EXHIBIT 10.26
FACILITY LEASE
dated as of December 18, 1996
between
FLEET NATIONAL BANK,
not in its individual
capacity but solely
as Owner Trustee,
as Lessor
and
PANDA-BRANDYWINE, L.P.,
as Lessee
(230 MW Natural Gas-Fired
Qualifying Cogeneration Facility
Located in Brandywine, Maryland)
THIS FACILITY LEASE AND THE FACILITY COVERED HEREBY HAVE BEEN
ASSIGNED TO AND ARE SUBJECT TO A LIEN AND SECURITY INTEREST IN
FAVOR OF
FIRST SECURITY BANK, NATIONAL ASSOCIATION, AS INDENTURE
TRUSTEE UNDER THE TRUST INDENTURE DATED
AS OF THE DATE HEREOF FOR THE BENEFIT OF THE HOLDERS OF THE LOAN
CERTIFICATES REFERRED TO IN SUCH TRUST INDENTURE. THIS FACILITY
LEASE HAS BEEN EXECUTED IN SEVERAL COUNTERPARTS. TO THE EXTENT,
IF ANY, THAT THIS FACILITY LEASE CONSTITUTES CHATTEL PAPER (AS
SUCH TERM IS DEFINED IN THE UNIFORM COMMERCIAL CODE AS IN EFFECT
IN ANY APPLICABLE JURISDICTION), NO SECURITY INTEREST IN THIS
FACILITY LEASE MAY BE CREATED THROUGH THE TRANSFER OR POSSESSION
OF ANY COUNTERPART HEREOF OTHER THAN THE "ORIGINAL EXECUTED
COUNTERPART", WHICH SHALL BE IDENTIFIED AS THE COUNTERPART
CONTAINING THE RECEIPT THEREFOR EXECUTED BY
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
AS INDENTURE TRUSTEE, ON THE SIGNATURE PAGES THEREOF.
TABLE OF CONTENTS
Page
SECTION 1. Definitions 1
SECTION 2. Lease of the Facility; Term; Personal Property 2
SECTION 3. Rent; Adjustments to Rent 2
(a) Basic Rent 2
(b) Supplemental Rent 2
(c) Method of Payment 4
(d) Adjustments 4
(e) Computation of Adjustments 5
(f) Intentionally left blank. 6
(g) Amendment to Lease 6
(h) Minimum Basic Rent 6
SECTION 4. Net Lease 6
SECTION 5. Relinquishment of Possession and Use of the
Facility 8
(a) Surrender 8
(b) Manuals; Books 9
(c) Aid in Disposition 9
(d) Removal 9
(e) Accrued Maintenance 10
SECTION 6. Warranties of the Lessor 10
(a) Quiet Enjoyment 10
(b) Disclaimer of Other Warranties 10
(c) Enforcement of Certain Warranties 11
(d) Governmental Actions 12
SECTION 7. Special Covenants of Lessee 12
(a) Liens; Taxes 12
(b) Operation and Maintenance Reserve Account 12
(c) Rent Reserve Account 13
(d) Warranty Maintenance Reserve Account 14
(e) Termination of Accounts 15
SECTION 8. Facility Operation and Maintenance;
Modification; Identification 15
(a) Facility Operation and Maintenance 15
(b) Inspection 16
(c) Modifications 17
(d) Title to Modifications 17
(e) Funding of the Costs of Modifications 18
(f) Removal of Property 18
(g) Reports 19
(h) Contest of Applicable Law 20
(i) Identification 21
SECTION 9. Event of Loss, Event of Regulation 21
(a) Damage or Loss 21
(b) Repair 21
(c) Event of Loss; Payment of Stipulated Loss
Value 21
(d) Event of Regulation; Payment of Fair Market
Sales Value 22
(e) Requisition of Use 24
(f) Application of Payments on an Event of Loss 24
(g) Application of Payments Not Relating to an
Event of Loss 24
(h) Application During Default or Event of Default 25
SECTION 10. Insurance 25
SECTION 11. No Assignment or Sublease 25
SECTION 12. Lease Renewal; Purchase Option 26
(a) Fixed Rate Renewal Option 26
(b) Purchase Option 26
(c) Purchase Date 26
SECTION 13. Notices for Renewal or Purchase; Determination
of Fair Market Value 27
(a) Expiration of Basic Term 27
(b) Expiration of Renewal Terms 27
(c) Elections Irrevocable 27
(d) Determination of Fair Market Value 27
SECTION 14. Events of Default 28
SECTION 15. Remedies 34
(a) Remedies 34
(b) No Release 36
(c) Remedies Cumulative 36
(d) Waiver 37
(e) Allocation of Basic Rent 37
SECTION 16. Notices 37
SECTION 17. Successors and Assigns 38
SECTION 18. Right to Perform for Lessee 38
SECTION 19. General Covenants 38
SECTION 20. Amendments and Miscellaneous 39
(a) Amendments in Writing 39
(b) Survival 39
(c) Severability of Provisions 39
(d) True Lease 39
(e) GOVERNING LAW 39
(f) SUBMISSION TO JURISDICTION 39
(g) WAIVER 40
(h) Headings 40
(i) Counterpart Execution 40
(j) Limitation of Liability 40
(k) Copies of Notices 41
(l) Certain Rights of Power Purchaser 41
Schedules
A Description of Facility
B Description of Site and Easements
C Basic Rent Factors
D Stipulated Loss Values
FACILITY LEASE
FACILITY LEASE, dated as of December 18, 1996, between
FLEET NATIONAL BANK (formerly known as Shawmut Bank Connecticut,
National Association), a national banking association, not in its
individual capacity but solely as Owner Trustee under the Trust
Agreement referred to below, as Lessor (the "Lessor"), and PANDA-
BRANDYWINE, L.P., a Delaware limited partnership, as Lessee (the
"Lessee" or the "Partnership").
W I T N E S S E T H
WHEREAS, General Electric Capital Corporation and the
Lessor have entered into the Trust Agreement, dated as of March
30, 1995, pursuant to which the Lessor has agreed to act as
trustee for General Electric Capital Corporation (in such
capacity, the "Owner Participant") for the purpose of, among
other things, purchasing the Facility from the Lessee and leasing
it back to the Lessee hereunder;
WHEREAS, the Lessor owns the Facility and is the lessee
of the Site;
WHEREAS, subject to the terms and conditions set forth
in the Participation Agreement, the Lessee desires to lease from
the Lessor the Facility upon the terms and subject to the
conditions set forth herein; and
WHEREAS, subject to the terms and conditions set forth
in the Participation Agreement, the Lessor is willing to lease
the Facility to the Lessee upon the terms and subject to the
conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and of
the mutual agreements herein contained and other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
SECTION 1. Definitions. For purposes of this Facility
Lease, capitalized terms used herein and not otherwise defined
shall have the meanings assigned to them in Annex A to the
Participation Agreement dated as of December 18, 1996 among the
Owner Participant, the Owner Trustee, Panda Brandywine
Corporation, the Lessee, Fleet National Bank, not in its
individual capacity but solely as Security Agent, First Security
Bank, National Association, not in its individual capacity but
solely as Indenture Trustee, Credit Suisse, a bank organized and
existing under the laws of Switzerland, acting by and through its
New York branch, as Administrative Agent, and the Loan
Participants named therein (as the same may be amended,
supplemented or otherwise modified from time to time, the
"Participation Agreement") (such definitions to be equally
applicable to both the singular and plural forms of the terms
defined). Any term defined in the Participation Agreement or by
reference to an agreement, instrument or other document shall
have the meaning so assigned to it whether or not the
Participation Agreement, such agreement, instrument or document
is in effect. Unless otherwise indicated, references in this
Facility Lease to sections, paragraphs, clauses, appendices,
schedules and exhibits are to the same contained in or attached
to this Facility Lease.
SECTION 2. Lease of the Facility; Term; Personal
Property. (a) Upon the terms and subject to the conditions of
this Facility Lease, the Lessor hereby leases to the Lessee, and
the Lessee hereby leases from the Lessor, the Facility.
(b) The term of this Lease shall begin on the Lease
Closing Date and shall end, unless terminated earlier pursuant to
the terms hereof, on the last day of the Lease Term.
(c) It is the intention of the Lessor and the Lessee
that the Facility, each Modification and every portion thereof is
severed, and shall be and remain severed, to the maximum extent
permitted by Applicable Law, from the real estate constituting
the Site and the Easements and even if physically attached
thereto, shall retain the character of personal property, shall
be treated as personal property with respect to the rights of all
Persons, shall be removable (subject to the provisions of the
Transaction Documents) and shall not be or become fixtures or
part of the real estate constituting the Site and the Easements.
(d) The Facility is described in Schedule A hereto and
the Site and Easements are described in Schedule B hereto.
SECTION 3. Rent; Adjustments to Rent.
(a) Basic Rent. The Lessee shall pay to the Lessor,
as basic rent (herein referred to as "Basic Rent") for the
Facility, the following amounts:
(i) on each Basic Rent Payment Date
occurring during the Basic Term, an installment of Basic
Rent equal to the percentage of Lessor's Cost set forth
opposite such Basic Rent Payment Date on Schedule C hereto;
and
(ii) on each Basic Rent Payment Date
occurring during the Fixed Rate Renewal Term, if any, an
amount equal to the Fixed Rate Renewal Basic Rent.
(b) Supplemental Rent. The Lessee shall pay to the
Lessor, or to whomever shall be entitled thereto, as supplemental
rent (herein referred to as "Supplemental Rent"), the following
amounts:
(i) when due, any amount payable hereunder
as Stipulated Loss Value; and
(ii) when due, or if no due date is
specified, on demand, and on an After-Tax Basis (except with
respect to payments of interest and fees made in respect of
the LOC Reimbursement Obligations, which shall not be on an
After-Tax Basis), any and all amounts, liabilities and
obligations, other than Basic Rent, Stipulated Loss Value
and the Supplemental Rent referred to in the other clauses
of this Section 3(b), which the Lessee assumes or agrees to
pay hereunder, under the Participation Agreement, the
Collateral Security Documents or the other Financing
Documents to the Lessor, the Security Agent, any Loan
Participant, the Indenture Trustee, the Administrative
Agent, the Owner Participant or others, including without
limitation any amounts constituting LOC Reimbursement
Obligations;
(iii) when due, or if no due date is
specified, on demand, all amounts required to be paid by the
Lessee under the Tax Indemnity Agreement;
(iv) when due, (A) an amount equal to the
Partnership's Pro Rata Share (or the full amount if payable
as a result of a Lease Event of Default) of the amounts due
as Breakage Costs on the Loan Certificates pursuant to the
Indenture, (B) an amount equal to the Partnership's Pro Rata
Share of amounts payable under Section 2.12 of the Indenture
and (C) amounts payable ("Swap Breakage Costs") to the
Interest Hedging Counterparty in connection with an early
termination of the Interest Hedging Agreement (but only if
such termination is a result of a Lease Event of Default, an
Event of Loss pursuant to which the Lessee does not elect to
rebuild the Facility (but only to the extent of available
insurance proceeds after payment of all amounts due to
Lessor pursuant to Section 9(c) hereof) or an Event of
Regulation (excluding any Special QF Loss Event); and
(v) on demand and, in any event, no later
than the Basic Rent Payment Date next succeeding the date
such amounts shall be due and payable hereunder, to the
extent permitted by Applicable Law, interest on any Rent not
paid when due at a rate per annum equal to the Overdue Rate
(calculated on the same basis as the Loan Certificates and
with respect to the period when the same shall be overdue),
for the period commencing on such due date (or, in the case
of any payment with respect to an indemnity, when payment is
made by the Indemnitee of the related liability) until the
same shall be paid.
(c) Method of Payment. Each payment of Rent shall be
made in immediately available funds no later than 12:00 noon, New
York City time, on the date such payment shall be due and payable
hereunder or, if no due date is specified, upon demand of the
Person entitled to such payment, and shall be paid to the Lessor
at its address specified in Section 16 or at such other address
as the Lessor may specify by notice in writing to the Lessee;
provided, however, that so long as the Lien of the Indenture
shall not have been discharged or the Security Deposit Agreement
shall remain in effect, the Lessor hereby directs, and the Lessee
agrees, that all Rent (other than Excepted Payments, which shall
be paid by the Lessee directly to the Person entitled thereto),
(all without set-off or counterclaim as and to the extent
provided in Section 4 hereof) and all other amounts referred to
in Section 3(a) and 3(b) hereof shall be paid directly to the
Security Agent at its principal office at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or as the Security Agent may
otherwise direct within the United States, by wire transfer of
immediately available funds in U.S. Dollars no later than the
time specified therefor in the Security Deposit Agreement on the
due date of payment. If the date on which any payment of Rent is
due hereunder shall not be a Business Day, such payment shall be
made as aforesaid on the next succeeding Business Day (unless the
Debt Rate is then based upon the Eurodollar Rate and the next
succeeding Business Day falls in another calendar month, in which
case such payment shall be made on the next preceding Business
Day), together with interest thereon at the higher of (i) 12% and
(ii) the Debt Rate. Any payment made later than 12:00 noon, New
York City time, shall be deemed to have been made on the next
succeeding Business Day.
(d) Adjustments. The Basic Rent Factors and
Stipulated Loss Values contained on Schedule C and Schedule D
hereto have been calculated in part on the basis of the
assumptions set forth in Schedule 10 to the Participation
Agreement. If a Change in Tax Law or a Change in Accounting
Treatment shall occur prior to the Lease Closing Date or any such
assumption proves on the Lease Closing Date to have been
incorrect (even if such determination is made subsequent to the
Lease Closing Date), such Basic Rent Factors and Stipulated Loss
Values shall be adjusted (upward or downward) so as to preserve
the Owner Participant's Net Economic Return. If after the Lease
Closing Date the costs and expenses paid in connection with the
leveraging of this Facility Lease prove to be greater or less
than the amount set forth therefor in Item 14 of Schedule 10 to
the Participation Agreement, such Basic Rent Factors and
Stipulated Loss Values shall be adjusted so as to preserve the
Owner Participant's Net Economic Return, provided that in no
event shall installments of Basic Rent be increased as a result
of such adjustment such that they would be higher than if no
leveraging had been done. In the event the Owner Participant
elects to consummate a refinancing pursuant to Section 11 of the
Participation Agreement, the installments of Basic Rent shall be
recalculated and reduced in the manner set forth in Section 11.1
of the Participation Agreement.
All adjustments shall (A) to the extent the original
Basic Rent Schedule complied with the IRS guidelines and Section
467 of the Code, satisfy the provisions of Revenue Procedures 75-
21 and 75-28 or any successor or supplemental procedure as in
effect on the date of such adjustment and any other applicable
statutes, regulations, revenue procedures, revenue rulings or
technical information releases relating to the subject matter of
such revenue procedures, (B) to the extent the original Basic
Rent Schedule complied with the IRS guidelines and Section 467 of
the Code, be made in a manner designed to comply with Section 467
of the Code and any regulations thereunder or under any other
successor, supplemental or similar provisions of Federal income
tax law and not otherwise cause any adverse effect under any
Federal income tax law in effect at the time of such adjustment,
(C) preserve the Owner Participant's Net Economic Return, (D) to
the extent possible and not inconsistent with the foregoing, be
made in a manner designed to maintain level Operating Cash Flow
Ratios for each Quarterly Measurement Period to occur during the
Basic Term and (E) to the extent possible and not inconsistent
with the foregoing (and except in the case of an adjustment
resulting from an increase in Lessor's Cost from that set forth
in Schedule 10 to the Participation Agreement), minimize any
resulting increase and maximize any resulting decrease in the net
present value of the installments of Basic Rent to the Lessee
(determined using the Discount Rate) to the extent the foregoing
criteria are met.
(e) Computation of Adjustments. (i) Upon the
occurrence of an event specified in Section 3(d), the Owner
Participant shall make the necessary computations on a basis
consistent with that used by the Owner Participant in the
computation of the Basic Rent Factors and Stipulated Loss Values
at the time and in connection with the execution and delivery of
this Facility Lease.
(ii) Upon the occurrence of an event
requiring an adjustment to any Basic Rent Factors or Stipulated
Loss Values pursuant to Section 3(d) or the provisions of the Tax
Indemnity Agreement, the Owner Participant shall make the
necessary computations and, within 90 days of the Owner
Participant's knowledge of such event, furnish to the Lessee a
certificate of the Owner Participant setting forth the amount of
any increase or decrease in such Basic Rent Factors or Stipulated
Loss Values and certifying that each adjustment made was
calculated in accordance with the same methodology as was
applicable to the Basic Rent Factors and Stipulated Loss Values
set forth in Schedules 6 and 10 to the Participation Agreement.
Upon request of the Lessee made within a reasonable time
following the delivery to the Lessee by the Owner Participant of
any such certificate, KPMG Peat Marwick (or such other
independent auditors as may be selected by the Owner Participant
and reasonably satisfactory to the Lessee) shall verify that each
adjustment made was calculated in accordance with the same
methodology as was applicable to the Basic Rent Factors and
Stipulated Loss Values set forth in Schedules 6 and 10 to the
Participation Agreement. The costs of such verification shall be
borne by the Lessee, unless the amount of the rent adjustment is
changed by the greater of (i) five percent of the rent adjustment
and (ii) one half percent of the rent as adjusted, in each case
in present value terms following such audit, in which case such
costs shall be borne by the Owner Participant.
The adjustments to the Basic Rent Factors and
Stipulated Loss Values in connection with the leveraging of the
Facility Lease which have been computed by GE Capital at the
closing of the Lease Debt financing are intended to be consistent
with the methodology set forth in Schedule 9 to the Participation
Agreement, and, at the Partnership's request and expense, KPMG
Peat Marwick or such other independent financial advisors expert
in leasing transactions selected by GE Capital and reasonably
satisfactory to the Partnership shall verify the same to the
Partnership. The costs of such verification shall be borne by
the Lessee, unless the amount of the rent adjustment is changed
by the greater of (i) five percent of the rent adjustment and
(ii) one half percent of the rent as adjusted, in each case in
present value terms following such audit, in which case such
costs shall be borne by the Owner Participant.
(f) Intentionally left blank.
(g) Amendment to Lease. The Lessor and the Lessee
shall execute and deliver an addendum to this Facility Lease to
reflect each adjustment referred to in Section (d), provided that
the failure to execute and deliver an addendum shall not affect
any such adjustment.
(h) Minimum Basic Rent. Notwithstanding any other
provision of this Lease to the contrary, each installment of
Basic Rent due on each Rent Payment Date and not constituting an
Excepted Payment shall be, under any and all circumstances, an
amount at least sufficient to pay in full each installment of
principal of and interest on the Loan Certificates (assuming the
full drawdown thereof) then required to be paid pursuant to the
Loan Certificates (other than, during the Accretion Loan
Availability Period, the Accretion Amount with respect to such
Rent Payment Date and amounts becoming due in connection with the
exercise of remedies pursuant to Section 15 hereof).
SECTION 4. Net Lease.
This Facility Lease is a net lease and the Lessee
hereby acknowledges and agrees that the Lessee's obligation to
pay all Rent hereunder, and the rights of the Lessor in and to
such Rent, shall be absolute, unconditional and irrevocable and,
to the maximum extent permitted by Law, shall not be affected by
any circumstance of any character whatsoever, including, without
limitation: (i) any set-off, abatement, counterclaim, suspension,
recoupment, reduction, compromise, settlement, release,
modification, amendment (whether material or otherwise), waiver,
release or discharge (by act or operation of law), rescission,
defense or other right or claim that the Lessee may have against
the Lessor, the Owner Participant, the Security Agent, any Loan
Participant, the Administrative Agent, the Indenture Trustee, the
Operator, the Contractor, any subcontractor, any vendor or
manufacturer of any equipment or assets included in the Facility
or any Modification or any part of any thereof, or any other
Person for any reason whatsoever; (ii) any defect in or failure
of the title, merchantability, condition, design, compliance with
specifications, operation or fitness for use of all or any part
of the Facility, any Modification, the Site or the Easements;
(iii) any damage to, or removal, abandonment, dismantling,
decommissioning, shutdown, salvage, scrapping, requisition,
taking, condemnation, loss, theft or destruction of all or any
part of the Facility, any Modification, the Site or the
Easements, or any interference, interruption or cessation in the
use or possession of the Facility, the Site or the Easements by
the Lessee or by any other Person for any reason whatsoever or of
whatever duration; (iv) any restriction, prevention or
curtailment of or interference with any use of all or any part of
the Facility, any Modification, the Site or the Easements; (v)
any insolvency, bankruptcy, reorganization, liquidation, sale or
other disposition of all or substantially all the assets of,
marshalling of assets or similar proceeding by or against the
Lessee or the Lessor, the Owner Participant, the Security Agent,
the Administrative Agent, any Partner, any Participant or any
other Person; (vi) the invalidity, illegality or unenforceability
(or the allegation of invalidity, illegality or unenforceability)
of this Facility Lease, the Participation Agreement, any
Collateral Security Agreement, any other Financing Document, any
Project Document, the Tax Indemnity Agreement or any other
instrument referred to herein or therein or any other infirmity
herein or therein or any lack of right, power or authority of the
Lessor, the Owner Participant, the Security Agent, the Indenture
Trustee, the Lessee, any Partner, any Participant, any Loan
Participant or any other Person to enter into this Facility
Lease, the Participation Agreement, any Collateral Security
Document, any other Financing Document, any Project Document, the
Tax Indemnity Agreement or to perform the obligations hereunder
or thereunder or consummate the transactions contemplated hereby
or thereby or any doctrine of force majeure, impossibility,
frustration or failure of consideration; (vii) the breach or
failure of any warranty or representation made in this Facility
Lease, the Participation Agreement, any Collateral Security
Document, any other Financing Document, any Project Document, the
Tax Indemnity Agreement or any other agreement by the Lessee, the
Lessor, the Owner Participant the Security Agent, any Partner,
any Participant, the Indenture Trustee, the Administrative Agent,
any Loan Participant or any other Person; (viii) any failure,
omission or delay on the part of any Person to enforce, assert or
exercise any right, power or remedy under any Transaction
Document; (ix) the taking or omission of any of the actions
referred to in any of the Transaction Documents; or (x) any other
circumstance or happening whatsoever, whether or not similar to
any of the foregoing. The Lessee hereby waives, to the extent
permitted by Applicable Law, any and all rights that it may now
have or that at any time hereafter may be conferred upon it, by
statute or otherwise, to modify, terminate, cancel, quit or
surrender this Facility Lease or to effect or claim any
diminution or reduction of Rent payable by the Lessee hereunder,
except in accordance with the express terms hereof. The Lessee
agrees that, if for any reason whatsoever this Lease shall be
terminated in whole or in part by operation of Law or otherwise,
then, except as provided herein, the Lessee shall pay, to the
maximum extent permitted by Applicable Law, to the Lessor or any
other Person entitled thereto, an amount equal to each
installment of Basic Rent and all payments of Supplemental Rent
at the time such payment would have become due and payable in
accordance with the terms hereof had this Facility Lease not been
terminated in whole or in part. Each payment of Rent made by the
Lessee hereunder (absent manifest error) shall be final and the
Lessee shall not seek or have any right to recover all or any
part of such payment from the Lessor or any Person for any reason
whatsoever. All covenants, agreements and undertakings of the
Lessee herein shall be performed at its cost, expense and risk
unless expressly otherwise stated. Nothing in this Section 4 or
elsewhere shall be construed as a guaranty by the Lessee of any
residual value of the Facility or as waiving in any respect the
rights of the Lessee to seek enforcement through money damages or
specific performance of its rights hereunder.
SECTION 5. Relinquishment of Possession and Use of the Facility.
(a) Surrender. Unless the Lessee has theretofore
acquired the Facility as provided herein, on the Lease
Termination Date, the Lessee shall surrender possession of the
Facility and the Site to the Lessor (or to a Person specified by
the Lessor to the Lessee in writing not less than 30 days prior
to the Lease Termination Date). At the time of such surrender,
the Lessee shall pay or have paid all amounts due and payable, or
to become due and payable, by it hereunder and under the
Financing Documents and the Tax Indemnity Agreement (including,
without limitation, all amounts payable with respect to any and
all Modifications approved or authorized (with or without the
consent of the Lessor) prior to the Lease Termination Date,
whether or not implementation thereof has been completed on or
prior to such date), and the Facility and the Site shall be free
and clear of all Liens (other than Lessor's Liens and Permitted
Liens) and in the condition and state of repair required by the
provisions of this Facility Lease, including Section 8(a) hereof,
and not subject to any contest referred to in Section 8(h)
hereof. Unless the Lessee has theretofore acquired the Facility
as provided herein, the Lessee will use all reasonable efforts to
transfer to the Lessor on the Lease Termination Date all permits
and other Governmental Actions (to the extent permitted by Law),
rights, lease(s), license agreement(s), easements and
appurtenances held by Lessee that are necessary to or reasonably
desirable for the ownership, operation or maintenance of the
Facility and any Modifications, including all permits and other
Governmental Actions, rights, lease(s), license agreement(s),
easements and appurtenances held by Lessee that are necessary to
or reasonably desirable to possess and enjoy the Site and the
Easements. During the Lease Term, the Lessee warrants that it
shall not take any action that would prevent, or make unlikely
the return of the Facility, together with such permits and other
Governmental Actions, rights, easements and appurtenances held by
Lessee.
(b) Manuals; Books. Unless the Lessor otherwise
directs, upon return of the Facility, the Lessee shall deliver to
the Lessor all logs, books, manuals and data and inspection,
modification and overhaul records required to be maintained or
maintained with respect to the Facility or otherwise in the
Lessee's possession.
(c) Aid in Disposition. If the Lessee has not given
notice of its intention to buy the Facility or renew the Lease,
the Lessee agrees, during the last 24 months of the Lease Term,
to cooperate in all reasonable respects with the efforts of the
Owner Participant and/or the Lessor to (i) (to the extent not
inconsistent with the terms of the Power Purchase Agreement)
lease or sell the Facility on the expiration of the Lease Term
and (ii) obtain any permits, other Governmental Actions, rights
and easements which under Applicable Law cannot be transferred by
the Lessee; provided, however, that the Lessor shall reimburse
the Lessee for all reasonable out of pocket expenses and that
nothing in this Section 5(c) shall require the Lessee to take any
action or to permit or suffer any action which shall unreasonably
interfere with the use of the Facility by the Lessee.
(d) Removal. Unless the Facility shall have been
transferred to the Lessee pursuant to Section 9(c), 9(d), 12(b)
or 15 hereof, the Lessee shall, upon the request of the Lessor
after the Lease Termination Date and the termination of the Power
Purchase Agreement, at the Lessee's own expense and risk,
promptly dismantle the Facility and prepare the deliverable
components of the Facility for shipment by rail or truck
following the expiration or termination of this Facility Lease.
Upon request of the Lessor, the Lessee shall also deliver, at the
Lessee's expense, the deliverable components of the Facility, as
so disassembled and prepared for shipment, to the nearest
railhead or other suitable common carrier for shipment. In
connection with the foregoing, the Lessee shall furnish or cause
to be furnished to the Lessor such insurance, bonds, indemnities
and other assurances as the Lessor may reasonably require.
(e) Accrued Maintenance. On or prior to six months
prior to the Lease Termination Date, unless the Facility is to be
transferred to the Lessee pursuant to Section 9(c), 9(d), 12(b)
or 15 hereof, the Lessee and the Owner Participant shall select
an independent engineer of nationally recognized standing (the
"Independent Engineer") and the Lessee shall, (i) if the
Independent Engineer determines that a major maintenance overhaul
of the Facility is advisable at such time, conduct, at Lessee's
expense, a major maintenance overhaul of the Facility within six
months of the Lease Termination Date (such major maintenance
overhaul to be conducted in accordance with the Independent
Engineer's reasonable specifications) or (ii) if the Independent
Engineer determines that a major maintenance overhaul of the
Facility is not advisable at such time, pay to the Lessor on the
Lease Termination Date an amount equal to the lesser of (A) the
amount then on deposit in the Operation and Maintenance Reserve
Account and (B) the amount determined by the Independent Engineer
to be the Lessee's "proportionate share" of the costs of the next
scheduled major maintenance overhaul of the Facility (the lesser
of (A) and (B), the "Accrued Maintenance Payment"). The
Independent Engineer will determine such proportionate share by
multiplying the reasonably estimated cost of the next scheduled
major maintenance overhaul by a fraction, the numerator of which
is the number of years from the last major maintenance overhaul
of the Facility to the Lease Termination Date and the denominator
of which is the number of years from the last such overhaul to
the next scheduled date for major maintenance overhaul of the
Facility.
SECTION 6. Warranties of the Lessor.
(a) Quiet Enjoyment. The Lessor warrants that, so
long as no Lease Event of Default shall have occurred and be
continuing, it will not disturb the Lessee's rights to quiet
enjoyment of the possession and use of the Facility, the Site and
the Easements in accordance with the terms of this Facility Lease
and the other Transaction Documents.
(b) Disclaimer of Other Warranties. The warranties
set forth in Section 6(a) hereof are in lieu of all other
warranties of the Lessor, whether written, oral or implied, with
respect to this Facility Lease, the Facility, any Modification,
the Site or the Easements. As among the Loan Participants, the
Administrative Agent, the Indenture Trustee, the Security Agent,
the Owner Participant, the Lessor and the Lessee, execution by
the Lessee of this Facility Lease shall be conclusive proof of
the compliance of the Facility, the Site, any Modification and
the Easements with all requirements of this Facility Lease, and
the Lessee acknowledges and agrees that (i) THE LESSOR IS NOT A
MANUFACTURER OF OR A DEALER IN PROPERTY OF SUCH KIND AND (ii) THE
LESSOR LEASES AND THE LESSEE TAKES THE FACILITY, AND SHALL TAKE
EACH MODIFICATION AND ANY PART THEREOF, AS IS AND WHERE IS, WITH
ALL FAULTS, AND NONE OF THE LESSOR, THE OWNER PARTICIPANT, THE
ADMINISTRATIVE AGENT, INDENTURE TRUSTEE OR ANY LOAN PARTICIPANT
HAS MADE NOR SHALL BE DEEMED TO HAVE MADE, AND EACH HEREBY
DISCLAIMS ANY REPRESENTATION OR WARRANTY, EITHER EXPRESS OR
IMPLIED, AS TO ANY MATTER WHATSOEVER, INCLUDING, WITHOUT
LIMITATION, THE DESIGN OR CONDITION OF THE FACILITY, ANY
MODIFICATION, THE SITE, THE EASEMENTS OR ANY PART THEREOF, THE
MERCHANTABILITY THEREOF OR THE FITNESS THEREOF, FOR ANY
PARTICULAR PURPOSE, TITLE TO THE FACILITY, ANY MODIFICATION, THE
SITE, THE EASEMENTS OR ANY PART THEREOF, THE QUALITY OF THE
MATERIAL OR WORKMANSHIP THEREOF OR CONFORMITY THEREOF TO
SPECIFICATIONS, FREEDOM FROM PATENT OR TRADEMARK INFRINGEMENT OR
THE ABSENCE OF ANY LATENT OR OTHER DEFECTS, WHETHER OR NOT
DISCOVERABLE, NOR SHALL THE LESSOR, THE OWNER PARTICIPANT, THE
ADMINISTRATIVE AGENT, INDENTURE TRUSTEE OR ANY LOAN PARTICIPANT
BE LIABLE FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING
LIABILITY IN TORT, STRICT OR OTHERWISE), IT BEING AGREED THAT ALL
SUCH RISKS, AS AMONG THE LOAN PARTICIPANTS, THE ADMINISTRATIVE
AGENT, THE INDENTURE TRUSTEE, THE SECURITY AGENT, THE OWNER
PARTICIPANT, THE LESSOR AND THE LESSEE, ARE TO BE BORNE BY THE
LESSEE AND THE BENEFITS OF ANY IMPLIED WARRANTIES OF SUCH PARTIES
ARE HEREBY WAIVED BY LESSEE. The provisions of this Section 6(b)
have been negotiated, and except to the extent otherwise
expressly provided in Section 6(a) hereof, the foregoing
provisions are intended to be a complete exclusion and negation
of any representations or warranties by the Lessor, the Security
Agent, the Indenture Trustee, the Administrative Agent, the Owner
Participant and the Loan Participants, express or implied, with
respect to the Facility or any Modification that may arise
pursuant to the Uniform Commercial Code of any applicable
jurisdiction, or any other Law now or hereafter in effect, under
this Facility Lease or otherwise.
(c) Enforcement of Certain Warranties. (i) Unless a
Lease Event of Default shall have occurred and be continuing, the
Lessor authorizes the Lessee (directly or through agents,
including the Operator) at the Lessee's expense (but not so as to
prejudice the rights of the Lessor as assignee of Lessee's
rights), to assert for the Lessor's account, during the Lease
Term, all of the Lessor's rights (if any) under any applicable
warranty and any other claim (whether under this Facility Lease,
any Financing Document or otherwise) that the Lessee or the
Lessor may have against any vendor or manufacturer with respect
to the Facility or any Modification, and the Lessor agrees to
cooperate, at the Lessee's expense, with the Lessee and its
agents in asserting such rights. Any amount recovered by the
Lessee under any such warranty or other claim against any vendor
or manufacturer shall be applied in accordance with Sections 9(g)
and (h) hereof.
(ii) The Lessee agrees to preserve and
protect Lessor's rights under any warranty, covenant or
representation made by Contractor, any other EPC Contractor or
any other vendor, manufacturer or supplier with respect to the
Facility or any Modification, and the Lessee will take no action
which will impair such rights of the Lessor and covenants to act
solely in strict compliance with any restrictions or requirements
prerequisite to the continued existence, enforcement, validity
and maintenance of any such warranty, covenant or representation.
(d) Governmental Actions. The Lessor will, upon the
reasonable request and at the expense of the Lessee, assist the
Lessee in any proceeding as may be reasonably necessary or as may
be otherwise required by law in connection with the obtaining of
any Governmental Action necessary or desirable to operate the
Facility.
SECTION 7. Special Covenants of Lessee.
(a) Liens; Taxes. The Lessee shall not directly or
indirectly create, incur or suffer to exist any Lien on or with
respect to the Facility, any Modification, the Site, the
Easements, the Lessor's title thereto or interest therein, or on
or with respect to any title or interest of the Lessee therein or
in this Facility Lease or in any other asset of the Lessee,
except Permitted Liens, and the Lessee, at its own expense, shall
promptly take such action as may be necessary duly to discharge
any such Lien that may arise at any time during the Lease Term.
Subject to the contest provisions of the Tax Indemnity Agreement
and subsection 6.11 of the Participation Agreement, the Lessee
further agrees that it shall pay or cause to be paid on or before
the time or times prescribed by Applicable Law (after giving
effect to any applicable grace period) any Taxes imposed on the
Lessee (or any affiliated or related group of which the Lessee is
a member) under the Applicable Laws of any jurisdiction that, if
unpaid, might result in any Lien prohibited by this Facility
Lease. The Lessee will promptly pay or cause to be paid any
valid, final judgment enforcing any such Tax against it and cause
the same to be satisfied and discharged. THE LESSEE SHALL NOT
HAVE ANY RIGHT, POWER OR AUTHORITY TO CREATE OR INCUR ANY LIEN
UPON THE FACILITY. NOTICE IS HEREBY GIVEN TO ALL CONTRACTORS,
SUBCONTRACTORS, LABORERS, MATERIALMEN AND OTHER PERSONS THAT
NEITHER THE LESSOR NOR THE OWNER PARTICIPANT WILL BE LIABLE FOR
ANY LABOR, SERVICES OR MATERIALS FURNISHED TO LESSEE, AND THAT NO
LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS SHALL ATTACH TO
OR AFFECT THE FACILITY.
(b) Operation and Maintenance Reserve Account. (i) On
the Lease Closing Date, the Lessee shall deposit in the Operation
and Maintenance Reserve Account an amount equal to the Initial
Operation and Maintenance Reserve Deposit. On each Basic Rent
Payment Date, unless and until the Required Operation and
Maintenance Reserve Balance shall be on deposit in the Operation
and Maintenance Reserve Account, the Lessee shall, out of the
cash then available in the Revenue Account (and in accordance
with the priorities set forth in the Security Deposit Agreement),
deposit into the Operation and Maintenance Reserve Account: (A)
with respect to each of the first eight (8) Basic Rent Payment
Dates, an amount equal to $125,000 plus the amount of any accrued
deficiencies in contributions to the Operation and Maintenance
Reserve Account with respect to prior periods, (B) with respect
to the eight (8) Basic Rent Payment Dates occurring immediately
thereafter, an amount equal to $375,000 plus the amount of any
accrued deficiencies in contributions to the Operation and
Maintenance Reserve Account with respect to prior periods and (C)
with respect to each Basic Rent Payment Date thereafter, an
amount equal to one fourth of the "Incremental Required Balance"
for the Lease Year in which such Basic Rent Payment Date falls,
plus the amount of any accrued deficiencies in contributions to
the Operation and Maintenance Reserve Account with respect to
prior periods. "Incremental Required Balance" for any Lease Year
shall be the difference between the Required Operation and
Maintenance Reserve Balance for such Lease Year and the Required
Operation and Maintenance Reserve Balance for the immediately
preceding Lease Year. Deposits made into the Operation and
Maintenance Reserve Account pursuant to Section 7(b)(iii) shall
not be credited toward the Lessee's obligation to make deposits
in such Account pursuant to this Section 7(b)(i).
(ii) Income or gain earned on amounts on deposit
in the Operation and Maintenance Reserve Account shall be deemed
to have been earned by Lessee and deposited into such account and
shall be retained therein and credited to the Required Operation
and Maintenance Reserve Balance. If, on any Basic Rent Payment
Date, as the result of the actual realization of income or gain
on the amounts on deposit in the Operation and Maintenance
Reserve Account, an amount in excess of the Required Operation
and Maintenance Reserve Balance shall be on deposit therein and
no Lease Default or Lease Event of Default shall have occurred
and then be continuing, such excess may be distributed to the
Revenue Account on such Basic Rent Payment Date.
(iii) In the event of any withdrawal from the
Operation and Maintenance Reserve Account (other than withdrawals
of income or gain in excess of the Required Operation and
Maintenance Reserve Balance as permitted pursuant to Section
7(b)(ii)), on each Basic Rent Payment Date occurring after such
withdrawal and until the Operation and Maintenance Reserve
Account has been replenished by the amount of such withdrawal,
the Lessee shall deposit into the Operation and Maintenance
Reserve Account, prior and in addition to any deposits required
to be made pursuant to Section 7(b)(i), 50% of Available Cash
Flow for the Quarterly Measurement Period ended one month prior
to such Basic Rent Payment Date.
(c) Rent Reserve Account.
(i) On the Lease Closing Date, the Lessee shall
deposit in the Rent Reserve Account an amount equal to the
Initial Rent Reserve Deposit. On each Basic Rent Payment Date,
unless and until the Required Rent Reserve Balance shall be on
deposit in the Rent Reserve Account, the Lessee shall deposit
into the Rent Reserve Account an amount equal to 50% of
Distributable Cash Flow for the Quarterly Measurement Period
ended one month prior to such Basic Rent Payment Date. Deposits
made into the Rent Reserve Account pursuant to Section 7(c)(iii)
shall not be credited toward the Lessee's obligations to make
deposits in such Account pursuant to this Section 7(c)(i).
(ii) Income or gain earned on amounts on deposit
in the Rent Reserve Account shall be deemed to have been earned
by Lessee and deposited into such account and shall be retained
therein and credited to the Required Rent Reserve Balance. If,
on any Basic Rent Payment Date, as the result of the actual
realization of income or gain on the amounts on deposit in the
Rent Reserve Account, an amount in excess of the Required Rent
Reserve Balance shall be on deposit therein and no Lease Default
or Lease Event of Default shall have occurred and be continuing,
such excess may be distributed to the Revenue Account on such
Basic Rent Payment Date.
(iii) In the event of any withdrawal from the
Rent Reserve Account (other than withdrawals of income or gain in
excess of the Required Rent Reserve Balance as permitted pursuant
to Section 7(c)(ii)), on each Basic Rent Payment Date occurring
after such withdrawal and until the amount on deposit in the Rent
Reserve Account has been replenished by the amount of such
withdrawal, the Lessee shall deposit into the Rent Reserve
Account, prior and in addition to any deposits required to be
made pursuant to Section 7(c)(i), an amount equal to 100% of
Distributable Cash Flow for the Quarterly Measurement Period
ended one month prior to such Basic Rent Payment Date.
(d) Warranty Maintenance Reserve Account; Completion Account.
(i) On the Lease Closing Date, the Lessee shall
deposit in the (A) Warranty Maintenance Reserve Account an amount
equal to the Required Warranty Maintenance Reserve Deposit and
(B) Completion Account an amount equal to the Initial
Construction Completion Deposit.
(ii) Income or gain earned on amounts on deposit
in the Warranty Maintenance Reserve Account and the Completion
Account shall be deemed to have been earned by Lessee and
deposited into such account and shall be retained therein.
(e) Termination of Accounts. If, on the Turbine
Warranty Termination Date, no Lease Default or Lease Event of
Default shall have occurred and be continuing and the Lessee
shall have paid all Rent then due and owing, the funds on deposit
in the Warranty Maintenance Reserve Account shall be transferred
to the Revenue Account. After the date of final acceptance under
the Construction Contract, the funds on deposit in the Completion
Account shall be transferred to the Partnership at the times and
on the conditions set forth in the Security Deposit Agreement.
If, on the Lease Termination Date, no Lease Default or Lease
Event of Default shall have occurred and be continuing and the
Lessee shall have paid all Rent then due and owing (including the
Accrued Maintenance Payment pursuant to Section 5(e)), the funds
on deposit in the Operation and Maintenance Reserve Account and
the Rent Reserve Account shall be distributed to the Lessee.
(f) Establishment of Special Account. Upon the
delivery by the Power Purchaser of a notice of "Fuel Default" (as
defined in the Consent of the Power Purchaser), the Security
Agent shall establish a special account under the Security
Deposit Agreement into which the Lessee shall deposit, on each
Basic Rent Payment Date thereafter (until such notice is
rescinded or such "Fuel Default" is cured (as determined by
Lessor in its reasonable judgment)), an amount equal to 100% of
the Cash Available for Distributions for the immediately
preceding Quarterly Measurement Period. The amounts on deposit
in such account shall be used by the Lessee, with the consent of
the Owner Participant and the Administrative Agent, to cure the
event or events giving rise to such Fuel Default or, following
the occurrence of a Lease Event of Default (including as a result
of the occurrence of a "Fuel/Performance Failure" (as defined in
the Consent of the Power Purchaser)), such amounts may be used by
the Owner Participant and the Administrative Agent to effect a
cure of any such event or may be otherwise applied by the Owner
Participant and the Administrative Agent, to satisfy the Lessee
Obligations in such order as they shall determine. All amounts
remaining in such account after all outstanding "Fuel Defaults"
have been cured shall, so long as no Lease Default or Lease Event
of Default shall have occurred and be continuing, be transferred
to the Partnership Security Account.
(g) Other Covenants.
The Lessee shall comply with each and every
covenant set forth in Section 19 hereof.
SECTION 8. Facility Operation and Maintenance;
Modification; Identification.
(a) Facility Operation and Maintenance. The Lessee
shall: (i) maintain the Facility in such condition that it will
have the capacity and functional ability to perform on a
continuing basis, in normal commercial operation, the functions
for which it was designed, ordinary wear and tear excepted; (ii)
operate, service, maintain, overhaul, test and repair the
Facility and any Modifications and replace all necessary or
useful parts and components thereof so that the condition and
operating efficiency of the Facility and any Modification will be
maintained and preserved in all respects in accordance with (A)
Prudent Utility Practice, (B) such operating standards as shall
be required to take advantage of and enforce all available
warranties, (C) the terms and conditions of all insurance
policies required to be maintained pursuant to Section 10 hereof
and (D) the terms and conditions of the Power Purchase Agreement;
(iii) use, possess, operate and maintain the Facility, any
Modification, the Site and the Easements in compliance with all
Applicable Laws and Governmental Actions affecting the Facility,
any Modification, the Site or the Easements or the use,
possession, operation and maintenance thereof except for such
noncompliance as would not subject Lessor, Lessee, Owner
Participant, Administrative Agent, Indenture Trustee or any Loan
Participant to criminal or material civil liability and as would
not have or would not reasonably be expected to have a material
adverse effect on the Facility or the ability of the Lessee or
any other Person to perform its obligations under any Transaction
Document to which it is or will become a party; and (iv) maintain
all records, logs, manuals and other materials in respect of the
Facility, any Modification, the Site and the Easements in
accordance with Prudent Utility Practice. Subject to Section
8(h) hereof, the Lessee shall comply, and shall cause the
Operator to comply, with all the Lessee's obligations under
Applicable Laws (including, without limitation, the CPCN)
affecting the Facility, any Modification, the Site and the
Easements. The Lessee shall not permit the Facility to be
maintained, used or operated in any manner or for any purpose
excepted from any insurance in respect of the Facility. The
Lessee shall not omit to take any action necessary to cause the
Facility to be maintained, used or operated in any manner or for
any purpose excepted from any insurance in respect of the
Facility. The Lessee shall not permit the Facility to be
maintained, used or operated other than as a Qualifying Facility.
The Lessee shall take all action necessary to cause the Facility
to be maintained, used and operated as a Qualifying Facility.
The Lessee shall not sell any electricity generated by the
Facility to any person other than the Power Purchaser.
(b) Inspection. The Owner Participant, the
Administrative Agent, the Lessor and their authorized
representatives, upon reasonable notice to the Lessee, shall have
the right, subject to the Lessee's safety rules and regulations,
to inspect the Facility and the Site at their expense, or, if a
Lease Event of Default has occurred and is continuing, at the
expense of the Lessee (including such inspections as may be
necessary to comply with Applicable Law and such inspections as
may be necessary to permit Lessor, Indenture Trustee or any Loan
Participant to exercise any rights such Person may have to
operate, take title to or transfer the Project). The Owner
Participant, the Administrative Agent, the Lessor and their
authorized representatives, upon reasonable notice to the Lessee,
shall have the right, at their expense, or, if a Lease Event of
Default has occurred and is continuing, at the expense of the
Lessee, to inspect the books and records of the Lessee relating
to the Facility and to make copies of and extracts therefrom
(other than copies of and extracts from proprietary data and
information) and may discuss the Lessee's affairs, finances and
accounts with its executive officers, all at such times and as
often as may be reasonably requested. None of the Owner
Participant, the Administrative Agent nor the Lessor shall have
any duty whatsoever to make any inspection or inquiry referred to
in this Section 8(b) nor shall they incur any liability or
obligation by reason of not making any such inspection or
inquiry.
(c) Modifications. The Lessee, at its expense (except
as provided in Section 8(e) hereof), shall make any Modification
required by any Applicable Law or Governmental Action (including,
without limitation, any Applicable Law or Governmental Action as
shall be necessary to avoid the Facility's losing its Qualifying
Facility status) unless the Lessee is contesting such Applicable
Law or Governmental Action in accordance with Section 8(h)
hereof. In addition, the Lessee, at its expense (except as
provided in Section 8(e) hereof), from time to time may make any
Modification that the Lessee may deem desirable in the conduct of
its business; provided, however, that the Lessee shall not have
the right to make any such optional Modification (i) if such
optional Modification, together with any optional Modifications
previously made, would diminish the utility, durability or
performance characteristics of the Facility or diminish the value
of the Facility, (ii) that will reduce the remaining useful life
of the Facility, (iii) that could cause the Facility to become
"limited use property" for Federal income tax purposes or (iv)
that would result in the Owner Participant being deemed to
receive additional income (as a result of such Modifications)
pursuant to the Code, regulations or Internal Revenue Service
guidelines, unless the Owner Participant is indemnified for all
taxes arising as a result of such additional income pursuant to
the Tax Indemnity Agreement and the Owner Participant is
reasonably satisfied that the Lessee has sufficient cash on hand
to pay such indemnity. On every other Basic Rent Payment Date,
commencing on the second Basic Rent Payment Date, the Lessee
shall provide to the Lessor a certificate of an Authorized
Officer of the Lessee which shall certify to the Lessor that from
the date of the last such certificate (or, in the case of the
first such certificate, from the Lease Closing Date to the date
of such certificate) the Lessee has not made optional
Modifications which diminish the value of the Project.
(d) Title to Modifications. Title to each
Modification shall vest as follows:
(i) in the case of each Nonseverable
Modification and each Severable Modification required by
Applicable Law or a Governmental Action, whether or not such
Modification is purchased (in whole or in part) by the
Lessor, the Lessor shall, without further act, effective on
the date such Modification shall have been incorporated into
the Facility, acquire title to such Modification;
(ii) in the case of each Severable Modification
not required by Applicable Law or Governmental Action, if
such Modification is purchased by the Lessor, the Lessor
shall, without further act, effective on the date such
Modification shall have been incorporated into the Facility,
acquire title to such Modification; and
(iii) in the case of each Severable Modification
not required by Applicable Law or Governmental Action, if
such Modification is not purchased by the Lessor, the Lessee
shall retain title to such Modification; provided, however,
that the Lessor shall have the option, exercisable by
irrevocable notice to the Lessee given not less than 30 days
prior to the Lease Termination Date (or within thirty days
after such date if the Lease is terminated in accordance
with the provisions of Section 15 hereof), to purchase such
Modification as of the Lease Termination Date for cash at a
price equal to the Fair Market Sales Value thereof, free and
clear of all Liens.
Immediately upon title to such Modification vesting in
the Lessor pursuant to subparagraph (i) or subparagraph (ii) of
this Section 8(d), such Modification shall, without further act,
become subject to this Lease and, if the Indenture is in effect,
to the Lien of the Indenture, and be deemed part of the Facility
for all purposes hereof.
(e) Funding of the Costs of Modifications. The Lessee
may request that the Owner Participant finance all or a portion
of the cost of any Modification on such terms as shall be
mutually acceptable to the Lessee and the Owner Participant and
consistent with the provisions of Section 3.11(b) of the
Indenture. The Owner Participant shall consider in good faith
any such request but shall not be under any obligation to provide
any financing. If the Owner Participant agrees to finance the
cost of any Modification, the Basic Rent Factors and Stipulated
Loss Values will be adjusted upward by an amount mutually
acceptable to the Lessor and the Owner Participant. The failure
or inability of the Owner Participant to finance a Modification
required by Applicable Law or Governmental Action shall not in
any manner affect the Lessee's obligation to make such
Modification.
(f) Removal of Property. Subject to compliance with
Applicable Law and Section 7.1 of the Participation Agreement and
so long as no Lease Default or Lease Event of Default shall have
occurred and be continuing, the Lessee may remove, sell, transfer
or dispose of any Severable Modification to which the Lessee
shall have title as provided in Section 8(d)(iii) hereof,
provided that, as soon as practicable after the removal of such
Severable Modification, the Lessee, at its expense, shall repair
any damage to the Facility caused by such removal and shall
restore any diminishment in value, utility, durability,
performance characteristics or useful life (other than the loss
of additional value, utility, durability or useful life directly
attributable to the Severable Modification) of the Facility
caused by such removal. The Lessee, at its expense, will
promptly replace all Parts which may from time to time become
worn out, lost, stolen, destroyed, seized, confiscated, damaged
beyond repair or permanently rendered unfit for use for any
reason whatsoever. The Lessee may, at its expense, remove in the
ordinary course of maintenance, service, repair, overhaul or
testing, any Parts, whether or not worn out, lost, stolen,
destroyed, seized, confiscated, damaged beyond repair or
permanently rendered unfit for use, so long as the Lessee, at its
expense, promptly replaces such Parts. In addition, subject to
compliance with Applicable Law and so long as no Lease Default or
Lease Event of Default shall have occurred and be continuing, the
Lessee may remove any tangible property that is unnecessary and
can be removed without diminishing the value or utility or useful
life of the Facility; provided, however, that the consent of the
Administrative Agent and the Owner Participant shall be required
for the removal of any such tangible property if the aggregate
fair market sales value of all such tangible property previously
removed pursuant to this sentence shall exceed $100,000. If any
Part is removed from the Facility for the purpose of replacement
thereof with another Part, title to such removed Part shall
remain the property of the Lessor, no matter where such removed
Part is located, until such time as the Part constituting a
replacement thereof shall have been incorporated into the
Project, at which time, without further act, title to such
removed Part shall vest in the Lessee or in such Person as shall
be designated by the Lessee, free of the Lien and security
interest of the Indenture and the Collateral Security Documents.
Each such replacement Part shall be free and clear of all Liens,
other than Permitted Liens, and shall be in as good operating
condition as, and shall have a value, utility and useful life at
least equal to, that of the Part removed, it being assumed for
purposes of this sentence that such removed Part was in at least
the condition and state of repair required by Section 8(a)
hereof.
(g) Reports. To the extent permissible under
Applicable Law, the Lessee shall prepare (or cause to be
prepared) and file in a timely fashion, or, if the Lessor or the
Owner Participant shall be required to file, the Lessee shall
prepare or cause to be prepared and deliver to the Lessor or the
Owner Participant, as the case may be, within a reasonable time
prior to the date for filing, all reports with respect to the
Facility, or the condition or operation thereof, that shall be
required to be filed with any Governmental Authority. On or
before March 1 of each year (commencing on the first March 1 to
occur twelve months after the Lease Closing Date) and on the
Lease Termination Date, the Lessee shall furnish to the Lessor
and the Administrative Agent a report stating the total cost of
all Modifications and describing separately and in reasonable
detail each Modification (or related group of Modifications) made
during the period from the Lease Closing Date to the last day of
the calendar year occurring more than twelve months after the
Lease Closing Date, in the case of the first such report, and
during the period from the end of the period covered by the last
previous period to the December 31 immediately preceding such
report, in the case of subsequent reports.
(h) Contest of Applicable Law. If, with respect to
any requirement of Applicable Law or any Governmental Action
relating to the use, operation or maintenance of the Facility,
(i) the Lessee is contesting diligently and in good faith by
appropriate proceedings such requirement or Governmental Action,
or (ii) compliance with such requirement or Governmental Action
shall have been permanently excused or exempted by a valid
nonconforming use, permit or waiver, exempting the Lessor and/or
the Lessee from such requirement or Governmental Action or (iii)
the Lessee shall be making a good faith effort and shall be
diligently taking all appropriate steps to comply with such
requirement or Governmental Action and shall achieve compliance
therewith within 90 days, then, in each such case, the failure by
the Lessee to comply with such requirement or Governmental Action
shall not constitute a Default hereunder, provided that (A) such
contest or noncompliance does not, in the opinion of the Lessor,
the Administrative Agent and the Owner Participant, involve any
material danger of (1) the sale, foreclosure, forfeiture or loss
of the Facility, any Modification or the Site or any part
thereof, (2) criminal or civil liability being imposed on the
Lessor, the Security Agent, the Administrative Agent, any Loan
Participant, the Indenture Trustee, the Owner Participant or any
Affiliate thereof, (B) the Lessee shall have furnished to the
Lessor, the Administrative Agent and the Owner Participant an
opinion of counsel satisfactory to such parties to the effect
that there is a substantial likelihood of success for such
contest and (C) such contest or noncompliance could not
reasonably be expected to have a materially adverse effect on the
ability of the Lessee to pay Rent or otherwise to comply with the
provisions of and to perform its obligations under this Facility
Lease or any other Financing Document or other Transaction
Document. The Lessee shall provide the Lessor, the
Administrative Agent and the Owner Participant with notice of any
such contest or noncompliance in detail sufficient to enable the
Lessor, the Administrative Agent and the Owner Participant to
ascertain whether such contest may have any material adverse
effect of the type described in the immediately preceding
sentence. Notwithstanding anything to the contrary herein or in
any Financing Document or in any other Transaction Document, the
Lessee's use, maintenance and operation of the Facility shall be
in compliance in all material respects with the requirements of
all Applicable Laws and Governmental Actions at the end of the
Lease Term unless compliance with such Applicable Laws or
Governmental Actions shall have been permanently excused or
exempted by a valid nonconforming use, permit or waiver exempting
the Lessor and/or the Lessee from such compliance.
(i) Identification. The Lessee shall maintain in
prominent places on and about the Facility throughout the Lease
Term plates or other appropriate markings bearing the inscription
"PROPERTY OF FLEET NATIONAL BANK, AS OWNER TRUSTEE, AND LEASED TO
PANDA-BRANDYWINE, L.P." in letters not less than one-half inch in
height. In addition, so long as the Lien of the Indenture shall
not have been discharged, such inscription shall, within 60 days
of the Lease Closing Date, also include the following sentence:
"A deed of trust and security interest in this facility has been
granted to First Security Bank, National Association, as
Indenture Trustee." Except as provided or as otherwise directed
by the Lessor or Indenture Trustee, the Lessee shall not allow
the name of any Person other than that of the Lessee to be placed
on any part of the Project as a designation that might reasonably
be interpreted as a claim of ownership or right to possession or
use thereof, other than meters or other property or equipment
owned by the Power Purchaser or buildings dedicated for use by
the Power Purchaser which may be identified as being owned by, or
designated for use by, as the case may be, the Power Purchaser.
Lessee shall replace any such inscription which may be removed or
destroyed or become illegible or which shall no longer be correct
because of a change in the identity of the Lessor or the
Indenture Trustee and, to the extent necessary, to give notice of
the Indenture Trustee's security interest in the Facility.
SECTION 9. Event of Loss, Event of Regulation.
(a) Damage or Loss. If an Event of Loss shall occur,
or if a substantial part of the Facility shall suffer damage,
loss, condemnation, confiscation, theft or seizure that does not
constitute an Event of Loss, the Lessee shall promptly, and in
any case within 5 Business Days after such event, so notify the
Lessor, the Owner Participant, the Administrative Agent, the
Indenture Trustee and the Security Agent.
(b) Repair. If the Facility or any part thereof shall
suffer damage that does not constitute an Event of Loss, the
Lessee shall, or the Lessee shall cause the Operator to, make
such repairs as are necessary to ensure that the Facility is
maintained in the condition and state of repair required under
Section 8(a) hereof.
(c) Event of Loss; Payment of Stipulated Loss Value.
If an Event of Loss shall occur, the Lessee shall, at its option,
either (i) if (A) in the reasonable opinion of the Independent
Engineer, the period required to replace or repair the Facility
(the "Reconstruction Period") will not exceed twelve months and
the amount of the proceeds of casualty insurance or condemnation
awards, or the like, payable with respect to such Event of Loss
(net of the costs of obtaining such proceeds or awards), is
sufficient to repair or replace the Facility and to pay Rent and
all other expenses and liabilities of the Lessee during such
Reconstruction Period (including any additional costs or amounts
payable under the Project Documents or payable in connection with
the execution of any additional or replacement Project Documents)
as such Rent and other expenses and liabilities come due, (B) all
Governmental Actions required in connection with the work done or
proposed to be done have been obtained, (C) the Power Purchase
Agreement will remain in full force and effect during such
Reconstruction Period and (D) the Operating Cash Flow Ratio after
rebuilding the Facility will be at least 1.0 to 1.0 for each
Quarterly Measurement Period prior to the end of the Lease Term
(as reasonably determined by the Administrative Agent and the
Owner Participant), then, at its sole cost and expense, repair or
replace the Facility, in which case all proceeds of casualty
insurance and condemnation awards, or the like, shall be applied
to such repair or replacement and to the payment of such Rent and
other expenses and liabilities, or (ii) pay to the Lessor, as
soon as is reasonably practicable, but in any event within 90
days from the date of the Event of Loss (or, if earlier, upon the
receipt of insurance proceeds in respect thereof), the Stipulated
Loss Value determined as of the Basic Rent Payment Date next
succeeding the date of the Event of Loss, cash collateralize all
undrawn and outstanding Letters of Credit in the manner provided
for in the Reimbursement Agreement and, without duplication, pay
all Rent and other amounts payable that the Lessee has assumed,
agreed or is required to pay to, or for the account of, the
Lessor, the Loan Participants or the Owner Participant under this
Facility Lease, the Participation Agreement, the Tax Indemnity
Agreement or any other Transaction Document. From the date the
Event of Loss occurs, or is deemed to have occurred, to and
including the date of payment of such Stipulated Loss Value and
other amounts, all Rent shall continue to be paid when due. Upon
the payment of all such amounts, (x) the Lease Term shall end and
the obligations of the Lessee hereunder (other than any
obligation expressed herein as surviving termination of this
Facility Lease) shall cease as of the date of such payment and
(y) the Lessor shall effect a Transfer to the Lessee or as the
Lessee shall direct.
(d) Event of Regulation; Payment of Fair Market Sales
Value. If an Event of Regulation shall occur, the party hereto
having knowledge thereof shall promptly so notify the other
party. Following the occurrence of an Event of Regulation, the
Lessor may demand, by notice to the Lessee, that the Lessee
purchase all right, title and interest of the Lessor in and to
the Facility, the Site, and the Transaction Documents, and, on
the date specified in such notice (which date shall be no earlier
than the thirtieth day following such notice), the Lessee shall
purchase from the Lessor the right, title and interest of the
Lessor in and to the Facility, the Site, and the Transaction
Documents, for a purchase price equal to the sum of Stipulated
Loss Value and Swap Breakage Costs (the "Event of Regulation
Purchase Price") determined as of the date of such purchase. The
Lessor shall apply such Event of Regulation Purchase Price to the
repayment in full of the unpaid principal amount and accrued
interest owing under the Loan Certificates and the payment of all
amounts owing in respect of the early termination of the Interest
Hedging Agreement; provided, however, that upon such repayment in
full of the Loan Certificates, and provided that the Lien of the
Indenture shall have then been discharged (or shall be discharged
concurrently therewith), that portion of the amount payable by
the Lessee in connection with such a Transfer that is in excess
of the sum of the amount of the unpaid principal amount and
accrued interest owing under the Loan Certificates, and Swap
Breakage Costs shall be paid either (i) in cash or (ii) by the
issuance of a promissory note of the Lessee (the "Lessee Note")
payable to the order of the Lessor or its designee (which may be
the Owner Participant), in a principal amount equal to the amount
of such payment (the principal amount of such Lessee Note being
herein called the "Lessee Loan"), which note (i) shall have a
term equal to the remainder of the Basic Term, (ii) shall be
payable in equal consecutive quarterly installments of principal
and interest, (iii) shall bear interest at a rate per annum which
will maintain the Owner Participant's Net Economic Return (as
certified by the Owner Participant to the Lessee and, upon the
request and at the expense of the Lessee, as verified by KPMG
Peat Marwick or such other independent auditors as may be
selected by the Owner Participant and reasonably satisfactory to
the Lessee), (iv) shall be secured by a valid and perfected Lien
on the Lessee's interests in the Facility, which security
interest shall be first, prior and superior to all Liens (other
than Permitted Liens), and the mortgage granting such Lien,
together with customary opinions of counsel, shall be
satisfactory to the Owner Participant, and (v) shall be governed
by customary terms and conditions (and certain customary defaults
and remedies), substantially the same as those set forth in the
Construction Loan Agreement, as shall be agreed in good faith
between the Lessor and the Lessee; and provided, further that in
the event such Event of Regulation shall result from a Special QF
Loss Event or otherwise from the acts or omissions of the Owner
Trustee or Owner Participant or an Affiliate thereof, the Lessee
shall not be required to pay any amounts in respect of the early
termination of the Interest Hedging Agreement or Swap Breakage
Costs. When the purchase price of the Facility is paid
(including any and all accrued and unpaid Rent owing hereunder),
and the documents are recorded or filed as hereinabove provided,
(x) the Lease Term shall end and the obligations of the Lessee
hereunder (other than the covenants and agreements of the Lessee
set forth in Sections 7, 10 and 19 and any other obligations
expressed herein as surviving termination of this Lease) shall
cease and (y) the Lessor shall effect a Transfer to the Lessee.
The obligations of the Lessee to the Lessor, the Security Agent,
the Owner Participant, GE Capital or the Loan Participants under
the other Transaction Documents (including, in respect of the
Letters of Credit) shall not be affected and shall remain in full
force and effect. The Lessee shall pay the costs and expenses
(including reasonable legal fees) incurred by the Lessor, the
Owner Participant and the Administrative Agent in connection with
the purchase of the Facility by the Lessee and the other
transactions referred to in this Section 9(d).
(e) Requisition of Use. In the case of a requisition
of use not constituting an Event of Loss, this Facility Lease
shall continue, and each and every obligation of the Lessee
hereunder and under each Financing Document shall remain in full
force and effect; provided, the Lessee shall promptly notify the
Lessor, the Owner Participant, the Administrative Agent and the
Indenture Trustee of such requisition of use. The Lessee shall
be entitled to all sums received by reason of any such
requisition of use for the period ending on the Lease Termination
Date. The Lessor shall be entitled to all sums received by
reason of any such requisition of use for the period after the
Lease Termination Date.
(f) Application of Payments on an Event of Loss.
Except as otherwise provided in Section 9(c) hereof and subject
to the provisions of the Security Deposit Agreement, payments
received by the Lessor or the Lessee from any Governmental
Authority, insurer or other Person (other than proceeds of
insurance carried by or on behalf of the Lessor pursuant to
subsection 6.6(i)(iv) of the Participation Agreement) as a result
of an Event of Loss shall be promptly paid to the Lessor (or the
Security Agent so long as the Security Deposit Agreement is in
effect) and applied as follows:
(i) so much of such payments as shall not
exceed the amount required to be paid by the Lessee pursuant
to Section 9(c) hereof shall be applied in reduction of the
Lessee's obligation to pay such amount if the same has not
already been paid by the Lessee or, if the same has already
been paid by the Lessee, shall be applied to reimburse the
Lessee for its payment of such amount;
(ii) the balance, if any, of such payments from
an insurer shall be paid over to the Lessee; and
(iii) the balance, if any, of such payments other
than from an insurer shall be paid to the Lessor and the
Lessee as their respective interests in the Project may
appear.
(g) Application of Payments Not Relating to an Event
of Loss. Subject to the provisions of the Security Deposit
Agreement, payments received by the Lessor or by the Lessee
(other than proceeds of insurance carried by or on behalf of the
Lessor pursuant to subsection 6.6(i)(iv) of the Participation
Agreement), net of the costs of obtaining such proceeds or
awards, from any Governmental Authority, insurer or other Person
with respect to any destruction, damage, loss, condemnation,
confiscation, theft, seizure of or requisition of title to the
Project or any part thereof, in each case not constituting an
Event of Loss, shall be promptly paid to the Lessor and applied
as follows:
(i) so much of such payments as shall be
necessary to reimburse the Lessee for all amounts expended
by it pursuant to Section 9(b) hereof shall be paid over to
the Lessee from time to time as such expenditures occur,
upon receipt by the Lessor of invoices or other appropriate
evidence of such expenditures;
(ii) the balance, if any, of such payments from an
insurer shall be paid over to, or retained by, the Lessee;
and
(iii) the balance, if any, of such payments other
than from an insurer shall be paid to the Lessor and the
Lessee as their respective interests in the Project may
appear.
(h) Application During Default or Event of Default.
Notwithstanding the foregoing provisions of this Section 9, if a
Lease Default or Lease Event of Default shall have occurred and
be continuing, any amount that would otherwise be payable to or
for the account of, or that would otherwise be retained by, the
Lessee pursuant to subsection 6.6 of the Participation Agreement,
Section 10 hereof or this Section 9 shall be paid to the Security
Agent as security for the obligations of the Lessee under this
Facility Lease and the other Transaction Documents and, at such
time thereafter as no Lease Default or Lease Event of Default
shall be continuing, such amount shall be paid promptly to the
Lessee unless this Facility Lease shall have previously been
declared to be in default pursuant to Section 15 hereof, in which
event such amount shall be disposed of in accordance with the
provisions of the Security Deposit Agreement and the other
Collateral Security Documents.
SECTION 10. Insurance.
The Lessee shall at all times comply with subsection
6.6 of the Participation Agreement whether or not the
Participation Agreement shall be in effect, the provisions of
which are hereby incorporated by reference and deemed set forth
herein, mutatis mutandis.
SECTION 11. No Assignment or Sublease.
THE LESSEE WILL NOT, WITHOUT THE PRIOR WRITTEN CONSENT
OF THE LESSOR, ASSIGN OR SUBLEASE OR OTHERWISE IN ANY MANNER
DELIVER, TRANSFER OR RELINQUISH POSSESSION OF ALL OR ANY PORTION
OF THE FACILITY OR THE SITE OR ASSIGN ANY OF ITS RIGHTS OR
OBLIGATIONS HEREUNDER, EXCEPT PURSUANT TO THE STEAM LEASE.
SECTION 12. Lease Renewal; Purchase Option.
(a) Fixed Rate Renewal Option. Subject to the
requirements set forth in Section 13(a), (b) and (c) hereof,
unless a Lease Default or Lease Event of Default shall have
occurred and be continuing on the date that notice of renewal is
delivered by the Lessee pursuant to Section 13(a) or (b) or at
the end of the Basic Term or the initial Renewal Term, as the
case may be, the Lessee shall have the option to renew the term
of this Lease (the "Fixed Rate Renewal Option") at the end of the
Basic Term or the initial Renewal Term, as the case may be, for a
five-year period (each such period being herein called a "Fixed
Rate Renewal Term"). On or before the date the Lessee provides
its notice of renewal, the Lessee shall provide the Lessor a copy
of an opinion (the "Renewal Appraisal") of an independent expert
appraiser (the "Renewal Appraiser"), reasonably satisfactory in
form and substance to the Lessor, which shall demonstrate that at
the end of the Basic Term or any Fixed Rate Renewal Terms, the
Lease will meet all applicable IRS and accounting guidelines.
During the Fixed Rate Renewal Term, the Lessee shall pay to the
Lessor the Fixed Rate Renewal Basic Rent in quarterly
installments in arrears on each Basic Rent Payment Date during
such Renewal Term.
(b) Purchase Option. Subject to the requirements of
Section 13(a) or 13(b) hereof, as the case may be, and to Section
13(c) hereof, unless a Lease Default or Lease Event of Default
shall have occurred and be continuing at the end of the Basic
Lease Term or any Renewal Term, as the case may be, the Lessee or
its designee shall have the option to purchase all of the right,
title and interest of the Lessor in and to the Facility, the
Site, the Easements and the Transaction Documents for the Fair
Market Sales Value thereof (excluding any Modifications not
purchased by the Lessor) at the end of the Basic Term or any
Renewal Term; provided, however, if there is a Lease Default or
Lease Event of Default on the date the Lessee delivers notice
pursuant to Section 13(a) or (b) hereof, as the case may be, that
it will exercise an option to purchase under this Section 12(b)
and if the Lessor enters into an agreement to sell all of the
right, title and interest of the Lessor in and to the Facility,
the Site, and the Transaction Documents prior to (x) the end of
the Basic Lease Term or any Renewal Term, as the case may be, and
(y) the date on which the Lessee shall have remedied all Lease
Defaults and Lease Events of Default and delivered notice of such
cure to the Lessor, the Lessee shall have no option to purchase
pursuant to this Section 12(c) notwithstanding anything to the
contrary in this Lease.
(c) Purchase Date. In the event that the Lessee
elects to purchase the Facility in accordance with Section 12(b),
on the closing date of such purchase the Lessee shall pay to the
Lessor the applicable purchase price, together with an amount
equal to all costs and expenses (including reasonable legal fees
and expenses incurred or paid by the Lessor and the Owner
Participant in connection with such sale and this Facility Lease
shall terminate). Upon receipt of such amounts (and all other
amounts owing to the Lessor, the Indenture Trustee, the
Administrative Agent, the Security Agent, the Loan Participants,
and the Owner Participant under the Transaction Documents), the
Lessor shall effect a Transfer of the Facility, the Site and
Lessor's interest in the Easements and the Transaction Documents.
SECTION 13. Notices for Renewal or Purchase;
Determination of Fair Market Value.
(a) Expiration of Basic Term. Not less than 18 months
prior to the expiration date of the Basic Term, the Lessee shall
give to the Lessor written notice that it intends to exercise one
of the following options: (i) the option to renew this Facility
Lease for the Fixed Rate Renewal Term pursuant to Section 12(a)
hereof or (ii) the option to purchase the Facility, the Site and
the Transaction Documents pursuant to Section 12(b) hereof.
Failure to give such notice shall be deemed an irrevocable
election to return the Facility to the Lessor pursuant to Section
5 hereof.
(b) Expiration of Renewal Terms. Not less than 18
months prior to the expiration date of any Fixed Rate Renewal
Term, the Lessee shall give to the Lessor written notice that it
intends to exercise one of the following options: (i) the option
to renew this Lease for a Fixed Rate Renewal Term pursuant to
Section 12(a) hereof (such option is only exercisable during the
initial Renewal Term) or (ii) the option to purchase the
Facility, the Site and the Transaction Documents pursuant to
Section 12(b) hereof. Failure to give such notice shall be
deemed an irrevocable election to return the Facility to the
Lessor pursuant to Section 5 hereof.
(c) Elections Irrevocable. If the Lessee has given a
notice referred to in Section 13(a) or 13(b) hereof, not less
than 180 days prior to the expiration of the Basic Term or any
Renewal Term, as the case may be, the Lessee or its designee
shall give to the Lessor irrevocable written notice as to which
of such options pursuant to Section 12(a) or 12(b) hereof, as the
case may be, the Lessee or its designee has selected and such
election shall be binding on the Lessee.
(d) Determination of Fair Market Value. If the Lessee
shall give to the Lessor notice of its election to purchase the
Facility, the Site and the Transaction Documents pursuant to
Section 12(b) hereof, then, not later than six months prior to
the expiration date of the Basic Term or of the then current
Renewal Term, as the case may be, the Lessee and the Owner
Participant shall endeavor in good faith to agree on the Fair
Market Sales Value of the Facility, the Site, Lessor's interest
in the Easements and the Transaction Documents at the end of the
Basic Term or the then current Renewal Term, as the case may be.
If the Lessee and the Owner Participant are unable to agree upon
such Fair Market Sales Value, such Fair Market Sales Value shall
be determined by the Appraisal Procedure which, to the fullest
extent possible and consistent with the existing conditions,
shall use the same methodology and assumptions as were used in
the appraisal delivered pursuant to Section 5.1(u) of the
Participation Agreement and which shall not take into
consideration any renewal or purchase option of the Lessee.
SECTION 14. Events of Default.
The term "Lease Event of Default" or "Event of
Default", wherever used herein, shall mean any of the following
events (whatever the reason for such event and whether it shall
be voluntary or involuntary, or come about or be effected by
operation of Law, or be pursuant to or in compliance with any
Applicable Law or Governmental Action):
(a) The Lessee shall fail to make, or cause to be
made, (i) any payment of Basic Rent, or Stipulated Loss
Value within five Business Days after the same shall become
due or (ii) any payment of Supplemental Rent (other than
Stipulated Loss Value) including, without limitation,
Supplemental Rent pursuant to Section 18 hereof, within five
days after notice from the Person entitled thereto; or
(b) Any representation or warranty made by the Lessee
herein or in the Participation Agreement or by the Lessee,
any Partner or Holdings in any Transaction Document to which
the Lessee, such Partner or Holdings is a party, or any
representation, warranty or statement in any certificate,
financial statement or other document furnished to the
Lessor by or on behalf of the Lessee hereunder or the
Lessee, any Partner or Holdings under any Transaction
Document, shall prove to have been false or misleading in
any material respect as of the time made or deemed made and,
if such misrepresentation is capable of being corrected as
of a subsequent date and if such correction is being sought
diligently, such misrepresentation shall not have been
corrected as of a day within thirty calendar days following
notice thereof being given to the Lessee, such Partner or
Holdings, as the case may be, or any of the representations
contained in clause (ii) of Section 3.13, Section 3.20 or
Section 3.27 of the Participation Agreement shall cease to
be correct at any time; or
(c)(i) The Lessee shall fail to perform or observe any
of its covenants contained in Section 5, Section 7, Section
10 or Section 11 hereof or contained in Section 6.2(iv)
(unless such failure is due solely to the occurrence of a
Special QF Loss Event), Section 6.6 or Section 7 of the
Participation Agreement (and incorporated herein by
reference) or (ii) the Lessee shall fail to perform or
observe any other of its covenants contained in the
Participation Agreement (and incorporated herein by
reference) or in this Facility Lease (other than those
referred to in paragraphs (a) and (b) above and in clause
(i) of this paragraph (c)) and such failure shall continue
unremedied or unwaived for a period of 30 days after written
notice thereof from the Lessor to the Lessee, or in the
event that such failure cannot be cured during such 30-day
period despite the Lessee's best efforts to do so, the cure
period shall be extended by an additional 30 days, for a
total of 60 days, as long as the failure cannot be cured by
the payment of money, the Lessee has promptly commenced cure
of the default within the initial 30-day period and
thereafter diligently and continuously prosecutes such cure
and the failure is of such a nature that is capable of being
cured within 60 days; provided that no cure period shall be
provided for a failure to comply with any such covenant or
obligation if providing such cure period could reasonably be
expected to have a Material Adverse Effect; or
(d) The Lessee, any Partner, Panda, Holdings or any
Affiliate of any thereof shall fail to perform or observe
any of its covenants or obligations contained in any of the
Financing Documents (except those described in paragraphs
(a), (b) and (c) above) or shall breach or otherwise be in
default under any such Financing Document (except to the
extent that the applicable grace period, if any, under such
document has not expired). The Lessee or any Participant
shall fail to perform or observe in any material respect
the terms or conditions of any Project Document to which it
is a party or shall materially breach or otherwise be in
default under any such Project Document; provided that any
such failure or breach by a Participant (other than any
Specified Participant) shall not constitute an Event of
Default hereunder so long as such failure or breach (i) does
not give rise to a default under the Power Purchase
Agreement and (ii) does not have (nor could it reasonably be
expected to have) a Material Adverse Effect; or
(e) The Lessee or the General Partner or any other
Specified Participant (or its permitted successor) shall (i)
default in any payment of principal of or interest on any
Indebtedness beyond the period of grace, if any, provided in
the instrument or agreement under which such Indebtedness
was created; or (ii) default in the observance or
performance of any other agreement or condition relating to
any such Indebtedness or contained in any instrument or
agreement evidencing, securing or relating thereto, in each
case beyond the period of grace, if any, provided therein,
or any other event shall occur or condition exist, the
effect of which default or other event or condition is to
cause, or to permit the holder or holders of such
Indebtedness (or a trustee or agent on behalf of such holder
or holders) to cause, such Indebtedness to become due prior
to its stated maturity or to realize upon any collateral
given as security therefor; provided, however, with respect
to any Specified Participant other than the Lessee (or any
Affiliate thereof) or the Power Purchaser, any such event
described in clause (i) or (ii) shall not constitute an
Event of Default hereunder unless such event would (x) give
rise to a default under the Power Purchase Agreement or (y)
have (or could reasonably be expected to have) a Material
Adverse Effect; or
(f) Any Specified Participant (or its permitted
successor) shall (i) apply for or consent to the appointment
of, or the taking of possession by, a receiver, custodian,
trustee or liquidator of itself or of all or a substantial
part of its property, (ii) admit in writing its inability,
or be generally unable, to pay its debts as such debts
become due, (iii) make a general assignment for the benefit
of its creditors, (iv) commence a voluntary case under the
Bankruptcy Code (as now or hereafter in effect), (v) file a
petition seeking to take advantage of any other law relating
to bankruptcy, insolvency, reorganization, winding up, or
composition or readjustment of debts, (vi) fail to
controvert in a timely and appropriate manner, or acquiesce
in writing to, any petition filed against such Specified
Participant in an involuntary case under such Bankruptcy
Code, or (vii) take any partnership or corporate action for
the purpose of effecting any of the foregoing; provided,
that with respect to any Specified Participant other than
the Lessee (or any Affiliate thereof) or the Power
Purchaser, any such action or failure to act shall not
constitute an Event of Default hereunder unless such action
or failure to act would (x) give rise to a default under the
Power Purchase Agreement or (y) would have (or could
reasonably be expected to have) a Material Adverse Effect;
or
(g) A proceeding or case shall be commenced without
the application or consent of any Specified Participant (or
its permitted successor) in any court of competent
jurisdiction, seeking (i) its liquidation, reorganization,
dissolution, winding-up, or the composition or readjustment
of debts, (ii) the appointment of a trustee, receiver,
custodian, liquidator or the like of such Specified
Participant under any law relating to bankruptcy,
insolvency, reorganization, winding-up, or composition or
adjustment of debts or (iii) a warrant of attachment,
execution or similar process against all or a substantial
part of the assets of such Specified Participant, and such
proceeding or case shall continue undismissed, or any order,
judgment or decree approving or ordering any of the
foregoing shall be entered and continue unstayed and in
effect, for a period of 60 or more days, or any order for
relief against such Specified Participant shall be entered
in an involuntary case under the Bankruptcy Code; provided,
that with respect to any Specified Participant other than
the Lessee (or any Affiliate thereof) or the Power
Purchaser, such proceeding or appointment shall not
constitute an Event of Default hereunder unless such action
or failure to act would (x) give rise to a default under the
Power Purchase Agreement or (y) would have (or could
reasonably be expected to have) a Material Adverse Effect;
or
(h) A judgment or judgments for the payment of money
in excess of $150,000 shall be rendered against the Lessee,
the Steam Host or the General Partner and (x) such judgment
or judgments shall remain in effect and unstayed and
unbonded for a period of 30 or more consecutive days or (y)
enforcement proceedings shall be commenced by any creditor
on any such judgments; or
(i) Any material provision of any Project Document
shall at any time for any reason cease to be valid and
binding or in full force and effect or any party thereto
shall so assert in writing; or any material provision of any
Project Document shall be declared to be null and void or
the validity or enforceability thereof shall be contested by
any party thereto or any Governmental Authority; or any
Participant shall deny that it has any further liability or
obligation under any Project Document to which it is a
party, except upon fulfillment of its obligations
thereunder; provided that with respect to any Project
Document (other than the Gas Contracts, the Power Purchase
Agreement and the Construction Contract), it shall not
constitute an Event of Default under this paragraph if (i)
the Partnership shall obtain a replacement agreement
satisfactory in form and substance to the Owner Participant
and the Administrative Agent (and, to the extent required
under the Power Purchase Agreement, the Power Purchaser)
with a Person reasonably satisfactory to the Owner
Participant and the Administrative Agent (and, to the extent
required, the Power Purchaser) within 30 days after such
invalidity, contest or denial shall have occurred and (ii)
such event does not give rise to a default under the Power
Purchase Agreement; or
(j) Any Collateral Security Document shall cease, for
any reason, to be in full force and effect or any party
thereto shall so assert in writing; any Collateral Security
Document shall cease to be effective to grant a perfected
Lien on the Collateral described therein with the priority
purported to be created thereby; or
(k) (i) The General Partner shall at any time cease to
be the managing general partner of the Lessee, or (ii) the
General Partner or the Limited Partner shall transfer, sell,
assign, mortgage, pledge or otherwise dispose of its equity
interest in the Lessee or the Project, or (iii) Holdings
shall transfer, sell, assign, mortgage, pledge or otherwise
dispose of its interest in any Partner or in any Affiliate
of any Partner (except, in the case of any Affiliate, as
contemplated by Section 8(e) of the Stock Pledge Agreement)
or (iv) Panda shall cease to directly or indirectly own 100%
of the capital stock of Holdings or indirectly own 100% of
the capital stock of the General Partner and the Limited
Partner, in each case without the Lessor's prior written
consent; provided, that the provisions of clauses (iii) and
(iv) notwithstanding, Holdings and Panda may transfer
interests in the General Partner and the Limited Partner so
long as (x) any such transfer is not prohibited by and is
made in accordance with the applicable provisions of the
Power Purchase Agreement, (y) Panda and Holdings (or, if
Panda and Holdings merge into each other or Holdings merges
into an intermediate entity between itself and Panda, the
surviving company of such merger) each continues to directly
or indirectly own at least 51% of the capital stock of the
General Partner and the Limited Partner and (z) any such
transfer is made subject to the Liens in favor of the
Security Agent under the Collateral Security Documents (and
any transferee shall so confirm the same); or
(l) The Lessee shall abandon the Facility for a period
longer than 30 consecutive days; or
(m) (i) Any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section
4975 of the Code) involving any Plan, (ii) any "accumulated
funding deficiency" (as defined in Section 302 of ERISA),
whether or not waived, shall exist with respect to any Plan,
or (iii) a Reportable Event shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a
trustee shall be appointed, to administer or to terminate
any Single Employer Plan, which Reportable Event or
institution of proceedings is, in the reasonable opinion of
the Owner Participant or the Administrative Agent, likely to
result in the termination of such Plan for purposes of Title
IV of ERISA, or (iv) any Single Employer Plan shall
terminate for purposes of Title IV of ERISA, or (v) the
Lessee or any Commonly Controlled Entity shall, or is, in
the reasonable opinion of the Owner Participant or the
Administrative Agent, likely to incur any liability in
connection with a withdrawal from, or the insolvency or
reorganization of, a Multiemployer Plan, or (vi) any other
event or condition shall occur or exist with respect to a
Plan; and in each case in clauses (i) through (vi) above,
such event or condition, together with all other such events
or conditions, if any, could subject the Lessee to any tax,
penalty or other liabilities in the aggregate material in
relation to the business, operations, property or financial
or other condition of the Lessee; or
(n) the Facility at any time ceases to be a Qualifying
Facility (unless such event constitutes a Special QF Loss
Event); or
(o) any Governmental Action required for (x) the
execution, delivery or performance by the Lessee, any
General Partner or any Reporting Participant of its
respective rights and obligations under any of the
Transaction Documents or (y) the construction, ownership,
leasing or operation of the Project as contemplated by the
Transaction Documents, shall be revoked, terminated,
withdrawn, modified, suspended or withheld or shall cease to
be in full force or effect, or any proceeding shall be
commenced by or before any Governmental Authority for the
purpose of so revoking, terminating, withdrawing, modifying,
suspending or withholding any such Governmental Action and
such proceeding is not dismissed within 60 days of the
commencement thereof; and such revocation, termination,
withdrawal, modification, suspension, withholding or
cessation or such proceedings could reasonably be expected
to have a Material Adverse Effect; or
(p) a Reimbursement Event of Default shall have
occurred and be continuing; or
(q) The Limited Partner or the General Partner shall
breach any of its obligations under the Transfer Agreement;
or the Power Purchaser shall have given the Lessee a notice
of a "Fuel Default" (as defined in the Consent of the Power
Purchaser), which shall have given rise to a
"Fuel/Performance Failure" (as defined in the Consent of the
Power Purchaser); or an "Event of Default" shall occur under
Subsection 15.1 of the Power Purchase Agreement; or
(r) The Lessee shall (i) fail to furnish to the
Lessor, the Owner Participant and the Administrative Agent
an Annual QF Status Certificate pursuant to Section 6.30(b)
or (d) of the Participation Agreement on the day such
certificate is due or (ii) any Annual QF Status Certificate
furnished pursuant to Section 6.30(b) or (d) of the
Participation Agreement shall indicate that, during the
period covered by such certificate, the Steam Host purchased
an amount of steam under the Steam Sales Agreement which was
less than the QF Minimum Steam Take set forth in such
certificate; provided, that an Event of Default shall not be
deemed to have occurred so long as either:
(A)(i) such Annual QF Status Certificate indicates
that the Facility met the QF Operating Standard for the
period covered by such certificate and (ii) on or prior to
the day that is 7 days after the last day of the period
covered by such certificate, the Steam Host shall have
purchased under the Steam Sales Agreement, during the period
covered by such certificate plus this additional 7-day
period, an amount of steam at least equal to the QF Minimum
Steam Take as determined for purposes of such certificate;
or
(B)(i) the Lessee shall have obtained from FERC an
order granting the Lessee a waiver of the QF Operating
Standard for the Initial QF Standards Measurement Period or
the QF Standards Measurement Period, as the case may be, for
which such certificate was furnished and (ii) such order
shall have become final and not subject to appeal and shall
not have become the subject of any judicial or
administrative proceedings.
SECTION 15. Remedies.
(a) Remedies. Upon the occurrence of any Event of
Default and at any time thereafter so long as the same shall be
continuing the Lessor at its option may, by notice to the Lessee,
declare this Lease to be in default (provided that this Lease
shall be deemed to have been declared in default without the
necessity of such notice upon the occurrence of any Event of
Default described in paragraph (f) or (g) of Section 14) and at
any time thereafter the Lessor may, to the extent permitted by
Applicable Law, exercise one or more of the following remedies,
as the Lessor in its sole discretion shall elect:
(i) the Lessor may (x) demand that the Lessee,
and thereupon the Lessee shall, at the Lessee's expense,
return possession of the Facility promptly to the Lessor in
the manner and condition required by, and otherwise in
accordance with the provisions of, Section 5 hereof, and (y)
take all action required to enable the Lessor to, and
thereafter, enter upon the Site and the Easements and take
possession (to the exclusion of the Lessee) of the Facility,
all without liability to the Lessor for or by reason of such
entry or taking of possession, whether for the restoration
of damage to property caused by such taking or otherwise;
(ii) the Lessor may sell the Facility or any
part thereof, either together with, or without, any interest
of the Lessor under the Site Lease and the Easements, at
public or private sale, as the Lessor may determine, free
and clear of any rights of the Lessee therein and without
any duty to account to the Lessee with respect to such sale
or for the proceeds thereof (except to the extent required
by clause (iv) or (v) below if the Lessor shall elect to
exercise its rights thereunder), in which event the Lessee's
obligation to pay Basic Rent with respect to the Facility or
the part thereof that has been sold (and as to which the
Lessee shall have been deprived of the use thereof), for
periods commencing after the date of such sale shall
terminate (except to the extent that Basic Rent is to be
included in computations under clause (iv) or (v) below if
the Lessor shall elect to exercise its rights thereunder);
(iii) the Lessor may hold, keep idle or lease to
others the Facility or any part thereof, as the Lessor in
its discretion may determine, free and clear of any rights
of the Lessee therein and without any duty to account to the
Lessee with respect to such action or inaction or any
proceeds with respect thereto, except that the Lessee's
obligation to pay Basic Rent for periods commencing after
the Lessee shall have been deprived of use of the Facility
pursuant to this clause (iii) shall be reduced by an amount
equal to the net proceeds, if any, received by the Lessor
from leasing the Facility to any Person other than the
Lessee for the same periods or any portion thereof;
(iv) the Lessor may, whether or not the Lessor
shall have exercised or shall thereafter at any time
exercise its rights under clause (i), (ii) or (iii) above,
by notice to the Lessee specifying a payment date (which
shall be not earlier than 10 days after the date of such
notice), demand that the Lessee pay to the Lessor, and the
Lessee shall pay to the Lessor, on the payment date
specified in such notice, as liquidated damages for loss of
a bargain and not as a penalty (in lieu of the Basic Rent
due after the Basic Rent Payment Date occurring on or
immediately succeeding the payment date specified in such
notice), any unpaid Rent due as of the Basic Rent Payment
Date occurring on or immediately succeeding the payment date
specified in such notice plus whichever of the following
amounts the Lessor, in its sole discretion, shall specify in
such notice (together with interest on such amount at the
Overdue Rate from the payment date specified in such notice
to the date of actual payment):
(A) an amount equal to the excess, if any,
of (1) Stipulated Loss Value, computed as of the Basic
Rent Payment Date occurring on or immediately
succeeding the payment date specified in such notice,
over (2) the Fair Market Rental Value of the Project
(determined on the basis of the then actual condition
of the Facility) for the remainder of the Lease Term
after discounting such Fair Market Rental Value
semiannually to present value as of the Basic Rent
Payment Date occurring on or immediately succeeding the
payment date specified in such notice at the Discount
Rate; or
(B) an amount equal to the excess, if any,
of (1) such Stipulated Loss Value over (2) the Fair
Market Sales Value of the Facility (determined on the
basis of the then actual condition of the Project) as
of the payment date specified in such notice; or
(C) an amount equal to the Stipulated Loss
Value as of the Basic Rent Payment Date occurring on or
next succeeding the payment date specified in such
notice and, in this event, upon payment by the Lessee
of all amounts payable by it hereunder and under the
other Transaction Documents, the Lessor shall effect a
Transfer to the Lessee and the Lease Term shall end and
all the Lessee's obligations hereunder (other than any
obligations expressed herein as surviving termination
of this Lease) shall cease; or
(v) if the Lessor shall have sold all the
Facility pursuant to clause (ii) above, the Lessor, if it
shall so elect, in lieu of exercising its rights under
clause (iv) above with respect to the Facility, by notice to
the Lessee may demand that the Lessee pay to the Lessor, and
the Lessee shall pay to the Lessor on the date specified in
such demand, as liquidated damages for loss of a bargain and
not as a penalty (in lieu of Basic Rent due for periods
commencing after the next Basic Rent Payment Date following
the date of such sale), any unpaid Rent due as of the next
Basic Rent Payment Date following the date of such sale,
plus the amount of any deficiency between the Sale Proceeds
and Stipulated Loss Value, computed as of such Basic Rent
Payment Date, together with interest at the Overdue Rate on
the amount of such Rent and such deficiency from the date
specified for payment until the date of actual payment; or
(vi) the Lessor may rescind or terminate this
Facility Lease or may exercise any other right or remedy
that may be available to it under Applicable Law or proceed
by appropriate court action to enforce the terms hereof or
to recover damages for the breach hereof.
(b) No Release. Except as provided in Section 15(a)
hereof, no rescission or termination of this Facility Lease, in
whole or in part, or repossession of the Facility or exercise of
any remedy under Section 15(a) hereof shall relieve the Lessee of
any of its obligations under this Facility Lease. In addition,
except as aforesaid, the Lessee shall be liable for any and all
unpaid Rent due hereunder before, after or during the exercise of
any of the foregoing remedies, including all reasonable legal
fees and other costs and expenses incurred by the Lessor, the
Owner Participant, the Security Agent, the Indenture Trustee and
the Administrative Agent by reason of the occurrence of any Event
of Default or the exercise of the Lessor's remedies with respect
thereto. At any sale of the Facility or any part thereof
pursuant to this Section 15, the Lessor, the Security Agent, the
Administrative Agent,the Owner Participant, the Indenture Trustee
or any Loan Participant may bid for and purchase such property.
(c) Remedies Cumulative. Except as expressly set
forth therein, no remedy under Section 15(a) hereof is intended
to be exclusive, but each shall be cumulative and in addition to
any other remedy provided thereunder or otherwise available to
the Lessor at law or in equity. No express or implied waiver by
the Lessor of any Default or Event of Default hereunder shall in
any way be, or be construed to be, a waiver of any future or
subsequent Default or Event of Default. The failure or delay of
the Lessor in exercising any right granted it hereunder upon any
occurrence of any of the contingencies set forth herein shall not
constitute a waiver of any such right upon the continuation or
recurrence of any such contingency or similar contingencies and
any single or partial exercise of any particular right by the
Lessor shall not exhaust the same or constitute a waiver of any
other right provided herein. To the extent permitted by
Applicable Law, the Lessee hereby waives any rights now or
hereafter conferred by statute or otherwise that may require the
Lessor to sell, lease or otherwise use the Facility in mitigation
of the Lessor's damages as set forth in paragraph (a) of this
Section 15 or that may otherwise limit or modify any of the
Lessor's rights and remedies provided in this Section 15.
(d) Waiver. To the extent permitted by Applicable
Law, the Lessee hereby waives any notice of termination or
intention to reenter provided for in any statute, or of the
institution of legal proceedings for that purpose, and in
addition waives any right of redemption or reentry or
repossession, or to restore the operation of this Lease if it is
terminated or if the Lessee is dispossessed by any judgment or by
warrant of any court or judge in the case of reentry or
repossession by the Lessor, or in the case of expiration of the
Lease Term. The Lessee, in addition, waives any and all benefits
of any and all Laws now or hereafter in force or effect exempting
property of the Lessee from liability for rent or for debt. The
Lessee also expressly waives:
(i) any and all rights of redemption granted by
or under any present or future laws in the event of the
Lessee being evicted or dispossessed for any cause, or in
the event of the Lessor obtaining possession of the
Facility, by reason of the violation by the Lessee of any of
the covenants or conditions of this Lease, or otherwise' and
(ii) the right, if any, to three months notice
and/or fifteen (15) or thirty (30) days' notice under the
Landlord and Tenant Act of 1951, as amended.
(e) Allocation of Basic Rent. If for the purpose of
Section 15(a)(ii) hereof it shall become necessary to allocate a
portion of the Basic Rent payable hereunder to any part of the
Facility, such allocation shall be in the same proportion as the
original cost of such part bears to Lessor's Cost.
SECTION 16. Notices.
All communications, declarations, demands and notices
provided for in this Facility Lease shall be in writing and shall
be given in person or by means of telex, telecopy, or other wire
transmission, or mailed by registered or certified mail, or sent
by courier, addressed as provided in the Participation Agreement
or, in the case of the Lessor, addressed to it at ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇, Attention: Corporate Trust
Administration, with a copy to the Owner Participant and the
Administrative Agent at their respective addresses provided in
the Participation Agreement. All such communications,
declarations, demands and notices given in such manner shall be
effective as specified in the Participation Agreement.
SECTION 17. Successors and Assigns.
This Facility Lease, including all agreements,
covenants, indemnities, representations and warranties contained
herein, shall be binding upon and inure to the benefit of the
Lessor and the Lessee and their respective successors and
permitted assigns (including the Indenture Trustee).
SECTION 18. Right to Perform for Lessee.
If Lessee fails to make any payment of Rent required to
be made hereunder or fails to perform or comply with any of its
agreements, covenants or obligations herein or hereunder, the
Owner Participant, the Indenture Trustee, the Administrative
Agent or the Lessor may, after notice to the Lessee, to the
extent permitted by Applicable Law and the Lessee's failure to
promptly cure such non-performance, but shall not be obligated
to, to the extent not prohibited by Applicable Law, itself make
any such payment or perform or comply with any such agreement,
covenant or obligation as the Lessee shall be obligated to pay,
perform or comply with under this Facility Lease, and the amount
of such payment and the amount of the reasonable expenses of the
Owner Participant, the Indenture Trustee, the Administrative
Agent or the Lessor incurred in connection with such payment or
the performance or compliance with such agreement, covenant or
obligation, as the case may be, together with interest thereon at
the Overdue Rate, shall be deemed Supplemental Rent, payable by
the Lessee upon demand.
SECTION 19. General Covenants.
The Lessee agrees, for the benefit of the Lessor, to
comply with its covenants and agreements set forth in Sections 6
and 7 of the Participation Agreement and its covenants and
agreements set forth in Articles X and XI of the Site Lease,
which covenants and agreements are incorporated herein by this
reference as fully as if set forth in full at this place. The
Lessee further agrees, during the Lease Term, to perform all
covenants, agreements and obligations imposed by the Site Lease
upon the Site Lessee.
SECTION 20. Amendments and Miscellaneous.
(a) Amendments in Writing. The provisions of this
Lease may not be waived, altered, modified, amended, supplemented
or terminated in any manner whatsoever except by written
instrument signed by the Lessor, the Lessee and, to the extent
required by the Power Purchase Agreement, the Power Purchaser.
(b) Survival. All indemnities, representations and
warranties contained or incorporated by reference in this
Facility Lease shall survive, and shall continue in effect
following, the execution and delivery of this Facility Lease and
the expiration or termination of this Facility Lease. The
obligations of the Lessee to pay Supplemental Rent and the
obligations of the Lessee and the Lessor under Sections 5, 6(a),
7(a), 9(b), 9(c), 9(d), 9(f), 9(g), 15, 17, 18, 19, 20(b), 20(c),
20(d) and 20(f) hereof shall survive the expiration or
termination of this Facility Lease.
(c) Severability of Provisions. Any provision of this
Facility Lease that may be determined by competent authority to
be prohibited or unenforceable in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by Applicable Law, the
Lessee hereby waives any provision of law that renders any
provision hereof prohibited or unenforceable in any respect.
(d) True Lease. This Facility Lease is intended as,
and shall constitute, an agreement of lease for all purposes
including for federal income tax purposes, and nothing herein
shall be construed as conveying to the Lessee any right, title or
interest in or to the Facility except as a lessee.
(e) GOVERNING LAW. THIS LEASE SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW
YORK, EXCEPT AS TO MATTERS RELATING TO THE CREATION OF THE
LEASEHOLD ESTATES HEREUNDER AND THE EXERCISE OF RIGHTS AND
REMEDIES WITH RESPECT TO SUCH LEASEHOLD AND ESTATES, WHICH SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE
STATE OF MARYLAND TO THE EXTENT MANDATORILY APPLICABLE.
(f) SUBMISSION TO JURISDICTION. (a) THE LESSEE
HEREBY IRREVOCABLY AND UNCONDITIONALLY:
1. SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS FACILITY LEASE, OR ANY
OTHER FINANCING DOCUMENT OR FOR RECOGNITION AND ENFORCEMENT
OF ANY JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE
GENERAL JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK,
THE COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN
DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF;
2. CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE
BROUGHT IN SUCH COURTS, AND WAIVES ANY OBJECTION THAT IT MAY
NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR
PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR
PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES
NOT TO PLEAD OR CLAIM THE SAME;
3. AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION
OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY
REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR
FORM OF MAIL), POSTAGE PREPAID TO THE LESSEE AT ITS ADDRESS
SPECIFIED IN SUBSECTION 13.2 OF THE PARTICIPATION AGREEMENT
AND, IF APPLICABLE, TO LESSOR AT ITS ADDRESS SET FORTH
HEREIN OR AT SUCH OTHER ADDRESS OF WHICH THE LESSEE, IF
APPLICABLE, SHALL HAVE BEEN NOTIFIED PURSUANT HERETO; AND
4. AGREES THAT NOTHING HEREIN OR THEREIN SHALL AFFECT
THE RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO ▇▇▇ IN ANY
OTHER JURISDICTION.
(g) WAIVER. EACH OF THE LESSEE AND LESSOR HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO OR ARISING OUT OF THIS AGREEMENT
OR ANY OTHER TRANSACTION DOCUMENT AND FOR ANY COUNTERCLAIM
THEREIN.
(h) Headings. The division of this Facility Lease
into sections, the provision of a table of contents and the
insertion of headings are for convenience of reference only and
shall not affect the construction or interpretation of this
Facility Lease.
(i) Counterpart Execution. This Facility Lease may be
executed in two counterparts and by each of the parties hereto in
separate counterparts (except that only the counterpart bearing
the receipt executed by the Indenture Trustee shall be the
original for purposes of perfecting a security interest therein
as chattel paper under the Uniform Commercial Code), such
counterparts together constituting but one and the same
instrument.
(j) Limitation of Liability. (i) There shall be full
recourse to the Partnership and all of its assets for the
liabilities of the Lessee under this Facility Lease and the other
Lessee Obligations, but in no event shall any Partner, Affiliate
of any Partner, or any officer, director or employee of the
Partnership, any Partner or their Affiliates or any holder of any
equity interest in any Partner be personally liable or obligated
for such liabilities and Lessee Obligations except as may be
specifically provided in any other Transaction Document to which
such Partner is a party or in the event of fraudulent actions,
knowing misrepresentations, gross negligence or wilful misconduct
by the Partnership, any Partner or any of their Affiliates in
connection with this Facility Lease. Subject to the foregoing
limitation on liability, the Lessor may ▇▇▇ or commence any suit,
action or proceeding against, any Partner or Affiliate in order
to obtain jurisdiction over the Lessee in order to enforce its
rights and remedies hereunder. Nothing herein contained shall
limit or be construed to limit the liabilities and obligations of
any Partner or any Affiliate in accordance with the terms of any
other Transaction Document creating such liabilities and
obligations to which such Partner or Affiliate is a party.
(ii) Fleet National Bank (f/k/a Shawmut Bank
Connecticut, National Association) is entering into this Facility
Lease solely as Owner Trustee under the Trust Agreement and not
in its individual capacity except as expressly set forth herein.
Accordingly, each of the representations, warranties,
undertakings and agreements herein made on the part of the
Lessor, is made and intended not as a personal representation,
warranty, undertaking or agreement by or for the purpose or with
the intention of binding Fleet National Bank (f/k/a Shawmut Bank
Connecticut, National Association) personally, but is made and
intended for the purpose of binding only the Trust Estate (except
as otherwise expressly set forth herein). This Facility Lease is
executed and delivered by the Lessor solely in the exercise of
the powers expressly conferred upon it as trustee under the Trust
Agreement; and no personal liability or responsibility is assumed
hereunder by or shall at any time be enforceable against Fleet
National Bank (f/k/a Shawmut Bank Connecticut, National
Association) or any successor in trust on account of any action
taken or omitted to be taken or any representation, warranty,
undertaking or agreement hereunder of the Lessor, either
expressed or implied, all such personal liability, if any, being
expressly waived by the parties hereto, except that the parties
hereto, or any Person acting by, through or under them, making a
claim hereunder, may look to the Trust Estate for satisfaction of
the same and Fleet National Bank of Connecticut (f/k/a Shawmut
Bank Connecticut, National Association) or its successor in
trust, as applicable, shall be personally liable for its own
gross negligence or willful misconduct in the performance of its
duties as Owner Trustee or otherwise.
(k) Copies of Notices. The Lessee agrees to furnish
to the Owner Participant and the Administrative Agent at their
respective addresses set forth in subsection 13.2 of the
Participation Agreement a copy of each notice, demand or other
written communication which it delivers to the Lessor hereunder.
(l) Certain Rights of Power Purchaser. Nothing in
this Facility Lease shall be deemed to limit the provisions of
the Consent of the Power Purchaser, which provisions are solely
for the benefit of the Power Purchaser and not the Lessee.
Without limiting the scope of the foregoing, the Lessor agrees,
for the exclusive benefit of the Power Purchaser and not the
Lessee, that the exercise of remedies or any similar action under
this Facility Lease is subject to, and shall be conducted in a
manner consistent with, the Power Purchaser's rights under (i)
the Consent of the Power Purchaser and (ii) the Power Purchase
Agreement and the Transfer Agreement (to the extent such rights
under the Power Purchase Agreement and the Transfer Agreement are
not explicitly waived by the Power Purchaser in accordance with
the terms of the Consent of the Power Purchaser).
(m) Assignment to Indenture Trustee. In order to
secure the indebtedness evidenced by the Loan Certificates and
certain other obligations as provided in the Indenture, the
Indenture provides, among other things, for the assignment by
Lessor to the Indenture Trustee of all of its right, title and
interest in, to and under this Facility Lease, to the extent set
forth in the Indenture, and for the creation of a Lien on and
security interest in the Lessor's Estate in favor of the
Indenture Trustee, and in furtherance thereof, Lessee and Lessor
have entered into the Security Deposit Agreement with the
Security Agent. The Lessee hereby acknowledges and consents to
such assignment and such security interest and hereby
acknowledges that to the extent set forth in the Indenture, the
Indenture Trustee shall have the right in its own name (in
certain cases together with the Owner Trustee and in other cases
to the exclusion of the Owner Trustee, all as set forth in
Section 3.10 of the Indenture) to take or refrain from taking
action under this Facility Lease, including the right (i) of the
Lessor to exercise any election or option, and to make any
decision or determination, and to give any notice, consent,
waiver or approval under this Facility Lease or in respect
thereof, (ii) to exercise any and all of the rights, powers and
remedies of the Lessor hereunder and (iii) to receive all moneys
payable to the Lessor under this Facility Lease. Lessee agrees
it will make all payments payable to Lessor hereunder in
accordance with the provisions of the Security Deposit Agreement.
IN WITNESS WHEREOF, each of the parties hereto has
caused this Facility Lease to be duly executed in New York, New
York, by an officer thereunto duly authorized as of the date and
year first above written.
FLEET NATIONAL BANK not in its
individual capacity but solely as
Owner Trustee, as Lessor
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Assistant Vice President
Address: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust
Administration
PANDA-BRANDYWINE, L.P., as Lessee
By: PANDA BRANDYWINE CORPORATION,
its general partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice President
Address: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Receipt of this original counterpart of the Lease is
hereby acknowledged on this day of , 1996.
Indenture Trustee:
not in its individual capacity, but
solely as Indenture Trustee
By:
Name:
Title:
Schedule A to Facility Lease
Facility Description
The Brandywine facility is a 230 megawatt natural gas-
fired qualifying cogeneration facility and a distilled water
facility located in Brandywine, Maryland. This facility
includes, but is not limited to, the following equipment:
Steam Generator
Air Pollution Control Equipment
Turbine Generator
Condenser
Cooling Tower
Distributed Control System
Instrumentation
Switchyard
Fuel Handling
Fans
Feedwater Pumps
Circulation Pumps
Fire Protection
Demineralizer
Piping and Valves
Electrical and Wiring
Concrete
Insulation
Buildings
Distilled Water Facility (as described on Schedule A-1 hereto)
Schedule A-1 to the Facility Lease
DISTILLED WATER FACILITY DESCRIPTION
The Distilled Water facility is located in Prince
George's County, Maryland. This facility consists of, but is not
limited to, the following:
Part I
Piperacks and miscellaneous supports (including grating)
Packaged distilled water system
Distilled water storage tank - 220,000 gallons
Truck filling pumps
Sump pumps
12" steam supply from Facility
Piping for Distilled Water Facility systems: circ. water, drains,
pump suction and discharge, tank, sumps, fire protection,
acid, potable water, including safety shower and eye wash
station
Electrical equipment including: MCCs, transformer, circuit
breakers, panels and local control stations
Raceway including conduit, cable tray and fittings
Wire, cable and terminations
Lighting, grounding and miscellaneous systems
Instrumentation
Insulation
Part II
Structural excavation for foundations
Backfill and placement for foundations
Paving required including subbase and base course
Chain link fence
Drainage pipe
Catch basins
Landscaping - trees and shrubs
Foundations and slabs for building, tank, equipment, sumps,
piperack and loading/unloading area
Painting
Pre-engineered building - 40'x50'x26' (including doors, HVAC and
fire protection)
Schedule C to Facility Lease
Basic Rent
Basic Rent Factors
Basic Rent Payment (Expressed as a Percentage
Dates of Lessor's Cost) Basic Rent ($)
January 31, 1997 0.00000000 0.00
April 30, 1997 1.20029675 2,610,509.14
July 31, 1997 1.20029675 2,610,509.14
October 31, 1997 1.20029675 2,610,509.14
January 31, 1998 1.20029675 2,610,509.14
April 30, 1998 1.19683328 2,602,976.48
July 31, 1998 1.19683328 2,602,976.48
October 31, 1998 1.19683328 2,602,976.48
January 31, 1999 1.19683328 2,602,976.48
April 30, 1999 2.29620246 4,993,979.62
July 31, 1999 2.29620246 4,993,979.62
October 31, 1999 2.29620246 4,993,979.62
January 31, 2000 2.29620246 4,993,979.62
April 30, 2000 2.37488883 5,165,113.54
July 31, 2000 2.37488883 5,165,113.54
October 31, 2000 2.37488883 5,165,113.54
January 31, 2001 2.37488883 5,165,113.54
April 30, 2001 3.13407979 6,816,267.67
July 31, 2001 3.13407979 6,816,267.67
October 31, 2001 3.13407979 6,816,267.67
January 31, 2002 3.13407979 6,816,267.67
April 30, 2002 3.21146101 6,984,563.04
July 31, 2002 3.21146101 6,984,563.04
October 31, 2002 3.21146101 6,984,563.04
January 31, 2003 3.21146101 6,984,563.04
April 30, 2003 3.20786720 6,976,746.91
July 31, 2003 3.20786720 6,976,746.91
October 31, 2003 3.20786720 6,976,746.91
January 31, 2004 3.20786720 6,976,746.91
April 30, 2004 3.15604880 6,864,047.77
July 31, 2004 3.15604880 6,864,047.77
October 31, 2004 3.15604880 6,864,047.77
January 31, 2005 3.15604880 6,864,047.77
April 30, 2005 3.17283124 6,900,547.67
July 31, 2005 3.17283124 6,900,547.67
October 31, 2005 3.17283124 6,900,547.67
January 31, 2006 3.17283124 6,900,547.67
April 30, 2006 3.24021670 7,047,103.40
July 31, 2006 3.24021670 7,047,103.40
October 31, 2006 3.24021670 7,047,103.40
January 31, 2007 3.24021670 7,047,103.40
April 30, 2007 3.45664779 7,517,816.44
July 31, 2007 3.45664779 7,517,816.44
October 31, 2007 3.45664779 7,517,816.44
January 31, 2008 3.45664779 7,517,816.44
April 30, 2008 3.50922174 7,632,158.81
July 31, 2008 3.50922174 7,632,158.81
October 31, 2008 3.50922174 7,632,158.81
January 31, 2009 3.50922174 7,632,158.81
April 30, 2009 3.59615670 7,821,232.48
July 31, 2009 3.59615670 7,821,232.48
October 31, 2009 3.59615670 7,821,232.48
January 31, 2010 3.59615670 7,821,232.48
April 30, 2010 3.81771181 8,303,089.69
July 31, 2010 3.81771181 8,303,089.69
October 31, 2010 3.81771181 8,303,089.69
January 31, 2011 3.81771181 8,303,089.69
April 30, 2011 4.12919795 8,980,536.67
July 31, 2011 4.12919795 8,980,536.67
October 31, 2011 4.12919795 8,980,536.67
January 31, 2012 4.12919795 8,980,536.67
April 30, 2012 4.64822566 10,109,363.00
July 31, 2012 4.64822566 10,109,363.00
October 31, 2012 4.64822566 10,109,363.00
January 31, 2013 4.64822566 10,109,363.00
April 30, 2013 4.81119481 10,463,802.40
July 31, 2013 4.81119481 10,463,802.40
October 31, 2013 4.81119481 10,463,802.40
January 31, 2014 4.81119481 10,463,802.40
April 30, 2014 4.91283292 10,684,853.75
July 31, 2014 4.91283292 10,684,853.75
October 31, 2014 4.91283292 10,684,853.75
January 31, 2015 4.91283292 10,684,853.75
April 30, 2015 4.73222658 10,292,055.47
July 31, 2015 4.73222658 10,292,055.47
October 31, 2015 4.73222658 10,292,055.47
January 31, 2016 4.73222658 10,292,055.47
April 30, 2016 4.33548907 9,429,196.43
July 31, 2016 4.33548907 9,429,196.43
October 31, 2016 4.33548907 9,429,196.43
Schedule D to Facility Lease
Stipulated Loss Value
(Does Not Include Accrued Basic Rent)
Stipulated Loss Value
(Expressed as a Percentage
Basic Rent Payment Dates of Lessor's Cost)
January 31, 1997 103.5835176
April 30, 1997 105.0818708
July 31, 1997 1065606003
October 31, 1997 108.0346849
January 31, 1998 109.5404455
April 30, 1998 111.0243886
July 31, 1998 112.4934824
October 31, 1998 113.9614550
January 31, 1999 115.4647321
April 30, 1999 115.8413064
July 31, 1999 116.2133821
October 31, 1999 116.5829078
January 31, 2000 116.9952710
April 30, 2000 117.2887505
July 31, 2000 117.5774056
October 31, 2000 117.8649491
January 31, 2001 118.2133382
April 30, 2001 117.7702829
July 31, 2001 117.3125097
October 31, 2001 116.8374231
January 31, 2002 116.3819144
April 30, 2002 115.7923177
July 31, 2002 115.1885155
October 31, 2002 114.5659027
January 31, 2003 113.9699963
April 30, 2003 113.3091352
July 31, 2003 112.6349848
October 31, 2003 111.9418678
January 31, 2004 111.2799687
April 30, 2004 110.6219010
July 31, 2004 109.9648015
October 31, 2004 109.3029443
January 31, 2005 108.6934086
April 30, 2005 108.0206457
July 31, 2005 107.3485249
October 31, 2005 106.6706979
January 31, 2006 106.0337316
April 30, 2006 105.2782399
July 31, 2006 104.5285936
October 31, 2006 103.7773433
January 31, 2007 103.0616258
April 30, 2007 102.0837241
July 31, 2007 101.1065038
October 31, 2007 100.1201405
January 31, 2008 99.1615295
April 30, 2008 98.1009635
July 31, 2008 97.0465823
October 31, 2008 95.9873911
January 31, 2009 94.9837308
April 30, 2009 93.8307069
July 31, 2009 926818851
October 31, 2009 91.5247731
January 31, 2010 90.3961988
April 30, 2010 88.9881069
July 31, 2010 87.5781992
October 31, 2010 86.1514123
January 31, 2011 84.7442992
April 30, 2011 82.9562116
July 31, 2011 81.1571049
October 31, 2011 79.3285664
January 31, 2012 77.5251655
April 30, 2012 75.1059818
July 31, 2012 72.6594327
October 31, 2012 70.1621122
January 31, 2013 67.6494783
April 30, 2013 64.8607552
July 31, 2013 62.0489710
October 31, 2013 591883544
January 31, 2014 56.3142524
April 30, 2014 53.2247758
July 31, 2014 50.1048472
October 31, 2014 46.9265093
January 31, 2015 43.7313060
April 30, 2015 40.5506215
July 31, 2015 37.2706782
October 31, 2015 33.8626356
January 31, 2016 30.3223928
April 30, 2016 27.0167931
July 31, 2016 23.5831704
October 31, 2016 20.0000000
