EXHIBIT 10.2
EXECUTION COPY
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▇▇▇▇ ▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
AS LESSOR
AND
PACIFIC SUNWEAR STORES CORP.,
AS LESSEE
---------------
LEASE AGREEMENT
DATED AS OF JULY 1, 2007
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RELATING TO:
$24,500,000
(AGGREGATE MAXIMUM PRINCIPAL AMOUNT)
CITY OF OLATHE, KANSAS
INDUSTRIAL REVENUE BONDS
(PACSUN PROJECT)
SERIES 2007
================================================================================
THE INTEREST OF THE CITY OF OLATHE, KANSAS (THE "CITY") IN THIS LEASE AGREEMENT
HAS BEEN PLEDGED AND ASSIGNED TO U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE
UNDER THE TRUST INDENTURE DATED AS OF JULY 1, 2007, BETWEEN THE CITY AND THE
TRUSTEE.
LEASE AGREEMENT
TABLE OF CONTENTS
Page
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Parties................................................................................. 1
Recitals ............................................................................... 1
ARTICLE I
DEFINITIONS
Section 1.1. Definitions of Words and Terms.......................................................... 1
Section 1.2. Rules of Interpretation................................................................. 3
ARTICLE II
REPRESENTATIONS
Section 2.1. Representations by the City............................................................. 3
Section 2.2. Representations by the Corporation...................................................... 4
ARTICLE III
GRANTING PROVISIONS
Section 3.1. Granting of Leasehold Estate............................................................ 5
Section 3.2. Lease Term.............................................................................. 5
Section 3.3. Possession and Use of the Project....................................................... 5
ARTICLE IV
PURCHASE, CONSTRUCTION, RENOVATION, INSTALLATION OF THE PROJECT
Section 4.1. Issuance of the Bonds................................................................... 6
Section 4.2. Purchase, Construction, Renovation, Installation of the Project......................... 6
Section 4.3. Project Costs........................................................................... 7
Section 4.4. Payment for Project Costs............................................................... 7
Section 4.5. Establishment of Completion Date........................................................ 7
Section 4.6. Surplus or Deficiency in Construction Fund.............................................. 8
Section 4.7. Project Property of City................................................................ 8
ARTICLE V
RENT PROVISIONS
Section 5.1. Basic Rent.............................................................................. 8
Section 5.2. Additional Rent......................................................................... 9
(i)
Section 5.3. Obligations of Corporation Absolute and Unconditional................................... 9
Section 5.4. Prepayment of Basic Rent................................................................ 10
Section 5.5. Redemption of Bonds..................................................................... 10
ARTICLE VI
MAINTENANCE, TAXES AND UTILITIES
Section 6.1. Maintenance and Repairs................................................................. 10
Section 6.2. Taxes, Assessments and Other Governmental Charges....................................... 10
Section 6.3. Utilities............................................................................... 11
Section 6.4. Ad Valorem Taxes........................................................................ 11
Section 6.5. Payment in Lieu of Taxes................................................................ 11
Section 6.6. Kansas Retailers' Sales Tax............................................................. 11
ARTICLE VII
INSURANCE
Section 7.1. Title Insurance......................................................................... 12
Section 7.2. Casualty Insurance...................................................................... 12
Section 7.3. Public Liability Insurance.............................................................. 13
Section 7.4. Blanket Insurance Policies.............................................................. 14
Section 7.5. Indemnification of Trustee.............................................................. 14
ARTICLE VIII
ALTERATION OF THE PROJECT
Section 8.1. Additions, Modifications and Improvements of the Project................................ 14
Section 8.3. Additional Improvements on the Project Site............................................. 14
Section 8.4. Permits and Authorizations.............................................................. 15
Section 8.5. Mechanics' Liens........................................................................ 15
Section 8.6. Option to Purchase Unimproved Portions of the Project Site.............................. 15
ARTICLE IX
DAMAGE, DESTRUCTION AND CONDEMNATION
Section 9.1. Damage or Destruction................................................................... 16
Section 9.2. Condemnation............................................................................ 18
ARTICLE X
SPECIAL COVENANTS
Section 10.1. No Warranty of Condition or Suitability by the City; Exculpation and Indemnification.... 19
Section 10.2. Surrender of Possession................................................................. 20
Section 10.3. City's Right of Access to the Project................................................... 20
Section 10.4. Granting of Easements; Leasehold Mortgages.............................................. 20
(ii)
Section 10.5. Indemnification of City and Trustee..................................................... 23
Section 10.6. Depreciation, Investment Tax Credit and Other Tax Benefits.............................. 24
Section 10.7. Corporation to Maintain its Corporate Existence......................................... 24
Section 10.8. Security Interests...................................................................... 24
ARTICLE XI
OPTION AND OBLIGATION TO PURCHASE THE PROJECT
Section 11.1. Option to Purchase the Project.......................................................... 24
Section 11.2. Conveyance of the Project............................................................... 25
Section 11.3. Relative Position of Option and Indenture............................................... 25
Section 11.4. Obligation to Purchase the Project...................................................... 25
ARTICLE XII
DEFAULTS AND REMEDIES
Section 12.1. Events of Default....................................................................... 26
Section 12.2. Remedies on Default..................................................................... 26
Section 12.3. Survival of Obligations................................................................. 27
Section 12.4. Limitation of Liability and Indemnity................................................... 28
Section 12.5. Performance of the Corporation's Obligations by the City................................ 28
Section 12.6. Rights and Remedies Cumulative.......................................................... 28
Section 12.7. Waiver of Breach........................................................................ 28
Section 12.8. Notice of Defaults Under Section 12.1; Opportunity of Corporation to Cure Defaults...... 28
Section 12.9. Trustee's Exercise of the City's Remedies............................................... 29
ARTICLE XIII
ASSIGNMENT AND SUBLEASE
Section 13.1. Assignment; Sublease.................................................................... 29
Section 13.2. Assignment of Revenues by City.......................................................... 30
Section 13.3. Prohibition Against Fee Mortgage of Project............................................. 30
Section 13.4. Restrictions on Sale or Encumbrance of Project by City.................................. 30
ARTICLE XIV
AMENDMENTS, CHANGES AND MODIFICATIONS
Section 14.1. Amendments, Changes and Modifications................................................... 31
ARTICLE XV
MISCELLANEOUS PROVISIONS
Section 15.1. Notices................................................................................. 31
Section 15.2. City Shall Not Unreasonably Withhold Consents and Approvals............................. 31
Section 15.3. Net Lease............................................................................... 32
(iii)
Section 15.4. No Pecuniary Liability.................................................................. 31
Section 15.5. Governing Law........................................................................... 32
Section 15.6. Binding Effect.......................................................................... 32
Section 15.7. Electronic Storage...................................................................... 32
Section 15.8. Severability............................................................................ 32
Section 15.9. Execution in Counterparts............................................................... 32
Signatures and Seals
Acknowledgments
Exhibit A Project Improvements
Exhibit B Project Site
Exhibit C Form of Requisition Certificate
(iv)
LEASE AGREEMENT
THIS LEASE AGREEMENT dated as of July 1, 2007 (the "Lease"), between the
CITY OF OLATHE, KANSAS, a municipal corporation organized and existing under the
laws of the State of Kansas (the "City"), as lessor, and PACIFIC SUNWEAR STORES
CORP., a California corporation (the "Corporation"), as lessee;
WITNESSETH:
WHEREAS, the City is authorized under the provisions of K.S.A. 12-1740 to
12-1749d, inclusive, as amended (the "Act"), to purchase, acquire, construct,
improve, equip, remodel, sell and lease certain facilities within its
jurisdiction for commercial purposes, and to issue revenue bonds for the purpose
of paying the cost of such facilities, and to pledge the income and revenues to
be derived from the operation of such facilities to secure the payment of the
principal of and interest on such bonds;
WHEREAS, pursuant to the Act, the governing body of the City has
heretofore passed Ordinance No. 07-34 (the "Ordinance") authorizing the City to
issue its Industrial Revenue Bonds (PacSun Project), Series 2007 (the "Bonds"),
the Bonds to be issued in the aggregate maximum principal amount of $24,500,000
for the purpose of acquiring, purchasing, constructing and installing a
commercial project, consisting of a distribution facility, including land,
buildings, structures, improvements and fixtures as hereinafter more fully
described (the "Project"), and authorizing the City to lease the Project to the
Corporation;
WHEREAS, pursuant to the Ordinance, the City is authorized to enter into a
Trust Indenture of even date herewith (the "Indenture"), with U.S. Bank National
Association, a national banking association, as trustee (the "Trustee"), for the
purpose of issuing and securing the Bonds, as therein provided, and to enter
into this Lease with the Corporation under which the City will acquire,
purchase, construct, improve and remodel the Project and will lease the Project
to the Corporation in consideration of rental payments by the Corporation which
will be sufficient to pay the principal of and interest on the Bonds; and
WHEREAS, pursuant to the foregoing, the City desires to lease the Project
to the Corporation and the Corporation desires to lease the Project from the
City, for the rentals and upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual
representations, covenants and agreements herein contained, the City and the
Corporation do hereby represent, covenant and agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITIONS OF WORDS AND TERMS. In addition to any words and
terms defined elsewhere in this Lease and the words and terms defined in SECTION
101 of the Indenture which definitions are hereby incorporated herein by
reference, and terms defined, the following words and terms as used in this
Lease shall have the following meanings:
"ADDITIONAL RENT" means the additional rental described in SECTIONS 5.2
and 6.2 of this Lease and, in addition, all payments required to be made to the
▇▇▇▇▇▇▇ County Treasurer in lieu of general ad valorem and personal property
taxes pursuant to the Tax Abatement Agreement.
"BASIC RENT" means the rental described in SECTION 5.1 of this Lease.
"EVENT OF DEFAULT" means any Event of Default as described in SECTION 12.1
of this Lease.
"FULL INSURABLE VALUE" means the lesser of: (i) the actual replacement
cost of the Project less physical depreciation and exclusive of land,
excavations, footings, foundation and parking lots as determined in accordance
with SECTION 7.2(a) hereof, or (ii) an amount at least sufficient to avoid the
effect of any coinsurance provisions of the applicable fire and casualty
insurance policy.
"INDENTURE" means the Trust Indenture dated as of July 1, 2007, between
the City and the Trustee, as from time to time amended and supplemented in
accordance with the provisions thereof.
"LEASE" means this Lease Agreement, between the City and the Corporation,
as from time to time amended and supplemented in accordance with the provisions
of this Lease and ARTICLE XII of the Indenture.
"LEASEHOLD MORTGAGE" means any leasehold mortgage permitted pursuant to
the provisions of SECTION 10.4(b) hereof.
"LEASE TERM" means the period from the effective date of this Lease until
the expiration thereof pursuant to SECTION 3.2 of this Lease.
"NET PROCEEDS" means, when used with respect to any insurance or
condemnation award with respect to the Project, the gross proceeds from the
insurance or condemnation award with respect to which that term is used
remaining after payment of all expenses (including attorneys' fees, trustee's
fees and any extraordinary expenses of the City and the Trustee) incurred in the
collection of such gross proceeds.
"PERMITTED ENCUMBRANCES" means, as of any particular time (a) liens for ad
valorem taxes and special assessments not then delinquent, (b) the Indenture,
(c) this Lease, (d) utility, access and other easements and rights-of-way,
mineral rights, restrictions, exceptions and encumbrances that will not
materially interfere with or impair the operations being conducted on the
Project Site or easements granted to the City, (e) such minor defects,
irregularities, encumbrances, easements, mechanic's liens, rights-of-way and
clouds on title as normally exist with respect to properties similar in
character to the Project and as do not in the aggregate materially impair the
property affected thereby for the purpose for which it was acquired or is held
by the City, (f) any Leasehold Mortgage, and (g) any other lien, encumbrance,
lease, easements, restrictions or covenants consented to by the Owner of 100% of
the principal amount of the Bonds.
"PLANS AND SPECIFICATIONS" means the plans and specifications prepared for
and showing the Project, as amended by the Corporation from time to time prior
to the Completion Date, the same being duly certified by the Corporation, and on
file at the principal office of the Corporation in Olathe, Kansas and which
shall be available for reasonable inspection by the City, the Trustee and their
duly appointed representatives.
"PROJECT IMPROVEMENTS" means all buildings, structures, improvements and
fixtures located on or to be acquired, purchased, constructed, improved or
remodeled on the Project Site pursuant to ARTICLE IV
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hereof, as described in EXHIBIT A attached hereto and by this reference made a
part hereof, and all additions, alterations, modifications and improvements
thereof made pursuant to this Lease.
"PROJECT SITE" means all of the real estate described in EXHIBIT B
attached hereto and by this reference made a part hereof.
"TRUSTEE" means U.S. Bank National Association in the City of Los Angeles,
California, a national banking association, duly organized and existing under
the laws of the United States of America, and its successor or successors and
any other corporation which at the time may be substituted in its place pursuant
to and at the time serving as Trustee under the Indenture.
SECTION 1.2. RULES OF INTERPRETATION.
(a) Words of the masculine gender shall be deemed and construed to include
correlative words of the feminine and neuter genders.
(b) Unless the context shall otherwise indicate, words importing the
singular number shall include the plural and vice versa, and words importing
persons shall include firms, associations and corporations, including
governmental entities, as well as natural persons.
(c) Wherever in this Lease it is provided that either party shall or will
make any payment or perform or refrain from performing any act or obligation,
each such provision shall, even though not so expressed, be construed as an
express covenant to make such payment or to perform, or not to perform, as the
case may be, such act or obligation.
(d) All references in this instrument to designated "Articles," "Sections"
and other subdivisions are, unless otherwise specified, to the designated
Articles, Sections and subdivisions of this instrument as originally executed.
The words "herein," "hereof," "hereunder" and other words of similar import
refer to this Lease Agreement as a whole and not to any particular Article,
Section or other subdivision.
(e) The Table of Contents and the Article and Section headings of this
Lease shall not be treated as a part of this Lease or as affecting the true
meaning of the provisions hereof.
(f) Wherever in this Lease the words "the Corporation shall" are used,
such words shall obligate the Corporation to take such action or to cause such
action to be taken or not taken to the extent such action is not directly within
the control of the Corporation.
ARTICLE II
REPRESENTATIONS
SECTION 2.1. REPRESENTATIONS BY THE CITY. The City makes the following
representations as the basis for the undertakings on its part herein contained:
(a) The City is a municipal corporation duly organized and validly
existing under the laws of the State of Kansas (the "State"). Under the
provisions of the Act, the City has lawful power and authority to enter into the
transactions contemplated by this Lease and to carry out its obligations
hereunder. By
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proper action of its governing body, the City has been duly authorized to
execute and deliver this Lease, acting by and through its duly authorized
officers.
(b) The City proposes to acquire the Project Site, subject to Permitted
Encumbrances, and proposes to acquire, purchase, construct, improve and remodel
or cause to be acquired, purchased, constructed, improved and remodeled on the
Project Site the Project Improvements. The City proposes to lease the Project to
the Corporation and sell the Project to the Corporation if the Corporation
exercises its option to purchase the Project, all for the purpose of furthering
the public purposes of the Act, and the governing body of the City has found and
determined that the acquisition, purchase, construction, improving and
remodeling of the Project will further the public purposes of the Act.
(c) To finance the costs of the Project, the City proposes to issue the
Bonds which will be scheduled to mature as set forth in ARTICLE II of the
Indenture and will be subject to redemption prior to maturity in accordance with
the provisions of ARTICLE III of the Indenture.
(d) The Bonds are to be issued under and secured by the Indenture,
pursuant to which the Project and the net earnings therefrom, including all
rents, revenues and receipts to be derived by the City from the leasing or sale
of the Project, will be pledged and assigned to the Trustee as security for
payment of the principal of and interest on the Bonds.
(e) The City will not mortgage the Project or pledge the revenues derived
therefrom for any bonds or other obligations other than the Bonds except with
the written consent of the Authorized Corporation Representative.
(f) The City shall have no authority to operate the Project as a business
or in any other manner except as the lessor thereof.
(g) The acquisition, purchase, construction, improvement and remodeling of
the Project and the leasing of the Project by the City to the Corporation will
further the public purposes of the Act.
(h) No member of the governing body of the City or any other officer of
the City has any significant or conflicting interest, financial, employment or
otherwise, in the Corporation or in the transactions contemplated hereby.
SECTION 2.2. REPRESENTATIONS BY THE CORPORATION. The Corporation makes the
following representations as the basis for the undertakings on its part herein
contained:
(a) The Corporation is a corporation validly existing and in good standing
under the laws of the State of California and duly qualified to do business in
the State of Kansas.
(b) The Corporation has lawful power and authority to enter into this
Lease and to carry out its obligations hereunder and by proper corporate action
of its Board of Directors, the Corporation has been duly authorized to execute
and deliver this Lease, acting by and through its duly authorized officers.
(c) The execution and delivery of this Lease, the consummation of the
transactions contemplated hereby, and the performance of or compliance with the
terms and conditions of this Lease by the Corporation will not conflict with or
result in a material breach of any of the terms, conditions or provisions of, or
constitute a material default under, any mortgage, deed of trust, lease or any
other corporate restrictions or any agreement or instrument to which the
Corporation is a party or by which it or any of its
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property is bound, or the Corporation's Articles of Incorporation or Bylaws or
any order, rule or regulation applicable to the Corporation or any of its
property of any court or governmental body, or constitute a material default
under any of the foregoing, or result in the creation or imposition of any
prohibited lien, charge or encumbrance of any nature whatsoever upon any of the
property or assets of the Corporation under the terms of any instrument or
agreement to which the Corporation is a party.
(d) The Project will comply with all presently applicable building and
zoning, health, environmental and safety ordinances and laws, and to the best of
its knowledge, without independent investigation, the Project will comply with
all other applicable laws, rules and regulations.
(e) The Project is located wholly within the corporate limits of the City
of Olathe, Kansas.
ARTICLE III
GRANTING PROVISIONS
SECTION 3.1. GRANTING OF LEASEHOLD ESTATE. The City hereby rents, leases
and lets the Project to the Corporation, subject to Permitted Encumbrances, and
the Corporation hereby rents, leases and hires the Project from the City,
subject to Permitted Encumbrances, for the rentals and upon and subject to the
terms and conditions herein contained.
SECTION 3.2. LEASE TERM. This Lease shall become effective upon its
delivery, and subject to sooner termination pursuant to the provisions of this
Lease, shall have an initial term commencing as of the date of this Lease and
terminating on January 1, 2018.
SECTION 3.3. POSSESSION AND USE OF THE PROJECT.
(a) The City covenants and agrees that as long as neither the City nor the
Trustee has exercised any of the remedies set forth in SECTION 12.2(c) following
the occurrence and continuance of an Event of Default, the Corporation shall
have sole and exclusive possession of the Project (subject to Permitted
Encumbrances and the City's and the Trustee's right of access pursuant to
SECTION 10.3 hereof) and shall and may peaceably and quietly have, hold and
enjoy the Project during the Lease Term. The City covenants and agrees that it
will not take any action, other than expressly pursuant to ARTICLE XII of this
Lease, to prevent the Corporation from having quiet and peaceable possession and
enjoyment of the Project during the Lease Term and will, at the request and
expense of the Corporation, cooperate with the Corporation in order that the
Corporation may have quiet and peaceable possession and enjoyment of the Project
and will defend the Corporation's enjoyment and possession thereof against all
parties.
(b) Subject to the provisions of this Section, the Corporation shall have
the right to use the Project for any lawful purpose allowed by law and
contemplated by the Act. The Corporation shall comply with all statutes, laws,
ordinances, orders, judgments, decrees, regulations, directions and requirements
of all federal, state, local and other governments or governmental authorities,
now or hereafter applicable to the Project or to any adjoining public ways, as
to the manner of use or the condition of the Project or of adjoining public
ways. The Corporation shall also comply with the mandatory requirements, rules
and regulations of all insurers under the policies carried under the provisions
of ARTICLE VII hereof. The Corporation shall pay all costs, expenses, claims,
fines, penalties and damages that may in any manner arise out of, or be imposed
as a result of, the failure of the Corporation to comply with the provisions of
this Section. Notwithstanding any provision contained in this Section, however,
the Corporation shall have the
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right, at its own cost and expense, to contest or review by legal or other
appropriate procedures the validity, legality or application of any such
governmental statute, law, ordinance, order, judgment, decree, regulation,
direction or requirement, or any such requirement, rule or regulation of an
insurer, and during such contest or review the Corporation may refrain from
complying therewith.
ARTICLE IV
PURCHASE, CONSTRUCTION, RENOVATION AND
INSTALLATION OF THE PROJECT
SECTION 4.1. ISSUANCE OF THE BONDS.
(a) In order to provide funds for the payment of the Project Costs, the
City agrees that it will issue, sell and cause to be delivered to the purchaser
thereof the Bonds in accordance with the provisions of the Indenture and the
Bond Purchase Agreement. The proceeds of the sale of the Bonds, when received,
shall be paid over to the Trustee for the account of the City. The Trustee shall
promptly deposit such proceeds, when received, as provided in the Indenture, to
be used and applied as hereinafter provided in this Article and in the
Indenture.
(b) The City may authorize the issuance of Additional Bonds from time to
time upon the terms and conditions provided in SECTION 209 of the Indenture for
the purposes described therein.
(c) If the Corporation is not in default hereunder, the City will, at the
request of the Corporation, from time to time, use its best efforts to issue the
amount of Additional Bonds specified by the Corporation; provided that the terms
of such Additional Bonds, the purchase price to be paid therefor and the manner
in which the proceeds therefrom are to be disbursed shall have been approved in
writing by the Corporation; provided further that the Corporation and the City
shall have entered into an amendment to this Lease to provide an increase in for
rent in an amount at least sufficient to pay principal and interest on the
Additional Bonds when due and the City shall have otherwise complied with the
provisions of the Indenture with respect to the issuance of such Additional
Bonds.
SECTION 4.2. PURCHASE, CONSTRUCTION, RENOVATION AND INSTALLATION OF THE
PROJECT. The City and the Corporation agree that the City will and the
Corporation as the agent of the City shall, but solely from the Construction
Fund except as otherwise provided herein, acquire, purchase, construct, improve
and remodel the Project as follows:
(a) Concurrently with the execution of this Lease, the City will acquire
the Project Site and any Project Improvements located on the Project Site and
which the Corporation desires to convey to the City, subject to the Permitted
Encumbrances. Concurrently with the execution of this Lease (1) a deed and any
other necessary instruments of transfer will be delivered to the City, (2) said
deed will be placed of record, and (3) the title insurance policies required by
ARTICLE VII hereof or commitments to issue such policies will be delivered to
the Trustee.
(b) The Corporation will, on behalf of the City, acquire, purchase,
construct, improve and remodel the Project Improvements on the Project Site and
otherwise improve the Project Site substantially in accordance with the Plans
and Specifications. The Corporation may make minor changes in and to the
construction contracts and the Plans and Specifications incorporated therein
without the consent of the City. The Corporation shall notify the City in
writing of major changes. "Major changes" shall be any change that
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has an estimated cost (increase or decrease) of $1,000,000. The Corporation
agrees that the aforesaid acquisition, purchase, construction, improvement and
remodeling will, with such changes and additions as may be made hereunder,
result in a project suitable for use by the Corporation for its purposes, and
that all real property described therein is necessary in connection with the
Project.
(c) The Corporation agrees that it will use commercially reasonable and
good faith efforts to cause the acquisition, purchase, construction, improvement
and remodeling of the Project to be completed as soon as practicable with all
reasonable dispatch. In the event such acquisition, purchase, construction,
improvement and remodeling commences prior to the receipt of proceeds from the
sale of the Bonds, the Corporation agrees to advance all funds necessary for
such purpose. The Corporation shall seek reimbursement for all such funds
advanced.
SECTION 4.3. PROJECT COSTS. The City hereby agrees to pay for, but solely
from the Construction Fund, and hereby authorizes and directs the Trustee to pay
for, but solely from the Construction Fund, all Project Costs upon receipt by
the Trustee of a certificate pursuant to SECTION 4.4 hereof. The term Project
Costs shall have the meaning set forth in the Indenture.
SECTION 4.4. PAYMENT FOR PROJECT COSTS. All Project Costs as specified in
SECTION 4.3 hereof shall be paid by the Trustee from the Construction Fund as
more fully provided in the Indenture. The City hereby authorizes and directs the
Trustee to make disbursements from the Construction Fund, upon receipt by the
Trustee of certificates in substantially the form attached hereto as EXHIBIT E,
signed by an Authorized Corporation Representative:
(a) requesting payment of a specified amount of such funds and
directing to whom such amount shall be paid (whose name and address shall
be stated);
(b) describing in reasonable detail each item of Project Costs for
which payment is being requested;
(c) stating that each item for which payment is requested is or was
necessary and appropriate in connection with the purchase, acquisition,
construction, improvement or remodeling of the Project, has been properly
incurred and is a proper charge against the Construction Fund, that the
amount requested either has been paid, or is justly due, and has not been
the basis of any previous requisition from the Construction Fund; and
(d) stating that, except for the amounts, if any, stated in said
certificate, to the best of their knowledge there are no outstanding
statements which are then due and payable for labor, wages, materials,
supplies or services in connection with the purchase, acquisition,
construction, improving or remodeling of the Project which, if unpaid,
might become the basis of a vendors', mechanics', laborers' or
materialmen's statutory or other similar lien upon the Project or any part
thereof, or setting out (i) all disputed statements and the reason for
such disputes, and (ii) all statements in process but not yet presented to
the Trustee for payment.
The Trustee may rely conclusively on any such certificate and shall not be
required to make any independent investigation in connection therewith.
SECTION 4.5. ESTABLISHMENT OF COMPLETION DATE. The Completion Date shall
be evidenced to the Trustee by a certificate signed by the Authorized
Corporation Representative stating (a) that the acquisition, purchase,
construction, improvement and remodeling of the Project has been completed
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substantially in accordance with the Plans and Specifications in all material
respects, (b) that all costs and expenses incurred in the acquisition, purchase,
construction, improvement and remodeling of the Project have been paid except
costs and expenses the payment of which is not yet due or is being retained or
contested in good faith by the Corporation, and (c) amounts to be retained by
Trustee with respect to item (b) above. Notwithstanding the foregoing, such
certificate shall state that it is given without prejudice to any rights against
third parties which exist at the date of such certificate or which may
subsequently come into being. The Corporation and the City agree to cooperate in
causing such certificate to be furnished to the Trustee.
SECTION 4.6. SURPLUS OR DEFICIENCY IN CONSTRUCTION FUND.
(a) Upon receipt of the certificate described in SECTION 4.5 hereof, the
Trustee shall, as provided in SECTION 504 of the Indenture, transfer any
remaining moneys then in the Construction Fund to the Bond Fund to be applied as
directed by the Corporation solely to (1) the payment of principal and premium,
if any, of the Bonds through the payment (including regularly scheduled
principal payments, if any) or redemption thereof at the earliest date
permissible under the terms of the Indenture, or (2) at the option of the
Corporation, to the purchase of Bonds at such earlier date or dates as the
Corporation may elect. Any amount so deposited in the Bond Fund may be invested
as permitted by SECTION 702 of the Indenture.
(b) If the Construction Fund shall be insufficient to pay fully all
Project Costs and to complete the Project lien free, the Corporation shall pay,
in cash, the full amount of any such deficiency by making payments thereof
directly to the contractors and to the suppliers of materials and services as
the same shall become due, and the Corporation shall save the City and the
Trustee whole and harmless from any obligation to pay such deficiency.
SECTION 4.7. PROJECT PROPERTY OF CITY. The Project Site and all Project
Improvements located thereon at the execution hereof and which the Corporation
desires to convey to the City, all work and materials on the Project
Improvements as such work progresses, and all additions or enlargements thereto
or thereof, the Project as fully completed, anything under this Lease which
becomes, is deemed to be, or constitutes a part of the Project, and the Project
as repaired, rebuilt, rearranged, restored or replaced by the Corporation under
the provisions of this Lease, except as otherwise specifically provided herein,
shall immediately when erected or installed become the absolute property of the
City, subject only to Permitted Encumbrances.
ARTICLE V
RENT PROVISIONS
SECTION 5.1. BASIC RENT. The Corporation covenants and agrees to pay to
the Trustee in same day funds for the account of the City during this Lease
Term, for deposit in the Bond Fund on or before 11:00 A.M., Trustee's local
time, on each January 1 and July 1, commencing January 1, 2008, the amount of
principal of and the interest on the Bonds then due in accordance with the
provisions of the Indenture, as Basic Rent for the Project, in an amount which,
when added to any collected funds then on deposit in the Bond Fund and available
for the payment of principal on the Bonds and the interest thereon on such
payment date, shall be equal to the amount payable on such payment date as
principal of the Bonds and the interest thereon as provided in the Indenture.
All payments of Basic Rent provided for in this Section shall be paid directly
to the Trustee and shall be deposited in accordance with the provisions of the
Indenture into the Bond Fund and shall be used and applied by the Trustee in the
manner and for the purposes set forth in this
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Lease and the Indenture. Subject to the other provisions of this Lease and the
Indenture, at any time that the Corporation is the sole Bondowner, the
Corporation may, at its option, make payments of Basic Rent by tendering a
portion of the principal amount of the Bonds equal to such principal payment
thereon to the Trustee for cancellation.
SECTION 5.2. ADDITIONAL RENT. The Corporation shall pay as Additional Rent
the following amounts (to the extent such amounts have not already been paid
pursuant to other provisions under this Lease):
(a) all reasonable fees, charges and expenses, including agent and counsel
fees, of the Trustee and the Paying Agent incurred under the Indenture, as and
when the same become due;
(b) all costs incident to the payment of the principal of and interest on
the Bonds as the same becomes due and payable, including all costs and expenses
in connection with the call, redemption and payment of all Outstanding Bonds;
(c) all expenses reasonably incurred in connection with the enforcement of
any rights against the Corporation or the Project under this Lease or the
Indenture by the City, the Trustee or the Bondowners, except for such expenses
as may be incurred solely as a result of the gross negligence or wrongful
misconduct of the City, the Trustee or both;
(d) an amount sufficient to reimburse the City for all expenses reasonably
incurred by the City hereunder and in connection with the performance of its
obligations under this Lease, the Indenture or the Tax Abatement Agreement;
(e) all amounts payable under the Tax Abatement Agreement;
(f) all annual fees of the City or the Kansas Board of Tax Appeals; and
(g) all other payments of whatever nature which the Corporation has agreed
to pay or assume under the provisions of this Lease.
SECTION 5.3. OBLIGATIONS OF CORPORATION ABSOLUTE AND UNCONDITIONAL.
(a) Except as expressly provided herein, the obligations of the
Corporation under this Lease to make payments of Basic Rent and Additional Rent
on or before the date the same become due, and to perform all of its other
obligations, covenants and agreements hereunder shall be absolute and
unconditional, without notice or demand, and without abatement, deduction,
set-off, counterclaim, recoupment or defense or any right of termination or
cancellation arising from any circumstance whatsoever, whether now existing or
hereafter arising, and irrespective of whether the Project shall have been
started or completed, or whether the City's title thereto or to any part thereof
is defective or nonexistent, and notwithstanding any damage to, loss, theft or
destruction of, the Project or any part thereof, any failure of consideration or
frustration of commercial purpose, the taking by eminent domain of title to or
of the right of temporary use of all or any part of the Project, legal
curtailment of the Corporation's use thereof, the eviction or constructive
eviction of the Corporation, any change in the tax or other laws of the United
States of America, the State of Kansas or any political subdivision thereof, any
change in the City's legal organization or status, or any default of the City
hereunder, and regardless of the invalidity of any action of the City, and
regardless of the invalidity of any portion of this Lease.
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(b) Nothing in this Lease shall be construed to release the City from the
performance of any agreement on its part herein contained or as a waiver by the
Corporation of any rights or claims the Corporation may have against City under
this Lease or otherwise, but any recovery upon such rights and claims shall be
had from the City separately, it being the intent of this Lease that the
Corporation shall be unconditionally and absolutely obligated to perform fully
all of its obligations, agreements and covenants under this Lease (including the
obligation to pay Basic Rent and Additional Rent) for the benefit of the
Bondowners. The Corporation may, however, at its own cost and expense and in its
own name or in the name of the City, prosecute or defend any action or
proceeding or take any other action involving third persons which the
Corporation deems reasonably necessary in order to secure or protect its right
of possession, occupancy and use hereunder, and in such event the City hereby
agrees to cooperate fully with the Corporation and to take all action necessary
to effect the substitution of the Corporation for the City in any such action or
proceeding if the Corporation shall so request.
SECTION 5.4. PREPAYMENT OF BASIC RENT. The Corporation may at any time
prepay all or any part of the Basic Rent provided for hereunder. During such
times as the amount held by the Trustee in the Bond Fund shall be sufficient to
pay, at the time required, the principal of and interest on all the Bonds then
remaining unpaid, the Corporation shall not be obligated to make payments of
Basic Rent under the provisions of this Lease.
SECTION 5.5. REDEMPTION OF BONDS. The City and the Trustee, at the written
direction of the Corporation, at any time the aggregate moneys in the Bond Fund
are sufficient for such purposes, shall (a) if the same are then redeemable
under the provision of ARTICLE III of the Indenture, take all steps that may be
necessary under the applicable redemption provisions of the Indenture to effect
the redemption of all or such part of the then Outstanding Bonds as may be
specified by the Corporation, on such redemption date as may be specified by the
Corporation or (b) cause such moneys in the Bond Fund or such part thereof as
the Corporation shall direct, to be applied by the Trustee for the purchase of
Bonds in the open market for the purpose of cancellation at prices not exceeding
the principal amount thereof, or (c) a combination of (a) and (b) as provided in
such direction.
ARTICLE VI
MAINTENANCE, TAXES AND UTILITIES
SECTION 6.1. MAINTENANCE AND REPAIRS. Throughout the Lease Term the
Corporation shall, at its own expense, keep the Project in as reasonably safe
condition as the operation thereof will permit, and keep the Project in good
repair and in good operating condition, making from time to time such repairs
thereto and renewals and replacements thereof as the Corporation deems
necessary.
SECTION 6.2. TAXES, ASSESSMENTS AND OTHER GOVERNMENTAL CHARGES.
(a) The Corporation shall promptly pay and discharge, as the same become
due, all taxes and assessments, general and special, and other governmental
charges of any kind whatsoever that may be lawfully taxed, charged, levied,
assessed or imposed upon or against the Project, or any part thereof or interest
therein (including the leasehold estate of the Corporation therein) or any
buildings, improvements at any time installed thereon by the Corporation, or the
income therefrom or Basic Rent and other amounts payable under this Lease,
including any new taxes and assessments not of the kind enumerated above to the
extent that the same are lawfully made, levied or assessed in lieu of or in
addition to taxes or assessments now customarily levied against real or personal
property, and further including all utility charges,
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assessments and other general governmental charges and impositions whatsoever,
foreseen or unforeseen, which if not paid when due would materially impair the
security of the Bonds or materially encumber the City's title to the Project;
provided that with respect to any special assessments or other governmental
charges that are lawfully levied and assessed which may be paid in installments,
the Corporation shall be obligated to pay only such installments thereof as
become due and payable during the Lease Term.
(b) The Corporation shall have the right, in its own name or in the City's
name, to contest the validity, application or amount of any tax, assessment or
other governmental charge which the Corporation is required to bear, pay and
discharge pursuant to the terms of this Article by appropriate legal proceedings
instituted before the tax, assessment or other governmental charge complained of
becomes delinquent if and provided (1) the Corporation, before instituting any
such contest, gives the City written notice of its intention so to do, (2) the
Corporation diligently prosecutes any such contest, at all times effectively
stays or prevents any official or judicial sale therefor, under execution or
otherwise, and (3) the Corporation promptly pays any final judgment enforcing
the tax, assessment or other governmental charge so contested and thereafter
promptly procures record release or satisfaction thereof. The City agrees to
cooperate fully with the Corporation in connection with any and all
administrative or judicial proceedings related to any tax, assessment or other
governmental charge. The Corporation shall hold the City whole and harmless from
any costs and expenses the City may incur related to any of the above.
SECTION 6.3. UTILITIES. All utilities and utility services used by the
Corporation in, on or about the Project shall be paid for by the Corporation and
shall be contracted for by the Corporation in the Corporation's own name, and
the Corporation shall, at its sole cost and expense, procure any and all
permits, licenses or authorizations necessary in connection therewith.
SECTION 6.4. AD VALOREM TAXES. The City and the Corporation acknowledge
that under the existing provisions of K.S.A. 79-201a, as amended, the property
purchased, acquired, constructed, reconstructed, improved, furnished, repaired,
enlarged or remodeled with the proceeds of the Bonds is entitled to exemption
from general ad valorem and property taxes (other than special assessments
levied on account of special benefits) on real and personal property, other than
inventory, for a period of ten (10) calendar years after the calendar year in
which the Bonds are issued, provided proper application is made therefor. The
City covenants that it will not voluntarily take any action which may be
reasonably construed as tending to cause or induce the levy or assessment of
such ad valorem or property taxes on the Project so long as any of the Bonds are
Outstanding and unpaid or for said ten (10) year period, whichever shall be the
shorter time, and at the Corporation's request, fully cooperate with the
Corporation in all reasonable ways to prevent any such levy or assessment. The
City shall file the Application for Exemption to effect the property tax
abatement described in K.S.A. 79-201a using information to be provided by the
Corporation. The Corporation agrees to pay any such levies or assessments that
are lawful on the Project.
SECTION 6.5. PAYMENT IN LIEU OF TAXES. The Corporation agrees that, during
each year the Project is exempt from ad valorem and personal property taxes by
reason thereof, the Corporation will make a payment in lieu of taxes to the City
in the amounts and at the times set forth in the Tax Abatement Agreement
providing for payments in lieu of such ad valorem and personal property taxes.
Such payment shall be made each year at the time ad valorem taxes on the Project
would first be due and payable but for such exemption.
SECTION 6.6. KANSAS RETAILERS' SALES TAX. The parties have entered into
this Lease Agreement in contemplation that, under the existing provisions of
K.S.A. 79-3606(d) and other applicable laws, sales of tangible personal property
or services purchased in connection with the acquisition, purchase,
construction, improving or remodeling of the Project are entitled to exemption
from the tax imposed by the Kansas
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Retailers' Sales Tax Act. The parties agree that the City shall, upon the
request of and with the Corporation's assistance, promptly obtain from the State
and furnish to the contractors and suppliers an exemption certificate for the
acquisition, purchase, construction, improving or remodeling of the Project. The
Corporation covenants that said exemption shall be used only in connection with
the purchase of tangible personal property or services becoming a part of the
Project.
ARTICLE VII
INSURANCE
SECTION 7.1. TITLE INSURANCE. The Corporation will purchase, on behalf of
the City and the Trustee, at its expense, from a Corporation duly qualified to
issue such insurance in the State of Kansas, an owner's policy of title
insurance in the amount of at least $1,000,000. Copies of said policy or a
commitment therefor will be delivered to the Trustee by the Corporation on or
before the date of issuance of the Bonds.
SECTION 7.2. CASUALTY INSURANCE.
(a) Subject to the right of the Corporation to increase the deductibles
described herein and to provide for self-insurance as provided in subparagraph
(c) of this Section, the Corporation shall at all times during the construction
period maintain at its sole cost and expense, or cause the contractors under the
construction contracts to maintain, in full force and effect a policy or
policies of Builder's Risk-Completed Value Form Insurance insuring the Project
against fire, lightning and all other risks covered by the extended coverage
endorsement then in use in the State of Kansas to the Full Insurable Value of
the Project (subject to reasonable loss deductible clauses not to exceed
$1,000,000).
Subject to the rights of the Corporation provided in subparagraph (c) of
this Section, prior to or simultaneously with the expiration of said Builder's
Risk Insurance, the Corporation shall at its sole cost and expense obtain and
shall maintain throughout the Lease Term, a policy or policies of insurance to
keep the Project constantly insured against loss or damage by fire, lightning
and all other risks covered by the extended coverage insurance endorsement then
in use in the State of Kansas in an amount equal to the Full Insurable Value
thereof (subject to reasonable loss deductible clauses not to exceed
$1,000,000). The initial determination of Full Insurable Value shall be made at
the Completion Date, and thereafter, the Full Insurable Value of the Project
shall be provided from time to time at the written request of the City or the
Trustee (but not more frequently than once in every three years) by the
certificate of an Authorized Corporation Representative or the chief financial
officer of the Corporation. The insurance required pursuant to this Section
shall be maintained at the Corporation's sole cost and expense, shall be
maintained with generally recognized responsible insurance company or companies
authorized to do business in the State of Kansas as may be selected by the
Corporation. Copies of the insurance policies required under this Section, or
originals or certificates thereof, shall be delivered by the Corporation to the
Trustee. All such policies of insurance pursuant to this Section, and all
renewals thereof, shall name the City, the Corporation and the Trustee as
insureds as their respective interests may appear, and shall contain a provision
that such insurance may not be canceled by the issuer thereof without at least
30 days' advance written notice to the City, the Corporation and the Trustee,
and shall be payable to the Trustee.
(b) In the event of loss or damage to the Project, the Net Proceeds of
casualty insurance carried pursuant to this Section shall be paid over to the
Trustee and shall be applied as provided in ARTICLE IX of this Lease.
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(c) In lieu of obtaining all or any part of the insurance required by
subparagraph (a) hereof, the Corporation may elect to be self-insured for all or
any part of the foregoing requirements (which right to self insure shall include
the right of the Corporation to increase the deductibles on such policies to an
amount not to exceed $1,000,000) provided the Corporation complies with each of
the following: (i) the Corporation notifies the City and the Trustee in writing
that it has elected to increase one or more of the deductibles on such policies
or to provide such coverages through a self-insurance program, (ii) if the
self-insurance program is maintained by a legal entity other than the
Corporation, the Corporation notifies the City and the Trustee in writing of an
address to which the City and the Trustee may submit claims under such
self-insurance program, and (iii) if the self-insurance program is maintained by
a legal entity other than the Corporation, the provider of such self insurance
program is rated in one of the three highest rating categories by a nationally
recognized rating agency (without regard to any rating modifiers) or if the
self-insurance program is maintained by the Corporation or an affiliate of the
Corporation, the consolidated net worth of such entity is at least equal to
$100,000,000 based upon audited financial statements submitted to the City and
the Trustee prior to the effective date of such self-insurance program.
SECTION 7.3. PUBLIC LIABILITY INSURANCE.
(a) Subject to the right of the Corporation to increase the deductibles
described herein and to provide for self-insurance as provided in subparagraph
(c) of this Section, the Corporation shall at its sole cost and expense maintain
or cause to be maintained at all times during the Lease Term general accident
and public liability insurance (including but not limited to coverage for all
losses whatsoever arising from the ownership, maintenance, operation or use of
any automobile, truck or other motor vehicle), under which the City, the
Corporation and the Trustee shall be named as additional insureds, properly
protecting and indemnifying the City and the Trustee, in an amount not less than
$1,000,000 for bodily injury (including death) in any one occurrence (subject to
reasonable loss deductible clauses not to exceed $100,000)), and not less than
$1,000,000 for property damage in any one occurrence (subject to reasonable loss
deductible clauses not to exceed $100,000). The policies of said insurance shall
contain a provision that such insurance may not be canceled by the issuer
thereof without at least 30 days' advance written notice to the City, the
Corporation and the Trustee. Such policies or copies or certificates thereof
shall be furnished to the Trustee.
(b) In the event of a public liability occurrence, the Net Proceeds of
liability insurance carried pursuant to this Section shall be applied toward the
extinguishment or satisfaction of the liability with respect to which such
proceeds have been paid.
(c) In lieu of obtaining all or any part of the insurance required by
subparagraph (a) hereof, the Corporation may elect to be self-insured for all or
any part of the foregoing requirements (which right to self insure shall include
the right of the Corporation to increase the deductibles on such policies to an
amount not to exceed $1,000,000) provided the Corporation complies with each of
the following: (i) the Corporation notifies the City and the Trustee in writing
that it has elected to increase one or more of the deductibles on such policies
or to provide such coverages through a self-insurance program, (ii) if the
self-insurance program is maintained by a legal entity other than the
Corporation, the Corporation notifies the City and the Trustee in writing of an
address to which the City and the Trustee may submit claims under such
self-insurance program, and (iii) if the self-insurance program is maintained by
a legal entity other than the Corporation, the provider of such self insurance
program is rated in one of the three highest rating categories by a nationally
recognized rating agency (without regard to any rating modifiers) or if the
self-insurance program is maintained by the Corporation or an affiliate of the
Corporation, the consolidated net worth of such entity is at least equal to
$100,000,000 based upon audited financial statements submitted to the City and
the Trustee prior to the effective date of such self-insurance program.
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SECTION 7.4. BLANKET INSURANCE POLICIES. The Corporation may satisfy any
of the insurance requirements set forth in this Article by using blanket
policies of insurance, provided each and all of the requirements and
specifications of this Article respecting insurance are complied with.
SECTION 7.5. INDEMNIFICATION OF TRUSTEE. The Corporation agrees to
indemnify and save the Trustee harmless against and from all claims by or on
behalf of any person, firm or corporation arising from the conduct or management
of, or from any work or thing done on, the Project during the Lease Term, and
against and from all claims arising during the Lease Term from (a) any condition
of the Project caused or permitted by the Corporation, (b) any breach or default
on the part of the Corporation in the performance of any of its obligations
under this Lease, (c) any contract entered into by the Corporation, its agents,
employees or contracting obligees in connection with the acquisition, purchase,
construction, improving, equipping or remodeling of the Project, (d) any act of
negligence of the Corporation or of any of its agents, contractors, servants,
employees or licensees, (e) any act of negligence of any assignee or sublessee
of the Corporation, or of any agents, contractors, servants, employees or
licensees of any assignee or sublessee of the Corporation and (f) the acceptance
of, and administration of the duties and obligations of the Trustee under the
Indenture and the documents related thereto, including without limitation, this
Lease; provided, however, that the indemnification contained in this SECTION 7.5
shall not extend to the Trustee to the extent that such claim is (i) the result
of work being performed at the Project by employees, agents or contractors of
the Trustee; (ii) the result of the negligence or willful misconduct of the
Trustee, their employees, agents or contractors; or (iii) is for consequential,
punitive or similar type damages. As a condition to such indemnification, the
Trustee will tender the defense of any claim for which it believes it is
entitled to indemnification to the Corporation in sufficient time to avoid a
default on the claim, and will cooperate in the contest or settlement of the
claim so long as it incurs no cost on that account.
ARTICLE VIII
ALTERATION OF THE PROJECT
SECTION 8.1. ADDITIONS, MODIFICATIONS AND IMPROVEMENTS OF THE PROJECT. The
Corporation shall have and is hereby given the right, at its sole cost and
expense, to make such additions, modifications and improvements in and to any
part of the Project as the Corporation from time to time may deem necessary or
desirable for its business purposes. All additions, modifications and
improvements made by the Corporation pursuant to the authority of this Section
shall (a) be made in workmanlike manner and in strict compliance with all laws
and ordinances applicable thereto, (b) when commenced, be prosecuted to
completion with due diligence, and (c) when completed, be deemed a part of the
Project; provided, however, that additions of machinery and equipment installed
in the Project by the Corporation shall remain the property of the Corporation
and may be removed by the Corporation.
SECTION 8.2. ADDITIONAL IMPROVEMENTS ON THE PROJECT SITE. The Corporation
shall have and is hereby given the right, at its sole cost and expense, to
construct on portions of the Project Site not theretofore occupied by buildings
or improvements such additional buildings and improvements as the Corporation
from time to time may deem necessary or desirable for its business purposes. All
additional buildings and improvements constructed on the Project Site by the
Corporation pursuant to the authority of this Section shall, during the life of
this Lease, remain the property of the Corporation and may be added to, altered
or razed and removed by the Corporation at any time. The Corporation covenants
and agrees (a) to make any repairs and restorations required to be made to the
Project because of the construction of, addition to, alteration or removal of
said additional
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buildings or improvements, (b) to keep and maintain said additional buildings
and improvements in good condition and repair, ordinary wear and tear excepted,
and (c) to promptly and with due diligence either raze and remove in a good and
workmanlike manner, or repair, replace or restore any of said additional
buildings and improvements as may from time to time be damaged by fire or other
casualty.
SECTION 8.3. PERMITS AND AUTHORIZATIONS. The Corporation shall not do or
permit others under its control to do any work on the Project related to any
repair, rebuilding, restoration, replacement, modification or addition to the
Project, or any part thereof, unless all requisite municipal and other
governmental permits and authorizations shall have been first procured. All such
work shall be done in a good and workmanlike manner and in compliance with all
applicable building, zoning and other laws, ordinances, governmental regulations
and requirements and in accordance with the requirements, rules and regulations
of all insurers under the policies required to be carried under the provisions
of ARTICLE VII hereof.
SECTION 8.4. MECHANICS' LIENS.
(a) Neither the City nor the Corporation shall do or suffer anything to be
done whereby the Project, or any part thereof, may be encumbered by any
mechanics' or other similar lien. Whenever and as often as any mechanics' or
other similar lien is filed against the Project, or any part thereof, purporting
to be for or on account of any labor done or materials or services furnished in
connection with any work in or about the Project, the Corporation shall
discharge the same of record within 90 days after the date of filing. Notice is
hereby given that the City shall not be liable for any labor or materials
furnished the Corporation or anyone claiming by, through or under the
Corporation upon credit, and that no mechanics' or other similar lien for any
such labor, services or materials shall attach to or affect the reversionary or
other estate of the City in and to the Project or any part thereof.
(b) Notwithstanding paragraph (a) above, the Corporation shall have the
right to contest any such mechanics' or other similar lien if within said 90-day
period stated above it notifies the City and the Trustee in writing of its
intention so to do, and provided the Corporation diligently prosecutes such
contest, at all times effectively stays or prevents any official or judicial
sale of the Project, or any part thereof or interest therein, under execution or
otherwise, and pays or otherwise satisfies any final judgment enforcing such
contested lien claim and thereafter promptly procures record release or
satisfaction thereof. The Corporation shall hold the City whole and harmless
from any loss, costs or expenses the City may incur related to any such contest.
The City shall cooperate fully with the Corporation in any such contest.
SECTION 8.5. OPTION TO PURCHASE UNIMPROVED PORTIONS OF THE PROJECT SITE.
The City hereby grants to the Corporation the right at any time and from time to
time to purchase any unimproved portion or portions of the Project Site. For the
purposes of this Section "unimproved" shall mean real property upon which no
improvements are located, excluding improvements relating to streets, sidewalks,
bridges, stormwater, grading, utility or other similar improvements. As
conditions to such purchase the City and the Trustee shall receive from the
Corporation at least 30 days prior to the proposed date for completing the
purchase the following (1) a written certificate from the Corporation to the
effect (i) that the Corporation desires to purchase an unimproved portion of the
Project Site, (ii) the proposed date for completing the purchase, and (iii) that
the Corporation is not in default (beyond the expiration of any applicable grace
or cure period) under any of the provisions of this Lease, (2) providing the
City and the Trustee with an adequate legal description of that portion
(together with the interest in such portion) of the property to be purchased and
a copy of a title commitment with respect to such property, (3) a certificate of
an independent engineer or surveyor, dated not more than 30 days prior to the
date of the request stating that, in the opinion of the person signing such
certificate, (i) the unimproved portion of the Project Site is unimproved within
the
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definition contained in this Section, (ii) the unimproved portion of the Project
Site so proposed to be purchased is not needed for the operation of the Project,
and (iii) the proposed purchase will not impair the usefulness of the Project
for its intended purposes and will not destroy the means of ingress thereto and
egress therefrom, and (4) the written consent of the Owners of all of the Bonds.
The purchase price for such unimproved portion of the Project Site shall
be determined by the Owners of all of the Bonds and shall be received in writing
by the City and the Trustee at least 10 days prior to the proposed date for
completing the purchase. Such purchase price shall be paid to the Trustee at the
time the City executes and delivers a Special Warranty Deed conveying the
property which is to be purchased to the Corporation. The Trustee shall deposit
such amount (if any) into the Bond Fund. If such amount is more than $1,000,
such amount shall be used by the Trustee to redeem Bonds in accordance with
SECTION 302(a) of the Indenture. If such amount is $1,000 or less the Trustee
shall apply such amount to the next interest payment on the Bonds.
Upon the City's receipt of written notice from the Trustee that the
Trustee has received all of the items required by this Section, the Mayor and
City Clerk of the City shall execute a Special Warranty Deed conveying such
property to the Corporation and shall deliver such deed to the Corporation. Such
Special Warranty Deed shall be subject to the following: (1) those liens and
encumbrances, if any, to which title to that portion of the Project Site was
subject when conveyed to the City; (2) those liens and encumbrances created by
the Corporation or to the creation or suffering of which the Corporation
consented; (3) those liens and encumbrances resulting from the failure of the
Corporation to perform or observe any of the agreement on its part contained in
this Lease; (4) Permitted Encumbrances other than the Indenture and this Lease;
and (5) if the unimproved portion of the Project Site or any part thereof is
being condemned, the rights and title of any condemning authority.
Upon any purchase of portions of the Project Site pursuant to this
Section, the portions of the Project Site so purchased shall no longer be
entitled to the benefits of the Tax Abatement Agreement.
ARTICLE IX
DAMAGE, DESTRUCTION AND CONDEMNATION
SECTION 9.1. DAMAGE OR DESTRUCTION.
(a) Subject to the provisions of any mortgage, if the Project shall be
damaged or destroyed by fire or any other casualty, whether or not covered by
insurance, the Corporation, as promptly as practicable, shall select one of the
following options:
(1) repair, restore, replace or rebuild the same to as nearly as may
be practicable their condition and character immediately prior to such
damage or destruction, and so that upon completion of such repairs,
restoration, replacement or rebuilding the Project shall be of a value not
less than the value thereof immediately prior to the occurrence of such
damage or destruction; or
(2) construct upon the Project Site new buildings and improvements
thereafter together with all new fixtures which are to be attached
thereto, provided that (i) the value thereof shall not be less than the
value of such destroyed or damaged Project Improvements immediately prior
to the occurrence of such damage or destruction and (ii) the nature of
such new buildings, improvements and fixtures will not impair the
character of the Project as an enterprise permitted by the Act; or
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(3) provide for the redemption and/or cancellation of all of the
Outstanding Bonds, in which event the Corporation shall not be required to
restore rebuild, repair, replace or reconstruct any portion of the Project
If the Corporation shall elect to construct any such new buildings and
improvements, for all purposes of this Lease, any reference to the words
"Project Improvements" shall be deemed to also include any such new buildings
and improvements and all additions thereto and all replacements and alterations
thereof.
The Net Proceeds of casualty insurance required by ARTICLE VII hereof
received with respect to such damage or loss to the Project shall be disbursed
in accordance with the Leasehold Mortgages (in the order of priority) so long as
the Leasehold Mortgages contain provisions governing the disbursement of
casualty insurance proceeds. If there is no Leasehold Mortgage, or if the
Leasehold Mortgage does not contain provisions governing the disbursement of
casualty insurance proceeds, then (i) if such Net Proceeds are less than
$250,000, the Net Proceeds shall be paid to the Corporation to be used in
accordance with this Lease, and (ii) if such Net Proceeds equal or exceed
$250,000, the Net Proceeds shall be paid to the Trustee and shall be applied in
the following manner:
(A) there shall be paid to the Corporation from the Net Proceeds
such part thereof as shall equal the cost to the Corporation of making
such temporary repairs or doing such other work, as, in the Corporation's
reasonable opinion, may be necessary in order to protect the Project
pending adjustment of the insurance loss or the making of permanent
repairs, restoration, replacement or rebuilding;
(B) there shall be paid to the Corporation from the Net Proceeds
such part thereof as shall equal the cost to the Corporation of repairing,
restoring, replacing or rebuilding the Project or any part thereof;
(C) payment to the Corporation pursuant to subdivisions (A) or (B)
of this subsection (a)(ii) from such Net Proceeds shall be made to the
Corporation from time to time as the work progresses, in amounts equal to
the cost of labor and material incorporated into and used in such work,
the architects' and engineers' fees, and other charges in connection with
such work, upon delivery to the City and the Trustee of a certificate of
the Corporation's architect or general contractor, as the case may be, in
charge of such work, certifying: (1) that the amounts so to be paid to the
Corporation are payable to the Corporation in accordance with the
provisions of this Article and that such amounts are then due and payable
by the Corporation or have theretofore been paid by the Corporation; (2)
the progress of the work; (3) that the work has been done in accordance
with the plans and specifications therefor and all insurance requirements
of ARTICLE VII hereof; (4) that the sum requested when added to all sums
previously paid out under this Article for the work does not exceed the
value of the work done to the date of such certificate; (5) the estimated
cost of completing the work, in reasonable detail; and (6) that the
remaining Net Proceeds are sufficient to pay the estimated cost of
completing the work;
(D) at the request of the City or the Trustee, the Corporation shall
furnish to the person requesting the same, at the time of any such
payment, with an official search, or other evidence reasonably
satisfactory to such person, that there has not been filed with respect to
the Project Site or the Project Improvements any mechanic's or other lien
which has not been discharged of record, in respect of any work, labor,
services or materials performed, furnished or supplied, in connection
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with the work and that all of said materials have been purchased free and
clear of all security interest or other encumbrances. The Trustee shall
not pay out any such sum when the Project Site or the Project Improvements
shall be encumbered with any such security interest or encumbrance. Upon
the termination of this Lease and the payment in full of the Bonds, any
monies then held by the Trustee shall be paid over to the Corporation.
(b) The insurance monies, if any, paid to the Corporation as provided
under this Article, on account of any loss or destruction to the Project, shall
be held by it in trust and applied only for the purposes of repairing,
reconstructing or restoring the Project or constructing new buildings and
improvements.
(c) If any of the insurance monies paid by the insurance company to the
Trustee or the Corporation as hereinabove provided, shall remain after the
completion of such repairs, restoration, replacement or rebuilding, and this
Lease shall not have terminated, the excess shall be deposited in the Bond Fund,
subject to the rights of any beneficiary. If the Net Proceeds shall be
insufficient to pay the entire cost of such repairs, restoration, replacement or
rebuilding, the Corporation shall pay the deficiency.
(d) Except as otherwise provided in this Lease, in the event of any such
damage by fire or any other casualty, the provisions of this Lease shall be
unaffected and the Corporation shall remain and continue liable for the payment
of all Basic Rent and Additional Rental and all other charges required hereunder
to be paid by the Corporation, as though no damage by fire or any other casualty
has occurred.
(e) The City and the Corporation agree that they will cooperate with each
other, to such extent as such other party may reasonably require, in connection
with the prosecution or defense of any action or proceeding arising out of, or
for the collection of any insurance monies that may be due in the event of, any
loss or damage, and that they will execute and deliver to such other parties
such instruments as may be required to facilitate the recovery of any insurance
monies.
(f) The Corporation agrees to give prompt notice to the City and the
Trustee with respect to all fires and any other casualties occurring in, on, at
or about the Project.
(g) If the Corporation shall determine that rebuilding, repairing,
restoring or replacing the Project is not practicable and desirable, any Net
Proceeds of casualty insurance required by ARTICLE VII hereof received with
respect to such damage or loss shall be paid into the Bond Fund and shall be
used to redeem Bonds on the earliest practicable redemption date or to pay the
principal of any Bonds as the same become due. The Corporation agrees to be
reasonable in exercising its judgment pursuant to this subsection (g).
(h) The Corporation shall not, by reason of its inability to use all or
any part of the Project during any period in which the Project is damaged or
destroyed or is being repaired, rebuilt, restored or replaced, nor by reason of
the payment of the costs of such rebuilding, repairing, restoring or replacing,
be entitled to any reimbursement from the City, the Trustee or the Bondowners or
to any abatement or diminution of the rentals payable by the Corporation under
this Lease or of any other obligations of the Corporation under this Lease
except as expressly provided in this Section.
SECTION 9.2. CONDEMNATION.
(a) If during the Lease Term, title to, or the temporary use of, all or
any part of the Project shall be condemned by or sold under threat of
condemnation to any authority possessing the power of eminent domain, to such
extent that the claim or loss resulting from such condemnation is greater than
$1,000,000,
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the Corporation shall, within 90 days after the date of entry of a final order
in any eminent domain proceedings granting condemnation or the date of sale
under threat of condemnation, notify the City, the Trustee and the mortgagee
under any Leasehold Mortgage (if any) in writing as to the nature and extent of
such condemnation or loss of title and whether it is practicable and desirable
to acquire or construct substitute improvements.
(b) If the Corporation shall determine that such substitution is
practicable and desirable, the Corporation shall proceed promptly with and
complete with reasonable dispatch the acquisition or construction of such
substitute improvements, so as to place the Project in substantially the same
condition as existed prior to the exercise of the said power of eminent domain,
including the acquisition or construction of other improvements suitable for the
Corporation's operations at the Project (which improvements will be deemed a
part of the Project and available for use and occupancy by the Corporation
without the payment of any rent other than herein provided, to the same extent
as if such other improvements were specifically described herein and demised
hereby); provided, that such improvements will be acquired by the City subject
to no liens, security interests or encumbrances prior to the lien and/or
security interest afforded by the Indenture other than Permitted Encumbrances.
In such case, any Net Proceeds received from any award or awards with respect to
the Project or any part thereof made in such condemnation or eminent domain
proceedings, or of the sale proceeds, shall be applied in the same manner as
provided in SECTION 9.1 hereof (with respect to the receipt of casualty
insurance proceeds).
(c) If the Corporation shall determine that it is not practicable and
desirable to acquire or construct substitute improvements, any Net Proceeds of
condemnation awards received by the Corporation shall be paid into the Bond Fund
and shall be used to redeem Bonds on the earliest practicable redemption date or
to pay the principal of any Bonds as the same becomes due and payable, all
subject to the rights of the mortgagees under the Leasehold Mortgage, if any.
(d) The Corporation shall not, by reason of its inability to use all or
any part of the Project during any such period of restoration or acquisition nor
by reason of the payment of the costs of such restoration or acquisition, be
entitled to any reimbursement from the City, the Trustee or the Bondowners or to
any abatement or diminution of the rentals payable by the Corporation under this
Lease nor of any other obligations hereunder except as expressly provided in
this Section.
(e) The City shall cooperate fully with the Corporation in the handling
and conduct of any prospective or pending condemnation proceedings with respect
to the Project or any part thereof, and shall, to the extent it may lawfully do
so, permit the Corporation to litigate in any such proceeding in the name and on
behalf of the City. In no event will the City voluntarily settle or consent to
the settlement of any prospective or pending condemnation proceedings with
respect to the Project or any part thereof without the prior written consent of
the Corporation.
(f) In no event will the City voluntarily settle or consent to the
settlement of any prospective or pending condemnation proceedings with respect
to the Project or any part thereof without the prior written consent of the
Corporation.
(g) The City irrevocably assigns to the Corporation all of its rights to
any condemnation proceeds received in its capacity as landlord under this Lease.
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ARTICLE X
SPECIAL COVENANTS
SECTION 10.1. NO WARRANTY OF CONDITION OR SUITABILITY BY THE CITY;
EXCULPATION AND INDEMNIFICATION. The City makes no warranty, either express or
implied, as to the condition of the Project or that it will be suitable for the
Corporation's purposes or needs. The Corporation releases the City from, agrees
that the City shall not be liable for and agrees to hold the City harmless
against, any loss or damage to property or any injury to or death of any person
that may be occasioned by any cause whatsoever pertaining to the Project or the
use thereof; except to the extent that such loss is the result of the gross
negligence or willful misconduct of the City, its employees, agents or
contractors.
SECTION 10.2. SURRENDER OF POSSESSION. Upon accrual of the City's right of
re-entry because of the Corporation's default hereunder (beyond any applicable
grace or cure period) or upon the cancellation or termination of this Lease for
any reason other than the Corporation's purchase of the Project pursuant to
ARTICLE XI hereof, the Corporation shall peacefully surrender possession of the
Project to the City in good condition and repair, ordinary wear and tear
excepted; provided, however, the Corporation shall have the right within 90 days
(or such later date as the City may agree to) after the termination of this
Lease to remove from the Project Site any buildings, improvements, furniture,
trade fixtures, machinery and equipment owned by the Corporation and not
constituting part of the Project. All repairs to and restorations of the Project
required to be made because of such removal shall be made by and at the sole
cost and expense of the Corporation, and during said 90-day (or extended) period
the Corporation shall bear the sole responsibility for and bear the sole risk of
loss for said buildings, improvements, furniture, trade fixtures, machinery and
equipment. All buildings, improvements, furniture, trade fixtures, machinery and
equipment owned by the Corporation and which are not so removed from the Project
prior to the expiration of said period shall be the separate and absolute
property of the City.
SECTION 10.3. CITY'S RIGHT OF ACCESS TO THE PROJECT. In addition to the
inspection rights of the City pursuant to SECTION 3.1 of the Tax Abatement
Agreement, the Corporation agrees that the City and the Trustee and their duly
authorized agents shall have the right at reasonable times during business
hours, subject to the Corporation's usual safety and security requirements, to
enter upon the Project Site after delivering written notice to the Corporation
(a) as may be reasonably necessary to cause to be completed the acquisition,
purchase, construction, improving or remodeling provided for in SECTION 4.2
hereof, (b) to perform such work in and about the Project made necessary by
reason of the Corporation's default (following notice and the expiration of
applicable grace or cure periods) under any of the provisions of this Lease, and
(c) following an Event of Default, to exhibit the Project to prospective
purchasers, lessees or trustees.
SECTION 10.4. GRANTING OF EASEMENTS; LEASEHOLD MORTGAGES
(a) If no Event of Default under this Lease shall have happened and be
continuing, the Corporation may at any time or times (1) grant easements,
licenses, rights-of-way (including the dedication of public highways) and other
rights or privileges in the nature of easements that are for the direct use of
the Project, or part thereof, by the grantee, (2) release existing easements,
licenses, rights-of-way and other rights or privileges, all with or without
consideration and upon such terms and conditions as the Corporation shall
determine, or (3) grant or permit the Permitted Encumbrances. The City agrees
that it will execute and deliver and will cause and direct the Trustee to
execute and deliver any instrument necessary or appropriate to confirm and grant
or release any such easement, license, right-of-way or other right or privilege
or any such agreement or other arrangement, upon receipt by the City and the
Trustee of: (i) a copy of the
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instrument of grant or release or of the agreement or other arrangement, (ii) a
written application signed by an Authorized Corporation Representative
requesting such instrument, and (iii) a certificate executed by an Authorized
Corporation Representative stating that such grant or release is not detrimental
to the proper conduct of the business of the Corporation, will not impair the
effective use or interfere with the efficient and economical operation of the
Project, and will not materially adversely affect the security intended to be
given by or under the Indenture. If no Event of Default shall have happened and
be continuing beyond any applicable grace period, any payments or other
consideration received by the Corporation for any such grant or with respect to
or under any such agreement or other arrangement shall be and remain the
property of the Corporation, but, in the event of the termination of this Lease
or during the continuation of an Event of Default, all rights then existing of
the Corporation with respect to or under such grant shall inure to the benefit
of and be exercisable by the City and the Trustee.
(b) The Corporation may mortgage the leasehold estate created by this
Lease, without the City's consent, provided and upon condition that:
(i) a duplicate original or certified copy or photostatic copy of
each such Leasehold Mortgage, and the note or other obligation secured
thereby, is delivered to the City within thirty (30) days after the
execution thereof; and
(ii) such Leasehold Mortgage shall contain a covenant to the effect
that the net proceeds of all insurance policies and the condemnation award
shall be held, used and applied for the purposes and in the manner
provided for in this Lease.
(c) Notwithstanding anything contained to the contrary in this Lease, (i)
the Corporation shall have the right to assign this Lease and any subleases to
any leasehold mortgagee or to the designee or nominee of such leasehold
mortgagee, without the consent of the City, and (ii) if the leasehold mortgagee
or its designee or nominee shall acquire ownership of the leasehold estate,
either following foreclosure of such Leasehold Mortgage or in liquidation of the
indebtedness and in lieu of foreclosure thereof, the leasehold mortgagee or its
designee or nominee shall have the further right to further assign this Lease
and any subleases and any purchase money mortgage accepted in connection
therewith, without the consent of the City and such assignee shall enjoy all
rights, powers and privileges granted herein to leasehold mortgagees.
(d) If (1) the Corporation shall execute and deliver a Leasehold Mortgage,
and (2) the provisions and conditions of subsection (b) above shall have been
fully complied with and observed with respect to such Leasehold Mortgage, and
(3) the Corporation or the mortgagee under such Leasehold Mortgage shall have
notified the City in writing of the making thereof and of the name and address
of such leasehold mortgagee; then:
(i) this Lease may not be modified, amended, canceled or surrendered
by agreement between the City and the Corporation, without the prior
written consent of such leasehold mortgagee;
(ii) there shall be no merger of this Lease or of the leasehold
estate created hereby with the fee title to the Project, notwithstanding
that this Lease or said leasehold estate and said fee title shall be owned
by the same person or persons, without the prior written consent of such
leasehold mortgagee;
(iii) the City shall serve upon each such leasehold mortgagee a copy
of each notice of default and each notice of termination given to the
Corporation under this Lease, at the same time as
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such notice is served upon the Corporation. No such notice to the
Corporation shall be effective unless a copy thereof is thus served upon
each leasehold mortgagee;
(iv) each leasehold mortgagee shall have the same period of time
after the service of such notice upon it within which the Corporation may
remedy or cause to be remedied the default which is the basis of the
notice plus sixty (60) days; and the City shall accept performance by such
leasehold mortgagee as timely performance by the Corporation;
(v) such leasehold mortgagee shall not be required to continue
possession or continue foreclosure proceedings under paragraph (vii) of
this subsection if the particular default has been cured;
(vi) the City may exercise any of its rights or remedies with
respect to any other default by the Corporation occurring during the
period of such forbearance provided for under said paragraph (g), subject
to the rights of the leasehold mortgagee under this Section as to such
other defaults;
(vii) in case of default by the Corporation under this Lease, other
than a default in the payment of money, the City shall take no action to
effect a termination of this Lease by service of a notice or otherwise,
without first giving to such leasehold mortgagee a reasonable time within
which either to obtain possession of the Project and to remedy such
default in the case of a default which is susceptible of being cured when
such leasehold mortgagee has obtained possession of the Project, or to
institute and with reasonable diligence to complete foreclosure
proceedings or otherwise acquire the Corporation's leasehold estate under
this Lease in the case of a default which is not so susceptible of being
remedied by such leasehold mortgagee, provided that the leasehold
mortgagee shall deliver to the City within thirty (30) days after the
expiration of the grace period applicable to the particular default, an
instrument unconditionally agreeing to remedy such default other than a
default not susceptible of being remedied by such leasehold mortgagee. The
City's right to terminate this Lease by reason of a default which is not
susceptible of being remedied by such leasehold mortgagee shall end with
respect to such default when the leasehold mortgagee obtains possession of
the Project as aforesaid, which possession shall be deemed to include
possession by a receiver;
(viii) if this Lease shall terminate prior to the expiration of the
Lease Term, the City shall enter into a new lease for the Project with any
such leasehold mortgagee, or its designee or nominee, for the remainder of
the term, effective as of the date of such termination, at the same rent
and upon the same terms, covenants and conditions contained herein, except
that such new lease shall not guarantee possession of the Project to the
new tenant as against the Corporation and/or anyone claiming under the
Corporation, and the City, simultaneously with the execution and delivery
of such new lease, shall turn over to the new tenant all monies, if any,
then held by the City under this Lease on behalf of the Corporation, on
condition that:
(A) such leasehold mortgagee shall make written request for
such new lease within thirty (30) days after the date of such
termination, and
(B) on the commencement date of the term of the new lease,
such leasehold mortgagee shall cure all defaults of the Corporation
under this Lease (susceptible of being cured by such leasehold
mortgagee) which remain uncured on that date, and shall pay or cause
to be paid all unpaid sums which at such time would have been
payable under this
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Lease but for such termination, and shall pay or cause to be paid to
the City on that date all expenses, including reasonable counsel
fees, court costs and disbursements, incurred by the City in
connection with any such default and termination as well as in
connection with the execution and delivery of such new lease;
(ix) if such leasehold mortgagee or its designee or nominee shall
become the owner of this Lease either following foreclosure of such
Leasehold Mortgage or in liquidation of the indebtedness and in lieu of
foreclosure thereof and such leasehold mortgagee or its designee or
nominee shall have assigned this Lease, such leasehold mortgagee or its
designee or nominee so assigning shall be released from all liability
accruing from and after the date of such assignment.
If more that one leasehold mortgagee shall request such new lease, such
new lease shall be made with and delivered to the leasehold mortgagee (or its
nominee or designee) whose mortgage has priority to those of any others. The
opinion of a reputable title insurance company, licensed to insure title to real
property in the State of Kansas, setting forth the order of priority of such
mortgage liens, may be relied on by the City as conclusive evidence of such
priority.
SECTION 10.5. INDEMNIFICATION OF CITY AND TRUSTEE. The Corporation shall
indemnify and save the City and the Trustee harmless from and against all claims
by or on behalf of any person, firm or corporation arising from the conduct or
management of, or from any work or thing done in, on or about, the Project
during the Lease Term, and against and from all claims arising during the Lease
Term from (a) any condition of the Project caused by the Corporation, (b) any
breach or default on the part of the Corporation in the performance of any of
its obligations under this Lease, (c) any contract entered into in by the
Corporation or its sublessee, if any, in connection with the acquisition,
purchase, construction, improving or remodeling of the Project, (d) any act of
negligence of the Corporation or of any of its agents, contractors, servants,
employees or licensees, and (e) any act of negligence of any assignee or
sublessee of the Corporation, or of any agents, contractors, servants, employees
or licensees of any assignee or sublessee of the Corporation; provided, however,
the indemnification contained in this SECTION 10.5 shall not extend to the City
or the Trustee if (i) such claim is the result of work being performed at the
Project by employees, agents or contractors of the City, or (ii) such claim is
the result of the gross negligence or willful misconduct of the City or its
employees, agents or contractors, or (iii) with respect to the Trustee, such
claim is the result of the negligence or willful misconduct of the Trustee or
its employees, agents or contractors. The Corporation shall indemnify and save
the City and the Trustee harmless from and against all costs and expenses
(except those which have arisen from the willful misconduct or gross negligence
of the City or the Trustee) incurred in or in connection with any action or
proceeding brought in connection with claims arising from circumstances
described in clauses (a) through (e), and upon notice from the City or the
Trustee, the Corporation shall defend them or either of them in any such action
or proceeding.
If a claim is made or any action is brought against the City or the
Trustee (collectively, the "Indemnified Parties") for which indemnification may
be sought against the Corporation under this Section 10.5, the Indemnified
Parties will promptly notify the Corporation in writing, and the Corporation
will promptly assume the defense thereof, including with the consent of the
Indemnified Party, which consent may not be unreasonably withheld, the
employment of counsel, the payment of all expenses and the right to negotiate
and consent to settlement. Any one or more of the Indemnified Parties will have
the right to employ separate counsel with respect to any such claim or in any
such action and to participate in the defense thereof, but the fees and expenses
of that counsel will be at the expense of the Indemnified Party or Indemnified
Parties unless the employment of such counsel has been specifically authorized,
in writing, by the Corporation or there is a conflict of interest that would
prevent counsel for the Corporation from adequately representing both the
Corporation and the Indemnified Parties. The Corporation will not be
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liable for any settlement of any action effected without its written consent,
but if settled with the written consent of the Corporation or if there is a
final judgment for the plaintiff in any such action of which the Corporation is
required to assume the defense, the Corporation agrees to indemnify and hold
harmless the Indemnified Parties from and against any loss or liability by
reason of the settlement or judgment.
SECTION 10.6. DEPRECIATION, INVESTMENT TAX CREDIT AND OTHER TAX BENEFITS.
The City agrees that any depreciation, investment tax credit or any other tax
benefits with respect to the Project or any part thereof shall be made available
to the Corporation, and the City will fully cooperate with the Corporation in
any effort by the Corporation to avail itself of any such depreciation,
investment tax credit or other tax benefits.
SECTION 10.7. CORPORATION TO MAINTAIN ITS CORPORATE EXISTENCE. The
Corporation agrees that until the Bonds are paid or payment is provided for in
accordance with the terms of the Indenture, it will maintain its corporate
existence, and will not dissolve or otherwise dispose of all or substantially
all of its assets; provided, however, that the Corporation may, without
violating the agreement contained in this Section, consolidate with or merge
into another domestic corporation (i.e., a corporation incorporated and existing
under the laws of one of the states of the United States) or permit one or more
other domestic corporations to consolidate with or merge into it, or may sell or
otherwise transfer to another domestic corporation all or substantially all of
its assets as an entirety and thereafter dissolve, provided, the surviving,
resulting or transferee corporation expressly assumes in writing all the
obligations of the Corporation contained in this Lease; and, further provided,
that the surviving, resulting or transferee corporation, as the case may be, has
a consolidated net worth (after giving effect to said consolidation, merger or
transfer) at least equal to or greater than that of the Corporation immediately
prior to said consolidation, merger or transfer. The term "net worth", as used
in this Section, shall mean the difference obtained by subtracting total
liabilities (not including as a liability any capital or surplus item) from
total assets of the Corporation and all of its subsidiaries. In any such
consolidation, merger or transfer the Corporation shall comply with the
provisions of SECTION 10.1 hereof to the extent applicable.
SECTION 10.8. SECURITY INTERESTS. At the written request of the Owner of
the Bonds, the City and the Corporation agree to enter into all instruments
(including financing statements and statements of continuation) necessary for
perfection of and continuance of the perfection of the security interests of the
City and the Trustee in the Project. Upon the written instructions of the Owner
of the Bonds, the Trustee, at the expense of the Corporation, shall file all
instruments the Owner of the Bonds shall deem necessary to be filed and shall
continue or cause to be continued the liens of such instruments for so long as
the Bonds shall be Outstanding. The City and the Corporation shall cooperate
with the Trustee in this regard by executing such continuation statements and
providing such information as the Trustee may require to renew such liens.
ARTICLE XI
OPTION AND OBLIGATION TO PURCHASE THE PROJECT
SECTION 11.1. OPTION TO PURCHASE THE PROJECT. The Corporation shall have,
and is hereby granted, the option to purchase the Project at any time, prior to
the expiration of the Lease Term upon payment in full of all Bonds then
Outstanding or provision for their payment having been made pursuant to ARTICLE
XIII of the Indenture. To exercise such option the Corporation shall give
written notice to the City and to the Trustee, if any, of the Bonds as shall
then be unpaid or provision for their payment shall not have been made in
accordance with the provisions of the Indenture, and shall specify therein the
date of closing such purchase, which date shall be not less than 30 nor more
than 180 days from the date such notice is
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mailed, and in case of a redemption of the Bonds in accordance with the
provisions of the Indenture the Corporation shall make arrangements satisfactory
to the Trustee for the giving of the required notice of redemption. The purchase
price payable by the Corporation in the event of its exercise of the option
granted in this Section shall be the sum of the following:
(a) an amount of money which, when added to the amount then on
deposit in the Bond Fund, will be sufficient to redeem all the then
Outstanding Bonds on the earliest redemption date next succeeding the
closing date, including, without limitation, principal and interest to
accrue to said redemption date and redemption expense; plus
(b) an amount of money equal to the Trustee's and the Paying Agent's
agreed to and reasonable fees and expenses under the Indenture accrued and
to accrue until such redemption of the Bonds; plus
(c) the sum of $100.
SECTION 11.2. CONVEYANCE OF THE PROJECT. At the closing of the purchase of
the Project pursuant to this Article, the City will upon receipt of the purchase
price deliver to the Corporation the following:
(a) If the Indenture shall not at the time have been satisfied in
full, a release from the Trustee of the Project from the lien and/or
security interest of the Indenture.
(b) Documents conveying to the Corporation legal title to the
Project, as it then exists, subject to the following: (1) those liens and
encumbrances, if any, to which title to the Project was subject when
conveyed to the City; (2) those liens and encumbrances created by the
Corporation or to the creation or suffering of which the Corporation
consented; (3) those liens and encumbrances resulting from the failure of
the Corporation to perform or observe any of the agreement on its part
contained in this Lease; (4) Permitted Encumbrances other than the
Indenture and this Lease; and (5) if the Project or any part thereof is
being condemned, the rights and title of any condemning authority.
SECTION 11.3. RELATIVE POSITION OF OPTION AND INDENTURE. The options and
obligation to purchase the Project granted to the Corporation in this Article
shall be and remain prior and superior to the Indenture and may be exercised
whether or not the Corporation is in default under this Lease, provided that
such default will not result in nonfulfillment of any condition to the exercise
of any such option and further provided that all options herein granted shall
terminate upon the termination of this Lease.
SECTION 11.4. OBLIGATION TO PURCHASE THE PROJECT. The Corporation hereby
agrees to purchase, and the City hereby agrees to sell, the Project for the sum
of $100 at the expiration of the Lease Term following full payment of the Bonds
or provision for payment thereof having been made in accordance with the
provisions of the Indenture.
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ARTICLE XII
DEFAULTS AND REMEDIES
SECTION 12.1. EVENTS OF DEFAULT. If any one or more of the following
events shall occur and be continuing, it is hereby defined as and declared to be
and to constitute an "Event of Default" or "default" under this Lease:
(a) Default in the due and punctual payment of Basic Rent for a
period of five (5) business days following written notice to the
Corporation by the City or the Trustee or default in the due and punctual
payment Additional Rent for a period of 30 days following written notice
to the Corporation by the City or the Trustee; or
(b) Default in the due observance or performance of any other
covenant, agreement, obligation or provision of this Lease on the
Corporation's part to be observed or performed, and such default shall
continue for 60 days after the City or the Trustee has given the
Corporation written notice specifying such default (or such longer period
as shall be reasonably required to cure such default; provided that (1)
the Corporation has commenced such cure within said 60-day period, and (2)
the Corporation diligently prosecutes such cure to completion); or
(c) The Corporation shall: (1) admit in writing its inability to pay
its debts as they become due; or (2) file a petition in bankruptcy or for
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under the Bankruptcy Code as now or in the
future amended or any other similar present or future federal or state
statute or regulation, or file a pleading asking for such relief; or (3)
make an assignment for the benefit of creditors; or (4) consent to the
appointment of a trustee, receiver or liquidator for all or a major
portion of its property or shall fail to have the appointment of any
trustee, receiver or liquidator made without the Corporation's consent or
acquiescence, vacated or set aside; or (5) be finally adjudicated as
bankrupt or insolvent under any federal or state law; or (6) be subject to
any proceeding, or suffer the entry of a final and non-appealable court
order, under any federal or state law appointing a trustee, receiver or
liquidator for all or a major part of its property or ordering the
winding-up or liquidation of its affairs, or approving a petition filed
against it under the Bankruptcy Code, as now or in the future amended,
which order or proceeding, if not consented to by it, shall not be
dismissed, vacated, denied, set aside or stayed within 60 days after the
day of entry or commencement; or (7) suffer a writ or warrant of
attachment or any similar process to be issued by any court against all or
any substantial portion of its property, and such writ or warrant of
attachment or any similar process is not contested, stayed, or is not
released within 60 days after the final entry, or levy or after any
contest is finally adjudicated or any stay is vacated or set aside; or
(d) The Corporation shall vacate or abandon the Project, or shall
have been ejected from the Project or any portion thereof by reason of a
defect in title to the Project, and the same shall remain uncured for and
unoccupied for a period of 60 days; or
(e) The occurrence and continuance of an "Event of Default" by the
Corporation under the Tax Abatement Agreement following any applicable
notice and grace period provided therein or in this Lease.
SECTION 12.2. REMEDIES ON DEFAULT. If any Event of Default referred to in
SECTION 12.1 hereof shall have occurred and be continuing, then the City may at
the City's election (subject, however, to any
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restrictions against acceleration of the maturity of the Bonds or termination of
this Lease in the Indenture), then or at any time thereafter, and while such
default shall continue, take any one or more of the following actions:
(a) cause all amounts payable with respect to the Bonds for the remainder
of the term of this Lease to become due and payable, as provided in the
Indenture;
(b) give the Corporation written notice of intention to terminate this
Lease on a date specified therein, which date shall not be earlier than 30 days
after such notice is given, and if all defaults have not then been cured, on the
date so specified, the Corporation's rights to possession of the Project shall
cease and this Lease shall thereupon be terminated, and the City may re-enter
and take possession of the Project; or
(c) without terminating this Lease, re-enter the Project to take
possession thereof pursuant to legal proceedings or pursuant to any notice
provided for by law, and having elected to re-enter or take possession of the
Project without terminating this Lease, the City shall use reasonable diligence
to relet the Project, or parts thereof, for such term or terms and at such
rental and upon such other terms and conditions as the City may deem advisable,
with the right to make alterations and repairs to the Project (but without
liability on the part of the Corporation to pay for any such alterations), and
no such re-entry or taking of possession of the Project by the City shall be
construed as an election on the City's part to terminate this Lease, and no such
re-entry or taking of possession by the City shall relieve the Corporation of
its obligation to pay Basic Rent or Additional Rent (at the time or times
provided herein), or any of its other obligations under this Lease, all of which
shall survive such re-entry or taking of possession, and the Corporation shall
continue to pay the Basic Rent and Additional Rent provided for in this Lease
until the end of this Lease Term, whether or not the Project shall have been
relet, less the Net Proceeds, if any, of any reletting of the Project after
deducting all of the City's reasonable expenses in or in connection with such
reletting, including without limitation all repossession costs, brokerage
commissions, legal expenses, expenses of employees, alteration costs and
expenses of preparation for reletting. Said Net Proceeds of any reletting shall
be deposited in the Bond Fund. Having elected to re-enter or take possession of
the Project without terminating this Lease, the City may (subject, however, to
any restrictions against termination of this Lease in the Indenture), by notice
to the Corporation given at any time thereafter following an Event of Default,
elect to terminate this Lease on a date to be specified in such notice, which
date shall be not earlier than 30 days after re-entry under (c) above, and if
all defaults shall not have then been cured, on the date so specified this Lease
shall thereupon be terminated. If in accordance with any of the foregoing
provisions of this Article the City shall have the right to elect to re-enter
and take possession of the Project, the City may enter and expel the Corporation
and those claiming through or under the Corporation and remove the property and
effects of both or either (forcibly if necessary) without being guilty of any
manner of trespass and without prejudice to any remedies for arrears of rent or
preceding breach of covenant. The City may take whatever action at law or in
equity which may appear necessary or desirable to collect rent then due and
thereafter to become due, or to enforce performance and observance of any
obligation, agreement or covenant of the Corporation under this Lease, and in
all events, the City shall take such action as directed to by the Owners of a
majority of the Bonds.
SECTION 12.3. SURVIVAL OF OBLIGATIONS. The Corporation covenants and
agrees with the City and Bondowners that its obligations under this Lease shall
survive the cancellation and termination of this Lease, for any cause, and that
the Corporation shall continue to pay the Basic Rent and Additional Rent and
perform all other obligations provided for in this Lease, all at the time or
times provided in this Lease; provided, however, that upon the payment of all
Basic Rent and Additional Rent required under ARTICLE V hereof, and upon the
satisfaction and discharge of the Indenture under SECTION 1301 thereof, the
Corporation's obligation under this Lease shall thereupon cease and terminate in
full.
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SECTION 12.4. LIMITATION OF LIABILITY AND INDEMNITY. Notwithstanding
anything contained to the contrary in this Lease, it is agreed that the City
will look only to the Corporation's interest in and to the Project and any
sublease with respect thereto for the collection of any judgment (or other
judicial process) requiring the payment of money or the making of any
performance by the Corporation in the event of a breach or default under this
Lease by the Corporation, and no other property or assets of the Corporation or
its officers, shareholders, partners or principal, disclosed or undisclosed,
shall be subject to levy, execution or other enforcement procedures for the
satisfaction of any such judgment (or other judicial process).
SECTION 12.5. PERFORMANCE OF THE CORPORATION'S OBLIGATIONS BY THE CITY. If
the Corporation shall fail to keep or perform any of its obligations as provided
in this Lease in the making of any payment or performance of any obligation,
then the City, or the Trustee in the City's name, may (but shall not be
obligated so to do) upon the continuance of such failure on the Corporation's
part for 30 days after written notice of such failure is given the Corporation
by the City or the Trustee, and without waiving or releasing the Corporation
from any obligation hereunder, as an additional but not exclusive remedy, make
any such payment or perform any such obligation, and all reasonable sums so paid
by the City or the Trustee and all necessary incidental reasonable costs and
expenses incurred by the City or the Trustee in performing such obligations
shall be deemed Additional Rent and shall be paid to the City or the Trustee on
demand, and if not so paid by the Corporation, the City or the Trustee shall
have the same rights and remedies provided for in SECTION 12.2 hereof in the
case of default by the Corporation in the payment of Basic Rent.
SECTION 12.6. RIGHTS AND REMEDIES CUMULATIVE. The rights and remedies
reserved by the City and the Corporation hereunder and those provided by law
shall be construed as cumulative and continuing rights. No one of them shall be
exhausted by the exercise thereof on one or more occasions. The City and the
Corporation shall each be entitled to specific performance and injunctive or
other equitable relief for any breach or threatened breach of any of the
provisions of this Lease, notwithstanding availability of an adequate remedy at
law, and each party hereby waives the right to raise such defense in any
proceeding in equity.
SECTION 12.7. WAIVER OF BREACH. No waiver of any breach of any covenant or
agreement herein contained shall operate as a waiver of any subsequent breach of
the same covenant or agreement or as a waiver of any breach of any other
covenant or agreement, and in case of a breach by the Corporation of any
covenant, agreement or undertaking by the Corporation, the City may nevertheless
accept from the Corporation any payment or payments hereunder without in any way
waiving City's right to exercise any of its rights and remedies provided for
herein with respect to any such breach or breaches of the Corporation which were
in existence at the time such payment or payments were accepted by the City.
SECTION 12.8. NOTICE OF DEFAULTS UNDER SECTION 12.1; OPPORTUNITY OF
CORPORATION TO CURE DEFAULTS.
(a) Anything herein to the contrary notwithstanding, no default specified
in SECTION 12.1(c) through (e) shall constitute an Event of Default until actual
notice of such default by registered or certified mail shall be given by the
Trustee or by the Owners of 25% in aggregate principal amount of all Bonds
Outstanding to the Corporation and the Corporation shall have had 30 days after
receipt of such notice to correct said default or cause said default to be
corrected, and shall not have corrected said default or caused said default to
be corrected within such period; provided, however, if any such default shall be
such that it cannot be corrected within such period, it shall not constitute an
Event of Default if corrective action is instituted by the Corporation within
such period and diligently pursued until the default is corrected.
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(b) Anything herein to the contrary notwithstanding, no default specified
in SECTION 12.1(b) shall constitute an Event of Default until actual notice of
such default by registered or certified mail shall be given (i) at any time the
Corporation is the Owner of 100% in aggregate principal amount of all Bonds
Outstanding, by the Owner of 100% in aggregate principal amount of all Bonds
Outstanding, and (ii) at any time the Corporation is not the Owner of 100% in
aggregate principal amount of all Bonds Outstanding, the Trustee or by the
Owners of 25% in aggregate principal amount of all Bonds Outstanding, to the
Corporation and the Corporation shall have had 30 days after receipt of such
notice to correct said default or cause said default to be corrected, and shall
not have corrected said default or caused said default to be corrected within
such period; provided, however, if any such default shall be such that it cannot
be corrected within such period, it shall not constitute an Event of Default if
corrective action is instituted by the Corporation within such period and
diligently pursued until the default is corrected.
(c) With regard to any alleged default concerning which notice is given to
the Corporation under the provisions of this Section, the City hereby grants the
Corporation full authority for account of the City to perform any covenant or
obligation, the nonperformance of which is alleged in said notice to constitute
a default, in the name and stead of the City, with full power to do any and all
things and acts to the same extent that the City could do and perform any such
things and acts in order to remedy such default.
SECTION 12.9. TRUSTEE'S EXERCISE OF THE CITY'S REMEDIES. Whenever any
Event of Default shall have occurred and be continuing, the Trustee may, but
except as otherwise provided in the Indenture shall not be obliged to, exercise
any or all of the rights of the City under this Article, upon notice as required
of the City unless the City has already given the required notice. In addition,
the Trustee shall have available to it all of the remedies prescribed by the
Indenture.
ARTICLE XIII
ASSIGNMENT AND SUBLEASE
SECTION 13.1. ASSIGNMENT; SUBLEASE.
(a) The Corporation shall have the right to assign, transfer, encumber or
dispose of this Lease or any interest therein or part thereof, with the written
consent of the City, for any lawful purpose under the Act. With respect to any
assignment, the Corporation shall comply with the following conditions:
(1) Such assignment shall be in writing, duly executed and
acknowledged by the assignor and in proper form for recording;
(2) Such assignment shall include the entire then unexpired term of
this Lease;
(3) A duplicate original of such assignment shall be delivered to
the City within ten (10) days after the execution thereof, together with
an assumption agreement, duly executed and acknowledged by the assignee in
proper form for recording, by which the assignee shall assume all of the
terms, covenants and conditions of this Lease on the part of the
Corporation to be performed and observed; and
(4) At the time of any such assignment there shall be no damage or
destruction to the Project which has not been repaired, restored and
replaced in accordance with the provisions of this
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Lease, unless any funds then held by the Corporation for the purposes of
such repair, restoration and replacement are simultaneously transferred to
the assignee.
Upon the satisfaction of the conditions set forth herein, the assignor
shall be relieved of all further liability occurring on and after the effective
date of such assignment. The consent of the City to any assignment, transfer,
encumbrance or disposition described in this subsection (a) shall not be
unreasonably withheld or delayed.
(b) The Corporation shall have the right, with the written consent of the
City, to sublet all of the Project to a single entity for any lawful purpose
under the Act. The Corporation shall have the right, without the consent of the
City, to sublet any part of the Project to more than one entity in the ordinary
course of its business for any lawful purpose under the Act. No sublease of the
Project shall release or discharge the Corporation from its primary liability
for the payment of the Basic Rent and Additional Rent hereunder and the
performance of each and all of the covenants and agreements herein contained,
and its duties and obligations under this Lease shall continue as if no such
sublease had been made. The Corporation shall, within 10 days after the delivery
thereof, furnish or cause to be furnished to the City and the Trustee a true and
correct copy of each such sublease. Any sublease may provide, at the
Corporation's option, that the City's consent shall not be required in respect
of any further subletting thereunder if such further subletting is for a similar
purpose as the original sublease and is for a purpose permissible under the Act.
If for any reason this Lease and the leasehold estate of the Corporation
hereunder is terminated by the City by summary proceedings or otherwise in
accordance with the terms of this Lease, the City covenants and agrees that such
termination of this Lease shall not result in a termination of any sublease
affecting the Project or any part or parts thereof and that they shall all
continue for the duration of their respective terms and any extensions thereof
as a direct lease between the City hereunder and the sublessee thereunder, with
the same force and effect as if the City hereunder had originally entered into
such sublease as landlord thereunder. Any such sublessee shall not be named or
joined in any action or proceeding by the City under this Lease to recover
possession of the Project or for any other relief if such sublessee is not then
in default under the terms of its sublease beyond any applicable grace period
for curing the same. The City shall, upon request, execute, acknowledge and
deliver such agreements evidencing and agreeing to the foregoing in a form
reasonably satisfactory to the Corporation.
Any consent of the City required by this subsection (b) shall not be
unreasonably withheld or delayed.
SECTION 13.2. ASSIGNMENT OF REVENUES BY CITY. The City shall assign and
pledge any rents, revenues and receipts receivable under this Lease, to the
Trustee pursuant to the Indenture as security for payment of the principal of,
interest and premium, if any, on the Bonds and the Corporation hereby consents
to such pledge and assignment.
SECTION 13.3. PROHIBITION AGAINST FEE MORTGAGE OF PROJECT. The City shall
not mortgage its fee interest in the Project, but may assign its interest in and
pledge any moneys receivable under this Lease to the Trustee pursuant to the
Indenture as security for payment of the principal of and interest on the Bonds.
SECTION 13.4. RESTRICTIONS ON SALE OR ENCUMBRANCE OF PROJECT BY CITY.
During the Lease Term, the City agrees that, except to secure the Bonds to be
issued pursuant to the Indenture, it will not sell, assign, encumber, mortgage,
transfer or convey the Project or any interest therein.
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ARTICLE XIV
AMENDMENTS, CHANGES AND MODIFICATIONS
SECTION 14.1. AMENDMENTS, CHANGES AND MODIFICATIONS. Except as otherwise
provided in this Lease or in the Indenture, subsequent to the issuance of Bonds
and prior to the payment in full of the Bonds (or provision for the payment
thereof having been made in accordance with the provisions of the Indenture),
this Lease may not be effectively amended, changed, modified, altered or
terminated without the prior written consent of the Trustee, given in accordance
with the provisions of the Indenture.
ARTICLE XV
MISCELLANEOUS PROVISIONS
SECTION 15.1. NOTICES. All notices, certificates or other communications
required or desired to be given hereunder shall be in writing and shall be
deemed duly given when (i) mailed by registered or certified mail, postage
prepaid, or (ii) sent by overnight delivery or other delivery service which
requires written acknowledgment of receipt by the addressee, addressed as
follows:
(a) To the City: City of Olathe, Kansas
City Hall
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: City Clerk
(b) To the Corporation: Pacific Sunwear Stores Corp.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Director/Treasurer
(c) To the Trustee: U.S. Bank National Association
Corporate Trust Services
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
All notices given by certified or registered mail as aforesaid shall be
deemed fully given as of the date they are so mailed. A duplicate copy of each
notice, certificate or other communication given hereunder by either the City or
the Corporation to the other shall also be given to the Trustee. The City, the
Corporation and the Trustee may from time to time designate, by notice given
hereunder to the others of such parties, such other address to which subsequent
notices, certificates or other communications shall be sent. Any notice may be
given by the attorney for such party.
SECTION 15.2. CITY SHALL NOT UNREASONABLY WITHHOLD CONSENTS AND APPROVALS.
Wherever in this Lease it is provided that the City shall, may or must give its
approval or consent, exercise its discretion, or execute supplemental agreements
or schedules, the City shall not unreasonably, arbitrarily or unnecessarily
withhold, delay, condition, or refuse to give such approvals or consents,
exercise its discretion, or refuse to execute such supplemental agreements or
schedules and the City shall act in a good faith manner in administering and
enforcing this Lease.
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SECTION 15.3. NET LEASE. The parties hereto agree (a) that this Lease
shall be deemed and construed to be a net lease, (b) that the payments of Basic
Rent are designed to provide the City and the Trustee funds adequate in amount
to pay all principal of and interest accruing on the Bonds as the same become
due and payable, and (c) that if after the principal of and interest on the
Bonds and all costs incident to the payment of the Bonds have been paid in full
the Trustee or the City holds unexpended funds received in accordance with the
terms hereof such unexpended funds shall, after payment therefrom of all sums
then due and owing by the Corporation under the terms of this Lease, and except
as otherwise provided in this Lease and the Indenture, become the absolute
property of and be paid over forthwith to the Corporation.
SECTION 15.4. NO PECUNIARY LIABILITY. No provision, covenant or agreement
contained in this Lease, the Indenture or the Bonds, or any obligation herein or
therein imposed upon the City, or the breach thereof, shall constitute or give
rise to or impose upon the City a pecuniary liability or a charge upon the
general credit or taxing powers of the City of Olathe or the State of Kansas.
Such limitation shall not apply to any liability or charge directly resulting
from the City's breach of any provision, covenant or agreement contained herein.
In no event shall either the City or the Corporation be liable for any
consequential, punitive or similar damages resulting from the breach of any
provision, covenant or agreement contained herein or otherwise arising under
this Lease.
SECTION 15.5. GOVERNING LAW. This Lease shall be construed in accordance
with and governed by the laws of Kansas.
SECTION 15.6. BINDING EFFECT. This Lease shall be binding upon and shall
inure to the benefit of the City and the Corporation and their respective
successors and assigns.
SECTION 15.7. ELECTRONIC STORAGE. The parties agree that the transactions
described herein may be conducted and related documents may be stored by
electronic means.
SECTION 15.8. SEVERABILITY. If for any reason any provision of this Lease
shall be determined to be invalid or unenforceable, the validity and
enforceability of the other provisions hereof shall not be affected thereby.
SECTION 15.9. EXECUTION IN COUNTERPARTS. This Lease may be executed
simultaneously in several counterparts, each of which shall be deemed to be an
original and all of which shall constitute but one and the same instrument.
[Remainder of page intentionally blank.]
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IN WITNESS WHEREOF, the parties hereto have caused this Lease to be
executed in their respective corporate names and their respective corporate
seals to be hereunto affixed and attested by their duly authorized officers, all
as of the date first above written.
CITY OF OLATHE, KANSAS
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------
Mayor
(Seal)
ATTEST:
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------
City Clerk
Lease Agreement
PacSun Project, Series 2007
S-1
PACIFIC SUNWEAR STORES CORP.,
a California corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President and
Chief Financial Officer
Lease Agreement
PacSun Project, Series 2007
S-2
EXHIBIT A
PROJECT IMPROVEMENTS
All buildings, structures, improvements and fixtures located on or to be
acquired or purchased for the construction, improvement or remodeling of the
Project Site pursuant to ARTICLE IV hereof and paid for in whole or in part from
the proceeds of Bonds and all additions, alterations, modifications and
improvements thereof made pursuant to this Lease.
A-1
EXHIBIT B
PROJECT SITE
▇▇▇ ▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, a subdivision in the City of
Olathe, ▇▇▇▇▇▇▇ County, Kansas
B-1
EXHIBIT C
[FORM OF REQUISITION CERTIFICATE]
Requisition No. ________
Date: __________________
REQUISITION CERTIFICATE
TO: U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE UNDER A TRUST INDENTURE DATED
AS OF JULY 1, ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, AND THE TRUSTEE,
AND LEASE AGREEMENT DATED AS OF JULY 1, ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, AND PACIFIC SUNWEAR STORES CORP.
The undersigned hereby requests that a total of $_____________ be paid for
Project Costs (as defined in said Lease) in such amounts, to such payees and for
such purposes as set forth on SCHEDULE 1 attached hereto.
I hereby state and certify that: (i) the amounts requested are or were
necessary and appropriate in connection with the acquisition, purchase,
construction, improving or remodeling of the Project, have been properly
incurred and are a proper charge against the Construction Fund, and have been
paid by or are justly due to the persons whose names and addresses are stated on
Schedule 1, and have not been the basis of any previous requisition from the
Construction Fund; (ii) as of this date, except for the amounts referred to
above, there are no, to the best of my knowledge, outstanding statements which
are due and payable for labor, wages, materials, supplies or services in
connection with the acquisition, purchase, construction, improving or remodeling
of said buildings and improvements which, if unpaid, might become the basis of a
vendors', mechanics', laborers' or materialmen's statutory or similar lien upon
the Project or any part thereof; and (iii) no part of the several amounts paid
or due as stated above has been or is being made the basis for the withdrawal of
any moneys from the Construction Fund in any previous or pending application for
payment made pursuant to said Lease.
For any payee which is the Corporation the undersigned hereby instructs
the Trustee to make such payment by wire transfer to the following account:
_____________________________, ABA No. ______________, Credit Account No.
_______________ (Pacific Sunwear Stores Corp.).
PACIFIC SUNWEAR STORES CORP.
By: ____________________________________
Name: __________________________________
Title: _________________________________
C-1
SCHEDULE 1 TO REQUISITION CERTIFICATE
Amount Payee and Address Description of Project Costs
------ ----------------- ----------------------------
$
-------
C-2