies or options hereunder or thereunder.
Without limitation of the foregoing, the Lessee shall pay to the Lessor the
Lessor's reasonable fees of outside legal counsel, any local counsel or the
allocated costs of in-house legal counsel, engineering (including, without
limitation, the Independent Engineer), accounting,
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consulting, brokerage or other similar professional fees or expenses, and any
fees or expenses associated with any travel or other costs relating to any
appraisals or examinations conducted in connection with the Lessee Obligations
or any Equipment or Collateral, and the amount of all such expenses shall,
until paid, bear interest at the Default Interest Rate.
14.3. Rights and Remedies Cumulative. The rights and remedies of the Lessor
------------------------------
and each Affiliate of the Lessor under this Agreement are in addition to, and
not in limitation of, other rights and remedies, including other rights of set
off, which the Lessor may have. No remedy herein conferred upon the Lessor is
intended to be exclusive of any other remedy and each and every remedy shall be
cumulative and in addition to every other remedy hereunder, now or hereafter
existing at law or in equity or otherwise.
14.4. Applicable Law. The interpretation, validity, and performance of this
--------------
Agreement and the other Lease Documents shall be governed by the internal laws
of the Commonwealth of Massachusetts, without regard to its principles relating
to choice or conflicts of law.
14.5. Successors and Assigns. No party shall have the right to assign this
----------------------
Agreement or the rights and interest provided to such party hereby, except with
the other party's prior written consent; provided, however, that the Lessor may
-------- -------
make an assignment as provided below. The terms, provisions, obligations and
conditions of this Agreement shall be binding upon and shall inure to the
benefit of the successors and permitted assigns of the parties hereto. From
time to time, the Lessor may assign or transfer its interest under this
Agreement and in and to the Equipment leased hereunder, or any portion thereof,
or participation interests therein, but no such assignment or transfer shall
affect or limit the rights and obligations of the Lessee as set forth in this
Agreement or any of the other Lease Documents. In the event of any such grant
by the Lessor of a participating interest to a participant, whether or not upon
notice to the Lessee, the Lessor shall remain responsible for the performance of
its obligations hereunder, and the Lessee shall continue to deal solely and
directly with the Lessor in connection with the Lessor's rights and obligations
under this Agreement. In the event of any such assignment or transfer pursuant
to which the assignee or transferee assumes the rights, interests and
obligations of the Lessor pursuant to an instrument executed by such assignee or
transferee and the Lessor, the Lessor shall be released of its obligations
hereunder. The Lessor may disclose to, or share with, any actual or prospective
transferee or participant all information, including, but not limited to,
financial information, in the Lessor's possession regarding the Transaction, the
Lessee, the Parent, ITG, the Facility and the Landfill Project. The Lessor
shall not be required to consult with the Lessee prior to making any assignment
or granting any participation pursuant to this section.
14.6. Headings. The headings and captions used in this Agreement are for
--------
convenience only and shall not be considered part of the subject matter of this
Agreement or used to interpret or construe any provision hereof.
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14.7. Waiver and Compliance. Any failure of a party to comply with any
---------------------
obligation, covenant, agreement or condition under any of the Lease Documents
may be expressly waived in writing by the other party, but no such waiver shall
be construed as a waiver of any other of the conditions or provisions of such
Lease Document, nor shall such waiver in any instance be construed as a waiver
of the same provision or condition in other or subsequent instances.
14.8. Entire Agreement. Each of the parties hereto intends this Agreement to
----------------
be the final expression of their agreement with respect to the subject matter
hereof and the complete and exclusive statement thereof, notwithstanding any
representation or statements to the contrary heretofore made, and there are no
warranties (in respect of the Equipment or otherwise), express or implied. This
Agreement may be modified only by written instrument signed by each of the
parties hereto.
14.9. Certain Rules of Construction. The following rules of interpretation
-----------------------------
shall govern:
(a) A reference to any Lease Document, agreement, budget,
document or schedule shall include such agreement, budget, document or
schedule as revised, amended, modified or supplemented from time to time in
accordance with its terms and the terms of this Agreement.
(b) A reference to any Exhibit hereto shall be deemed to
specifically incorporate the terms and provisions of such Exhibit herein.
(c) The singular includes the plural and the plural includes the
singular.
(d) A reference to any law includes any amendment or modification
to such law.
(e) A reference to any Person includes its permitted successors
and permitted assigns.
(f) Accounting terms not otherwise defined herein have the
meaning assigned to them by GAAP applied on a consistent basis by the
accounting entity to which they refer.
(g) The words "approval", "approved", "consent" and "consented
to", as the context so determines, means an approval in writing given to
the party seeking approval or consent after full and fair disclosure to the
party giving approval or consent of all material facts necessary in order
to determine whether approval or consent should be granted.
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(h) Reference to a particular "(S)" refers to that section of
this Agreement unless otherwise indicated.
(i) Use of the word "including" shall mean "including, without
limitation" unless the context otherwise requires.
(j) In the event of any conflict or inconsistency between the
provisions of this Agreement and the provisions of any other Lease
Document, the provision of this Agreement shall prevail.
14.10. Consent to Jurisdiction. The parties hereby absolutely and
-----------------------
irrevocably consent and submit to the jurisdiction of the Courts of the
Commonwealth of Massachusetts and of any Federal Court located in the said
Commonwealth in connection with any actions or proceedings brought by or against
such parties arising out of or relating to this Agreement or any other Lease
Document. In any such action or proceeding, the parties hereto absolutely and
irrevocably waive personal service of any summons, complaint, declaration or
other process and agree that the service thereof may be made by certified or
registered first class mail directed to each party at the address set forth in
(S)14.1. Any action brought by the Lessee arising out of or relating to this
Agreement shall be brought only either in the Courts of the Commonwealth of
Massachusetts or in any Federal Court located in the said Commonwealth.
Notwithstanding anything to the contrary stated herein, the Lessor may xxx the
Lessee in the courts of the Commonwealth of Massachusetts, the State of Ohio
and/or the Commonwealth of Pennsylvania and/or any other country, State of the
United States or place where the Lessee or any of the property or assets of the
Lessee may be found or in any other appropriate jurisdictions.
14.11. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
--------------------
WAIVES TRIAL BY JURY IN ANY LITIGATION WITH ANY OTHER IN ANY COURT WITH RESPECT
TO, IN CONNECTION WITH, OR ARISING OUT OF ANY OF THE LEASE DOCUMENTS, OR ANY
COURSE OF CONDUCT, COURSE OF DEALINGS (WHETHER VERBAL OR WRITTEN) OR OTHER
ACTIONS OF ANY PARTY. THIS WAIVER OF JURY TRIAL CONSTITUTES A MATERIAL
INDUCEMENT FOR THE LESSEE AND THE LESSOR TO ENTER INTO THE LEASE DOCUMENTS AND
THE TRANSACTIONS CONTEMPLATED THEREBY. THIS WAIVER OF JURY TRIAL SHALL BE
EFFECTIVE FOR EACH AND EVERY LEASE DOCUMENT WHETHER OR NOT SUCH DOCUMENT SHALL
CONTAIN SUCH A WAIVER OF JURY TRIAL. THE PARTIES HERETO CONFIRM THAT THE
FOREGOING WAIVERS ARE INFORMED AND FREELY MADE.
14.12. Conditions Solely for Benefit of Lessor. All rights of the Lessor
---------------------------------------
hereunder, including, without limitation, the conditions to the obligation of
the Lessor to effect the Transaction, are solely and exclusively for the benefit
of the Lessor and no other Person shall have standing to require satisfaction of
such provisions, rights or conditions in accordance with their terms and no
other Person (including, without limitation, any
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guarantor, surety, contractor, subcontractor, materialmen, or junior
lienholder) shall, under any circumstances, be deemed to be the beneficiary of
such provisions, rights or conditions, any or all of which may be freely
modified or waived, in whole or in part, by the Lessor at any time the Lessor
deems it advisable to do so.
14.13 Advance Notice of Lessee Litigation. No suit at law or in equity shall
-----------------------------------
be brought by the Lessee for any alleged breach of the terms of any Lease
Document unless notice in writing, particularly describing said alleged breach,
shall have been given to the Lessor within thirty (30) days after such alleged
breach of the terms of such Lease Document. In no event, except in the event of
bad faith, intentional misconduct, or gross negligence, shall the liability of
the Lessor to the Lessee for any breach hereof by the Lessor exceed a sum equal
to the amount which the Lessor may have failed to disburse in breach of this
Agreement, together with interest thereon at the rate then being charged by the
Lessor in connection with similar financings computed from the due date for the
payment of such amount to the earlier of the date on which this Agreement is to
be fully performed by the Lessee or the date on which such payment is made by
the Lessor.
14.14. Lessor's Rights Not Conferred to Third Parties. Any action taken by
----------------------------------------------
the Lessor pursuant to authority herein conferred, including, without
limitation, approving any construction management or other contracts or
subcontracts for the performing or furnishing of any portion of the Facility
Work in connection with the Facility, procuring Lien waivers and financial and
other information and making or causing to be made inspections of any Host Site,
will be taken by the Lessor for its own protection only, and Lessor shall not be
deemed to have assumed any responsibility to the Lessee or anyone else with
respect to the Facility, the performance of contracts by any contractor or
subcontractors, or the prevention of claims for, or the filing of, mechanic's
Liens.
14.15. Severability. The provisions of this Agreement are severable and if
------------
any one provision hereof shall be held invalid or unenforceable in whole or in
part in any jurisdiction, such invalidity or unenforceability shall affect only
such provision and only in such jurisdiction.
14.16. Counterparts. This Agreement and any amendment hereto may be executed
------------
in several counterparts, each of which shall be an original, and all of which
shall constitute but one and the same agreement. In proving this Agreement, it
shall not be necessary to produce more than one such counterpart executed by the
party to be charged.
14.17. Foreign Persons. In the event that (a) the Lessee or any member,
---------------
partner or stockholder of the Lessee now or hereafter is, or any legal or
beneficial interest in a member, partner or stockholder of the Lessee is now or
hereafter held, directly or indirectly, by, a "foreign person" under the
International Investment and Trade in Service Act of 1976, the Agricultural
Foreign Investment Disclosure Act of 1978, the Foreign Investments in Real
Property Tax Act of 1980, the regulations promulgated pursuant to such Acts or
any amendments of such Acts or regulations ("Foreign Person Acts and
Regulations") or (b) any Equipment or Collateral is transferred to any Person
that is a
-52-
"foreign person" under the Foreign Person Acts and Regulations ("Foreign
Transferee"), then (a) the Lessee or the Foreign Transferee, as the case may
be, shall be required to provide the Lessor with all information that the
Lessor requests concerning the Lessee, the member(s), partner(s) or
stockholder(s) of the Lessee or the holder of the legal or beneficial
interest, direct or indirect, in such member(s), partner(s), or stockholder(s)
of the Lessee as will be necessary to enable the Lessor to complete all
reports that the Lessor is required to file with the Internal Revenue Service
or any other governmental agency pursuant to the Foreign Person Acts and
Regulations, and the Lessee shall be required to pay to the Lessor all
reasonable costs and expenses incurred by the Lessor in connection with the
preparation and filing of such reports, including reasonable legal fees,
expenses and disbursements incurred by the Lessor in connection with such
reports, and (b) the Lessee or the Foreign Transferee, as the case may be,
shall indemnify the Lessor against all sums that the Lessor is required to
withhold and pay to the Internal Revenue Service or other applicable
governmental agency but which the Lessor has failed to withhold.
14.18. Estoppel Certificates. From time to time within ten (10) days of the
---------------------
Lessor's request, the Lessee shall provide the Lessor with a written statement,
signed and suitably acknowledged, stating the Rent the Lessee acknowledges to be
due under the Lease Documents or any Security Document and any claim of offset
or defense which the Lessee then asserts. If requested by the Lessor, such
statement shall include responses to reasonable questions relating to the
Lessee, the Equipment and/or the Collateral and the condition of the Lease,
Equipment and/or Collateral, both physical and financial.
14.19 Miscellaneous. An executed Equipment Schedule that incorporates by
-------------
reference the terms of this Agreement, marked "Original," shall be the original
of the lease of the Facility described therein for all purposes. All other
executed counterparts of the lease shall be marked "Duplicate." Nothing herein
contained shall give or convey to the Lessee any right, title or interest in and
to any Unit leased hereunder except as a lessee. No obligation of the Lessor
hereunder (except for its obligations under (S)9.11(b) and the Lease Supplement)
shall survive the Term, and should the Lessor permit the use of any Unit beyond
such Term, the obligations of the Lessee hereunder shall continue and such
permissive use shall not be construed as a renewal of the Term hereof nor as a
waiver of any right or continuation of any obligation of the Lessor hereunder,
and the Lessor may take possession of any such Unit at any time after the Term
upon demand after five (5) days' notice. Any cancellation or termination by the
Lessor pursuant to the provisions of this Agreement shall not release the Lessee
from any then outstanding obligations to the Lessor hereunder.
14.20 Limited Recourse Provisions.
---------------------------
14.20.1 Lessee Fully Liable. Lessee shall be fully liable for the
-------------------
obligations of Lessee hereunder and under each and every document or instrument
entered into by Lessee in connection with the transactions contemplated hereby;
provided, however, Lessor shall not have recourse to the Reimbursement Notes
except as provided below.
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14.20.2 Certain Limited Recourse. The Lessor shall have limited
------------------------
recourse to the Parent, ITG and the officers, directors, agents, shareholders
and employees of the Lessee, the Parent and ITG (collectively, the "Lessee
Parties"). The Lessee Parties shall have no liability except for the following:
(i) A Lessee Party shall be liable for a willful breach by such Lessee
party of provisions limiting payments or distributions;
(ii) A Lessee Party shall be liable for fraud by such Lessee Party;
(iii) A Lessee Party shall be liable for a breach of warranty or
representation with respect to such Lessee Party;
(iv) A Lessee Party shall be liable for a breach of warranty or
representation by such Lessee Party with respect to Lessee or the Project or
any related matter which was known to be false when made;
(v) ITG shall be fully liable under the Environmental Indemnity
Agreement;
(vi) Each individual signing this Agreement, or any other document or
instrument, in a representative capacity shall be liable for: (a) the warranty
and representation hereby made (or made by virtue of such signing) that such
person has legal capacity and is authorized to sign this Agreement, or such
other document or instrument, on behalf of the entity on whose behalf such
person has signed; and (b) intentional fraud by such person.
-54-
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement as a
sealed instrument as of the date first above written.
The Lessee:
WITNESS: Keystone Recovery, Inc.
By: /s/ Xxxxxxx X. Xxxxx
----------------------------
Name: Xxxxxxx X. Xxxxx
Title:
Hereunto Duly Authorized
----------------------------
The Lessor:
WITNESS: ABB Energy Capital L.L.C.
By: /s/ Xxxx X. Xxxxx
---------------------------- ----------------------------
Name:
Title:
Hereunto Duly Authorized
By:
---------------------------- ----------------------------
Name:
Title:
Hereunto Duly Authorized
Organic Waste Technologies, Inc. executes and joins in this Agreement solely
for the purpose of making the representations and warranties made by it herein
and agreeing to be bound by the covenants and obligations made herein by or with
respect to it.
ORGANIC WASTE TECHNOLOGIES, INC.
By: /s/ Xxxxxxx X. Xxxxx
------------------------------
Name: Xxxxxxx X. Xxxxx
Title:
Hereunto Duly Authorized
-55-
The IT Group, Inc. executes and joins in this Agreement solely for the
purpose of making the representations and warranties made by it herein and
agreeing to be bound by the covenants and obligations made herein by or with
respect to it.
THE IT GROUP, INC.
By: /s/ Xxxxxxx X. Xxxxx
--------------------------
Name: Xxxxxxx X. Xxxxx
Title:
Hereunto Duly Authorized
-56-
Schedule 1
(Definitions)
Additional Rent. Any and all amounts, liabilities and obligations that the
---------------
Lessee assumes or agrees to pay hereunder pursuant to (S)4.3, other than Basic
Rent and Interim Rent.
Affiliate. With reference to any Person, (i) any member, manager, director
---------
or officer of that Person, (ii) any other Person controlling, controlled by or
under direct or indirect common control of that Person, (iii) any other Person
directly or indirectly holding 10% or more of any class of the capital stock or
other equity interests (including options, warrants, convertible securities and
similar rights) of that Person and (iv) any other Person 10% or more of any
class of whose capital stock or other equity interests (including options,
warrants, convertible securities and similar rights) is held directly or
indirectly by that Person.
Agreement. See Preamble, which term shall include this Agreement and the
---------
Exhibits and Schedules hereto, as amended or restated and in effect from time to
time.
Annual Facility Budget. See (S)9.1(d).
----------------------
Approvals. All approvals, consents, exemptions, variances, special or
---------
other permits, waivers, orders, agreements, acknowledgments, authorizations and
licenses required under applicable Legal Requirements or under the terms of any
restriction, covenant or easement affecting the Landfill Project and/or the
Facility, or otherwise necessary, for the lawful ownership, acquisition,
construction, equipping, use, occupancy and operation of the Landfill Project
and/or the Facility, whether obtained from a Government Authority or any other
Person.
Assignment of Leases. The Assignment of Leases, Rents, Easements,
--------------------
Contracts and Permits of the Lessee in form and substance acceptable to the
Lessor and as the same may be amended or restated and in effect from time to
time.
Authorized Representatives. See (S)6.2.1.
--------------------------
Basic Rent. The amount payable as Basic Rent by the Lessee pursuant to
----------
(S)4.2.
Xxxx of Sale. The Xxxx of Sale executed and delivered by the Lessee as of
------------
the Closing Date, attached hereto as Exhibit B and hereby made a part of this
---------
Agreement and incorporated in this Agreement by reference.
Business Day. Any day on which banks in Boston, Massachusetts are open for
------------
business generally.
-57-
Capitalized Lease. Any lease under which the Lessee is the lessee or
-----------------
obligor, the discounted, future rental payment obligations under which are
required to be capitalized on the balance sheet of the Lessee in accordance with
GAAP and any so-called "synthetic leases".
Cash Revenues. All moneys paid to the Lessee under the Utility Agreement
-------------
or otherwise received by or payable to the Lessee from whatever source and for
whatever reason in connection with the Facility, including, without limitation,
all insurance and condemnation proceeds and payments under Project Documents.
CERCLA. The Comprehensive Environmental Response, Compensation and
------
Liability Act, and all rules regulations, judgments, decrees, and orders arising
thereunder, as each may be amended from time to time.
Charter Documents. In respect of any entity, the certificate or articles
-----------------
of incorporation or organization and the by-laws of such entity, of the
certificate of formation and operating agreement of such entity, or other
constitutive documents of such entity.
Closing Date. The date upon which all conditions precedent to effecting of
------------
the Transaction have been satisfied and the Purchase Price has been paid by the
Lessor to the Lessee.
Closing Fee. See (S)6.1.
-----------
Collateral. All of the property, rights and assets of the Lessee, the
----------
Parent and/or ITG that are or are intended to be subject to the security
interests created by the Security Documents.
Collateral Assignment of Project Contracts. The Collateral Assignment of
------------------------------------------
Project Contracts and Permits of the Lessee in form and substance acceptable to
the Lessor and as the same may be amended or restated and in effect from time to
time.
Construction Contracts. Any and all other documents and agreements
----------------------
(whether oral or written) entered into from time to time by or for the benefit
of the Lessee or the Facility relating to the engineering, construction and
procurement of the Facility (including, without limitation, the Equipment), as
each may be amended or restated, with the consent of the Lessor, and in effect
from time to time.
Current Liabilities. All liabilities of the Lessee that in accordance with
-------------------
GAAP are properly classified as current liabilities.
[Debt Service Coverage. As of any date, the number (expressed in
----------------------
percentage terms) determined through the following calculation: (a) the
aggregate Net Cash Revenues for the immediately preceding 365/366 days (except
during calendar year 2001
-58-
during which these revenues will be for the period from the Closing Date
through the date on which Debt Service Coverage is determined), and divided by
(b) the sum of [(i) all interest, fees, penalties, reimbursements and expenses
payable under any of the Loan Documents in respect of such 365/366 days
(except during calendar year 2001 during which these amounts will be for the
period from the Closing Date through the date on which Debt Service Coverage
is determined) plus (ii)] all regular monthly payments of Basic Rent payable
in respect of such 365/366-day period, and (c) multiplied by 100 in order to
state the quotient in percentage terms.]
Default. An event, misrepresentation or act which, with the giving of
-------
notice and/or the lapse of time, would become an Event of Default.
Default Interest Rate. The fixed rate per annum of fifteen percent (15%)
--------------------- --- -----
computed on the basis of a three hundred sixty (360) day year for the actual
number of days elapsed.
Easement Agreement. See Preamble.
------------------
Environmental Indemnity Agreement. The Environmental Indemnity Agreements
---------------------------------
each dated as of the Closing Date by and between the Lessor and, respectively,
the Lessee and ITG, in form and substance satisfactory to the Lessor and as the
same may be amended or restated and in effect from time to time.
Environmental Laws. Any and all laws pertaining to environmental matters,
------------------
including without limitation, CERCLA, the Resource Conservation and Recovery
Act, the Superfund Amendments and Reauthorization Act of 1986, the Federal Clean
Water Act, the Federal Clean Air Act, the Toxic Substances Control Act, and all
applicable local and state laws in each case as amended, and all rules,
regulations, judgments, decrees, orders and licenses arising under all such
laws.
Equipment. All of the Units described in the Lease Schedule executed and
---------
delivered under this Agreement.
ERISA. The Employee Retirement Income Security Act of 1974, and all
-----
rules, regulations, judgments, decrees, and orders arising thereunder, as each
may be amended or restated and in effect from time to time.
Event of Default. Any Event of Default specifically provided for in any of
----------------
the Lease Documents, including, without limitation, as provided in Article 12.
Event of Loss. The loss, theft, condemnation, damage beyond repair or
-------------
destruction or the rendering unfit for use of all or any portion of the Facility
(including, without limitation, the Project Site and the Equipment), or the Host
Site and/or the Landfill Project for whatever reason, or the requisitioning or
other taking of title thereto by any Government Authority under the power of
eminent domain or otherwise for an
-59-
indefinite period or for a stated period in excess of one year of all or any
portion of the Facility (including, without limitation, the Project Site and
the Equipment), or the Host Site and/or the Landfill Project, in each case as
determined by the Lessor in its sole and absolute discretion, regardless of
cause.
FDICIA. The Federal Deposit Insurance Corporation Improvement Act of 1991,
------
and all rules, regulations, judgments, decrees, and orders arising thereunder,
as each may be amended or restated and in effect from time to time.
Facility. See Preamble.
--------
Facility Work. Any labor, materials, fixtures, machinery, equipment and
-------------
improvements relating to the Facility.
Financial Statements. In respect of any period for any Person, the balance
--------------------
sheet of such Person as at the end of such period, and the related statement of
income, changes in stockholders equity and cash flow of such Person for such
period, each setting forth in comparative form the figures for the previous
comparable fiscal period, all in reasonable detail and prepared in accordance
with GAAP.
Financing Statements. The Uniform Commercial Code financing statements
--------------------
being executed and filed concurrently herewith by the Lessee, the Parent, or
ITG, as a debtor, and the Lessor, as secured party, with regard to certain items
of Collateral.
FIRREA. The Financial Institutions Reform, Recovery, and Enforcement Act
------
of 1989, and all rules, regulations, judgments, decrees, and orders arising
thereunder, as each may be amended or restated and in effect from time to time.
Foreign Person Acts and Regulations. See (S)14.17.
-----------------------------------
Foreign Transferee. See (S)14.17.
------------------
GAAP. Generally accepted accounting principles consistent with those
----
adopted by the Financial Accounting Standards Board and its predecessor, (a)
generally, as in effect from time to time, and (b) for purposes of determining
compliance by the Lessee with its financial covenants set forth herein, as in
effect for the fiscal year therein reported in the most recent Financial
Statements submitted to the Lessor prior to execution of this Agreement.
Government Authority. The United States of America, any State in which any
--------------------
portion of the Landfill Project, the Facility or the Collateral is located, the
city or town in which any portion of the Landfill Project, the Facility or the
Collateral is located, and any political subdivision, agency, authority,
department, commission, board, bureau, or instrumentality of any of them.
-60-
Hazardous Materials. Any substance (i) the presence of which requires or
-------------------
may hereafter require notification, investigation or remediation under any
Environmental Law; (ii) which is or becomes defined as a "hazardous waste" or
"hazardous material" or "hazardous substance" or "controlled industrial waste"
or "pollutant" or "contaminant" under any present or future Environmental Law or
amendments thereto including, without limitation, CERCLA and any applicable
local statutes and the regulations promulgated thereunder; (iii) which is toxic,
explosive, corrosive, flammable, infectious, radioactive, carcinogenic,
mutagenic or otherwise hazardous and is or becomes regulated by any governmental
authority, agency, department, commission, board or instrumentality of the
United States, any state of the United States, or any political subdivision
thereof to the extent any of the foregoing has or had jurisdiction over the
Lessee or any of its Subsidiaries or any landlord under any real property lease
under which the Lessee or any of its Subsidiaries is a tenant; or (iv) without
limitation, which contains gasoline, diesel fuel or other petroleum products,
asbestos or PCBs.
Hedge Agreement. The Hedge Agreement between the Lessee and the Lessor in
---------------
form and substance acceptable to the Lessor and as the same may be amended or
restated and in effect from time to time.
Host. See Preamble.
----
Host Recognition and Estoppel Agreement. The Host Recognition and Estoppel
---------------------------------------
Agreement in form and substance acceptable to the Lessor and as the same may be
amended or restated and in effect from time to time.
Host Site. See Preamble.
---------
Indebtedness. In respect of any entity, all obligations, contingent and
------------
otherwise, that in accordance with GAAP should be classified as liabilities,
including, without limitation: (a) all debt obligations; (b) all liabilities
secured by Liens; (c) all guarantees; (d) all liabilities in respect of bankers'
acceptances and letters of credit; and (e) all Capitalized Leases.
Indemnified Party. See (S)6.3.
-----------------
Independent Engineer. An independent engineer selected by the Lessor to
--------------------
perform certain tasks with respect to the Facility and the transactions
contemplated by this Agreement.
Initial Financial Statement. See (S)7.7.
---------------------------
Interim Rent. The amount payable as Interim Rent by the Lessee pursuant to
------------
(S)4.2.
ITG. The IT Group, Inc., a Delaware corporation.
---
-61-
Landfill Project. The ownership and operation of the landfill on the Host
----------------
Site and the business related thereto.
Landfill Work. All labor, materials, fixtures, machinery, equipment and
-------------
improvements relating to the Landfill Project.
Lease Documents. Collectively, this Agreement, the Security Documents, the
---------------
Environmental Indemnity Agreements, the Host Recognition and Estoppel Agreement
and any other document entered into by the Lessee, the Parent and/or ITG for the
benefit of the Lessor, as each may be amended or restated and in effect from
time to time.
Lease Schedule. The Lease Schedule executed and delivered by the Lessor
--------------
and the Lessee as of the Closing Date, attached hereto as Exhibit A and hereby
---------
made a part of this Agreement and incorporated in this Agreement by reference.
Lease Supplement. The Lease Supplement dated as of the date hereof,
----------------
attached hereto as Exhibit C and hereby made a part of this Agreement and
---------
incorporated herein by reference.
Leasehold Mortgage. The Leasehold Mortgage, Assignment of Leases and
------------------
Rents, Security Agreement and Fixture Financing Statement dated the Closing Date
executed by the Lessee in favor of the Lessor, in form and substance
satisfactory to the Lessor and as the same may be amended or restated and in
effect from time to time.
Legal Requirements. In respect of any Person or project, any law, treaty,
------------------
rule, regulation, ordinance, order or determination of an arbitrator, court or
other governmental authority, in each case applicable to or binding upon such
Person or project, or affecting any property owned or leased by such Person, or
any Lease Document or other restriction of record, affecting the Host Site, the
Project Site, the Landfill Project, the Facility or the Equipment.
Lessee. See Preamble.
------
Lessee Obligations. All obligations of the Lessee, the Parent and/or ITG
------------------
under the Lease Documents, including without limitation the obligation of the
Lessee to pay Rent under the Lease Documents.
Lessee's Right to Consent. When used herein to modify the Lessee's
-------------------------
obligation to pay taxes, the Lessee shall have the right to consent such
obligation by appropriate proceedings diligently conducted in good faith by the
Lessee so long as (i) the Lessee shall first notify the Lessor of its intention
to exercise such right and shall supply the Lessor with all such information
with respect thereto as the Lessor shall reasonably request, (ii) such contest
does not, in the Lessor's reasonable judgment, involve any danger of sale,
forfeiture or loss of any Unit or create any danger of the Lessor incurring
-62-
criminal liability or other liability for which indemnification, satisfactory to
the Lessor, of the Lessor, its successors, assigns, representatives, directors,
officers, employees, agents and servants by the Lessee is not provided, and
(iii) no Default or Event of Default has occurred and is continuing.
Lessor. See Preamble.
------
Lessor's Cost. The purchase price of each Unit to the Lessor (which shall
-------------
not exceed the amount set forth in the Lease Schedule), plus any excise, sales
and use taxes paid or payable by the Lessor with respect to the purchase
thereof, plus any costs and expenses approved and paid by the Lessor in
connection with the delivery and installation thereof.
Liens. See (S)10.2.
-----
Maintenance Budget. The equipment maintenance budget item contained in the
------------------
Annual Facility Budget.
Major Maintenance Amount. See (S)4.4.4(a).
------------------------
Major Maintenance Reserve Account. See (S)4.4.4(a).
---------------------------------
Material Adverse Effect. Any effect on the Facility (including the
-----------------------
Equipment) if it and any other such effect may reasonably be expected to have an
adverse effect on the Facility in an aggregate amount exceeding $200,000, any
effect on the Landfill Project if it and any other such effect may reasonably be
expected to have an adverse effect on the Landfill Project and/or the Facility
in an aggregate amount exceeding $200,000, or any material adverse effect on the
business, financial condition, assets or operations of the Lessee, the Parent,
or ITG or on the ability of the Lessee, the Parent, or ITG, as the case may be,
to perform its obligations under or consummate the transactions contemplated by
any of the Lease Documents or the Project Documents.
Material Adverse Event. Any occurrence, happening or event which has, or
----------------------
may reasonably be expected to have, a Material Adverse Effect.
Net Cash Revenues. For any given [calendar month], the Cash Revenues minus
-----------------
Operating Expenses incurred by the Lessee.
Notice of Lease. The Notice of Lease of the Host and the Lessee in form
---------------
and substance acceptable to the Lessor and as the same may be amended or
restated, with the consent of the Lessor, and in effect from time to time.
Occurrence. See (S)7.23.
----------
-63-
Operating Expenses. for any given [calendar month] [any and all costs and
------------------
expenses incurred by the Lessee in connection with the operation and maintenance
of the Facility and any other business operations, including, without
limitation, gas and utility payments, generator maintenance costs, premiums and
other insurance costs, maintenance fees and testing, taxes, administrative
expenses and Basic Rent].
Operations and Maintenance Agreement. The Operations and Maintenance
------------------------------------
Agreement between the Lessee and the Parent in form and substance acceptable to
the Lessor and as the same may be amended and restated, with the consent of the
Lessor, and in effect from time to time.
PCBs. Polychlorinated biphenyls.
----
Parent. Organic Waste Technologies, Inc., a Delaware corporation.
------
Permitted Indebtedness. See (S)10.1.
----------------------
Permitted Liens. See (S)10.2.
---------------
Permitted Transfers. See (S)10.3.
-------------------
Person. Any individual, corporation, limited liability company,
------
partnership, trust, unincorporated association, business, or other legal entity,
and any government or any governmental agency or political subdivision thereof.
Personal Property. All materials, furnishings, fixtures, furniture,
-----------------
machinery, equipment and all items of tangible or intangible personal property
now or hereafter owned or acquired by the Lessee, in which the Lessor has been,
or will be, granted an interest to secure the Lessee obligations.
Plans and Specifications. The plans and specifications for the Facility
------------------------
(including the Equipment), including final plans and specifications as furnished
to the Utility pursuant to the Utility Agreement, true and complete copies of
which are attached hereto as Exhibit D.
---------
Pledge Agreement. The Pledge Agreement of the Parent, in form and
----------------
substance satisfactory to the Lessor and as the same may be amended or restated
and in effect from time to time.
Prepayment Fee. An amount equal to five percent (5%) of any Basic Rent
--------------
prepaid.
Project Contractor. Any contractor, subcontractor, engineer or consultant
------------------
performing Facility Work in connection with the Facility.
-64-
Project Contracts. The Operations and Maintenance Agreement, the
-----------------
Construction Contracts and any and all other documents and agreements (whether
oral or written) entered into from time to time between the Lessee and any
Project Contractor relating to the Facility Work, as each may be amended or
restated, with the consent of the Lessor, and in effect from time to time.
Project Control Account. See (S)4.4.1.
-----------------------
Project Documents. The Easement Agreement, the Sales Agreement, the
-----------------
Utility Agreement, the Plans and Specifications, the Project Contracts and any
and all other documents executed from time to time in connection therewith, and
any and all other documents to which the Lessee is from time to time a party
relating to the Facility whether with the Host, any Project Contractor or any
other Person, as each may be amended or restated, with the Lessor's consent, and
in effect from time to time.
Project Site. The premises shown on the plan attached to this Agreement as
------------
Exhibit D.
Purchase Price. $8,300,000, the amount paid by the Lessor to the Lessee
---------------
for the purchase of the Equipment on the Closing Date.
Recalls. See (S)7.23.
-------
Reimbursement Notes. One or more promissory notes made by an Affiliate of
--------------------
the Lessee in favor of the Lessee in consideration of funds delivered to such
Affiliate in conformance with the terms and provisions of this Agreement out of
the proceeds of the transaction evidenced by the Lease Documents.
Rent. Additional Rent, Interim Rent and Basic Rent, collectively.
----
Rental Payment Date. Each date on which Basic Rent is payable hereunder.
-------------------
Retained Revenue Amount. See (S)4.4.4(a).
-----------------------
Retained Revenue Reserve Account. See (S)4.4.4(a).
--------------------------------
Sales Agreement. See Preamble.
---------------
Security Agreement. The Security Agreement dated as of the Closing Date
------------------
between the Lessee and the Lessor in form and substance acceptable to the
Lessor, as the same may be amended or restated and in effect from time to time.
Security Documents. The Security Agreement, the Pledge Agreement, the
------------------
Financing Statements, the Notice of Lease, the Assignment of Leases, the
Collateral Assignment of Project Contracts, the Leasehold Mortgage, the Hedge
Agreement, and
-65-
any additional documents evidencing or perfecting the Lessor's Lien on the
Collateral, each as amended and in effect from time to time.
Stipulated Loss Value. With respect to each Unit, the amount equal to the
---------------------
applicable percentage of Lessor's Cost of such Unit determined in accordance
with the table set forth on Annex B to the Lease Schedule.
Subsidiaries. Any corporation, association, joint stock company, limited
------------
liability company, business trust or other similar organization, other than
Lessee, of which more than 50% of the ordinary voting power for the election of
a majority of the members of the board of directors or other governing body of
such entity is held or controlled by the Lessee or a Subsidiary of the Lessee;
or any other such organization, other than the Lessee, the management of which
is directly or indirectly controlled by the Lessee or a Subsidiary of the Lessee
through the exercise of voting power or otherwise; or any joint venture, whether
incorporated or not, in which the Lessee has more than a 50% ownership interest
or any other entity which would be consolidated with the Lessee in presenting
its financial statements in accordance with GAAP.
Term. The period of time for which any one or more of the Units is leased
----
hereunder.
Title Company. See (S)5.1.16(r).
-------------
Title Policy. See (S)5.1.16(r).
------------
Transaction. The purchase and lease of the Equipment contemplated by this
-----------
Agreement.
Transfer. See (S)10.3.
--------
UCC. The Uniform Commercial Code, as the same may be in effect in any
---
jurisdiction in which Collateral or the Equipment is located or may be affected.
Unit. Each individual item of personal property described in the Lease
----
Schedule.
Utility. See Preamble.
-------
Utility Agreement. See Preamble.
-----------------
Utility Substation. [To come].
------------------
Withdrawal Date. See (S)4.4.3(a).
---------------
-66-
Schedule 6.2.1
(Authorized Representatives)
[TO BE PROVIDED BY LESSEE]
-67-
Schedule 7.5
(Existing Liens)
[TO BE PROVIDED BY LESSEE]
-68-
Schedule 7.10
(Litigation)
[TO BE PROVIDED BY LESSEE]
-69-
Schedule 7.15
(Environmental Matters)
[TO BE PROVIDED BY LESSEE]
-70-
Schedule 7.20
(Labor Matters)
[TO BE PROVIDED BY LESSEE]
-71-
Schedule 7.21
(Certain Transactions)
[TO BE PROVIDED BY LESSEE]
-72-
Schedule 7.23
(Products Liability)
[TO BE PROVIDED BY LESSEE]
-73-
Schedule 9.4
(Insurance)
(1) Worker's Compensation Insurance The Lessee shall maintain and require
-------------------------------
its contractors and their subcontractors to maintain insurance per applicable
statutes concerning worker's compensation, up to the monetary limits required by
such statutes.
(2) Commercial General Liability Insurance The Lessee shall arrange and
--------------------------------------
pay for a contractor's commercial general liability and property damage
insurance policy which will protect the Lessee and the Lessor from liability for
any personal injury, including death or property damage which may arise from the
Lessee's or its contractors operations or the operations of their subcontractors
or of anyone directly or indirectly employed in work by any of them, including
broad form comprehensive general liability, XCU coverage for operations,
liability for independent contractors, completed operation/products liability
coverage, broad form property damage liability, contractor's protective
liability, personal injury liability and blanket contractual coverage. Coverage
limits and characteristics for this insurance shall be as follows with no
deductible or with a deductible approved by the Lessor:
(i) For claims related to bodily injury and related liability, coverage
limits shall be $3,000,000 combined single limit, and not be less than
$1,000,000 for injury to one person resulting from a single accident;
(ii) For claims related to any property damage, coverage limits shall be
$1,000,000 per incident, and $3,000,000 annual aggregate.
(3) Contingent Liability and Property Damage Insurance The policy required
--------------------------------------------------
under (2) above shall be so written as to include contingent liability and
property damage insurance to protect against claims arising from the operation
of such contractor's subcontractors or anyone directly or indirectly employed by
them.
(4) Automobile Coverage The Lessee shall arrange and pay for automobile
-------------------
liability insurance, using a standard business automobile policy, in limits
specified as follows: (i) bodily injury, $1,000,000 each person and $1,000,000
each occurrence; and (ii) for property damage liability, $1,000,000 each
occurrence or a combined single limit of $1,000,000 each occurrence. Coverage
shall be for all vehicles, including all owned, non-owned and hired vehicles.
Standard omnibus clauses shall be included covering the legal liability, if any,
of the Lessee and the Lessor.
(5) Umbrella Coverage The Lessee shall arrange and pay for excess or
-----------------
umbrella liability insurance in an aggregate limit of $5,000,000 for each
occurrence and annual aggregate. The coverage shall be no more restrictive than
the primary automobile and general liability policies.
-74-
(6) Property Insurance The Lessee shall arrange and pay for commercial
------------------
property insurance upon the entire Facility (including, without, limitation, the
Equipment) covering physical loss or damage for the full cost of replacement of
the Facility (including, without limitation, the Equipment), but in all events
not less than the greater of (a) the aggregate fair market value thereof and (b)
the aggregate Stipulated Loss Value of all Units then leased under the
Agreement. Such insurance shall be on an "All Risk" basis and shall include
coverage against damage or loss caused by earth movement, flood, machinery
accidents, operational testing, and resultant physical loss or damage caused by
defective equipment, material, workmanship or design and any other perils
included within the ISO special peril's term. The Lessor, the Lessee, the
Lessee's vendors, the Lessee's contractors, and their subcontractors shall be
named as additional insureds as their interest may appear and such coverage
shall include a waiver of insurer's rights of subrogation in favor of all
insureds.
(7) Builder's Risk Insurance. At all times prior to completion of the
------------------------
improvements on the Project Site, the Lessee shall maintain builder's risk
completed value (non-reporting) form coverage, including "all-risk" type
coverage and coverage against the perils normally covered by a special extended
coverage endorsement, collapse, cost of demolition, increased cost of
construction and the value of the undamaged portion of the project (all in
appropriate standard form for the jurisdiction in which the Project Site is
located), and other endorsements affording protection against such risks as the
Lessor may designate, with such insurance companies as the Lessor may approve,
all such insurance naming the Lessor as an additional insured and to be payable
first in the case of loss to the Lessor as Mortgagee and to be maintained in
such amounts as to afford one hundred percent (100%) coverage against loss,
providing not less than thirty (30) days prior written notice of cancellation,
termination or amendment to the Lessor, coverage being such insurance non-
contributory.
(8) Lease Requirements. The Lessee shall maintain all insurance required
------------------
by the Lease and any other Project Documents.
(9) Other Insurance. The Lessee shall maintain all such additional
---------------
insurance as the Lessor may from time to time reasonably require.
-75-
Schedule 10.1
(Existing Indebtedness)
[TO BE PROVIDED BY LESSEE]
-76-
Schedule 10.7
(Certain New Agreements)
[TO BE PROVIDED BY LESSEE]
-77-
Exhibit A
---------
(Lease Schedule)
-78-
[Original]
or
--
[Duplicate]
Lease Schedule
to and incorporating by reference
Agreement and Lease
dated as of December , 2000
between
Keystone Recovery, Inc.,
Lessee
and
ABB Energy Capital, L.L.C.,
Lessor
This Lease Schedule is executed pursuant to, and incorporates by this
reference, all terms and conditions of the Agreement and Lease identified above
(the "Agreement"). This Schedule, together with the Agreement (including,
without limitation, all Schedules and Exhibits thereto) constitutes a separate
instrument of lease. Capitalized terms used, but not defined, herein shall have
the meanings assigned to them in the Agreement. By their execution of this
Schedule, the parties reaffirm all terms and conditions of the Agreement except
as they may be modified hereby.
1. Description, Location and Purchase Price.
----------------------------------------
Annex A to this Lease Schedule sets forth the description of each Unit, its
present location and the purchase price paid by ABB Energy Capital L.L.C. to
acquire each Unit as of the date hereof.
2. Term.
----
Interim Term: [December , 2000], to [January 15, 2001]
Basic Term: [January 16, 2001], to [January 15, 2014]
3. Rent.
----
Interim Rent: One installment of Interim Rent in the amount of $ shall
be paid on [January 15, 2001].
Basic Rent: Each installment of Basic Rent shall be in the amount of $ .
Basic Rent shall be payable in monthly installments commencing on [February 15,
2001], and on the 15th day of each month thereafter through the last such
installment due on [January 15, 2014].
4. Default Interest Rate. See Schedule 1 of the Agreement
---------------------
-1-
5. Stipulated Loss Value.
---------------------
A Stipulated Loss Schedule is set forth as Annex B to this Lease Schedule.
The Stipulated Loss Value for any Unit is equal to the purchase price of such
Unit as set forth on Annex A to this Lease Schedule multiplied by the percentage
set forth in Annex B opposite the Rent Payment Date next following the date on
which the event or occurrence requiring the determination of Stipulated Loss
Value occurred.
Approved and Agreed as of this day of December, 2000, as the Lease
Schedule to and forming a part of the above-described Agreement and Lease.
Keystone Recovery, Inc., Lessee
By:
-------------------------------
ABB Energy Capital L.L.C., Lessor
By:
-------------------------------
Attachments: Annex A (Equipment List)
Annex B (Stipulated Loss Values)
-2-
Annex A
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Items Sold
----------
1. Units Located at
-----------------------------------------------------------
Description of Unit Price Recovery Period
------------------- ----- ---------------
-3-
Annex B
-------
Stipulated Loss Values
----------------------
Rent Payment Date Percent of Acquisition Cost
----------------- ---------------------------
-1-
Exhibit B
---------
(Xxxx of Sale)
B-1
XXXX OF SALE
Keystone Recovery, Inc., an Ohio corporation (the "Vendor"), for and in
consideration of __________________ Dollars ($________) and other good and
valuable consideration paid by ABB Energy Capital L.L.C. (the "Purchaser"),
receipt of which is hereby acknowledged, does hereby grant, sell, transfer and
deliver unto the Purchaser and its successors and assigns, the property
described in Annex A hereto.
TO HAVE AND HOLD all and singular said property to the Purchaser and its
successors and assigns, for its and their own use and benefit forever.
The Vendor hereby warrants specially that it is the holder of legal title
to and all beneficial interest in said property; that the Vendor has good and
lawful right to sell said property as aforesaid; that said property is free from
all rights of others and all liens, mortgages, other encumbrances, pledges,
claims, charges and security interests arising by, through or under the Vendor;
and that the Vendor will warrant and defend said property against the claims and
demands of all persons whomsoever claiming by, through or under the Vendor. The
Purchaser and the Vendor agree and acknowledge that the sale and conveyance
contemplated hereby is solely for the purpose of conveying security title to
said property to the Purchaser and granting to the Purchaser a first priority
security interest therein. All said property in which an interest is conveyed
hereby shall remain in the possession of the Vendor pursuant to the Agreement
and Lease, dated as of December ___, 2000, between the Purchaser and the Vendor.
The Vendor (at the Vendor's sole cost and expense) shall take such further
actions and execute and deliver such further instruments, documents and
financing statements, as the Purchaser (or its successors and assigns) may
request consistent with the intention of the parties as provided herein and in
such Agreement and Lease.
Each Unit of Equipment [define] has been inspected by the Vendor and Vendor
warrants that each Unit is in good working order as of the date hereof and in
such condition as meets the requirements of all applicable federal, state or
local laws or regulations.
Each provision of this Xxxx of Sale shall bind the Vendor and its
successors and assigns and shall inure to the benefit of an be enforceable by
the Purchaser and its successors and assigns (whether or not such provision
shall specifically refer to successors and assigns).
IN WITNESS WHEREOF, the Vendor has executed and delivered this instrument
under its corporate seal this day of December, 2000.
(Corporate Seal) Keystone Recovery, Inc.
By:
---------------------
Name:
B-2
Title:
Hereunto Duly Authorized
Attest:
-----------------------------
Title:
Attachment: Annex A (Equipment List)
B-3
Exhibit C
---------
Lease Supplement
to
Agreement and Lease
dated as of December , 2000
between
ABB Energy Capital L.L.C., Lessor
and
Keystone Recovery, Inc., Lessee
Purchase Option. If the Lessee is not then in default hereunder, the
---------------
Lessee shall have the right to purchase all, but not less than all, Units at the
expiration of the Term at a price equal to their then fair market value. The
Lessee shall give the Lessor written notice one-hundred eighty (180) days prior
to the end of the Term of its election to exercise such option. Payment of the
option price shall be made on the last day of the Term to the Lessor at an
account to be designated by the Lessor by wire transfer against delivery of a
xxxx of sale transferring each Unit to the Lessee as is, where is, and with all
faults. If the Lessor and the Lessee are unable to arrive at an agreement as to
fair market value within forty-five (45) days following the aforesaid notice,
the fair market value of each such Unit shall be determined in accordance with
the appraisal procedure described below.
Appraisal Procedure. The Appraisal Procedure shall be a procedure
-------------------
whereby two independent appraisers, neither of whom shall be a manufacturer of
any Unit, one chosen by the Lessee and one chosen by the Lessor, shall mutually
agree upon the amount in question. The Lessor and the Lessee, as the case may
be, shall deliver a written notice to the other party appointing its appraiser
within 10 business days after receipt from the other party of a written notice
appointing that party's appraiser. If within fifteen (15) Business Days of the
appointment of the last of the two appraisers as described above, the two
appraisers are unable to agree upon the amount in question, a third independent
appraiser, who shall not be a manufacturer of any Unit, shall be chosen within
five (5) Business Days thereafter by the mutual consent of such first two
appraisers or, if such first two appraisers fail to agree upon the appointment
of a third appraiser, such appointment shall be made by an authorized
representative of the American Arbitration Association or any organization
successor thereto. The decision of each appraiser so appointed and chosen shall
be given within fifteen (15) Business Days after the selection of such third
appraiser. The average of the three appraisals arrived at by such three
appraisers shall be binding and conclusive on the Lessee and the Lessor. The
Lessor and the Lessee shall pay the fees and expenses of the respective
appraisers appointed by them and shall share equally the fees and expenses of
the third appraiser, if any.
C-1
Exhibit D
---------
(Plans and Specifications)
[Lessee to Provide]
D-1
ABB ENERGY CAPITAL L.L.C.
XXX XXXXXXXX XXXXX
XXXXXXXXXXX, XX 00000
December 29, 2000
Keystone Recovery, Inc.
0000 Xxxxxxx Xxxxxxxxx
Xxxxxxxxxxx, XX 00000-0000
Attention: Xxxxxxx Xxxxx
Re: Letter of Credit No. NY-20512-30029001 dated December 28, 2000
In the Face Amount of $8,500,000.00
Issued by Citibank, N.A. to ABB Energy Capital L.L.C.
For the Account of Keystone Recovery, Inc. (the "Letter of Credit")
Dear Rich:
ABB Energy Capital L.L.C., as Lender, and Keystone Recovery, Inc., as
Borrower, are today entering into a loan arrangement evidenced by a Term Note of
even date herewith in the original principal amount of $8,300,000.00 made
payable by Borrower in favor of Lender (the "Note") and secured by the Letter of
Credit. This Letter Agreement sets forth and confirms various agreements of
Borrower and Lender regarding the Note, the Letter of Credit and the
transactions contemplated in connection therewith.
Lender and Borrower entered into a certain Commitment Letter dated October
23, 2000 (the "Commitment Letter") in connection with financing to be provided
to Borrower related to Borrower's activities at the Keystone Landfill in
Lackawanna County, Pennsylvania (the "Project"). The parties acknowledge that,
although the Commitment Letter contemplates a loan to the Borrower, the parties
have subsequently agreed to enter into a sale/lease back transaction on
substantially the same terms and conditions set forth in the Commitment Letter.
The Commitment Letter sets forth various conditions that must be satisfied
prior to the closing of the financing transaction (the "Financing"). Those
conditions (the "Closing Conditions") include, but are not limited to, "(i)
changes occurring in the market or financial condition of Project participants
or otherwise affecting the Project, (ii) acceptable results of [Lender's] due
diligence including the need to revise or update assumptions, and (iii)
satisfactory documentation, in each case determined in [Lenders] sole
-----------------------------------------
discretion." (emphasis added)
-----------
Although the Commitment Letter contemplates a closing no later than
December 15, 2000, the parties have not yet completed all the tasks necessary to
close the Financing. The Borrower has requested, and the Lender has agreed to,
an extension of the outside closing date for the Financing from December 15,
2000 to February 8, 2001. In addition, in order to accommodate certain financial
objectives of the Borrower and its parent company, The IT Group, Inc. which are
unrelated to the Financing, the Borrower has requested that, prior to the end of
the calendar year 2000, the Lender advance the full amount of the contemplated
Financing ($8,300,000.00) (the "Proceeds") even though the Closing Conditions
have not been met. Subject to the terms and conditions of this Letter
Agreement, Lender has agreed so to advance the Proceeds as a loan to the
Borrower on the date hereof
In consideration of the Lender advancing the Proceeds as contemplated
herein, the Borrower will, prior to the advance of the Proceeds, pay to the
Lender in immediately available funds the Closing Fee equal 1.5% of the Proceeds
contemplated in the Commitment Letter. The Closing Fee will be earned upon the
payment thereof and will not be refundable under any circumstances.
The indebtedness incurred as a result of the Lender's advance of the
Proceeds will be evidenced by the Note, a copy of which is attached hereto as
Exhibit A. The original executed Note shall be delivered to the Lender prior to
the Lender's advance of the Proceeds.
The indebtedness evidenced by the Note shall be secured by the Letter of
Credit, a copy of which is attached hereto as Exhibit B. The original Letter of
Credit shall be delivered to the Lender prior to the Lender's advance of the
Proceeds.
Prior to the Lender's advance of the Proceeds, the Borrower will execute
the Agreement and Lease pursuant to which the Financing will be implemented if
and when the closing of the Financing occurs. The original Agreement and Lease
as executed by Borrower will be delivered to Lender's counsel, Goulston &
Storrs, P.C., to hold in escrow pending a closing of the Financing and Lender's
execution and delivery of the Agreement and Lease incident thereto. The parties
acknowledge that the Agreement and Lease as executed by Borrower as aforesaid
contains certain blanks and is missing various information, including, without
limitation, the schedules and exhibits thereto. Prior to and as a condition of
closing the Financing, in addition to and consistent with the other Closing
Conditions and the conditions to closing set forth in the Agreement and Lease,
the parties must finalize and complete the Agreement and Lease to Lender's sole
and absolute satisfaction.
Even though the Proceeds will already have been advanced pursuant to the
terms of this Letter Agreement, the parties contemplate continuing to work
toward a closing of the Financing as contemplated by the Commitment Letter,
including, without limitation, satisfaction of the Closing Conditions and all
conditions to closing set forth in the Agreement and Lease. If the Financing is
so closed on or prior to February 8, 2001 (the "Outside Closing Date") to the
sole and absolute satisfaction of the Lender, the Lender will release the Letter
of Credit and return the original Note to the Borrower simultaneously with such
closing, and the documents executed in connection with such closing shall
thereafter govern the relationship of the parties.
The Borrower shall pay all costs and expenses of Lender (including, without
limitation, all attorneys' fees and costs) incurred in connection with the loan
secured by the Letter of Credit described herein and/or the Financing,
including, without limitation, the Lender's costs of due diligence, document
preparation and negotiation, collection and/or enforcement. The Borrower hereby
acknowledges that the obligation to pay such costs and expenses is evidenced by
the Note in addition to the original principal amount thereof and is secured by
the Letter of Credit.
The Lender shall be entitled to accelerate payment of all amounts due under
the Note (including principal, interest and other amounts due thereunder) under
the following circumstances:
2
(a) The Financing does not close on or prior to the Outside Closing Date
for any reason, including the failure to satisfy all of the Closing
Conditions and the conditions to closing set forth in the Agreement and
Lease to the Lender's sole and absolute satisfaction; or
(b) The Borrower defaults in any of its obligations hereunder or under the
Note; or
(c) The Borrower indicates that it does not intend to close the Financing
on or prior to the Outside Closing Date; or
(d) Any bankruptcy or insolvency filing is made by or against the Borrower
or its parent company, The IT Group, Inc..
Lender shall be entitled so to accelerate payment under the Note without
prior notice to Borrower, in which event all amounts (including principal,
interest and other amounts due thereunder) will immediately be due and payable,
and Lender will be entitled draw on the Letter of Credit in full or in part to
pay all such amounts. Lender will also be entitled, at its option, to draw on
the Letter of Credit to make any mandatory or voluntary prepayment under the
Note rather than accept payment directly from Borrower. If the Lender draws on
the Letter of Credit as aforesaid, the Commitment Letter automatically will
terminate and the executed Agreement and Lease will be voided, in each case,
without the need for further action by any party.
The terms and provisions of this Letter Agreement are intended to be
binding upon and inure to the benefit of the parties hereto. Borrower may not
assign its rights or obligations hereunder without the prior written consent of
Lender.
3
Please acknowledge your agreement with the foregoing by executing this
Letter Agreement in the space provided below and returning the original to the
undersigned.
ABB ENERGY CAPITAL L.L.C.
By: /s/
----------------------------
Name:
Title:
Hereunto duly authorized
AGREED TO AND ACKNOWLEDGED:
KEYSTONE RECOVERY, INC.
By: /s/ Xxxxxxx X. Xxxxx Date: December 29, 2000
-----------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President
Hereunto duly authorized
4
SECURED NONRECOURSE TERM NOTE
$8,300,000.00 December 28, 2000
--
FOR VALUE RECEIVED, the undersigned KEYSTONE RECOVERY, INC., an Ohio
corporation (the "Borrower"), by this promissory note (hereinafter called the
"Term Note"), absolutely and unconditionally promises to pay to the order of ABB
ENERGY CAPITAL L.L.C., a Delaware limited liability company (together with any
subsequent holder of this Term Note, the "Lender" or "holder") the principal sum
of EIGHT MILLION THREE HUNDRED THOUSAND and 00/100 DOLLARS ($8,300,000.00), and
to pay interest on the principal sum outstanding hereunder from time to time
from the date hereof until the said principal sum or the unpaid portion thereof
shall have become due and payable as hereinafter provided. Payments made under
this Term Note will be paid to the Lender at Lender's principal place of
business at Xxx Xxxxxxxx Xxxxx, Xxxxxxxxxxx, XX 00000 or as otherwise directed
by the Lender.
This Term Note evidences the obligation of the Borrower (a) to repay the
principal amount of the term loan made by the Lender to the Borrower as herein
provided; (b) to pay interest, as herein provided, on the principal amount
hereof remaining unpaid from time to time; and (c) to pay other amounts which
may become due and payable hereunder as herein provided. The payment of the
principal of and the interest on this Term Note and the payment of all (if any)
other amounts as may become due and payable on or in respect of this Term Note
are secured by a Letter of Credit No. NY-20512-30029001, in the face amount of
$8,500,000.00 issued by Citibank, N.A. to the Lender for the account of the
Borrower, dated as of December 28, 2000 (the "Letter of Credit").
The unpaid principal (not at the time overdue) under this Term Note shall
bear interest at the rate of ten and 19/100 percent (10. 19%) per annum. (the
"Interest Rate"). Accrued interest on the unpaid principal under this Term Note
shall be payable on the Maturity Date or, if applicable, with a prepayment or
accelerated payment as permitted or required herein.
The entire principal of this Term Note shall be payable by the Borrower to
the holder hereof on or before February 8, 2000 (the "Maturity Date").
On the Maturity Date, there shall become absolutely due and payable by the
Borrower hereunder, and the Borrower hereby promises to pay to the Lender, the
balance (if any) of the principal hereof then remaining unpaid, all of the
unpaid interest accrued thereon and all (if any) other amounts payable on or in
respect of this Term Note or the indebtedness evidenced hereby.
Each overdue amount (whether of principal, interest or otherwise) payable
on or in respect of this Term Note or the indebtedness evidenced hereby whether
during the term hereof, on the Maturity Date or as a result of the acceleration
of the indebtedness evidenced hereby shall (to the extent permitted by
applicable law) bear interest at the default rate equal to the Interest Rate
plus five percent (5%). The unpaid interest accrued on each overdue amount in
accordance with the foregoing terms of this paragraph shall become and be
absolutely due and payable by the Borrower to the Lender on demand by the
Lender. Interest on each overdue amount will continue to accrue as provided by
the foregoing terms of this paragraph until the obligations of the Borrower in
respect of the payment of such overdue amount shall be discharged (whether
before or after judgment).
1
Each payment of principal, interest or other sum payable on or in respect
of this Term Note or the indebtedness evidenced hereby shall be made by the
Borrower directly to the Lender in U.S. Dollars, at the address of the Lender
set forth above, on the due date (by acceleration or otherwise) of such payment,
and in immediately available and freely transferable funds. All payments on or
in respect of this Term Note or the indebtedness evidenced hereby shall be made
without set-off or counterclaim and free and clear of and without any
deductions, withholdings, restrictions or conditions of any nature.
The Borrower will have the right to prepay the unpaid principal of this
Term Note in full (but not in part) at any time together with the payment of all
accrued interest and other amounts payable on or in respect of this Term Note or
the indebtedness evidenced hereby, and an additional amount equal to five
percent (5%) of the principal amount hereof (the "Prepayment Charge"). Borrower
acknowledges that the Prepayment Charge is non-refundable compensation to the
Lender in consideration of the Lender's entering into the term loan arrangement
described herein and in the LOC Agreement (hereinafter defined). The Borrower
will have an obligation to prepay the principal of this Term Note if and to the
extent required under, and upon the terms contained in, that certain Letter
Agreement of even date between the Lender and the Borrower regarding the Letter
of Credit (the "LOC Agreement"). Any prepaid principal of this Term Note may not
be reborrowed.
Pursuant to and upon the terms contained in the LOC Agreement, the entire
unpaid principal of this Term Note, all of the interest accrued on -the unpaid
principal of this Term Note and all (if any) other amounts payable on or in
respect of this Term Note or the indebtedness evidenced hereby may be declared
to be immediately due and payable, whereupon the entire unpaid principal of this
Term Note, all of the interest accrued on the unpaid principal of this Term Note
and all (if any) other amounts payable on or in respect of this Term Note or the
indebtedness evidenced hereby shall (if not already due and payable) forthwith
become and be due and payable to the Lender without presentment, demand, protest
or any other formalities of any kind, all of which are hereby expressly and
irrevocably waived by the Borrower.
The Borrower agrees to pay all reasonable costs of enforcement and/or
collection, including reasonable attorneys' fees, upon any default hereunder,
under the LOC Agreement or under any other instrument related to the
indebtedness evidenced hereby. In addition, the Borrower agrees to pay all of
Lender's costs and expenses associated with this term loan transaction as more
fully described in the LOC Agreement.
All computations of interest payable as provided in this Term Note shall be
made by the Lender on the basis of the actual number of days elapsed and a 360
day year.
Notwithstanding any provision contained in this Term Note, the LOC
Agreement or any other document or other instrument or agreement now or
hereafter executC4 in connection with this Term Note or the loan evidenced
hereby, the maximum amount of interest and other charges in the nature thereof
contracted for, or payable hereunder or thereunder, shall not exceed the maximum
amount which may be lawfully contracted for, charged and received in this loan
transaction, all as determined by the final judgment of a court of competent
jurisdiction, including all appeals therefrom.
Should all or any part of the indebtedness represented by this Term Note be
collected by action at law, or in bankruptcy, insolvency, receivership or other
court proceedings, or should this Term Note be placed in the hands of attorneys
for collection, the Borrower hereby promises to pay to
2
the holder of this Term Note, upon demand by the holder hereof at any time, in
addition to principal, interest and all (if any) other amounts payable on or in
respect of this Term Note or the indebtedness evidenced hereby, all court costs
and reasonable attorneys' fees and all other collection charges and expenses
reasonably incurred or sustained by the holder of this Term Note.
No delay or omission on the part of the Lender or any holder hereof in
exercising any right hereunder shall operate as a waiver of such right or of any
other rights of the Lender or such holder, nor shall any delay, omission or
waiver on any one occasion be deemed a bar or waiver of the same or any other
right on any future occasion.
Any notice or other communication in connection with this Term Note, shall
be in writing, addressed as provided below and (i) deposited in the United
States mail, postage prepaid, by registered or certified mail, return receipt
request or (ii) hand delivered by any nationally recognized commercial courier
or overnight delivery service (such as Federal Express or United Parcel Service)
addressed:
If to the Borrower:
0000 Xxxxxxx Xxxxxxxxx
Xxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Attention: Xxxxxxx Xxxxx and Xxxxx X. Xxxxxxx
If to the Lender:
ABB Energy Capital L.L.C.
Xxx Xxxxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxx
Senior Vice President and Chief Underwriter
with copies in the same manner to:
Goulston & Storrs, P.C.
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxxxxxx
Any party may change its address for such notices to such other address in the
United States as the addressee shall have specified by written notice given as
set forth above. All periods of notice shall be measured from the deemed date of
delivery. A notice shall be deemed to have been given, delivered and received
upon the earlier of- (i) if sent by such certified or registered mail, on the
third business day following the date of postmark, or (ii) if delivered by hand
by such courier or overnight delivery service, when so delivered or tendered for
delivery during usual business hours on a business day.
The Borrower and every, endorser and guarantor of this Term Note or -the
obligation evidenced hereby, (a) waives presentment, demand, notice, protest,
all other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Term Note, suretyship defenses and
defenses in the nature thereof, (b) waives any defenses based upon, and
3
specifically assents to, any extension or postponement of the time of payment or
any other indulgence, to any substitution, exchange or release of collateral and
to the addition or release of any other party or person primarily or secondarily
liable, (c) agrees that if any security or collateral given to secure this Term
Note or the indebtedness evidenced hereby shall be found to be unenforceable in
full or to any extent, or if the Lender or any other party shall fail to perfect
or to protect such security or collateral, the same shall not relieve or release
any party liable hereon or thereon nor vitiate any other security or collateral
given by the Borrower to the Lender, (d) waives trial by jury in any action
relating to this Term Note, and (e) consents to all of the terms and conditions
contained in this Term Note, the LOC Agreement and any other instruments now or
hereafter executed evidencing or governing all or any portion of the security or
collateral for this Term Note and such LOC Agreement and other documents and all
amendments thereto.
THIS TERM NOTE IS INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT. IT IS
UNDERSTOOD AND AGREED THAT THIS TERM NOTE AND THE LOC AGREEMENT WERE NEGOTIATED,
EXECUTED AND DELIVERED IN THE COMMONWEALTH OF MASSACHUSETTS, WHICH COMMONWEALTH
HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND THE UNDERLYING TRANSACTIONS
EMBODIED BY THIS TERM NOTE AND THE LOC AGREEMENT. THIS TERM NOTE, THE LOC
AGREEMENT AND THE OBLIGATIONS OF THE BORROWER HEREUNDER AND THEREUNDER SHALL FOR
ALL PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE SUBSTANTIVE LAW
OF THE COMMONWEALTH OF MASSACHUSETTS, WITHOUT REGARD TO ITS PRINCIPLES RELATING
TO CHOICE OR CONFLICTS OF LAW. THE BORROWER AGREES THAT ANY SUIT FOR THE
ENFORCEMENT OF THIS TERM NOTE MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH
OF MASSACHUSETTS OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE
NONEXCLUSIVE JURISDICTION OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH
SUIT BEING MADE UPON THE BORROWER BY MAIL AT THE ADDRESS SPECIFIED FOR NOTICES
HEREIN. THE BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OIR HEREAFTER
HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS
BROUGHT IN AN INCONVENIENT COURT.
This Term Note shall be binding upon the Borrower and its successors and
assigns and shall inure to the benefit of Lender's successors and assigns.
This Term Note shall survive and continue in full force and effect beyond
and after payment and satisfaction hereof in the event the Lender is required to
disgorge or return any payment received as a result of any laws pertaining to
the preferences, fraudulent conveyances or fraudulent transfers.
The obligations under this Term Note shall be on a non-recourse basis to
Borrower, Borrower's parent, subsidiary and other affiliated entities and their
respective officers, directors, shareholders and members (collectively, the
"Borrower Parties"), and Borrower Parties shall have no personal liability
hereunder except for fraud or willful misconduct (other than non-payment).
Except as aforesaid, Lender's recourse hereunder shall be to the Letter of
Credit and any other collateral that may hereafter be provided for Borrower's
obligations hereunder from time to time.
4
IN WITNESS WHEREOF, the undersigned has caused this Term Note to be signed
in its corporate name and its corporate sea] to be impressed thereon by its
duly authorized officer as of the day and year first above written.
ATTEST: KEYSTONE RECOVERY, INC.
_________________________ By: /s/ Xxxxxxx X. Xxxxx
----------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President
Hereunto Duly Authorized
5
Allonge and Amendment No. 2
To
Secured Non-Recourse Term Note
This Allonge and Amendment No. 2, is dated as of February 19, 2001, and is
between ABB Energy Capital L.L.C. (the "Lender") and Keystone Recovery, Inc.
(the "Borrower"), amending the $8,300,000 Secured Non-Recourse Term Note, dated
December 28, 2000 (as amended by Allonge and Amendment No. 1 dated as of
February 8, 2001, the "Original Note"), which was made and delivered by the
Borrower to the Lender.
WITNESSETH
WHEREAS, the parties hereto desire to amend the Original Note to extend the
maturity thereof;
NOW, THEREFORE, in consideration of the premises and of other valuable
consideration the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. The Original Note is hereby amended by deleting the date "February 22,
2001" from the fourth paragraph thereof and inserting in place thereof the date
"March 30, 2001".
2. Except as expressly supplemented and amended hereby, the Original Note
is in all respects ratified and confirmed and shall remain in full force and
effect and this Allonge and Amendment No. 2 is hereby expressly made
supplemental to and a part thereof.
3. This Allonge and Amendment No. 2 shall at all times remain affixed to
the Original Note so as to become a part thereof and is hereby incorporated
therein as if fully set forth therein. Notwithstanding the intention of the
parties hereto that this Allonge and Amendment No. 2 be affixed to the Original
Note, this Allonge and Amendment No. 2 shall continue in full force and effect
even if it has not been so affixed.
4. This Allonge and Amendment No. 2 shall be governed by, and construed in
accordance with, the laws of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the parties hereto have caused this Allonge and
Amendment No. 2 to be duly executed as an instrument under seal as of the day
and year first above written.
Borrower:
--------
Keystone Recovery, Inc.
By: /s/ Xxxxxxx X. Xxxxx
----------------------------
Xxxxxxx X. Xxxxx
Vice President
Hereunto Duly Authorized
Lender:
------
ABB Energy Capital L.L.C.
By: /s/ Xxxx X. Xxxxx
----------------------------
Xxxx X. Xxxxx
Senior Vice President and
Chief Underwriter
Hereunto Duly Authorized
