EXHIBIT 10.3
▇▇▇▇▇▇▇ & ▇▇▇▇, P.C.
K104189\lease.v5
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LEASE AGREEMENT
between
CITY OF OLATHE, KANSAS
and
KING'S COURT INVESTORS LIMITED PARTNERSHIP
Dated as of November 1, 1998
$2,209,000
Multifamily Housing Revenue Refunding Bonds
(King's Court Apartments Project)
Series 1998
of the
City of Olathe, Kansas
CERTAIN OF THE RIGHTS, TITLE AND INTEREST OF THE CITY OF OLATHE, KANSAS TO THIS
LEASE HAVE BEEN ASSIGNED TO SECURITY BANK OF KANSAS CITY, AS TRUSTEE UNDER THE
TRUST INDENTURE DATED AS OF NOVEMBER 1, 1998, BETWEEN THE CITY AND THE TRUSTEE.
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TABLE OF CONTENTS
PAGE
Parties......................................................................1
Recitals.....................................................................1
ARTICLE I
DEFINITIONS, CONSTRUCTION AND CERTAIN GENERAL PROVISIONS
Section 1.1. Definitions...................................................2
Section 1.2. Rules of Interpretation.......................................2
ARTICLE II
REPRESENTATIONS
Section 2.1. Representations by the Issuer.................................3
Section 2.2. General Representations by the Lessee.........................3
Section 2.3. Tax Representations of the Lessee.............................6
ARTICLE III
ISSUANCE OF BONDS; PAYMENT OF COSTS
Section 3.1. Issuance of Bonds.............................................7
Section 3.2. No Warranty by Issuer.........................................7
Section 3.3. Payment of Issuance Costs.....................................7
Section 3.4. Title Insurance...............................................8
ARTICLE IV
GRANTING PROVISIONS, LEASE PAYMENTS AND OTHER PAYMENTS, AND
ASSIGNMENTS OF ISSUER'S RIGHTS, ETC.
Section 4.1. Termination of Base Lease and Sublease; Grant of
Leasehold Estate..............................................9
Section 4.2. Possession and Use of Project.................................9
Section 4.3. Lease Payments................................................9
Section 4.4. Additional Payments..........................................10
Section 4.5. Obligations of Lessee Unconditional; Non-Recourse............11
Section 4.6. Lessee's Remedies............................................13
Section 4.7. Assignment of Issuer's Rights................................13
Section 4.8. Net Lease....................................................13
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ARTICLE V
MAINTENANCE; MODIFICATIONS; INSURANCE; ASSIGNMENT OF PROJECT;
LOSS OF OR DAMAGE TO PROJECT
Section 5.1. Maintenance and Modification of Project by Lessee............13
Section 5.2. Assignment of Lease by Lessee................................14
Section 5.3. Taxes, Assessments and Other Charges.........................14
Section 5.4. Use of Project...............................................14
Section 5.5. Insurance....................................................15
Section 5.6. Casualty or Condemnation.....................................15
Section 5.7. Utilities....................................................15
Section 5.8. Depreciation and Investment Tax Credit.......................15
ARTICLE VI
PARTICULAR COVENANTS
Section 6.1. Indemnification..............................................15
Section 6.2. Further Assurances and Corrective Instruments................16
Section 6.3. Recording and Filing of Documents............................16
Section 6.4. itigation Notice.............................................16
Section 6.5. Annual Certificate...........................................17
Section 6.6. Covenant to Enter into Agreement or Contract to Provide
Ongoing Disclosure...........................................17
ARTICLE VII
ASSIGNMENT OF ISSUER'S RIGHTS UNDER LEASE AGREEMENT
Section 7.1. Assignment by the Issuer.....................................17
Section 7.2. Restriction on Transfer of Issuer's Rights...................17
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
Section 8.1. Events of Default Defined....................................17
Section 8.2. Remedies on Default..........................................18
Section 8.3. No Remedy Exclusive..........................................20
Section 8.4. Agreement to Pay Attorneys' Fees and Expenses................21
Section 8.5. Authority and Lessee to Give Notice of Default...............21
Section 8.6. Performance of Lessee's Obligations..........................21
Section 8.7. Remedial Rights Assigned to the Trustee......................21
Section 8.8. Significant Bondowner to Direct Trustee......................21
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ARTICLE IX
REPAYMENT AND ACCELERATION OF LEASE PAYMENTS;
PURCHASE OF PROJECT
Section 9.1. Prepayment at the Option of the Lessee.......................22
Section 9.2. Mandatory Prepayment Upon Certain Events.....................22
Section 9.3. Purchase of Project; Required Prepayment.....................22
Section 9.4. Notice of Prepayment.........................................23
Section 9.5. Precedence of this Article...................................23
ARTICLE X
MISCELLANEOUS
Section 10.1 Authorized Representatives...................................23
Section 10.2. Term of Lease Agreement......................................24
Section 10.3. Notices......................................................24
Section 10.4. Performance Date Not a Business Day..........................24
Section 10.5. Binding Effect...............................................24
Section 10.6. Amendments, Changes and Modifications........................24
Section 10.7. Execution in Counterparts....................................24
Section 10.8. No Pecuniary Liability.......................................25
Section 10.9. Extent of Covenants of the Issuer; No Personal
or Pecuniary Liability.......................................25
Section 10.10. Severability.................................................26
Section 10.11. Governing Law................................................26
Signatures and Seals..........................................S-1
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LEASE AGREEMENT
THIS LEASE dated as of November 1, 1998 (this "Lease"), between the CITY OF
OLATHE, KANSAS, a municipal corporation organized and existing under the laws of
the State of Kansas (the "Issuer"), and KING'S COURT INVESTORS LIMITED
PARTNERSHIP, a Kansas limited partnership (the "Lessee"). Capitalized terms not
defined elsewhere herein shall have the meaning set forth in the Indenture as
more fully described in Section 1.1.
RECITALS:
1. The Issuer is a municipal corporation duly organized and validly
existing under the Constitution and laws of the State of Kansas.
2. The Issuer is authorized to issue revenue bonds in accordance with the
applicable provisions of K.S.A. 12-1740 through 12-1749d, inclusive, and 10-116a
(collectively, the "Act"), for the purpose of acquiring, constructing, repairing
or improving certain facilities as described in the Act and to refund revenue
bonds previously issued under the Act.
3. The Issuer has issued its City of Olathe, Kansas Multifamily Housing
Revenue Bonds (Kings Court Apartments Project), Series 1990 in the aggregate
principal amount of $2,300,000 (the "Prior Bonds") pursuant to the Act for the
purpose of refinancing the acquisition, rehabilitation, furnishing and equipping
the 82-unit commercial multifamily rental residential project known as King's
Court Apartments located at ▇▇▇▇-▇ ▇▇▇▇▇▇ ▇▇▇▇▇ within the incorporated limits
of the Issuer (the "Project") pursuant to the Indenture of Trust dated as of
July 1, 1990 (the "Prior Indenture"), between the Issuer and BNY Trust Company
of Missouri, as agent for NationsBank, N.A. (successor to NationsBank, N.A.
(Midwest), as successor to Boatmen's National Bank, as successor to Boatmen's
First National Bank of Kansas City, as successor to the Federal Deposit
Insurance Corporation, as receiver and successor to Missouri Bridge Bank, as
successor to the Federal Deposit Insurance Corporation, as receiver and
successor to The Merchants Bank, the "Prior Trustee").
4. In connection with the issuance of the Prior Bonds and the bonds
refunded with the proceeds of the Prior Bonds, (i) the Lessee leased the Project
to the Issuer pursuant to the Lease dated as of December 1, 1985, as amended by
the Amendment to Lease dated as of July 1, 1990 (collectively, the "Prior
Lease"), each between the Lessee and the Issuer, and (ii) the Issuer subleased
the Project to the Lessee pursuant to the Sublease dated as of December 1, 1985,
as amended by the Amendment to Sublease dated as of July 1, 1990 (collectively,
the "Prior Sublease"), each between the Issuer and the Lessee.
5. The Prior Bonds are subject to optional redemption in whole on any date
upon the optional prepayment of the Mortgage Loan (as defined in the Prior
Indenture) by the Lessee.
6. The Lessee has now requested that the Issuer issue refunding bonds under
the Act to provide moneys to prepay the Mortgage Loan and refund and redeem the
Prior Bonds in whole on December 1, 1998 and thereby refinance the Project, by
the Issuer's acquisition of the Project and the lease of the Project to the
Lessee pursuant to the terms of this Lease.
7. In order to provide funds to refinance the Project and refund the Prior
Bonds, and in consideration of the conveyance of the Project to the Issuer by
the Lessee, the Issuer has determined to make
amounts available to the Lessee to prepay the Mortgage Loan solely from the
proceeds of the Multifamily Housing Revenue Refunding Bonds (King's Court
Apartments Project) Series 1998 (the "Bonds") to be issued in the aggregate
principal amount of $2,209,000 under the Trust Indenture dated as of November 1,
1998 (the "Indenture"), between the Issuer and Security Bank of Kansas, as
trustee (the "Trustee").
8. In connection with the issuance of the Bonds, the Issuer is leasing the
Project to the Lessee pursuant to this Lease.
9. In connection with the redemption of the Prior Bonds, the lien of the
Prior Indenture will be defeased and the Indenture, the Prior Lease and the
Prior Sublease will be terminated.
10. Under the terms of this Lease, the Lessee has agreed to make rental
payments in amounts and at the times sufficient to timely pay the principal and
purchase price of and premium, if any, and interest on the Bonds.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein set forth, the Issuer and the Lessee do hereby covenant
and agree as follows:
ARTICLE I
DEFINITIONS, CONSTRUCTION AND CERTAIN GENERAL PROVISIONS
Section 1.1. Definitions. All capitalized terms not elsewhere defined in
this Lease have the meanings set forth in Section 101 of 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
person shall include firms, partnerships, associations and corporations,
including public bodies, as well as natural persons.
(c) The words "herein," "hereby," "hereunder," "hereof," "hereto,"
"hereinbefore," "hereinafter" and other equivalent words refer to this Lease and
not solely to the particular article, section, paragraph or subparagraph hereof
in which such word is used.
(d) Reference herein to a particular article or a particular section shall
be construed to be a reference to the specified article or section of this Lease
unless the context or use clearly indicates another or different meaning or
intent. Reference in this Lease to a schedule or an exhibit shall be construed
to be a reference to the specified schedule or exhibit to this Lease unless the
context or use clearly indicates another or different meaning or intent.
(e) Wherever an item or items are listed after the word "including," such
listing is not intended to be a listing that excludes items not listed.
(f) The table of contents, captions and headings in this Lease are for
convenience only and in no way define, limit or describe the scope or intent of
any provisions or sections of this Lease.
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ARTICLE II
REPRESENTATIONS
Section 2.1. Representations by the Issuer. The Issuer represents to the
Lessee that:
(a) The Issuer is a municipal corporation duly organized and validly
existing under the laws of the State. The issuer has acquired the Project under
the provisions of the Act.
(b) The Issuer has lawful power and authority under the Act to enter into
this Lease and the Indenture and to carry out its obligations hereunder and
under the Indenture. By proper action of its governing body, the Issuer has been
duly authorized to execute and deliver this Lease, acting by and through its
duly authorized officers. The Indenture, the Tax Agreement, the Land Use
Restriction Agreement and this Lease have been duly executed and delivered by
the Issuer and each constitutes a valid, legal, binding and enforceable
obligation of the Issuer (subject to bankruptcy, insolvency or creditors rights
laws generally and principles of equity generally) without offset, defense or
counterclaim. The execution, delivery and performance of the Indenture, this
Lease, the Land Use Restriction Agreement and the Tax Agreement by the Issuer
will not violate any law, regulation, order or decree of any governmental
authority and all consents, approvals, authorizations, orders or filings of or
with any court or governmental agency or body, if any, required for the
execution, delivery and performance of such documents by the Issuer have been
obtained or made.
(c) The Project constitutes a "project" within the meaning of the Act, and
the lease of the Project to the Lessee and the application of the proceeds
received by the Issuer from the sale of the Bonds for the purposes herein
specified will further the public purposes of the Act.
(d) To refinance the costs of the Project, the Issuer proposes to issue the
Bonds in the aggregate principal amount of $2,209,000. The Bonds will bear
interest and be scheduled to mature and will be subject to purchase and
redemption prior to maturity in accordance with the provisions of the Indenture.
The Bonds are to be issued under and secured by the Indenture, pursuant to which
the Project and the rents, revenues and receipts derived by the Issuer pursuant
to this Lease, other than the Unassigned Issuer Rights, will be pledged and
assigned to the Bondholders as security for payment of the principal of,
premium, if any, and interest on the Bonds.
(f) To its knowledge, no member of the governing body of the Issuer or any
other officer of the Issuer has any significant or conflicting interest,
financial, employment or otherwise, in the Lessee, the Project or in the
transactions contemplated hereby.
(g) To the extent within its reasonable control, the Issuer will not
knowingly engage in any activity which might result in the income of the Issuer
to be received hereunder becoming taxable to it or interest on the Bonds
becoming includable in gross income for federal income tax purposes.
Section 2.2. General Representations by the Lessee.
(a) The Lessee is a limited partnership duly formed and validly existing
under the laws of the State, is in good standing under the laws of the State,
and is duly authorized to conduct its business in the State and all other states
where its activities require such authorization, has power and authority to
enter into this Lease and the other Financing Documents to which the Lessee is a
party, and to use the Project and for
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the purpose set forth in this Lease, and by proper corporate action has
authorized the execution and delivery of this Lease and the other Financing
Documents to which the Lessee is a party, and has approved the Indenture.
(b) This Lease and the other Financing Documents to which the Lessee is a
party have been duly executed and delivered by the Lessee; such documents
constitute valid, legal, binding and enforceable obligations of the Lessee
(subject to bankruptcy, insolvency or creditors rights generally and principles
of equity generally), without offset, defense or counterclaim; the execution,
delivery and performance of such documents by the Lessee will not violate any
law, regulation, order or decree of any governmental authority; and all
consents, approvals, authorizations, orders or filings of or with any court or
governmental agency or body, if any, required for the execution, delivery and
performance of such documents by the Lessee have been obtained or made.
(c) The execution and delivery of this Lease and the other Financing
Documents to which the Lessee is a party, the consummation of the transactions
contemplated thereby, and the fulfillment of the terms and conditions thereof do
not and will not conflict with or result in a breach of any of the terms or
conditions of the Lessee's Limited Partnership Agreement, any restriction or any
agreement or instrument to which the Lessee is now a party or by which it is
bound or to which any property of the Lessee is subject, and do not and will not
constitute a default under any of the foregoing, or, to the best of the Lessee's
knowledge, cause the Lessee to be in violation of any order, decree, statute,
rule or regulation of any court or any state or federal regulatory body having
jurisdiction over the Lessee or the Project and do not and will not result in
the creation or imposition of any lien, charge or encumbrance of any nature upon
any of the property or assets of the Lessee contrary to the terms of any
instrument or agreement to which the Lessee is a party or by which it is bound.
(d) The use of the Project, as it is proposed to be operated, complies with
all presently applicable zoning, development, pollution control, water
conservation, environmental and other laws, regulations, rules and ordinances of
the federal government and the State and the respective agencies thereof and the
political subdivision in which the Project is located; the Lessee has obtained
all necessary approvals of and licenses, permits, consents and franchises from
federal, state, county, municipal or other governmental authorities having
jurisdiction over the Project to operate the Project and to enter into, execute
and perform its obligations under this Lease and the other Financing Documents
to which the Lessee is a party.
(e) In addition to the Bonds, no other obligations have been or are
expected to be issued before or after the Bonds by or on behalf of any state,
territory or possession of the United States, or any political subdivision of
any of the foregoing, or the District of Columbia under Section 103 of the Code
and regulations, (1) the proceeds of which will be used primarily with respect
to facilities, the principal user or users of which will be the Lessee or
"related persons" (as defined in Section 147(a) of the Code) thereto, and (2)
which will be (i) sold (or in the case of variable rate obligations, issued)
less than fifteen (15) days apart, (ii) sold (or in the case of variable rate
obligations, issued) pursuant to the same plan of financing, and (iii) payable
from the same source of funds, determined without regard to guarantees from
unrelated parties.
(f) The Lessee is not in the trade or business of selling properties such
as the Project and has acquired its leasehold estate in the Project evidenced by
this Lease Agreement for investment purposes only or otherwise for use by the
Lessee in its trade or business, and therefore the Lessee has no present
intention to voluntarily sell, surrender or otherwise transfer, in whole or
part, its interest in the Project in the foreseeable future.
(g) There are no actions, suits, proceedings or inquiries or investigations
at law or in equity
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pending or, to the knowledge of the Lessee, threatened against the Lessee or any
property of the Lessee in any court or before any federal, state, municipal or
other governmental agency, which, if decided adversely to the Lessee, would have
a material adverse effect upon the Lessee or upon the business or properties of
the Lessee or upon its power, authority and right to enter into this Lease and
the other Financing Documents to which the Lessee is a party; and the Lessee is
not in default with respect to any order of any court or governmental agency.
(h) The Lessee has not incurred, and will not incur, any indebtedness for
borrowed money other than under this Lease, the Financing Documents and the
Loan.
(i) The Lessee has filed all federal and state income tax returns, if any,
which, to the knowledge of the Lessee, are required to be filed and has paid all
taxes shown on said returns and all assessments and governmental charges
received by it to the extent that they have become due.
(j) The Lessee has reviewed and approved the provisions of the Indenture.
(k) To the best of the Lessee's knowledge, no member of the governing body
of the Issuer or any other officer of the Issuer has any significant or
conflicting interest, financial, employment or otherwise, in the Lessee, the
Project or the transactions contemplated hereby.
(l) There has been no material adverse change in the financial condition,
prospects or business affairs of the Lessee or the feasibility or physical
condition of the Project since November 3, 1998.
(m) The covenants, representations and warranties of the Lessee in the Land
Use Restriction Agreement and the Tax Agreement are true and correct and are
incorporated herein by reference and made a part of this Lease.
(n) To the best knowledge of the Lessee, the Lessee has made and shall
continue to make all required contributions to all employee benefit plans, if
any, and the Lessee has no knowledge of any material liability which has been
incurred by the Lessee which remains unsatisfied for any taxes or penalties with
respect to any employee benefit plan or any multi-employer plan, and each such
plan as been administered in compliance with its terms and the applicable
provisions of ERISA and any other federal or State law.
(o) The Lessee (1) has not entered into the transaction or any Financing
Document with the actual intent to hinder, delay or defraud any creditor, and
(2) received reasonably equivalent value in exchange for its obligations
hereunder and under the Financing Documents. Giving effect to the transactions
contemplated by the Financing Documents, the fair salable value of the Lessee's
assets exceeds and will, immediately following the execution and delivery of the
Financing Documents, exceed the Lessee's total liabilities, including, without
limitation, subordinated, unliquidated, disputed or contingent liabilities. The
fair salable value of the Lessee's assets is and will, immediately following the
execution and delivery of the Financing Documents, be greater than the Lessee's
probable liabilities, including the maximum amount of its contingent liabilities
or its debts as such debts become absolute and matured. The Lessee's assets do
not and, immediately following the execution and delivery of the Financing
Documents will not, constitute unreasonably small capital to carry out its
business as conducted or as proposed to be conducted. The Lessee does not intend
to, and does not believe that it will, incur debts and liabilities (including,
without limitation, contingent liabilities and other commitments) beyond its
ability to pay such debts as they mature (taking into account the timing and
amounts to be payable on or in respect of obligations of the Lessee).
(p) The Lessee has no known material contingent liabilities.
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(q) The Lessee has no material financial obligation under any indenture,
mortgage, deed of trust, loan or lease agreement or other agreement or
instrument to which the Lessee is a party or by which the Lessee or the Project
are otherwise bound, other than obligations incurred in the ordinary course of
business and other than this Lease, the other Financing Documents to which the
Lessee is a party and the Loan.
(r) The Lessee has not borrowed or received other debt financing that has
not been heretofore repaid in full other than the Loan and advances made by the
members of its general partner and its limited partners.
(s) The Lessee is not (1) an "investment company" or a company "controlled
by an investment company" within the meaning of the Investment Company Act of
1940, as amended; (2) a "holding company" or a "subsidiary company" of a
"holding company" or an "affiliate" of either a "holding company" or a
"subsidiary company" within the meaning of the Public Utility Holding Company
Act of 1935, as amended; or (3) subject to any other federal or state law or
regulation which purports to restrict its ability to borrow money.
(t) Except as disclosed in the Title Policy (pursuant to Section 3.4),
there are no pending or, to the knowledge of the Lessee, proposed special or
other assessments for public improvements affecting the Project, nor, to the
knowledge of the Lessee, are there any contemplated improvements to the
mortgaged property that may result in such special or other assessments.
(u) No statement of fact made in this Lease or in the other Financing
Documents to which the Lessee is a party made by the Lessee contains any untrue
statement of a material fact or omits to state any material fact necessary to
make statements made herein or therein by the Lessee not misleading. There is no
fact presently known to the Lessee which has not been disclosed which adversely
affects nor as far as the Lessee can foresee would adversely affect the
business, operations or conditions (financial or otherwise) of the Lessee.
(v) The Project has adequate rights of access to public ways and is served
by adequate water, sanitary sewer and storm drainage facilities. All public
utilities necessary to the continued use and enjoyment of the Project as
presently used and enjoyed are located in the public right-of-way abutting the
Project and all such utilities are connected so as to serve the Project without
passing over other property. All roads necessary for the full utilization of the
Project for its current purpose have been completed and dedicated to public use
and accepted by all governmental authorities or are the subject of access
easements for the benefit of the Project.
(w) The Project is not located in a flood hazard area as defined by the
Federal Insurance Administration, except as shown on the survey delivered to the
Lender.
Section 2.3. Tax Representations of the Lessee.
(a) The Lessee will not take any action that would adversely affect the
exclusion of interest on the Bonds from gross income for federal income tax
purposes and will take whatever action is reasonably practical after
consideration of all alternatives necessary to comply with the requirements of
the Code to maintain the exclusion from gross income for federal income tax
purposes of the interest on the Bonds. The Lessee will not use the Project or
suffer or permit the Project to be used in any manner or to any extent, and will
take no action or refrain from taking any action, nor, to the extent within its
control, suffer or permit any action to be taken or condition to exist which
causes or may cause the interest on the Bonds to be includable in gross income
for federal income tax purposes.
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(b) The Lessee will comply with the Tax Agreement.
ARTICLE III
ISSUANCE OF BONDS; PAYMENT OF COSTS
Section 3.1. Issuance of Bonds. The Issuer has contracted for the sale of
the Bonds authorized by the Indenture, and the Lessee approves the terms of the
Indenture. Forthwith upon execution of this Lease, the other Financing Documents
and the Indenture, or as soon thereafter as practicable, the Issuer will execute
the Bonds and deliver the Bonds to the initial purchaser or to its order upon
payment of the purchase price and filing with the Trustee of the opinion of Bond
Counsel as to the legality of the Bonds and the furnishing of all other
documents required to be furnished before such delivery. The proceeds of the
Bonds will be deposited with the Trustee and disbursed in accordance with
Section 203(d) of the Indenture.
Section 3.2. No Warranty by Issuer. The Lessee recognizes that, because the
components of the Project have been and are to be designated and selected by it,
THE ISSUER HAS NOT MADE AN INSPECTION OF THE PROJECT OR OF ANY FIXTURE OR OTHER
ITEM CONSTITUTING A PORTION THEREOF, AND THE ISSUER MAKES NO WARRANTY OR
REPRESENTATION, EXPRESS OR IMPLIED OR OTHERWISE, WITH RESPECT TO THE SAME OR THE
LOCATION, USE, DESCRIPTION, DESIGN, MERCHANTABILITY, FITNESS FOR USE FOR ANY
PARTICULAR PURPOSE, CONDITION OR DURABILITY THEREOF, OR AS TO THE QUALITY OF THE
MATERIAL OR WORKMANSHIP THEREIN, IT BEING AGREED THAT ALL RISKS INCIDENT THERETO
ARE TO BE BORNE BY THE LESSEE. IN THE EVENT OF ANY DEFECT OR DEFICIENCY OF ANY
NATURE IN THE PROJECT OR ANY FIXTURE OR OTHER ITEM CONSTITUTING A PORTION
THEREOF, WHETHER PATENT OR LATENT, THE ISSUER SHALL HAVE NO RESPONSIBILITY OR
LIABILITY WITH RESPECT THERETO. THE PROVISIONS OF THIS SECTION HAVE BEEN
NEGOTIATED AND ARE INTENDED TO BE A COMPLETE EXCLUSION AND NEGATION OF ANY
WARRANTIES OR REPRESENTATIONS BY THE ISSUER, EXPRESS OR IMPLIED, WITH RESPECT TO
THE ORIGINAL PROJECT OR ANY FIXTURE OR OTHER ITEM CONSTITUTING A PORT ION
THEREOF, WHETHER ARISING PURSUANT TO THE UNIFORM COMMERCIAL CODE OR ANY OTHER
LAW NOW OR HEREAFTER IN EFFECT.
Section 3.3. Payment of Issuance Costs. The Lessee agrees that it will
provide any and all funds required for the prompt and full payment of all costs
of issuance of the Bonds, including, but not limited to, the following items:
(1) all legal (including Bond Counsel and counsel to the Lessee, the
Issuer and the Trustee), abstractors, financial and accounting fees and
expenses, administrative fees, Rating Agency fees, printing and engraving
costs and other expenses incurred and to be incurred on or before or in
connection with issuance of the Bonds;
(2) premiums on all insurance required to be taken out and maintained
until this Lease is terminated pursuant to Section 8.3;
(3) all mortgage registry taxes and recording fees and other taxes,
charges, assessments, license or registration fees of every nature
whatsoever incurred and to be incurred in connection with this financing;
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(4) all initial fees and expenses of the Trustee, the Paying Agent and
the Issuer;
(5) all fees and expenses for title insurance, survey and related
matters; and
(6) other costs of issuance.
Section 3.4. Title Insurance.
(a) The Lessee agrees to furnish to the Issuer and the Trustee an owner's
policy of title insurance and a leasehold policy of title insurance, each issued
by the Title Company, in Standard ALTA forms, dated the Closing Date concerning
the Project (the "Title Policy"), in form and substance reasonably satisfactory
to the Issuer, naming the Issuer and the Trustee as insureds, in an amount not
less than the original principal amount of the Bonds, insuring:
(1) that fee title to the Premises is in the Issuer;
(2) that the Lessee is the owner of a valid leasehold estate in the
Project under the terms of this Lease;
(3) that the Mortgage is a valid first lien upon the Lessee's
leasehold estate in the Premises, subject only to Permitted Encumbrances
defined in the Mortgage;
(4) that the Project and its use does not violate any zoning or other
use restrictions covering the Premises and that coverage provided includes
the endorsements required by the initial Significant Bondowner as a
condition to its purchase of the Bonds;
(5) that the following standard exceptions be waived and insured: (i)
facts which would be disclosed by a comprehensive survey of the Premises,
(ii) mechanic's, contractors' or materialmen's liens and lien claims, (iii)
rights of parties in possession other than residential tenants under leases
with a term of one year or less and (iv) all other exceptions noted in
Schedule B, Section 1 of the Title Policy; and
(6) such other matters as the Issuer or the Trustee may reasonably
request.
(b) The Lessee hereby represents that the Permitted Encumbrances do not and
will not materially adversely affect (1) the ability of the Lessee to pay the
Lease Payments in a timely manner or (b) the use or operation of the Project for
the use currently being made thereof or the value of the Project.
(c) The Lessee has good and marketable fee simple title to the leasehold
estate created by this Lease in the Project, and good title to the personal
property, subject to no liens, charges or encumbrances other than the Permitted
Encumbrances.
(d) Upon the execution by the Lessee and the recording of the Original
Project Mortgage, and upon the execution and filing of UCC-1 financing
statements, the Trustee will have a valid first lien on Lessee's leasehold
estate in the Project and a valid security interest in the personal property
subject to no liens, charges or encumbrances other than the Permitted
Encumbrances.
8
ARTICLE IV
GRANTING PROVISIONS, LEASE PAYMENTS AND OTHER PAYMENTS, AND
ASSIGNMENTS OF ISSUER'S RIGHTS, ETC.
Section 4.1. Termination of Prior Lease and Prior Sublease; Grant of
Leasehold Estate. The Base Lease and the Sublease are hereby terminated. The
Issuer and the Lessee will execute appropriate instruments for the release of
the Project from the Prior Lease and the Prior Sublease. The Issuer hereby
rents, leases and lets the Project to the Lessee, and the Lessee hereby rents,
leases and hires the Project from the Issuer, subject to Permitted Encumbrances,
for the rentals and upon and subject to the terms and conditions herein
contained, for a term commencing on the date hereof and ending on the final
maturity date of the Bonds (the "Lease Term"), unless sooner terminated in a
manner provided for in this Lease.
Section 4.2. Possession and Use of Project.
(a) The Issuer covenants and agrees that as long as the Lessee is not in
default under this Lease, the Lessee shall have sole and exclusive possession of
the Project (subject to Permitted Encumbrances) and shall and may peaceably and
quietly have, hold and enjoy the Project during the Lease Term. The Issuer
covenants and agrees that it will not take any action, other than as expressly
provided in Article IX, to prevent the Lessee from having quiet and peaceable
possession and enjoyment of the Project during the Lease Term. The Issuer, at
the request and sole expense of the Lessee, will cooperate with the Lessee in
order that the Lessee may have quiet and peaceable possession and enjoyment of
the Project and will defend the Lessee's enjoyment and possession thereof
against all parties.
(b) Subject to the provisions of this Section, the Lessee shall have the
right to use the Project for any lawful purpose allowed by law and contemplated
by the Act. The Lessee 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 Lessee
shall also comply with the mandatory requirements, rules and regulations of all
insurers under the insurance policies carried by the Lessee. The Lessee will 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 Lessee to comply
with the provisions of this Section. The Lessee has the right, at its own cost
and expense, to contest or review by legal or other appropriate procedures the
validity or legality 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 Lessee
may refrain from complying therewith.
Section 4.3. Lease Payments.
(a) Subject to the Lessee's right to acquire the Project from the Issuer
under Article VIII, the Lessee agrees to make rental payments ("Lease Payments")
to the Trustee at its principal corporate trust office, for the account of the
Issuer, for deposit in the Bond Fund, in federal or other immediately available
funds, during normal business hours on or before 11:00 a.m. Trustee's local
time, on each Lease Payment Date (except as otherwise provided below), the
amount of such payment being as follows:
(i) the amount of the principal of the Bonds coming due on each
Interest Payment Date and other date, whether at stated maturity, by
redemption or acceleration or otherwise;
9
(ii) the amount of interest on the Bonds coming due on each Interest
Payment Date;
(iii) the amount of redemption premium, if any, on the Bonds coming
due on any redemption date;
(iv) any Late Payment Penalty payable inunediately, without demand;
(v) on each Tender Date, the purchase price of any Bonds required to
be purchased pursuant to the Indenture; and
(vi) all other amounts due under the Bonds, the Indenture and the
Financing Documents.
(b) The Lessee acknowledges that any late payment under this Lease (and, as
a result, late payment on the Bonds) will cause the Bondowners to incur costs
not contemplated by the purchase of the Bonds, the exact amount of the costs
being difficult and impracticable to assess. These costs include, without
limitation, processing and accounting charges and the potential costs to be
incurred as a result of the Bondowners's frustration and inability to meet its
other commitments. Therefore the payment of the Late Payment Penalty and
interest on the Bonds at the Default Rate will be immediately due as liquidated
damages for the Lessee's failure to make prompt payment and to compensate the
Bondowners for such costs. The Lessee agrees that any Late Payment Penalty and
change in the interest rate on the Bonds to the Default Rate represents a
reasonable sum considering all of the circumstances existing as of the date of
issuance of the Bonds and represents a fair and reasonable estimate of the costs
that the Bondowners will incur by reason of any late payment. The Issuer and the
Lessee agree that proof of actual damages would be costs and inconvenient and
that the Lessee's payment of any Late Payment Penalty or interest at the Default
Rate will not constitute the waiver of any Event of Default or event of default
under the Indenture with respect to any overdue Lease Payment and will not
prevent the Trustee's exercise of any remedies under the Indenture.
(c) Except for such interest of the Lessee as may hereafter arise pursuant
to Section 405 of the Indenture, the Lessee and the Issuer each acknowledge that
neither the Lessee nor the Issuer has any interest in the Bond Fund and any
moneys deposited therein shall be in the custody of and held by the Trustee in
trust for the benefit of the Bondowners.
(d) By its initials appearing below, the Lessee acknowledges that: (1) it
fully understands the provisions of this Section and the redemption provisions
of the Indenture, (2) the issuance of the Bonds by the Issuer at the request of
the Lessee at the interest rate and under the terms provided in the Bonds and
the Indenture is sufficient consideration for the inclusion of the provisions of
this Section and the redemption provisions of the Indenture, (3) the Issuer
would not issue the Bonds and enter into this Lease without the inclusion of the
provisions of this Section and the redemption provisions of the Indenture, (4)
the provisions of this Lease, the Bonds and the Indenture limiting the rights of
prepayment and redemption and providing for payment of redemption premium
specified in the Bonds and the Indenture were independently negotiated and
bargained for, and constitute a specific, material part of the consideration
given by the Lessee to the Issuer, the Trustee and the Bondowners.
/s/FNC /s/ARM /s/KKN
-------------------------
Lessee's Initials
Section 4.4. Additional Payments.
(a) The Lessee shall pay the following amounts to the following persons,
all as "Additional Payments" under this Lease:
10
(i) to the Trustee, when due, all reasonable fees and charges for its
services rendered under the Indenture, this Lease and any other Financing
Document, and all reasonable expenses (including without limitation
reasonable fees and charges of any paying agent, bond registrar, counsel,
accountant, engineer or other person) incurred in the performance of the
duties of the Trustee under the Indenture, this Lease or any other
Financing Document for which the Trustee and other persons are entitled to
repayment or reimbursement;
(ii) to the Issuer, upon demand, its regular fees and charges, if any,
and all reasonable expenses (including without limitation reasonable
attorney's fees) incurred by the Issuer in relation to the transactions
contemplated by this Lease and the Indenture, which are not otherwise to be
paid by the Lessee under this Lease or the Indenture;
(iii) to the appropriate person, such payments as are required (1) as
payment for or reimbursement of any and all reasonable costs, expenses and
liabilities incurred by the Issuer, the Trustee or the Bondowner or any of
them in satisfaction of any obligations of the Lessee under this Lease that
the Lessee does not perform, or incurred in the defense of any action or
proceeding with respect to the Project, this Lease, the Indenture, or the
other Financing Documents or (2) as reimbursement for expenses paid, or as
prepayment of expenses to be paid, by the Issuer or the Trustee and that
are incurred as a result of a request by the Lessee or a requirement of
this Lease and that the Lessee is not otherwise required to pay under this
Lease;
(iv) to the Rate Agent, upon demand, the fees and expenses required to
be paid to the Rate Agent;
(v) all amounts required to be deposited in the Rebate Fund in
accordance with the Tax Agreement; and
(vi) all amounts due under the Financing Documents.
(b) Additional Payments shall be deemed past due for purposes of this Lease
if such remain unpaid after 30 days following the date when due. Any past due
Additional Payments which are due to the Issuer, the Trustee or the Bondowner
shall continue as an obligation of the Lessee until they are paid and shall bear
interest (except as may be otherwise provided in the Financing Documents) at the
Bond Interest Rate plus five percent during the period such Additional Payments
remain unpaid.
Section 4.5. Obligations of Lessee Unconditional; Non-Recourse.
(a) The Lessee covenants and agrees with and for the express benefit of the
Issuer and the Owners of the Bonds that it will pay all amounts due under
Sections 4.3 and 4.4 and perform its from any circumstances whatsoever, whether
now existing or hereafter arising, and regardless of whether or not the Project
is completed, any change in the tax or other law of the United States of
America, the State or any political subdivision of either thereof, any change in
the Issuer's legal organization or status, or any default of the Issuer
hereunder, and regardless of the invalidity of any action of the Issuer, and
regardless of the invalidity of any portion of this Lease, and, to the extent
permitted by law, the Lessee hereby waives the provisions of any statute or
other law now or hereafter in effect contrary to any of its obligations,
covenants or agreements under this Lease or which releases or purports to
release the Lessee therefrom. Nothing in this Lease shall be construed as a
waiver by the Lessee of any rights or claims the Lessee may have against the
Issuer under this Lease or otherwise, but any recovery upon such rights or
claims shall be had from the Issuer separately, it being the intent of this
Lease that the Lessee shall be unconditionally and absolutely
11
obligated to perform fully all of its obligations, agreements and covenants
under this Lease for the benefit of the Owners of the Bonds.
(b) Notwithstanding anything contained herein or in the Financing Documents
to the contrary, except as expressly set forth to the contrary below, the Lessee
shall have no personal liability for Payments under this Lease or the
performance of the covenants under the Financing Documents and the Issuer and
the Trustee agree not to seek a deficiency or personal money judgment against
the Lessee for the failure to satisfy the same, but in such event the Issuer and
the Trustee will look solely to the security for satisfaction. The foregoing
limitation of liability shall not apply, however, to any loss, damage or
expense, including, without limitation, attorney's fees, court costs, expert
witness fees and any other similar expenses incurred by the Issuer, the Trustee
and the Holders as a result of:
a) intentional or willful fraud or misrepresentation, or negligent
acts or omissions;
b) waste of the Project;
c) failure to pay real or personal property taxes or assessments
attributable to the Property;
d) misapplication of any proceeds
(i) paid under any insurance policies, or
(ii) realized from awards from condemnation or the exercise of the
power of eminent domain or taking in lieu thereof, both arising from the
Project;
e) the existence, use, generation, migration, storage, release,
threatened release, or disposal of hazardous materials on, onto, from or
under the Project;
f) any misapplication of the gross proceeds from the Project, which
misapplication shall be deemed to have occurred in the event any such gross
proceeds are not first applied to costs of operating the Project,
including, but not limited to, the amounts then due at the time of such
application by the Lessee under this Lease; and
g) failure of the Lessee to deliver to the Issuer or the Trustee any
rents or other income derived from the operation of the Project received by
the Lessee at any time subsequent to the date that the Trustee provides
notice to the Lessee that the Trustee has terminated the Lessee's license
to collect the same in accordance with the Assignment.
Nothing herein contained shall: (i) be construed to prevent the Trustee
from exercising and enforcing any other remedy allowed at law or equity or
allowed by any of the Financing Documents; or (ii) limit the Lessee's liability
under the Mortgage or under the Environmental Agreement and Indemnity.
Furthermore, the Lessee understands and agrees that notwithstanding the
limitation of liability hereinabove set forth, if the Lessee transfers any of
its right, title and interest in the Project or further encumbers the Project in
violation of the terms and provisions of the Mortgage, commencing upon the
effective date of any such transfer of title or encumbrance, the Lessee
thenceforth shall be personally liable for the payment of Lease Payments due and
payable under this Lease. Finally, Maker understands and agrees that the
limitation of liability set forth above does not apply to its obligation to pay
certain amounts including, without limitation, back taxes and other amounts due
pursuant to Section 306 of the Indenture following any Determination of
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Taxability.
Section 4.6. Lessee's Remedies. Nothing contained in this Article shall be
construed to release the Issuer from the performance of any of its agreements
herein, and if the Issuer should fail to perform any such agreements, the Lessee
may institute such action against the Issuer as the Lessee may deem necessary to
compel such performance so long as such action shall not violate the Lessee's
agreements in Section 4.5 or diminish or delay the amounts required to be paid
by the Lessee pursuant to Sections 4.3 and 4.4. The Lessee, however,
acknowledges and agrees that any pecuniary obligation of the Issuer created by
or arising out of this Lease shall be payable solely out of the proceeds derived
from this Lease, the sale of the Bonds, any insurance and condemnation awards,
or amounts received upon the sale or other disposition of the Project upon a
default by the Lessee or otherwise.
Section 4.7. Assignment of Issuer's Rights. Under the Indenture, the Issuer
will, as additional security for the Bonds, assign, transfer, pledge and grant a
security interest in its rights under this Lease to the Trustee (except for the
Unassigned Issuer's Rights). The Trustee is hereby given the right to enforce,
either jointly with the Issuer or separately, the performance of the obligations
of the Lessee, and the Lessee hereby consents to the same and agrees that the
Trustee may enforce such rights as payments required under this Lease directly
to the Trustee. The Issuer and the Lessee recognizes that the Trustee and the
Bondowner are third party creditor-beneficiaries of this Lease.
Section 4.8. Net Lease. The Issuer and the Lessee agree that (a) this Lease
is intended to be a net lease, (b) the Lease Payments are designed to provide
the Issuer and the Trustee funds adequate in amount to pay all principal of and
interest and any purchase price and redemption premium accruing on the Bonds as
the same become due and payable, (c) to the extent that the Lease Payments are
not sufficient to provide the Issuer and the Trustee with funds sufficient for
the foregoing purposes, the Lessee will pay, upon demand, as Additional
Payments, such additional sums of money, in cash, as may from time to time be
required for such purposes, and (d) if, after all of the Bonds are deemed to be
paid in accordance with Article XI of the Indenture and provisions has been made
for payment of all other sums payable under the Indenture and this Lease in
accordance with Article XI of the Indenture, the Trustee or the Issuer holds
unexpended funds received in accordance with the terms of this Lease, the
unexpended funds shall, after deduction for all sums then due and owing by the
Lessee under this Lease, and except as otherwise provided in this Lease and the
Indenture, become the absolute property of and be paid over to the Lessee.
ARTICLE V
MAINTENANCE; MODIFICATIONS; INSURANCE; ASSIGNMENT OF PROJECT; LOSS OF
OR DAMAGE TO PROJECT
Section 5.1. Maintenance and Modification of Project by Lessee.
(a) The Lessee will, at its own expense, (i) keep the Project in as
reasonably safe condition as its operations shall permit, (ii) with respect to
the Project, comply with all applicable health and safety standards and all
other industrial requirements or restrictions enacted or promulgated by the
State, or any political subdivision or agency thereof, or by the United States
of America or any agency thereof, and (iii) maintain and repair the Project as
provided in Section 1.3 of the Mortgage. The Lessee is not obligated to operate,
maintain, preserve, repair, replace or renew any element or unit of the Project
the maintenance, repair, replacement or renewal of which becomes, in the sole
judgment of the Lessee and subject to the other Financing Documents and the Loan
Documents, uneconomical to the Lessee because of damage, destruction
13
or obsolescence, or change in economic or business conditions, or change in
government standards and regulations. The Lessee shall not permit or suffer
others to commit a nuisance in or about the Project or itself commit a nuisance
in connection with its use or occupancy of the Project. The Lessee will pay all
costs and expenses of operation of the Project.
(b) The Lessee may, subject to the other Financing Documents and the Loan
Documents and at its own expense, make from time to time any additions,
modifications or improvements to the Project that it may deem desirable for its
business purposes and that do not materially impair the structural strength or
effective use, or materially decrease the value, of the Project; provided that
no such addition, modification or improvement shall result in a change in the
character of the Project in a manner that would result in any of the
representations or warranties contained herein with respect to the Project or
the use of the proceeds of the Bonds being or becoming false, untrue, misleading
or breached. All additions, modifications or improvements made by the Lessee
pursuant to the Issuer of this Section shall (i) be made in a workmanlike manner
and in strict compliance with all laws and ordinances applicable thereto, (ii)
when commenced, be prosecuted to completion with due diligence, and (ill) other
than personal property and trade fixtures, when completed, be deemed a part of
the Project.
Section 5.2. Assignment of Lease by Lessee.
(a) Except as otherwise provided in this Section, Section 1.11 of the
Mortgage and Section 10 of the Land Use Restriction Agreement, the Lessee will
not sell, transfer or otherwise dispose of its interest in the Project under
this Lease, or any portion thereof, without the prior written consent of the
Issuer, the Trustee and the Lender as required under any Loan Document. The
consent of the Issuer to any assignment, transfer, encumbrance or disposition
described in this Section will not be unreasonably withheld or delayed.
Section 5.3. Taxes, Assessments and Other Charges.
(a) The Lessee shall pay all taxes, assessments and charges of any kind
whatsoever that may at any time be lawfully assessed or levied against or with
respect to the Project (including any tax upon or with respect to the income or
profits of the Issuer from the Project that, if not paid, would become a charge
on the payments to be made under this Lease prior to or on a parity with the
charge thereon created by the Indenture and including ad valorem, sales and
excise taxes, assessments and charges upon the Lessee's interest in the
Project), all utility and other charges incurred in the operation, maintenance,
use, occupancy and upkeep of the Project and all assessments and charges
lawfully made by any governmental body for public improvements that may be
secured by lien on the Project.
(b) The Lessee may, at its expense, in its own name or in the Issuer's
name, to contest in good faith the validity or amount of any tax, assessment or
other governmental charge. The Issuer agrees to cooperate fully with the Lessee
in connection with any and all administrative or judicial proceedings related to
any tax, assessment or other governmental charge and in such event may permit
the amounts so contested to remain undischarged and unsatisfied during the
period of such contest and any appeal therefrom. The Lessee shall hold the
Issuer, the Trustee and the Bondowners whole and harmless from any costs and
expenses the Issuer, the Trustee and the Bondowners may incur related to any of
the above.
(c) The Lessee will furnish to the Issuer and the Trustee, upon request,
proof, or other written evidence, of payment of any taxes, governmental charges,
utility charges, insurance premiums or other charges required to be paid by the
Lessee under this Lease.
Section 5.4. Use of Project. The Issuer will not take or cause the Trustee
to take any action
14
(other than as provided herein or in the Indenture) to interfere with the
Lessee's interest in the Project or to interfere with possession, custody, use
and enjoyment of the Project.
Section 5.5. Insurance. The Lessee will cause the Project to be kept
continuously insured as provided in Section 1.5 of the Mortgage.
Section 5.6. Casualty or Condemnation. The Lessee or the Issuer, as the
case may be, will notify the Issuer, the Significant Bondowner, the Lessee and
the Trustee immediately in the case of damage to or destruction of the Project
or any portion thereof resulting from fire or other casualty (hereinafter
referred to as a "casualty loss") or of a condemnation or loss of title. The
Lessee shall restore the Project, prepay the Lease Payments in whole or in part
or take such other action, as is required or permitted by the Mortgage and the
other Financing Documents.
Section 5.7. Utilities. All utilities and utility services used by the
Lessee in, on or about the Project shall be paid for by the Lessee and shall be
contracted for by the Lessee in the Lessee's own name. The Lessee shall, at its
sole cost and expense, procure any and all permits, licenses or authorizations
necessary in connection therewith.
Section 5.8. Depreciation and Investment Tax Credit. The Issuer agrees that
any depreciation or investment tax credit with respect to the Project or any
part thereof shall be made available to the Lessee, and the Issuer will fully
cooperate with the Lessee in any effort by the Lessee to avail itself of any
such depreciation or investment tax credit.
ARTICLE VI
PARTICULAR COVENANTS
Section 6.1. Indemnification.
(a) The Lessee releases the Issuer and the Trustee from, agrees that the
Issuer and the Trustee shall not be liable for, and indemnifies the Issuer and
the Trustee against, all liabilities, losses, damages (including attorneys'
fees), causes of action (including negligent acts), suits, claims, costs and
expenses, demands and judgments of any nature imposed upon or asserted against
the Issuer or the Trustee on account of:
(i) any loss or damage to property or injury to or death of or loss by
any person that may be occasioned by any cause whatsoever pertaining to the
construction, maintenance, operation and use of the Project;
(ii) any breach or default on the part of the Lessee in the
performance of any covenant or agreement of the Lessee under this Lease or
any other Financing Document, or arising from any act or failure to act by
the Lessee, or any of its agents, contractors, servants, employees or
licensees;
(iii) violation of any law, ordinance or regulation affecting the
ownership, occupancy or use of the Project;
(iv) the authorization, issuance and sale of the Bonds, and the
provision of any information furnished by the Lessee in connection
therewith concerning the Project or the Lessee or arising from (1) any
errors or omissions of any nature whatsoever by the Lessee such that the
15
Bonds, when delivered to the Bondowners, are not validly issued and binding
obligations of the Issuer or (2) any fraud or misrepresentations or
omissions contained in the proceedings of the Issuer or the Trustee
furnished by or attributable to the Lessee relating to the issuance of the
Bonds or pertaining to the financial condition of the Lessee which, if
known to the original purchaser of the Bonds, might reasonably be
considered a material factor in its decision to purchase the Bonds; and
(v) any claim or action or proceeding with respect to the matters set
forth in subsections (i), (ii), (iii) and (iv) above brought thereon.
(b) The Lessee agrees to indemnify the Issuer and the Trustee for and to
hold it harmless against all liabilities, claims, costs and expenses incurred
without negligence or willful misconduct on the part of the Issuer and the
Trustee, on account of any action taken or omitted to be taken by the Issuer and
the Trustee in accordance with the terms of this Lease, the Bonds, the other
Financing Documents or the Indenture or any action taken at the request of or
with the consent of the Lessee, including the costs and expenses of the Issuer
and the Trustee in defending itself against any such claim, action or proceeding
brought in connection with the exercise or performance of any of its powers or
duties under this Lease, the other Financing Documents, the Bonds or the
Indenture.
(c) In case any action or proceeding is brought against the Issuer or the
Trustee in respect of which indemnity may be sought hereunder, the party seeking
indemnity shall promptly give notice of that action or proceeding to the Lessee,
and the Lessee upon receipt of that notice shall have the obligation and the
night to assume the defense of the action or proceeding; provided, that failure
of a party to give that notice shall not relieve the Lessee from any of its
obligations under this Section unless that failure prejudices the defense of the
action or proceeding by the Lessee. At its own expense, an indemnified party may
employ separate legal counsel and participate in the defense. The Lessee shall
not be liable for any settlement without its consent.
(d) The indemnification set forth above is intended to and shall include
the indemnification of all affected councilmembers, officials, directors,
officers, attorneys, accountants, financial advisors, staff and employees of the
Issuer and the Trustee, respectively. That indemnification is intended to and
shall be enforceable by the Issuer and the Trustee, respectively, to the full
extent permitted by law.
Section 6.2. Further Assurances and Corrective Instruments. Subject to the
Indenture, the Issuer and the Lessee from time to time may execute, acknowledge
and deliver, or cause to be executed, acknowledged and delivered, Supplemental
Lease Agreements and such further instruments as may reasonably be required for
correcting any inadequate or incorrect description of the Project and for
carrying out the intention or facilitating the performance of this Lease.
Section 6.3. Recording and Filing of Documents. The Lessee will cause all
appropriate financing and continuation statements and other security instruments
to be recorded and filed in such manner and in such places as may be required by
law to fully preserve and protect the rights and security of the Bondowners, the
Trustee, the Issuer and the Significant Bondowner. The Lessee will pay all fees
and expenses, including reasonable legal fees, incurred in connection with such
recordings and filings.
Section 6.4. Litigation Notice. The Lessee shall give the Issuer, the
Trustee and the Bondowner prompt notice of any action, suit or proceeding by it
or against it at law or in equity, or before any governmental instrumentality or
agency, or of any of the same which may be threatened, which, if adversely
determined, would materially impair the right of the Lessee to carry on the
business which is contemplated in connection with the Project, or would
materially and adversely affect its business, operations, properties,
16
assets or condition. Within one Business Day after the filing by or against the
Lessee of a petition in bankruptcy, the Lessee shall notify the Trustee and the
Significant Bondowner in writing as to the occurrence of such filing.
Section 6.5. Annual Certificate. The Lessee will furnish to the Issuer, the
Trustee and the Significant Bondowner, on or before November 1 of each year
beginning November 1, 1999, a certificate, signed by the Authorized Lessee
Representative, stating that the Lessee has made a review of its activities with
respect to the Project during the preceding calendar year for the purpose of
determining whether or not the Lessee has complied with all of the terms,
provisions and conditions of this Lease and the other Financing Documents and
that the Lessee has kept, observed, performed and fulfilled each and every
covenant, provision and condition of this Lease and the other Financing
Documents on its part to be performed and is not in default, in the performance
or observance of any of the terms, covenants, provisions or conditions hereof.
If the Lessee shall be in default such certificate shall specify all such
defaults and the nature thereof.
Section 6.6. Covenant to Enter into Agreement or Contract to Provide
Ongoing Disclosure. The Lessee agrees that the initial placement of the Bonds is
exempt from the requirements of Paragraph (b)(5)(i) of the Securities and
Exchange Commission Rule 15c2-12 under the Securities Exchange Act of 1934, as
amended (17 CFR Part 240, Section 240.15c2-12) (the "Rule"' pursuant to
Paragraph (d)(1) of the Rule. If as a result of a conversion of Interest Rate
Mode or as a result of any amendment or supplement to the Indenture or this
Lease, the Bonds cease to be exempt under the Rule, the Lessee will enter into
an agreement or contract, constituting an undertaking, to provide ongoing
disclosure as may be necessary to comply with the Rule as then in effect. The
covenant and agreement contained in this Section 6.6 is for the benefit of the
Bondowners as required by the Rule.
ARTICLE VII
ASSIGNMENT OF ISSUER'S RIGHTS UNDER LEASE AGREEMENT
Section 7.1. Assignment by the Issuer. The Issuer, by means of the
Indenture and as security for the payment of the principal of, purchase price,
and redemption premium, if any, and interest on the Bonds, and the obligations
payable to the Bondowners under the Financing Documents, will assign, pledge and
grant a security interest in certain of its rights, title and interests in, to
and under this Lease, including Lease Payments and Additional Payments and other
revenues, moneys and receipts received by it pursuant to this Lease, to the
Trustee (reserving its rights to Unassigned Issuer's Rights).
Section 7.2. Restriction on Transfer of Issuer's Rights. The Issuer will
not sell, assign, encumber, mortgage, transfer or convey the Project, this Lease
or any interest therein except the pledge and assignment of the Project and this
Lease pursuant to the Indenture to secure the Bonds.
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
Section 8.1. Events of Default Defined. The term "Event of Default" or
"Default" shall mean any one or more of the following events:
(a) Failure by the Lessee to make timely payment of any Lease Payment or
any Additional Payment when due.
17
(b) Failure by the Lessee to observe and perform any covenant, condition or
agreement on the part of the Lessee under this Lease, any Financing Document or
the indenture, other than as referred to in the preceding subparagraph (a) of
this Section, for a period of 60 days after written notice of such default has
been given to the Lessee and the Significant Bondowner by the Issuer, the
Significant Bondowner or the Trustee during which time such default is neither
cured by the Lessee or the Significant Bondowner nor waived in writing by the
Issuer, the Significant Bondowner and the Trustee, provided that, if the failure
stated in the notice cannot be corrected within the 60-day period, the Issuer,
the Significant Bondowner and the Trustee may consent in writing to an extension
of such time prior to its expiration and the Issuer, the Significant Bondowner
and the Trustee will not unreasonably withhold their consent to such an
extension if corrective action is instituted by the Lessee or the Significant
Bondowner within the 60-day period and diligently pursued to completion and if
such consent, in their judgment, does not materially adversely affect the
interests of the Bondowners; provided, however, that any such default must be
corrected within 120 days and any default may be waived in writing by the
Significant Bondowner.
(c) Any material representation or warranty by the Lessee herein or in any
certificate or other instrument delivered under or pursuant to this Lease or the
Indenture or in connection with the financing of the Project shall prove to have
been false, incorrect, misleading or breached in any material respect on the
date when made, unless waived in writing by the Issuer, the Significant
Bondowner and the Trustee.
(d) The Indenture at any time shall prove not to be a valid, binding and
enforceable agreement of the Issuer or shall not constitute a valid assignment
of the rights of the Issuer under this Lease described in Section 7.1
purportedly assigned under the Indenture and effective to vest in the Trustee
all such rights of the Issuer in, to and under this Lease, including the right
to enforce this Lease in accordance with its terms.
(e) Any Financing Document at any time shall prove not to be a valid,
binding and enforceable agreement of the Borrower.
(f) An Event of Bankruptcy with respect to the Lessee occurs.
Section 8.2. Remedies on Default.
(a) If the principal of all Bonds then Outstanding and the interest accrued
thereon has been declared immediately due and payable pursuant to the provisions
of Section 702 of the Indenture, all Lease Payments for the remainder of the
Lease Term shall become immediately due and payable without any further act or
action on the part of the Issuer or the Trustee and the Trustee, as assignee of
the Issuer, may immediately proceed (subject to Section 8.8)to take any one or
more of the remedial steps set forth in subparagraph (b)(ii) below.
(b) Subject to Section 8.8, whenever any Event of Default has occurred and
is continuing, the Issuer may take any one or more of the following remedial
steps:
(i) by written notice to the Lessee declare all Lease Payments to be
immediately due and payable, together with interest on overdue payments of
principal and redemption premium, if any, the Special Redemption Premium,
and, to the extent permitted by law, interest, at the rate or rates of
interest specified in the respective Bonds, without presentment, demand or
protest, all of which are expressly waived;
(ii) take whatever other action at law or in equity, as may appear
necessary or desirable
18
to collect the amounts payable pursuant to this Lease then due and
thereafter to become due or to enforce the performance and observance of
any obligation, agreement or covenant of the Lessee under this Lease or the
Indenture;
(iii) give the Lessee written notice of intention to terminate this
Lease on a date specified therein, which date shall not be earlier than 10
days after such notice is given, and if all defaults have not then been
cured, on the date so specified, the Lessee's rights to possession of the
Project shall cease and this Lease shall thereupon be terminated, and the
Issuer may re-enter and take possession of the Project;
(iv) 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 Issuer shall use reasonable
diligence to re-let the Project, or parts thereof, for such term or terms
and at such rental and upon such other terms and conditions as the Issuer
may deem advisable, with the right to make alterations and repairs to the
Project, and no such re-entry or taking of possession of the Project by the
Issuer shall be construed as an election on the Issuer's part to terminate
this Lease, and no such re-entry or taking of possession by the Issuer
shall relieve the Lessee of its obligation to pay Lease Payments or
Additional Payments (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 Lessee shall continue to pay the
Lease Payments and Additional Payments provided for in this Lease until the
end of the Lease Term, whether or not the Project shall have been re-let,
less the proceeds, if any, of any re-letting of the Project after deducting
all of the Issuer's reasonable expenses in or in connection with such
re-letting, including without limitation all repossession costs, brokerage
commissions, legal expenses, expenses of employees, alteration costs and
expenses of preparation for re-letting. The proceeds of any re-letting
shall be deposited in the Bond Fund. Having elected to re-enter or take
possession of the Project without terminating this Lease, the Issuer may
(subject, however any restrictions against termination of this Lease in the
Indenture), by notice to the Lessee given at any time thereafter while the
Lessee is in default in the payment of Lease Payments or Additional
Payments or in the performance of any other obligation under this Lease,
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, and if all
Events of Default shall not have then been cured, on the date so specified
this Lease shall thereupon be terminated; and
(v) take whatever action at law or in equity may appear necessary or
appropriate to enforce its Unassigned Issuer's Rights; provided that the
Issuer will not take any action which would prejudice the rights of the
Trustee.
(c) If in accordance with any of the foregoing provisions of this Article
the Issuer shall have the right to elect to re-enter and take possession of the
Project, the Issuer may enter and expel the Lessee and those claiming through or
under the Lessee 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 Issuer 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 Lessee under this Lease.
(d) Upon the occurrence of an Event of Default by the Lessee, the Issuer
grants to the Trustee a reasonable time within which to obtain possession of the
Project, to institute and with reasonable diligence to complete foreclosure
proceedings or otherwise acquire the Lessee's leasehold estate under this Lease
prior
19
to the Issuer's exercise of any remedy under paragraph (b)(iii) of this Section.
The Issuer's right to terminate this Lease shall end when the Trustee obtains
possession of the Project as aforesaid, which possession shall be deemed to
include possession by a receiver.
(e) If this Lease shall terminate prior to the expiration of the Lease Term
(including the rejection of this Lease by the trustee of the Lessee in a
proceeding under the Bankruptcy Code), the Issuer shall enter into a new lease
for the Project with the Trustee, or its designee or nominee, for the remainder
of the Lease Term, effective as of the date of termination, at the same rent and
upon the same terms, covenants and conditions contained in this Lease, except
that such new lease shall not guarantee possession of the Project to the new
tenant as against the Lessee or anyone claiming under the Lessee, and the
Issuer, simultaneously with the execution and delivery of such new lease, shall
turn over to the new tenant all moneys, if any, then held by the Issuer under
this Lease on behalf of the Lessee, on condition that:
(i) the Trustee shall make written request for such new lease within
30 days after the date of such termination, and
(ii) on the commencement date of the term of the new lease, the
Trustee shall pay or cause to be paid, solely from moneys available under
the Indenture, to the Issuer on that date all expenses, including
reasonable counsel fees, court costs and disbursements, incurred by the
Issuer in connection with any such default and termination as well as in
connection with the execution and delivery of such new lease.
Any new lease entered under the terms of this paragraph (e) will provide that
the new lease will not be terminated by the issuer during the period the
Trustee, or its nominee or designee, is the tenant.
(f) In the enforcement of the remedies provided in this Section. the
Trustee may treat all expenses of enforcement, including reasonable legal,
accounting and advertising fees and expenses, as Additional Payments then due
and payable by the Lessee.
(g) Any amount collected pursuant to action taken under this Section shall
be paid to the Trustee and applied, first, to the payment of any reasonable
costs, expenses and fees incurred by the issuer or the Trustee as a result of
taking such action and, next, any balance shall be used to satisfy any Lease
Payments then due by payment into the Bond Fund and applied in accordance with
the Indenture and, then, to satisfy any other Additional Payments then due or to
cure any other Event of Default.
(h) Notwithstanding the foregoing, the Trustee shall not be obligated to
take any step that in its opinion will or might cause it to expend time or money
or otherwise incur liability, unless and until satisfactory indemnity has been
furnished to the Trustee at no cost or expense to the Trustee.
(i) The provisions of this Section are subject to the limitation that the
annulment of a declaration that the Bonds are immediately due and payable shall
automatically constitute an annulment of any corresponding declaration made
pursuant to subparagraph (b)(i) of this Section and a waiver and rescission of
the consequences of such declaration and of the Event of Default with respect to
which such declaration has been made, provided that no such waiver or rescission
shall extend to or affect any other or subsequent Default or impair any right
consequent thereon. If any covenant, condition or agreement contained in this
Lease is breached or any Event of Default has occurred and such breach or Event
of Default is thereafter waived by the Trustee, such waiver shall be limited to
such particular breach or Event of Default.
20
Section 8.3. No Remedy Exclusive. Subject to Section 8.8, no remedy herein
conferred or reserved is intended to be exclusive of any other available remedy
or remedies, but each and every such remedy shall be cumulative and shall be in
addition to every other remedy given under this Lease or now or hereafter
existing at law or in equity or by statute. No delay or omission to exercise any
right or power accruing upon Default shall impair any such right or power or
shall be construed to be a waiver thereof, but any such right and power may be
exercised from time to time and as often as may be deemed expedient. In order to
entitle the Trustee to exercise any remedy reserved to it in this Article, it
shall not be necessary to give any notice, other than such notice as may be
herein expressly required.
Section 8.4. Agreement to Pay Attorneys' Fees and Expenses. In connection
with any Event of Default by the Lessee, if the Trustee, the Issuer or the
Significant Bondowner employs attorneys or incurs other expenses for the
collection of amounts payable hereunder or the enforcement of the performance or
observance of any covenants or agreements on the part of the Lessee herein
contained, the Lessee agrees that it will, on demand therefor, pay such party
the reasonable fees of such attorneys and such other reasonable expenses so
incurred by such party.
Section 8.5. Issuer and Lessee to Give Notice of Default. The Issuer and
the Lessee shall each, at the expense of the Lessee, promptly give to the
Trustee and the Significant Bondowner written notice of any Default of which the
Issuer or the Lessee, as the case may be, shall have actual knowledge or written
notice, but the Issuer shall not be liable for failing to give such notice.
Section 8.6. Performance of Lessee's Obligations. If the Lessee fails to
keep or perform any of its obligations as provided in this Lease in respect of
(a) maintenance of insurance, (b) payments of taxes, assessments and other
charges, (c) repairs and maintenance of the Project, (d) compliance with legal
or insurance requirements, or in the making of any other payment or performance
of any other obligation, then the Issuer, the Significant Bondowner or the
Trustee may (but shall not be obligated so to do) upon the continuance of such
failure on the Lessee's part for 15 days after notice of such failure is given
to the Lessee by the Issuer, the Significant Bondowner or the Trustee, and
without waiving or releasing the Lessee from any obligation hereunder, as an
additional but not exclusive remedy, make any such payment or perform any such
obligation, and all sums so paid by the Issuer, the Significant Bondowner or the
a Trustee and all necessary incidental costs and expenses incurred by the
Issuer, the Significant Bondowner or the Trustee in performing such obligations
shall be deemed to be Additional Payments and shall be paid to the Issuer, the
Significant Bondowner or the Trustee on demand.
Section 8.7. Remedial Rights Assigned to the Trustee. Upon the execution
and delivery of the Indenture, the Issuer will thereby have assigned to the
Trustee all rights and remedies conferred upon or reserved to the Issuer by this
Lease, reserving only the Unassigned Issuer's Rights. Subject to Section 8.8,
the Trustee shall have the exclusive right to exercise such rights and remedies
conferred upon or reserved to the Issuer by this Lease in the same manner and to
the same extent, but under the limitations and conditions imposed thereby and
hereby. The Trustee, the Significant Bondowner and the other Bondowners shall be
deemed third party creditor beneficiaries of all representations, warranties,
covenants and agreements contained herein.
Section 8.8. Significant Bondowner to Direct Trustee. Any provision herein
to the contrary notwithstanding, the Issuer and the Trustee, as assignee of the
Issuer, (a) shall exercise the remedies provided for under this Lease only if
and as directed in writing by the Significant Bondowner and (b) shall not waive
any Event of Default without the prior written consent of the Significant
Bondowner. Any direction from the Significant Bondowner must be in accordance
with the provisions of law and of this Lease. The Issuer and the Trustee shall
have the right to decline to follow any direction if the Issuer or the Trustee,
as
21
applicable, in good faith determines that the proceeding so directed would
involve it in personal liability unless the Issuer or the Trustee, as the case
may be, is furnished indemnity satisfactory to it for the reimbursement of all
costs and expenses to which it may be put and to protect it against all
liability which it may incur in or by reason of such direction.
ARTICLE IX
PREPAYMENT AND ACCELERATION OF LEASE PAYMENTS; PURCHASE OF PROJECT
Section 9.1. Prepayment at the Option of the Lessee. Upon the exercise by
the Lessee of its option to cause the Bonds or any portion thereof to be
redeemed pursuant to Section 303 of the Indenture, the Lessee shall prepay Lease
Payments in whole or in part at the times and at the prepayment prices
sufficient to redeem all or a corresponding portion of the Bonds then
Outstanding in accordance with said paragraph, including the Special Redemption
Premium. At the written direction of the Lessee with the prior written consent
of the Significant Bondowner, such prepayments shall be applied to the
redemption of the Bonds in whole or in part in accordance with said paragraph.
Section 9.2. Mandatory Prepayment Upon Certain Events. If the Bonds are
subject to mandatory redemption for any other reason described in Section 304 or
Section 306 of the Indenture, the Lessee shall prepay Lease Payments in whole at
the time and at the prepayment prices sufficient to redeem all of the Bonds then
Outstanding in accordance with Section 304 or Section 306 of the Indenture, as
applicable. The Lessee will promptly notify the Issuer, the Significant
Bondowner and the Trustee in writing of the occurrence and existence of any
event or condition which could result in mandatory prepayment under this
Section.
Section 9.3. Purchase of Project, Required Prepayment.
(a) Except during the continuance of an Event of Default, the Lessee shall
have the option, with the prior written consent of the Significant Bondowner, to
purchase the Project at any time, prior to the expiration of the Lease Term and
terminate this Lease if (i) the Bonds have been paid in full or if provision is
otherwise made for payment of the Bonds in such manner that the Indenture will
be discharged under Article XII of the Indenture on or before the date of
termination, (ii) prepayment and termination is allowed by the Mortgage, and
(iii) the Lessee provides the Trustee and the Issuer with an opinion of Bond
Counsel to the effect that all such conditions have been satisfied, provided
that this Lease may not be terminated unless and until (a) all of the Lessee's
obligations under the Financing Documents have been satisfied and (b) all of the
Lessee's obligations with respect to the Issuer's fees and any rebate obligation
have been satisfied and the Lessee has so certified to the Issuer and the
Trustee. All obligations of the Lessee under Sections 4.4 and 6.1 shall survive
termination of this Lease until payment in full of the Bonds.
(b) Notwithstanding the foregoing, the Lessee may not terminate this Lease
unless and until the Trustee has on deposit an amount equal to the sum of the
following:
(i) moneys on deposit in any of the Funds established under the
Indenture and available for that purpose which are sufficient to discharge
the Indenture in accordance with Article XI of the Indenture; plus
(ii) to the extent not paid under subparagraph above, an amount equal
to the Trustee's fees, expenses and charges under the indenture and any
other amounts due under Section 6.1,
22
accrued and, to the extent determinable, to accrue until the Bonds are
fully paid and redeemed and all other advances, fees, costs and expenses
reasonably incurred and to be incurred on or before the termination date by
the Trustee under the Indenture and by the Issuer and the Trustee under
this Lease and the other Financing Documents; plus
(iii) the sum of $100.
(c) On the purchase date, a closing shall be held at any office mutually
agreed upon among the Issuer, the Lessee and the Trustee (which closing may be
conducted by mail or recognized overnight delivery service). At the closing the
Issuer and the Trustee shall, upon acknowledgment of receipt of the sum set
forth in paragraph (b) above, execute and deliver to the Lessee such release and
other instruments as the Lessee reasonably determines is necessary to terminate
this Lease, including documents conveying to the Lessee legal title to the
Project, as it then exists, subject to the following: (i) those liens and
encumbrances, if any, to which title to the Project was subject when conveyed to
the Issuer; (ii) those liens and encumbrances created by the Lessee or to the
creation or suffering of which the Lessee consented; (iii) those liens and
encumbrances resulting from the failure of the Lessee to perform or observe any
of the agreement on its part contained in this Lease; (iv) Permitted
Encumbrances other than the Indenture and this Lease; and (v) if the Project or
any part thereof is being condemned, the rights and title of any condemning
authority. All further obligations of the Lessee hereunder (except as
specifically provided in Sections 4.4 and 6.1) shall thereupon terminate,
provided, however, that the Lessee shall also remain obligated to pay or
reimburse the Issuer, and the Trustee for the payment of all other fees, costs
and expenses unaccounted for in the sum paid in accordance with paragraph (b)
above and reasonably incurred before or subsequent to such closing in connection
with the Bonds and to pay arbitrage rebate.
(d) The Lessee hereby agrees to purchase, and the Issuer 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.
Section 9.4. Notice of Prepayment. To exercise an option granted by Section
9.1 or 9.3, the Lessee shall give written notice to the Issuer, the Significant
Bondowner and the Trustee which shall specify therein the date upon which a
prepayment of Lease Payments will be made, which date shall be not less than 45
days from the date the notice is received by the Trustee, and which shall
contain the written consent of the Significant Bondowner. In the Indenture, the
Issuer has directed the Trustee to forthwith take all steps (other than the
payment of the money required to redeem the Bonds) necessary under the
applicable provisions of the Indenture to effect any redemption of the then
Outstanding Bonds, in whole or in part, pursuant to Article III of the
Indenture.
Section 9.5. Precedence of this Article. The rights, options and
obligations of the Lessee set forth in this Article may be exercised or shall be
fulfilled, as the case may be, whether or not a Default exists hereunder,
provided that such Default will not result in nonfulfillment of any condition to
the exercise of any such right or option and provided further that no amounts
payable pursuant to this Lease shall be prepaid in part during the continuance
of an Event of Default described in Section 8.1(a).
ARTICLE X
MISCELLANEOUS
Section 10.1. Authorized Representatives.
23
(a) Whenever under this Lease the approval of the Issuer is required or the
Issuer is required or permitted to take some action, such approval shall be
given or such action shall be taken by the Authorized Issuer Representative and
the Lessee, the Significant Bondowner and the Trustee shall be authorized to act
on any such approval or action.
(b) Whenever under this Lease the approval of the Lessee is required or the
Lessee is required or permitted to take some action, such approval shall be
given or such action shall be taken by the Authorized Lessee Representative, and
the Issuer, the Significant Bondowner and the Trustee shall be authorized to act
on any such approval or action.
(c) Whenever under this Lease the approval of the Significant Bondowner is
required or the Significant Bondowner is required or permitted to take some
action, such approval shall be given or such action shall be taken by an
authorized officer of the Significant Bondowner, and the Issuer, the Lessee and
the Trustee shall be authorized to act on any such approval or action.
Section 10.2. Term of Lease Agreement. This Lease shall be effective from
and after its execution and delivery and shall continue in full force and effect
until the Bonds are deemed to be paid within the meaning of Article XI of the
Indenture and provision has been made for paving all other sums payable by the
Lessee to the Issuer, the Trustee, the Significant Bondowner and the paying
agents for the Bonds under this Lease and the Indenture to the date of the
retirement of the Bonds. All agreements, covenants, representations and
certifications the Lessee as to all matters affecting the tax-exempt status of
the interest on the Bonds and the indemnifications provided by Section 6.1 shall
survive the termination of this Lease.
Section 10.3. Notices. All notices, certificates or other communications
hereunder shall be sufficiently given and shall be deemed given when delivered
by hand delivery or on the third day following the day on which the same has
been mailed by registered or certified mail, postage prepaid, addressed as
specified in Section 1203 of the Indenture. Notice to the Bondowners shall be
given, if necessary, in the manner provided in Section 1203 of the Indenture. A
duplicate copy of each notice, certificate or other communication given
hereunder to any party mentioned in Section 1203 shall be given to all other
parties mentioned therein (other than the Bondowners unless a copy is required
to be furnished to them by other provisions of this Lease). The Issuer, the
Lessee, the Significant Bondowner or the Trustee may, by notice given hereunder,
designate any further or different addresses to which subsequent notices,
certificates or other communications shall be sent to it.
Section 10.4. Performance Date Not a Business Day. If the last day for
performance of any act or the exercising of any right, as provided in this
Lease, shall not be a Business Day, such payment may be made or act performed or
right exercised on the next succeeding Business Day.
Section 10.5. Binding Effect. This Lease shall inure to the benefit of and
shall be binding upon the Issuer, the Lessee and their respective successors and
assigns, subject to the provisions contained in Section 5.2.
Section 10.6. Amendments, Changes and Modifications. Except as otherwise
provided in this Lease or in the Indenture, subsequent to the issuance of Bonds
and prior to all of the Bonds being deemed to be paid in accordance with Article
XI of the Indenture and provision being made for the payment of all sums payable
under the Indenture in accordance with Article XI of the Indenture, this Lease
may not be effectively amended, changed, modified, altered or terminated without
the concurring written consent of the
24
Trustee and the Significant Bondowner, given in accordance with the Indenture.
Section 10.7. Execution in Counterparts. This Lease may be executed in
several counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument; provided, however, that for purposes
of Article 9 of the Uniform Commercial Code of the State, no security interest
in this Lease may be created by the transfer or possession of any counterpart
hereof other than the counterpart containing the receipt therefor executed by
the Trustee on or immediately following the signature page hereof delivered,
pledged and assigned to the Trustee.
Section 10.8. No Pecuniary Liability. No provision, representation,
covenant or agreement contained in this Lease or in the Indenture, the Bonds, or
any obligation herein or therein imposed upon the Issuer, or the breach thereof,
shall constitute or give rise to or impose upon the Issuer a pecuniary liability
(except to the extent of any rental payments, revenues and receipts derived by
the Issuer pursuant to this Lease). No provision hereof shall be construed to
impose a charge against the general Credit of the Issuer or any personal or
pecuniary liability upon any director. official or employee of the Issuer.
Section 10.9. Extent of Covenants of the Issuer; No Personal or Pecuniary
Liability of Issuer.
(a) No covenant, agreement or obligation contained in this Lease shall be
deemed to be a covenant, agreement or obligation of any present or future
councilmember, officer, employee or agent of the Issuer in his or her individual
capacity, and neither the councilmembers of the Issuer nor any officer thereof
executing the Bonds shall be liable personally on the Bonds or be subject to any
personal liability or accountability by reason of the issuance thereof. No
councilmember, officer, employee or agent of the Issuer shall incur any personal
liability with respect to any other action taken by him pursuant to this
Indenture or the Act, provided such member, officer, employee or agent acts in
good faith.
(b) No agreements or provisions contained in this Lease nor any agreement,
covenant or undertaking by the Issuer contained in any document executed by the
Issuer in connection with the Project, or the issuance, sale and delivery of the
Bonds shall give rise to any pecuniary liability of the Issuer or a charge
against its general credit, or shall obligate the Issuer financially in any way
except as may be payable from the Lease Payments by the Lessee and the proceeds
of the Bonds. No failure of the Issuer to comply with any term, condition,
covenant or agreement herein or in any document executed by the Issuer in
connection with the issuance and sale of the Bonds shall subject the Issuer to
liability for any claim for damages, costs or other financial or pecuniary
charge except to the extent that the same can be paid or recovered from the
Lease Payments or proceeds of the Bonds. Nothing in this Indenture precludes a
proper party in interest from seeking and obtaining, to the extent permitted by
law, specific performance against the Issuer for any failure to comply with any
term, condition, covenant or agreement herein, provided that no costs, expenses
or other monetary relief will be recoverable from the Issuer except as may be
payable from the repayments by the Lessee under tile Lease Agreement or from the
proceeds of the Bonds.
(c) No recourse shall be had for the payment of the principal of or premium
or interest on any of the Bonds or for any claim based thereon or upon any
obligation, covenant or agreement contained in this Lease against any past,
present or future officer, councilmember, employee or agent of the Issuer, or of
any successor corporation, as such, either directly or through the Issuer or any
successor corporation, under any rule of law or equity, statute or constitution
or by the enforcement of any assessment or penalty or otherwise, and all such
liability of any such officers, councilmembers, employees or agents, as such, is
hereby expressly waived and released as a condition of, and consideration for,
the execution of this Lease and the issuance of such Bonds.
25
(d) Anything in this Lease to the contrary notwithstanding, it is expressly
understood and agreed by the parties hereto that (i) the Issuer may rely
conclusively on the truth and accuracy of any certificate, option, notice, or
other instrument furnished to the Issuer by the Trustee or the Lessee as to the
existence of any fact or state of affairs required hereunder to be noticed by
the Issuer; (ii) the Issuer shall not be under any obligation hereunder to
perform any record keeping or to provide any legal services; and (iii) none of
the provisions of this Lease shall require the Issuer to expend or risk its own
funds or otherwise incur financial liability in the performance of any of its
duties or in the exercise of any of its rights or powers under this Lease,
unless it shall first have been adequately indemnified to its satisfaction
against the cost, expenses, and liability which may be incurred.
Section 10.10. Severability. If any provision of this Lease, or any
covenant, stipulation, obligation, agreement, act or action, or part thereof
made, assumed, entered into or taken thereunder, or any application of such
provision, is for any reason held to be illegal or invalid, such illegality or
invalidity shall not affect any other provision of this Lease or any other
covenant, stipulation, obligation, agreement, act or action, or part thereof,
made, assumed, entered into, or taken, each of which shall be construe d and
enforced as if such illegal or invalid portion were not contained herein. Such
illegality or invalidity of any application thereof shall not affect any legal
and valid application thereof, and each such provision, covenant, stipulation,
obligation, agreement, act or action, or part thereof, shall be deemed to be
effective, operative, made, entered into or taken in the manner and to the full
extent permitted by law.
Section 10.11. Governing Law. This Lease shall be governed by and construed
in accordance with the laws of the State.
[remainder of this page intentionally left blank]
26
IN WITNESS WHEREOF, the Issuer and the Lessee have caused this Lease to be
executed in their respective names.
CITY OF OLATHE, KANSAS
[SEAL] By /s/
Mayor
ATTEST:
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
City Clerk
S-1
KING'S COURT INVESTORS LIMITED
PARTNERSHIP,
a Kansas limited partnership
By: King's Court Associates, L.L.C.,
a Kansas limited liability company,
its General Partner
By Its Members:
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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S-2